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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, 2000
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 Identification Number)
incorporation or organization)
12140 COMMUNITY ROAD, POWAY, CALIFORNIA 92064
(Address of principal executive offices)
(858) 513-1801
(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 11, 2000 there were 15,462,204 shares of the Registrant's common
stock, par value $0.01 per share, outstanding.
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ALDILA, INC.
TABLE OF CONTENTS
FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 2000
<TABLE>
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations for the three
months ended June 30, 2000 and 1999
and the six months ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------------- -------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,445 $4,077
Marketable securities 7,437 4,513
Accounts receivable 6,032 4,807
Inventories 8,556 12,326
Deferred tax assets 4,010 4,010
Prepaid expenses and other current assets 835 741
------------------- -------------------
Total current assets 31,315 30,474
PROPERTY, PLANT AND EQUIPMENT 9,937 11,298
INVESTMENT IN JOINT VENTURE 7,316 7,181
TRADEMARKS AND PATENTS 13,615 13,833
GOODWILL 44,056 44,770
DEFERRED FINANCING FEES 191 256
OTHER ASSETS 181 191
------------------- -------------------
TOTAL ASSETS $106,611 $108,003
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,745 $3,258
Accrued expenses 2,819 3,693
Income taxes payable 2,373 167
Long-term debt, current portion 8,000 8,000
------------------- -------------------
Total current liabilities 15,937 15,118
LONG-TERM LIABILITIES:
Long-term debt 4,000 8,000
Deferred tax liabilities 6,245 6,338
Deferred rent liabilities 44 398
------------------- -------------------
Total liabilities 26,226 29,854
------------------- -------------------
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 shares 155 155
Additional paid-in capital 42,627 42,627
Retained earnings 37,603 35,367
------------------- -------------------
Total stockholders' equity 80,385 78,149
------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $106,611 $108,003
=================== ===================
</TABLE>
See notes to consolidated financial statements.
3
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ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
NET SALES $17,082 $12,612 $33,795 $23,175
COST OF SALES 11,377 9,956 25,104 18,230
-------------- -------------- -------------- --------------
Gross profit 5,705 2,656 8,691 4,945
-------------- -------------- -------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE 2,262 1,831 4,140 3,696
AMORTIZATION OF GOODWILL 357 357 714 714
PLANT CONSOLIDATION - - (566) -
-------------- -------------- -------------- --------------
Operating income 3,086 468 4,403 535
-------------- -------------- -------------- --------------
OTHER EXPENSE (INCOME):
Interest expense 229 344 517 678
Other, net (110) 6 (247) 13
Equity in earnings of joint venture (32) - (70) -
-------------- -------------- -------------- --------------
INCOME (LOSS) BEFORE INCOME TAXES 2,999 118 4,203 (156)
PROVISION FOR INCOME TAXES 1,343 190 1,967 223
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $1,656 ($72) $2,236 ($379)
============== ============== ============== ==============
NET INCOME (LOSS) PER COMMON SHARE $0.10 ($0.00) $0.14 ($0.02)
============== ============== ============== ==============
NET INCOME (LOSS) PER COMMON SHARE,
ASSUMING DILUTION $0.10 ($0.00) $0.14 ($0.02)
============== ============== ============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 15,462 15,462 15,462 15,462
============== ============== ============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES 15,556 15,462 15,566 15,462
============== ============== ============== ==============
</TABLE>
See notes to consolidated financial statements.
