Exhibit 99.1
ALDILA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30 , 2007
(In thousands, except share data)
| | | | | | Pro Forma
Condensed
Consolidated
Balance Sheet | |
| | September 30,
2007 | | Pro forma
Adjustments | | as of
30-Sep-07 | |
ASSETS | | | | | | | |
| | | | | | | |
CURRENT ASSETS: | | | | | | | |
Cash and cash equivalents | | $ | 17,030 | | $ | 19,643 | (a) | $ | 36,673 | |
Accounts receivable | | 5,207 | | — | | 5,207 | |
Inventories, net | | 16,109 | | — | | 16,109 | |
Other current assets | | 4,144 | | — | | 4,144 | |
Total current assets | | 42,490 | | 19,643 | | 62,133 | |
| | | | | | | |
PROPERTY, PLANT AND EQUIPMENT | | 12,596 | | — | | 12,596 | |
INVESTMENT IN JOINT VENTURE | | 3,134 | | (3,134 | )(b) | — | |
OTHER NON-CURRENT ASSETS | | 1,707 | | | | 1,707 | |
TOTAL ASSETS | | $ | 59,927 | | $ | 16,509 | | $ | 76,436 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Accounts payable | | $ | 4,891 | | | | $ | 4,891 | |
Accrued expenses | | 2,343 | | | | 2,343 | |
Other current liability | | 137 | | | | 137 | |
Total current liabilities | | 7,371 | | — | | 7,371 | |
| | | | | | | |
LONG-TERM LIABILITIES: | | | | | | | |
Other long-term liabilies | | 824 | | | | 824 | |
Total liabilities | | 8,195 | | — | | 8,195 | |
| | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | |
Common stock | | 55 | | | | 55 | |
Additional paid-in capital | | 49,801 | | | | 49,801 | |
Retained earnings | | 1,876 | | 16,509 | (c) | 18,385 | |
Total stockholders’ equity | | 51,732 | | 16,509 | | 68,241 | |
| | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 59,927 | | $ | 16,509 | | $ | 76,436 | |
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ALDILA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(In thousands, except per share data)
| | Nine months
ended
30-Sep-07 | | Pro forma
Adjustments | | Pro Forma
Condensed
Consolidated
Statement
of Operations | |
| | | | | | | |
NET SALES | | $ | 51,478 | | $ | — | | $ | 51,478 | |
COST OF SALES | | 34,951 | | 427 | (d) | 35,378 | |
Gross profit | | 16,527 | | (427 | ) | 16,100 | |
| | | | | | | |
SELLING, GENERAL AND ADMINISTRATIVE | | 9,737 | | — | | 9,737 | |
Operating income | | 6,790 | | (427 | ) | 6,363 | |
| | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | |
Other, net | | 720 | | — | | 720 | |
Equity in earnings of joint venture | | 280 | | (280 | )(e) | — | |
| | | | | | | |
INCOME BEFORE INCOME TAXES | | 7,790 | | (707 | ) | 7,083 | |
PROVISION FOR INCOME TAXES | | 2,747 | | (247 | (f) | 2,500 | |
| | | | | | | |
NET INCOME | | $ | 5,043 | | $ | (460 | ) | $ | 4,583 | |
| | | | | | | |
NET INCOME PER COMMON SHARE | | $ | 0.91 | | $ | (0.08 | ) | $ | 0.83 | |
| | | | | | | |
NET INCOME PER COMMON SHARE, ASSUMING DILUTION | | $ | 0.90 | | $ | (0.08 | ) | $ | 0.82 | |
| | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 5,523 | | 5,523 | | 5,523 | |
| | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES | | 5,584 | | 5,584 | | 5,584 | |
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ALDILA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(In thousands, except per share data)
| | Year ended
December 31,
2006 | | Pro Forma
Adjusmtents | | Pro Forma
Consolidated
Statement
of Operations | |
| | | | | | | |
NET SALES | | $ | 72,370 | | $ | — | | $ | 72,370 | |
COST OF SALES | | 48,087 | | 825 | (d) | 48,912 | |
Gross profit | | 24,283 | | (825 | ) | 23,458 | |
| | | | | | | |
SELLING, GENERAL AND ADMINISTRATIVE | | 10,731 | | — | | 10,731 | |
Operating income | | 13,552 | | (825 | ) | 12,727 | |
| | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | |
Interest income | | 714 | | — | | 714 | |
Other, net | | 2,148 | | — | | 2,148 | |
Equity in earnings of joint venture | | 407 | | (407 | )(e) | — | |
| | | | | | | |
INCOME BEFORE INCOME TAXES | | 16,821 | | (1,232 | ) | 15,589 | |
PROVISION FOR INCOME TAXES | | 5,585 | | (406 | )(f) | $ | 5,179 | |
| | | | | | | |
NET INCOME | | $ | 11,236 | | $ | (826 | ) | $ | 10,410 | |
| | | | | | | |
NET INCOME PER COMMON SHARE, BASIC | | $ | 2.04 | | $ | (0.15 | ) | $ | 1.89 | |
| | | | | | | |
NET INCOME PER COMMON SHARE, ASSUMING DILUTION | | $ | 2.01 | | $ | (0.15 | ) | $ | 1.86 | |
| | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 5,518 | | 5,518 | | 5,518 | |
| | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES | | 5,591 | | 5,591 | | 5,591 | |
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NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1. Basis of Presentation
The unaudited pro forma condensed consolidated financial statements present Aldila, Inc. and Subsidiaries (the “Company”) pro forma financial position and results of operations based upon historical financial information after giving effect to the previously announced sale of Carbon Fiber Technology LLC (“CFT”) to SGL Carbon Fibers and Composites, Inc. (“SGL”), a subsidiary of SGL Group – The Carbon Company. The unaudited pro forma condensed consolidated financial statements are presented as if the sale had been completed on September 30, 2007 for purposes of the unaudited condensed consolidated balance sheet information, and on January 1 for each of the periods ended September 30, 2007 and December 31, 2006, respectively, for purposes of the unaudited condensed consolidated statements of operations information with the exception of the gain that would have been recognized from the transaction. In addition, the Company did not recognize any additional interest income in the unaudited condensed consolidated statements of operations for the cash received for the transaction.
The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the consolidated results of operations that the Company would have achieved had the sale of CFT taken place on January 1 for the periods presented and do not purport to be indicative of the effects that may be expected to occur in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Company’s historical consolidated financial statements and accompanying notes.
The unaudited pro forma condensed consolidated financial statements of the Company are presented in accordance with Article 11 of Regulation S-X.
2. Pro Forma Sale of CFT
On November 28, 2007, the Company announced that its subsidiary, Aldila Materials Technology Corp. (“AMTC”) had entered into an agreement for the sale of AMTC’s 50% interest in CFT to SGL. SGL owned 50% of CFT prior to acquiring 50% from AMTC. The sale closed on November 30, 2007. SGL paid AMTC $17.0 million in cash, plus cash equal to one-half of CFT’s Net Working Capital as of November 30, 2007. The total gross proceeds received by the Company from SGL for the sale was $19.8 million. As part of the transaction, the Company entered into a supply agreement to allow the Company to purchase up to 900,000 pounds of carbon fiber during the first year, and up to approximately 1,000,000 pounds of carbon fiber in subsequent years. The supply agreement will run for five years, subject to certain early termination provisions. The Company will pay CFT’s costs plus an agreed mark-up for the carbon fiber purchased under the supply agreement.
3. Pro Forma Adjustments
The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements are as follows:
(a) Amount represents the estimated net proceeds received for the sale of CFT. The Company received approximately $19.8 million and estimates that its professional fees associated with the transaction will be approximately $200,000.
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(b) To eliminate the Company’s equity in CFT.
(c) The estimated gain that would have been recognized for the sale of CFT.
(d) The estimated increase in costs to the Company for carbon fiber purchased from CFT under the new supply agreement. The amount is estimated based upon the Company’s carbon fiber pound consumption for each period presented times the estimated increase in the per pound cost of carbon fiber inherent in the aforementioned supply agreement.
(e) To eliminate the Company’s equity in earnings of CFT.
(f) The effective tax rates used for the pro forma adjustments, was 35% for the interim nine month period ended September 30, 2007 and 33% for the twelve month period ended December 31, 2006. The effective tax rates were derived from the calculated effective tax rate for each period presented as originally reported on the respective financial statements.
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