<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
OR
/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-21872
ALDILA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3645590
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
15822 BERNARDO CENTER DRIVE, SAN DIEGO, CALIFORNIA 92127
(Address of principal executive offices)
(619) 592-0404
(Registrant's Telephone No.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
As of August 7, 1998 there were 15,462,204 shares of the Registrant's common
stock, par value $0.01 per share, outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ALDILA, INC.
TABLE OF CONTENTS
FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
June 30, 1998 and December 31, 1997 3
Consolidated Statements of Income for the three
months ended June 30, 1998 and 1997 and the six
months ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the
six months ended June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,592 $ 3,046
Accounts receivable 10,882 4,640
Income taxes receivable - 14
Inventories 10,549 13,186
Deferred tax assets 2,902 2,902
Prepaid expenses and other current assets 813 734
-------- --------
Total current assets 30,738 24,522
PROPERTY, PLANT AND EQUIPMENT 26,519 26,170
TRADEMARKS AND PATENTS 14,486 14,704
GOODWILL 46,911 47,625
DEFERRED FINANCING FEES 88 107
-------- --------
TOTAL ASSETS $118,742 $113,128
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,312 $ 4,051
Accrued expenses 4,048 3,696
Income taxes payable 1,327 -
-------- --------
Total current liabilities 10,687 7,747
LONG-TERM LIABILITIES:
Long-term debt 20,000 20,000
Deferred tax liabilities 7,337 7,487
Deferred rent liabilities 558 611
-------- --------
Total liabilities 38,582 35,845
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,000,000 shares;- NO shares issued
Common stock, $.01 par value; authorized
30,000,000 shares;- issued and outstanding
15,462,204 and 15,428,871 shares 155 154
Additional paid-in capital 42,627 42,456
Retained earnings 37,378 34,673
-------- --------
Total stockholders' equity 80,160 77,283
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $118,742 $113,128
-------- --------
-------- --------
</TABLE>
3
<PAGE>
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $21,153 $17,008 $40,270 $31,609
COST OF SALES 15,177 11,310 28,454 21,094
--------- --------- --------- ---------
Gross profit 5,976 5,698 11,816 10,515
--------- --------- --------- ---------
SELLING, GENERAL AND ADMINISTRATIVE 2,419 2,708 5,487 5,351
AMORTIZATION OF GOODWILL 357 357 714 714
--------- --------- --------- ---------
Operating income 3,200 2,633 5,615 4,450
--------- --------- --------- ---------
OTHER:
Interest expense 323 316 639 632
Other (income), net (54) (128) (101) (284)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 2,931 2,445 5,077 4,102
PROVISION FOR INCOME TAXES 1,367 1,069 2,372 1,793
--------- --------- --------- ---------
NET INCOME $1,564 $1,376 $2,705 $2,309
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME PER COMMON SHARE $0.10 $0.09 $0.18 $0.15
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME PER COMMON SHARE,
ASSUMING DILUTION $0.10 $0.09 $0.17 $0.15
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
4
<PAGE>
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1998 1997
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,705 $2,309
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,896 2,831
Changes in assets and liabilities:
Accounts receivable (6,242) (3,620)
Inventories 2,637 (3,980)
Prepaid expenses and other current assets (79) (158)
Accounts payable 1,261 3,299
Accrued expenses 352 (149)
Income taxes payable/receivable 1,341 920
Deferred tax liabilities (150) (137)
Deferred rent liabilities (53) (75)
------- -------
Net cash provided by operating activities 4,668 1,240
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (2,294) (6,784)
------- -------
Net cash used for investing activities (2,294) (6,784)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 156 -
Repurchase of common stock - (2,186)
Tax benefit from exercise of stock options 16 -
------- -------
Net cash provided by (used for)
financing activities 172 (2,186)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,546 (7,730)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,046 19,676
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $5,592 $11,946
------- -------
------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $620 $613
Income taxes $1,166 $1,009
</TABLE>
5
<PAGE>
ALDILA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. BASIS OF PRESENTATION
The consolidated balance sheet as of June 30, 1998 and the consolidated
statements of income and of cash flows for the three and six month periods
ended June 30, 1998 and 1997, are unaudited and reflect all adjustments of a
normal recurring nature which are, in the opinion of management, necessary
for a fair presentation of the financial position and results of operations
for the interim periods. The consolidated balance sheet as of December 31,
1997 was derived from the Company's audited financial statements. Operating
results for the three month period ended June 30, 1998 are not necessarily
indicative of results to be expected for the fiscal year ending December 31,
1998. These consolidated financial statements should be read in conjunction
with the Company's December 31, 1997 consolidated financial statements and
notes thereto.
2. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
Raw materials $ 7,902 $ 7,514
Work in process 985 2,108
Finished goods 1,662 3,564
------- -------
Inventories $10,549 $13,186
------- -------
------- -------
</TABLE>
3. LONG-TERM DEBT
Line of Credit - In March of 1998 the Company established a $10.0 million
unsecured line of credit with a financial institution expiring June 30, 1999.
Borrowings under the line of credit bear interest, at the bank reference rate
or the LIBOR rate plus 1.5%, at the election of the Company. The line of
credit requires the maintenance of certain financial ratios. No borrowings
have been made against the line of credit.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW - BUSINESS CONDITIONS
Aldila, Inc. and subsidiaries (the "Company") is principally in the
business of designing, manufacturing and marketing graphite (carbon fiber
based composite) golf club shafts, with approximately 85% of its net sales
resulting from sales to golf club manufacturers for inclusion in their clubs.
As a result, the Company's operating results are substantially dependent not
only on demand by its customers for the Company's shafts, but also on demand
by consumers for clubs including graphite shafts such as the Company's.
In 1998, the Company began production of carbon fiber at its new
facility in Evanston, Wyoming. The Company will use the output of this
facility to satisfy a significant portion of its internal demand for carbon
fiber in the manufacturing of golf club shafts. It also anticipates that it
will produce at this new facility carbon fiber in excess of what it will be
able to use in the manufacturing of golf club shafts. The Company intends to
sell such excess, in some cases in the form of graphite prepreg manufactured
using its existing facility in Poway, California, to other manufacturers of
carbon fiber-based products. The Company has not yet realized significant
revenues from the sale of carbon fiber or graphite prepreg to third parties
through the first half of 1998. The Company is also exploring entering into
the manufacture of new carbon fiber-based products in order to take advantage
of this excess carbon fiber capacity and may make acquisitions of other
companies in order to acquire such product lines. The Company expects that
the additional vertical integration offered by its new facility will assist
it in maintaining its position as a low cost manufacturer of graphite golf
club shafts at all price points. Management of the Company believes that the
ability to manufacture carbon fiber will also ultimately enable the Company
to diversify its sales and reduce its dependence on the overall golf club
market, while continuing to leverage the Company's existing composite
materials expertise, which should provide opportunities for growth that are
not currently present in the golf shaft business. This new facility will
need to undergo a "shakedown" period and will not be operating at full
capacity initially, therefore, the full benefit of this facility to the
Company is not expected to be realized until at least 1999.
Historically, graphite shafts have principally been offered by
manufacturers of higher priced, premium golf clubs, and the Company's sales
have been predominantly of premium graphite shafts. In addition, until
recently, the United States market for graphite shafts was dominated by a
relatively small number of United States-based shaft manufacturers. Both of
these aspects of the graphite shaft market have been changing. As a high
percentage of premium clubs are already sold with graphite shafts, as
compared to a smaller percentage of value priced clubs, the Company
anticipates that growth in graphite shaft usage in the future will be greater
in the value priced segment of the market than in the premium segment.
Management of the Company expects sales of shafts for the value priced club
market to increase significantly over the next several years, although
management also anticipates that sales of premium shafts will continue to
represent a majority of the Company's sales measured in dollars for the
foreseeable future. Over the last several years, the number of shaft
manufacturers of graphite golf shafts serving the United States
7
<PAGE>
premium club market has increased, including affiliates of foreign
manufacturers that had previously not had significant sales in the United
States. These two overall trends in the graphite shaft marketplace have had
the effect, and are expected by management to continue to have the effect for
at least the next several years, of decreasing the average selling price of
the Company's shafts. Although the Company's gross profit margin is being
adversely affected by the reduction in average selling price and continuing
increases in raw material costs, these adverse effects on gross margin should
be mitigated to some extent by efforts being taken by the Company to control
costs, including manufacturing its own graphite prepreg and, starting in 1998
its own carbon fiber, increased automation and increasing the percentage of
its shafts being manufactured in countries with lower labor and overhead
costs. In order to increase its capacity to manufacture shafts in a lower
cost environment, the Company is planning to open a second shaft
manufacturing facility in Zhuhai, China in the first quarter of 1999.