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ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $2,236 ($379)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 2,077 3,133
Loss on disposal of fixed assets 19 9
Changes in assets and liabilities:
Accounts receivable (1,225) (3,666)
Inventories 3,770 2,270
Prepaid expenses and other current assets (83) 161
Accounts payable (513) (1,139)
Accrued expenses (351) (576)
Income taxes payable 2,206 (392)
Deferred tax liabilities (93) (104)
Deferred rent liabilities (354) (60)
------------- -------------
Net cash provided by (used for) operating
activities 7,689 (743)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (262) (744)
Investment in marketable securities (2,924) -
Investment in joint venture (135) -
------------- -------------
Net cash used for investing activities (3,321) (744)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit - 1,700
Payments under line of credit - (1,700)
Principal payments on long-term debt (4,000) -
------------- -------------
Net cash used for financing activities (4,000) -
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 368 (1,487)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,077 1,972
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $4,445 $485
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $512 $660
Income taxes $74 $483
</TABLE>
See notes to consolidated financial statements.
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ALDILA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. BASIS OF PRESENTATION
The consolidated balance sheet as of June 30, 2000 and the consolidated
statements of operations and of cash flows for the three and six month period
ended June 30, 2000 and 1999, 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 presented. The consolidated balance sheet as of December 31,
1999 was derived from the Aldila, Inc. and subsidiaries' (the "Company's")
audited financial statements. Operating results for the interim periods
presented are not necessarily indicative of results to be expected for the
fiscal year ending December 31, 2000. These consolidated financial statements
should be read in conjunction with the Company's December 31, 1999 consolidated
financial statements and notes thereto.
2. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Raw materials $ 3,425 $ 6,026
Work in process 2,968 3,658
Finished goods 2,163 2,642
------------------ ------------------
Inventories $ 8,556 $ 12,326
================== ==================
</TABLE>
3. LONG-TERM DEBT
SENIOR NOTES - The Company placed $20.0 million in principal amount of
senior notes with an institutional investor on November 30, 1993. $12.0 million
in principal remains outstanding at June 30, 2000. The notes bear interest at
6.13%, payable semi-annually on March 31 and September 30. Semi-annual principal
payments of $4.0 million, plus accrued interest, are due on March 31 and
September 30 through September 30, 2001. The senior notes contain certain
restrictions, including limitations on additional borrowings, the payment of
dividends and capital stock repurchases. Under the most restrictive provision of
the senior notes, the Company must meet consolidated fixed charge coverage
ratios at specified levels. As of June 30, 2000, the Company was in compliance
with all covenants under the senior notes. The fair value of the fixed rate
senior notes approximates their carrying amount based on the estimated current
incremental borrowing rates for similar obligations with similar terms.
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REVOLVING CREDIT AGREEMENT - On July 9, 1999, Aldila Golf Corp.
("Aldila Golf"), a wholly-owned subsidiary of the Company, entered into a Loan
and Security Agreement (the "Agreement") with a financial institution which
provides Aldila Golf with up to $12.0 million in secured financing. The
Agreement has a three year term and is secured by substantially all of the
assets of Aldila Golf and guaranteed by the Company. Advances under the
Agreement are made based on eligible accounts receivables and inventories of
Aldila Golf and bear interest at the Adjusted Eurodollar rate (as defined) plus
2.5% or at the bank reference rate at the election of the Company. The Agreement
requires the Company to maintain a minimum level of tangible net worth (as
defined). As of June 30, 2000, the Company was in compliance with all covenants
under the Agreement and there were no outstanding borrowings.
4. COMMITMENT AND CONTINGENCIES
The Company completed a Lease Termination Agreement ("Termination
Agreement") with the landlord of the Rancho Bernardo manufacturing facility
subsequent to December 31, 1999. The Termination Agreement allows the Company to
buy itself out of the remaining years (through 12/31/2001) of the lease for a
sum of $900,000. The Termination Agreement was finalized and the payment was
made on February 18, 2000. As such, the Company recovered approximately $0.6
million against previously taken plant consolidation charges.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW - BUSINESS CONDITIONS
The Company is principally engaged in the business of designing,
manufacturing and marketing graphite (carbon fiber based composite) golf club
shafts, with approximately 90% 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 established a manufacturing facility in Evanston,
Wyoming for the production of carbon fiber. During 1998 and through the first
ten months of 1999, the Company used the material from this facility to satisfy
a significant portion of its internal demand for carbon fiber in the
manufacturing of golf club shafts. During 1999, the Company also produced and
sold carbon fiber from this facility to other unrelated entities for the
manufacture of other carbon-based products. On October 29, 1999, SGL Carbon
Fibers and Composite, Inc. ("SGL") purchased a 50% interest in the Company's
carbon fiber manufacturing operation. The Company and SGL entered into an
agreement to operate the facility as a limited liability company with equal
ownership interests between the venture partners. The Company and SGL also
entered into supply agreements with the new entity, Carbon Fiber Technology LLC
("CFT"), for the purchase of carbon fiber at cost plus an agreed mark-up.
