Alidila, Inc. reported net sales of $12.2 million and net income of $1.3 million (24 cents per share) for the three months ending Sept. 30, 2010 as compared to net sales of $10.7 million and a net loss of $571,000 (11 cents loss per share) for the comparable period in 2009.


The $1.3 million income in third quarter of 2010 included a tax benefit realization of $1.0 million related to the company's unrecognized tax benefits. For the nine months ended Sept. 30, 2010, net sales of $42.7 million and net income of $2.7 million (51 cents per share) as compared to net sales of $35.0 million and net loss of $1.2 million (24 cents per share) for the comparable period of 2009.

“We continued to experience relatively strong sales during our third quarter, historically our weakest quarter. Our consolidated sales increased by 15% for the three months ended Sept. 30, 2010 as compared to the comparable period of 2009. The increase in sales was driven by increases in sales for both of our operating divisions. In our Composite Product division, shaft sales increased by 6%, unit sales increased by 15% and average selling price declined by 8%.


In our Composite Materials division, sales increased by 61%. For the nine months ended September 30, 2010, consolidated sales are up 22% as compared to 2009, with Composite Product sales up 13% and Composite Materials up 81%. Golf shaft sales are up 13% on an increase in units of 22% and a decline in average selling prices of 7%,” said Peter R. Mathewson, Chairman and CEO.

“The golf industry and golf equipment sales in particular have suffered through several years of tough conditions with declines in sales in the key categories of woods and irons during 2008, 2009 and year to date 2010. Retail sales numbers through August of 2010 show metal wood units off 4% and dollars off 7%, with the biggest decline in drivers with a decline of 11% in units and dollars are off 16%. In the iron category unit sales are down 2% and dollars are down 1%.”


“This is not surprising because the macro economic conditions have been severely stressed since the second half of 2008 and we have yet to emerge with a full recovery. Our golf sales are dependent on discretionary spending. As the economy improves, it's reasonable to assume the industry will regain much of the lost sales over the last several years. With this in mind, our 2010 year to date performance has been quite good and ranks near the top in our industry. Our market share has remained strong; our costs reduced with our closure of our Mexico factory in 2009 and our concerted effort to fully utilize our Vietnam factory that enjoys our lowest cost structure. For OEMs, fitters and avid golfers who are always looking for a new and compelling story, Aldila is the leading graphite golf shaft manufacturer delivering innovative, performance enhancing technology and visually engaging products,” Mathewson said.

“Backlog of $6.1 million as of September 30, 2010 is down by 39% as compared to our backlog of $10.1 million as of September 30, 2009. Our backlog has been affected by the change in our OEM and their assemblers' ordering patterns. They have shortened their lead times on ordering new product reflecting continued emphasis on tight inventory management. Our balance sheet remains strong with cash of $7.6 million and no debt as of September 30, 2010,” said Mathewson.


“With the 2010 professional tours wrapping up their respective seasons, we are proud to report that we had one of our best years ever on both the PGA and Nationwide Tours. Players using Aldila shafts won 14 events on the PGA Tour and 15 events on the Nationwide Tour — over half of all the events. Some highlights included our RIP™ shaft being used to win the U.S. Open Championship and the winner of the Greenbrier Classic using a full bag of Aldila wood shafts to shoot a final round 59; the second 59 shot by a player in 2010 while using Aldila shafts. PGA Tour Professionals who played Aldila driver shafts this year also won over $39 million during the season. We are also delighted to report that the world's best players once again chose Aldila over all other shaft manufacturers as their shaft of choice for both woods and hybrids during the 2010 PGA Tour season. Aldila had nearly twice as many hybrid shafts in play this year as any other manufacturer. We are also extremely proud that for the 3rd consecutive year, Aldila was the most popular graphite shaft in play during the PGA Tour's FedEx Cup Playoffs. In addition, players using Aldila shafts won 2 of the 4 FedEx Cup Playoff events,” Mr. Mathewson said.


“The new Aldila RIP™ continues to be well received in the market place and is being launched through leading club manufacturers and distributors. New models of the RIP™ are going through final testing and being readied for launch early in 2011. The new models received very positive reviews during testing on Tour this year and were quickly put into play. We are confident that these new additions to the RIP™ product line will be well received in the market as well,” Mr. Mathewson.


“Our Composite Materials Division continues to thrive with sales up 61% versus the third quarter of 2009 and up 81% through the nine months ended September 30, 2010 compared to the same period in 2009. We continue to strengthen the organization with the addition of a new Quality Manager,” 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,
                                    ——————  ——————
                                      2010      2009      2010      2009
                                    ——–  ——–  ——–  ——–

NET SALES                           $ 12,227  $ 10,671  $ 42,744  $ 35,048
COST OF SALES                          9,375     8,153    32,067    28,285
                                    ——–  ——–  ——–  ——–
    Gross profit                       2,852     2,518    10,677     6,763
                                    ——–  ——–  ——–  ——–

SELLING, GENERAL AND ADMINISTRATIVE    2,648     2,367     8,484     7,755
PLANT CONSOLIDATION                        –       212         –       212
                                    ——–  ——–  ——–  ——–
    Operating income (loss)              204       (61)    2,193    (1,204)
                                    ——–  ——–  ——–  ——–

OTHER INCOME (EXPENSE):
    Interest income                        3         3         5        12
    Interest expense                       –       (46)      (32)     (148)
    Other, net                            (4)        4        13       (76)
                                    ——–  ——–  ——–  ——–

INCOME (LOSS) BEFORE INCOME TAXES        203      (100)    2,179    (1,416)
(BENEFIT) PROVISION FOR INCOME
 TAXES                                (1,054)      471      (489)     (170)
                                    ——–  ——–  ——–  ——–

NET INCOME (LOSS)                   $  1,257  $   (571) $  2,668  $ (1,246)
                                    ========  ========  ========  ========


NET INCOME (LOSS) PER COMMON SHARE  $   0.24  $  (0.11) $   0.51  $  (0.24)
                                    ========  ========  ========  ========

NET INCOME (LOSS) PER COMMON SHARE,
 ASSUMING DILUTION                  $   0.24  $  (0.11) $   0.51  $  (0.24)
                                    ========  ========  ========  ========

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                    5,224     5,186     5,210     5,178
                                    ========  ========  ========  ========

WEIGHTED AVERAGE NUMBER OF COMMON
 AND COMMON EQUIVALENT SHARES          5,255     5,186     5,234     5,178
                                    ========  ========  ========  ========