In recent years, the Company's results of operations have been
materially affected on several occasions by dramatic year-to-year changes in
sales to an individual golf club manufacturer customer. Such changes can
result either from decisions by the customer to increase or decrease shaft
purchases from an alternative supplier or from the traditional volatility in
consumer demand for specific clubs. The Company believes that this
volatility is likely to continue in the future, particularly as club
manufacturers seek to gain competitive advantages through an increased rate
of technological innovation in club design. The Company's results will
benefit whenever it has an opportunity to supply shafts for the latest "hot"
club and will be adversely affected whenever sales of clubs containing Aldila
shafts drop dramatically. In particular, in recent years, a significant
portion of the Company's sales has tended to be concentrated in one or two
customers, thereby making the Company's results of operations dependent to a
large extent on continued sales to those customers. In the first six months
of 1998, sales to Callaway Golf Company and Taylor Made Golf represented 24%
and 20%, respectively, of the Company's total net sales. The Company expects
Callaway and Taylor Made to continue to be the Company's largest customers at
least through 1998. The Company believes that while it will often not be
possible to predict, with any certainty, shifts in demand for particular
clubs, the Company's broad range of club manufacturer customers should reduce
in some cases the extent of the impact on the Company's financial results.
RESULTS OF OPERATIONS
SECOND QUARTER 1998 COMPARED TO SECOND QUARTER 1997
NET SALES. Net sales increased $4.1 million, or 24.4%, to $21.2 million
for the second quarter ended June 30, 1998 (the "1998 Period") from $17.0
million for the second quarter ended in 1997 (the "1997 Period"). The
increase in net sales was attributable to increased unit sales to the
Company's club manufacturer customers. Unit sales increased 47% in the 1998
Period as compared to the 1997 Period, which was offset by an 18% decrease in
the average selling price of shafts sold, both as a result of a change in
product mix to lower priced value shafts as well as continued pressure on
shaft prices.
8
<PAGE>
GROSS PROFIT. Gross profit increased $0.3 million, or 4.9%, to $6.0
million for the 1998 Period from $5.7 million for the 1997 Period principally
as a result of the increase in net sales. The Company's gross profit margin
decreased to 28.3% in the 1998 Period compared to 33.5% in the 1997 Period as
a result of a charge of $0.5 million against cost of sales related to the
production ramp-up in the new facility in Evanston, Wyoming as well as
continued pressure on shaft prices.
OPERATING INCOME. Operating income increased $0.6 million, or 21.5%, to
$3.2 million for the 1998 Period from $2.6 million for the 1997 Period, but
decreased as a percentage of net sales to 15.1% in the 1998 Period compared
to 15.5% in the 1997 Period. Selling, general and administrative expense
decreased as a percentage of net sales to 11.4% for the 1998 Period as
compared to 15.9% for the 1997 Period primarily as a result of lower
advertising expenses incurred in the 1998 Period as compared to the 1997
Period.
Other income decreased to $54,000 for the 1998 Period as compared to
$128,000 for the 1997 Period as a result of decreased investment income on
lower average cash balances in the 1998 Period.
SIX MONTH PERIOD IN 1998 COMPARED TO SIX MONTH PERIOD IN 1997
NET SALES. Net sales increased $8.7 million, or 27.4%, to $40.3 million
for the six month period ended June 30, 1998 from $31.6 million for the six
month period ended June 30, 1997. The increase in net sales was attributable
to increased unit sales to the Company's club manufacturer customers. Unit
sales increased 51% in the six month period ended June 30, 1998 as compared
to the six month period ended June 30, 1997, which was offset by an 18%
decrease in the average selling price of shafts sold, both as a result of a
change in product mix to lower price shafts as well as continued pressure on
shaft prices.
GROSS PROFIT. Gross profit increased $1.3 million, or 12.4%, to $11.8
million for the six month period ended June 30, 1998 from $10.5 million for
the six month period ended June 30, 1997 principally as a result of the
increase in net sales. The Company's gross profit margin decreased to 29.3%
for the six month period ended June 30, 1998 compared to 33.3% for the six
month period ended June 30, 1997 as a result of continued pressure on shaft
prices and a charge of $0.5 million against cost of sales related to the
production ramp-up in the new facility in Evanston, Wyoming.