Profits and losses of CFT are shared equally by the partners. The Company
anticipates that the carbon fiber from this facility will primarily be consumed
by the joint venture partners; however, any excess carbon fiber produced at this
facility could be marketed for sale to unrelated third parties. The Company does
not expect third party sales at CFT nor the sale of graphite prepreg to have a
significant effect on either its sales or profitability for several years.
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. However, in recent years the
Company has realized substantial sales growth in the value priced segment of the
graphite shaft market. The Company now competes aggressively with primarily
United States based shaft manufacturers for premium graphite shafts and also
against primarily foreign based shaft manufacturers for lower priced value shaft
sales. The Company continues to maintain a broad customer base in the premium
shaft market segment. While the Company's market share in the value segment is
not as great as the premium segment, the Company has advanced rapidly in
securing new customers in this segment in recent years. Presently, there exists
substantial excess graphite shaft manufacturing capacity both in the United
States and in other countries. This has had the effect, and is expected by
management to continue to have the effect for at least the next several years,
of decreasing the selling prices of the Company's shafts. Although the Company's
gross profit margin is being adversely affected by the reduction in selling
prices, the adverse effects on gross margin have been mitigated in the past to
some extent by steps taken by the Company to control costs, including obtaining
lower prices for its raw materials and manufacturing its own graphite prepreg,
and should be mitigated
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to some extent in the future as the Company increases the percentage of its
shafts being manufactured in countries with lower labor and overhead costs.
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 among several customers, thereby making the Company's results of
operations dependent to a large extent on continued sales to Taylor Made-adidas
Golf Co. ("Taylor Made"), Callaway Golf Company ("Callaway") and Ping. In 1999
sales to Taylor Made, Callaway and Ping represented 17%, 12% and 10%,
respectively, of the Company's total net sales. The Company expects Taylor Made,
Callaway and Ping to continue to be the Company's largest customers, at least
through 2000. 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 2000 COMPARED TO SECOND QUARTER 1999
NET SALES. Net sales increased $4.5 million, or 35.4%, to $17.1 million
for the second quarter ended June 30, 2000 (the "2000 Period") from $12.6
million for the second quarter ended 1999 (the "1999 Period"). The increase in
net sales was attributable to increased shaft unit sales to the Company's club
manufacturer customers which was partially offset primarily by no carbon fiber
sales in the 2000 Period which were $1.9 million in the 1999 Period, and also by
a decrease in the average shaft unit selling price of shafts sold. Shaft unit
sales increased 80.3% in the 2000 Period as compared to the 1999 Period, and the
average selling price of shafts sold decreased 6.9%.
GROSS PROFIT. Gross profit increased $3.0 million, or 114.8%, to $5.7
million for the 2000 Period from $2.7 million for the 1999 Period as a result of
the increase in net sales and less expensive carbon fiber consumed in the 2000
Period. The Company's gross profit margin increased to 33.4% in the 2000 Period
compared to 21.1% in the 1999 Period primarily as a result of increased volume,
which resulted in a lower overall cost per unit.