9
<PAGE>
OPERATING INCOME. Operating income increased $1.2 million, or 26.2%, to
$5.6 million for the six month period ended June 30, 1998 from $4.4 million
for the six month period ended June 30, 1997, but decreased as a percentage
of net sales to 13.9% for the six month period ended June 30, 1998 compared
to 14.1% for the six month period ended June 30, 1997. Selling, general and
administrative expense decreased as a percentage of net sales to 13.6% for
the six month period ended June 30, 1998 as compared to 16.9% for the six
month period ended June 30, 1997 primarily as a result of lower advertising
and other administrative expenses incurred in the six month period in 1998
compared to 1997.
Other income decreased to $101,000 for the six month period ended June
30, 1998 as compared to $284,000 for the six month period ended June 30, 1997
as a result of decreased investment income on lower average cash balances in
1998.
LIQUIDITY AND CAPITAL RESOURCES
Since November 1993, the only indebtedness of the Company has been $20.0
million in 6.13% senior notes due 2001. Generally, the Company has not
required borrowings to finance its operations or provide working capital but
it may require additional financing to support its working capital needs on a
short-term basis. In March of 1998, the Company established a $10.0 million
unsecured line of credit from a financial institution expiring June 30, 1999
which is available to support any short-term working capital requirements.
Cash (including cash equivalents) provided by operating activities for
the six month period in 1998 was $4.7 million compared to $1.2 million
provided by operating activities for the six month period in 1997. This
increase resulted principally from the increase in net income and decrease in
cash used for working capital items in 1998 as compared to 1997. The Company
used $2.3 million for capital expenditures during the six month period ended
June 30, 1998, primarily related to the completion of construction of a new
facility for the manufacture of carbon fiber. The design, construction and
start-up of the 50,000 square foot facility was completed in the first
quarter of 1998 and had a total cost of approximately $16.0 million. The
Company used existing cash and cash provided by operating activities to fund
the project. Other than maintenance capital expenditures in the ordinary
course of business (which the Company does not expect to be significant), the
only planned capital expenditures over the next twelve months are in
connection with the new China facility and additional expansion of prepreg
capacity, which is expected to total approximately $7.2 million and will be
funded out of existing cash and cash provided by operating activities.
The Company may from time to time consider the acquisition of businesses
complementary to the Company's business. The Company could require
additional debt financing if it were to engage in a material acquisition in
the future.
10
<PAGE>
The Company recognizes the need to ensure its operations will not be
adversely impacted by the inability of the Company's information systems to
process data having dates on or after January 1, 2000 (the "Year 2000"
issues). Processing errors due to software failure arising from calculations
using the Year 2000 date are a recognized risk. The Company is currently
addressing the risk, with respect to the availability and integrity of its
financial systems and the reliability of its operating systems, and is in the
process of communicating with suppliers, customers, financial institutions
and others with whom it conducts business transactions to assess whether they
are Year 2000 compliant. The Company does not believe that it will incur a
material financial impact from the risk, or from assessing the risk, arising
from the Year 2000 issues.
SEASONALITY
Because the Company's customers have historically built inventory in
anticipation of purchases by golfers in the spring and summer, the principal
selling season for golf equipment, the Company's operating results have been
affected by seasonal demand for golf clubs, which has generally resulted in
the highest sales occurring in the second quarter. The timing of customers'
new products introductions has frequently mitigated the impact of seasonality
in recent years.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
With the exception of historical information (information relating to
the Company's financial condition and results of operations at historical
dates or for historical periods), the matters discussed in this Management's
Discussion and Analysis of Financial Condition and Results of Operations are
forward-looking statements that necessarily are based on certain assumptions
and are subject to certain risks and uncertainties. These forward-looking
statements are based on management's expectations as of the date hereof, that
necessarily contain certain assumptions and are subject to certain risks and
uncertainties. The Company does not undertake any responsibility to update
these statements in the future. The Company's actual future performance and
results could differ from that contained in or suggested by these forward
looking statements as a result of a variety of factors, including (i) risks
associated with the addition of the new facility in China (such as the need
to obtain required governmental permits and approvals, potential construction
delays, and the need to hire and train additional employees), (ii) the
ability to produce high volumes of carbon fiber at lower cost at the
Evanston, Wyoming facility, which has been undergoing a "shakedown" period
following its commencement of production earlier in 1998, (iii) changes in
demand by the Company's customers for graphite golf shafts, graphite prepreg
or carbon fiber (due to factors such as changes in consumer demand for
products including the Company's products, changes in availability or prices
for golf shafts, graphite prepreg or carbon fiber, changes in inventory
purchasing practices by the Company's customers (iv) the availability of raw
materials for the Company's manufacturing operations (principally carbon
fiber and acrylic fiber) at anticipated prices, (v) the ability of the
Company to develop new customer relationships with non-graphite golf users of
prepreg and carbon fiber, and (vi) risks resulting from the increasing
portion of the Company's manufacturing operations that is conducted in Mexico
and China (including the risk of political instability, export/import
regulation, currency exchange rate risk, and cultural differences).