OPERATING INCOME. Operating income increased $2.6 million, or 459.4%, to
$3.1 million for the 2000 Period from $0.5 million for the 1999 Period, and
increased as a percentage of net sales to 18.1% in the 2000 Period compared to
3.7% in the 1999 Period. Selling, general and
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administrative expense increased to $2.3 million in the 2000 Period from $1.8
million in the 1999 Period primarily resulting from higher incentive charges
partially offset by reductions in other expenditures. Selling, general and
administrative expense decreased as a percentage of net sales to 13.2% for the
2000 Period compared to 14.5% for the 1999 Period, primarily as a result of the
increase in net sales.
INCOME (LOSS) BEFORE INCOME TAXES. Income (loss) before income taxes
increased $2.9 million to $3.0 million for the 2000 Period from $0.1 million for
the 1999 Period. The major portion of the increase is attributed to the increase
in operating income.
INCOME TAXES. The Company recorded a provision for income taxes of $1.3
million in the 2000 Period compared to $0.2 million in the 1999 Period. The
increase in the income tax provision was a result of the Company's higher income
before income taxes.
SIX MONTH PERIOD IN 2000 COMPARED TO THE SIX MONTH PERIOD IN 1999
NET SALES. Net sales increased $10.6 million, or 45.8%, to $33.8 million
for the six month period ended June 30, 2000 from $23.2 million for the six
month period ended June 30, 1999. The increase in net sales was attributable to
increased shaft unit sales which was partially offset primarily by no carbon
fiber sales in the 2000 Period which were $2.1 million in the 1999 Period, and
also by a decrease in the average shaft unit selling price. Shaft unit sales
increased by 94.9% in the six month period ended June 30, 2000 as compared to
the six month period ended June 30, 1999, and the average selling price of
shafts sold decreased 11.0%.
GROSS PROFIT. Gross profit increased $3.7 million, or 75.8%, to $8.7
million for the six month period ended June 30, 2000 from $4.9 million for the
six month period ended June 30, 1999. The Company's gross profit margin
increased to 25.7% for the six month period ended June 30, 2000 compared to
21.3% for the six month period ended June 30, 1999, primarily as a result of
increased volume which results in a lower overall cost per unit. Gross profit
margin was negatively impacted in the six month period ended June 30, 2000 from
the carry over of higher cost inventories from 1999. The impact of the 1999
higher cost inventories resulted in an approximate 14% reduction in gross profit
reported. Gross profit margin in the six month period ended June 30, 2000 was
impacted positively by an approximate $0.3 million adjustment to inventory
reserves.
OPERATING INCOME. Operating income increased $3.9 million, or 623.0%, to
$4.4 million for the six month period ended June 30, 2000 from $0.5 million for
the six month period ended June 30, 1999, and increased as a percentage of net
sales to 13.0% for the six month period ended June 30, 2000 compared to 2.3% for
the six month period ended June 30, 1999. Selling, general and administrative
expense increased by 12% to $4.1 million for the six month period ended June 30,
2000 from $3.7 million for the six month period ended June 30, 1999. The
increase in the six months ended June 30, 2000 was a result of higher incentive
charges partially offset by reductions in other expenditures. Selling, general
and administrative expense decreased as a percentage of net sales to 12.3% for
the six month period ended June 30, 2000 compared to 15.9% for the six month
period ended June 30, 1999, primarily as a result of the increase in net
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sales. In addition, operating income was positively impacted in the six month
period ended June 30, 2000 by the recovery of $0.6 million in previously
recorded plant consolidation charges.
INCOME (LOSS) BEFORE INCOME TAXES. Income (loss) before income taxes
increased $4.4 million to $4.2 million for the six month period ended June 30,
2000 from ($0.2) million for the six month period ended June 30, 1999, primarily
as a result of higher operating income.
INCOME TAXES. The Company recorded a provision for income taxes of $2.0
million in the six month period ended June 30, 2000 compared to $0.2 million in
the six month period ended June 30, 1999, which was primarily as a result of the
affect of higher income before taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company has in place a $12.0 million revolving credit facility from a
financial institution which is secured by substantially all the assets of Aldila
Golf and guaranteed by the Company. Borrowings under the line of credit bear
interest, at the election of Aldila Golf, at the bank reference rate or at the
adjusted Eurodollar rate plus 2.5%. Availability for borrowings under the Line
of Credit was approximately $6.1 million as of June 30, 2000. The Company has
$12.0 million in principal amount of senior notes outstanding which bear
interest at 6.13%. Semi-annual principal payments of $4.0 million, plus accrued
interest, are due on March 31 and September 30 through September 30, 2001.
Cash (including cash equivalents) provided by operating activities in the
six month period ended June 30, 2000 was $7.7 million compared to $0.7 million
used for operating activities for the six month period ended June 30, 1999. This
increase resulted principally from the increase in net income and an increase in
cash provided by working capital items in the six month period ended June 30,
2000 as compared to cash used for working capital items in the six month period
ended June 30, 1999. The Company used $0.3 million for capital expenditures
during the six month period ended June 30, 2000. Management anticipates capital
expenditures will not exceed $1.0 million for 2000. The Company may also incur
capital expenditures over the next several years to expand and enhance the
production capacity of the CFT operation in Evanston, Wyoming in order to take
advantage of new opportunities brought to CFT and further reduce production
costs for the carbon fiber acquired by the Company, in addition to an obligation
to support one half of CFT's fixed annual cost. The Company believes that it
will have adequate cash resources, including anticipated cash flow and borrowing
availability to meet its obligations at least through 2001.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements". SAB 101 provides the SEC staff's
views in applying
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generally accepted accounting principles to selected revenue recognition issues.
We will be required to adopt SAB 101 in the fourth quarter of the 2000 fiscal
year. We do not expect the adoption of SAB 101 will have a material effect on
our financial position or results of operations.
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
product 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.
The Company's Report on Form 10-K for the year ended December 31, 1999 (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 Form 10-K and Management's Discussion
and Analysis of Financial Condition and Results of Operations" in Part I, Item 7
of the Form 10-K. The forward-looking statements in this 10-Q are particularly
subject to the risks that
- our principal customers will not continue to increase their
orders over last year;
- our principal customers will be unwilling to satisfy a
significant portion of their demand with shafts manufactured
in Mexico or China instead of with shafts manufactured in the
United States;
- we will not achieve success marketing shafts to club
assemblers based in China;
- our international operations will be adversely affected by
political instability, currency fluctuation, export/import
regulation and other risks typical of multi-national
operations, particularly those operating in less developed
countries; and
- our joint venture with SGL Carbon Fibers and Composites, Inc.
will be unsuccessful.
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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 10,
2000. At the Annual Meeting three items were submitted to a vote
of the stockholders of the Company and were approved:
1) The nine 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>
Peter E. Bennett 13,701,905 878,486
Thomas A. Brand 13,682,255 898,136
Marvin M. Giles, III 13,687,405 892,986
Vincent T. Gorguze 13,680,370 900,021
John J. Henry 13,668,755 911,636
Donald C. Klosterman 13,663,305 917,086
Wm. Brian Little 13,696,155 884,236
Peter R. Mathewson 13,701,680 878,711
Chapin Nolen 13,684,055 896,336
</TABLE>
2) The stockholders also ratified the appointment of Deloitte &
Touche LLP as the Company's independent accountants for the
fiscal year ending December 31, 2000. 14,471,538 votes were cast
for ratification of Deloitte & Touche LLP, 84,955 votes were
cast against; and there were 23,898 abstentions and 0 broker
non-votes.
3) The stockholders also ratified a proposal to amend the 1994
Stock Incentive Plan. 4,533,448 votes were cast for ratification
to amend the 1994 Stock Incentive Plan, 3,261,050 votes were
cast against, and there were 413,778 abstentions and 6,372,115
broker non-votes.
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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, 2000.
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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 11, 2000 /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
15