11
<PAGE>
The Company's Report on Form 10-K for the year ended December 31, 1997
(the "Form 10-K") presents a more detailed discussion of these and other
risks related to the forward looking statements in this 10-Q, in particular
under "Business Risks" in Part I, Item 1 of the Company's Form 10-K and
Management's Discussion and Analysis of Financial Condition and Results of
Operation" in Part I, Item 7 of the Form 10-K.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 6,
1998. At the Annual Meeting, two items were submitted to a vote
of the stockholders of the Company and were approved:
1) The eleven current directors of the Company (listed below)
were nominated and elected to serve until the next annual meeting
of stockholders. Votes cast for each director as well as votes
withheld are as follows:
<TABLE>
<CAPTION>
WITHHELD
NAME FOR AUTHORITY
---- --- ---------
<S> <C> <C>
Gary T. Barbera 14,596,361 76,575
Peter E. Bennett 14,597,640 75,326
Thomas A. Brand 14,583,491 89,475
Jon B. DeVault 15,595,340 77,626
Marvin M. Giles, III 14,596,666 76,300
Vincent T. Gorguze 14,581,083 91,883
John J. Henry 14,592,315 80,651
Donald C. Klosterman 14,589,715 83,251
Wm. Brian Little 14,597,515 75,451
Peter R. Mathewson 14,597,315 75,651
Chapin Nolen 14,594,891 78,075
</TABLE>
12
<PAGE>
2) The stockholders also ratified the appointment of Deloitte &
Touche LLP as the Company's independent accountants for the
fiscal year ending December 31, 1998. 14,586,527 votes were cast
for ratification of Deloitte & Touche LLP; 50,435 votes were cast
against; and there were 36,004 abstentions and 0 broker non-votes.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11.1 - Statement re: Computation of Net Income per
Common Share
(b) Exhibit 27.1 - Financial Data Schedule
(c) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant
during the quarter ended June 30, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: ALDILA, INC.
August 7, 1998 /s/ Robert J. Cierzan
------------------------------------
Robert J. Cierzan
Vice President, Finance
Signing both in his capacity as
Vice President and as Chief
Accounting Officer of the Registrant
14
<PAGE>
EXHIBIT 11.1
ALDILA, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
BASIC:
Net income $ 1,564 $ 1,376 $ 2,705 $ 2,309
Weighted average number of common shares outstanding 15,451 15,677 15,441 15,796
--------- --------- --------- ----------
Net Income per common share $ 0.10 $ 0.09 $ 0.18 $ 0.15
--------- --------- --------- ----------
--------- --------- --------- ----------
ASSUMING DILUTION:
Net income $ 1,564 $ 1,376 $ 2,705 $ 2,309
Weighted average number of common shares outstanding 15,451 15,677 15,441 15,796
The number of shares resulting from the assumed
exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from such exercise, using the average
market price during the period 442 83 259 83
--------- --------- --------- ----------
Weighted average number of common and
common equivalent shares 15,893 15,760 15,700 15,879
--------- --------- --------- ----------
Net Income per common share, assuming dilution $ 0.10 $ 0.09 $ 0.17 $ 0.15
--------- --------- --------- ----------
--------- --------- --------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORAMTION EXTRACTED FROM THE
COMPANY'S REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOR ENDED JUNE 30, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,592
<SECURITIES> 0
<RECEIVABLES> 10,882
<ALLOWANCES> 0
<INVENTORY> 10,549
<CURRENT-ASSETS> 30,738
<PP&E> 26,519
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,742
<CURRENT-LIABILITIES> 10,687
<BONDS> 20,000
0
0
<COMMON> 155
<OTHER-SE> 80,005
<TOTAL-LIABILITY-AND-EQUITY> 118,742
<SALES> 40,270
<TOTAL-REVENUES> 40,270
<CGS> 28,454
<TOTAL-COSTS> 33,941
<OTHER-EXPENSES> 714<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 639
<INCOME-PRETAX> 5,077
<INCOME-TAX> 2,372
<INCOME-CONTINUING> 2,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,705
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.17
<FN>
<F1> GOODWILL AMORTIZATION
</FN>
</TABLE>
