[ALDILA Logo]
April 14, 2003
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Aldila, Inc., to be held Wednesday,
May 14, 2003, at 10:30 a.m. at the Rancho Bernardo Inn, 17550 Bernardo Oaks
Drive, San Diego, California 92128. The formal notice and proxy statement
for the Annual Meeting are attached to this letter.
It is important that you vote your shares as soon as possible, either
by the phone, by using the Internet, or by mail as explained on the
enclosed proxy card, even if you currently plan to attend the Annual
Meeting. By doing so, you will ensure that your shares are represented and
voted at the meeting. If you decide to attend, you can still vote your
shares in person, if you wish.
On behalf of the Board of Directors, I thank you for your cooperation
and I look forward to seeing you on May 14.
Very truly yours,
/s/ Peter R. Mathewson
Peter R. Mathewson
Chairman of the Board
ALDILA, INC.
13450 STOWE DRIVE
POWAY, CALIFORNIA 92064
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 2003
TO THE STOCKHOLDERS OF ALDILA, INC.
Notice is hereby given that the Annual Meeting of Stockholders of
Aldila, Inc. (the "Company") will be held at the Rancho Bernardo Inn, 17550
Bernardo Oaks Drive, San Diego, California 92128, on Wednesday, May 14,
2003, at 10:30 a.m., Pacific time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect by vote of the holders of Common
Stock a total of four persons to the Board of Directors to serve
until the next Annual Meeting of Stockholders and until their
successors are elected and have qualified. The Board of
Directors' nominees are:
Thomas A. Brand Lloyd I. Miller, III
Peter R. Mathewson Bryant R. Riley
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the Board of Directors' selection of Deloitte & Touche LLP
as the Company's independent accountants for the fiscal year
ending December 31, 2003.
3. OTHER BUSINESS. To consider and act upon such other business as
may properly come before the meeting.
Only stockholders of record at the close of business on March 27, 2003
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
Robert J. Cierzan
Secretary
Dated: April 14, 2003
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE VOTE BY TELEPHONE, OR BY USING THE INTERNET OR BY MAIL, AS
INSTRUCTED ON THE ENCLOSED PROXY CARD, AS PROMPTLY AS POSSIBLE. YOU MAY
REVOKE YOUR PROXY (WHETHER GIVEN BY TELEPHONE, INTERNET OR MAIL) IF YOU
DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.
ALDILA, INC.
13450 STOWE DRIVE
POWAY, CALIFORNIA 92064
(858) 513-1801
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2003
GENERAL
This proxy statement is furnished to stockholders of Aldila, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company (the "Board" or "Board
of Directors") for use at the Annual Meeting of Stockholders to be held at
10:30 a.m., Pacific time, on Wednesday, May 14, 2003, at the Rancho
Bernardo Inn, 17550 Bernardo Oaks Drive, San Diego, California 92128, and
any adjournments thereof (the "Annual Meeting" or "Meeting").
Common stockholders of record as of the close of business on March 27,
2003, will be entitled to vote at the Meeting or any adjournments thereof.
As of the record date, the Company had outstanding 4,947,648 shares of
Common Stock, each entitled to one vote on all matters to be voted upon.
This proxy statement, the accompanying form of proxy and the Company's
annual report to stockholders for the fiscal year ended December 31, 2002
are being mailed on or about April 14, 2003 to each stockholder entitled to
vote at the Meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is voted by telephone, using the Internet or
executed and returned by mail in time and not revoked, all shares
represented thereby will be voted. Each proxy will be voted in accordance
with the stockholder's instructions. If no such instructions are specified,
the proxies will be voted FOR the election of each person nominated for
election as a director and FOR the ratification of the Board's selection of
Deloitte & Touche LLP as the Company's independent accountants for the
fiscal year ending December 31, 2003.
Assuming a quorum is present, the affirmative vote by the holders of a
plurality of the votes cast at the Meeting will be required for the
election of directors; the affirmative vote of a majority of the votes cast
at the Meeting will be required for the ratification of the Board's
selection of Deloitte & Touche LLP as the Company's independent
accountants; and the affirmative vote of a majority of the votes cast at
the Meeting will be required to act on all other matters to come before the
Annual Meeting. An automated system administered by the Company's transfer
agent tabulates the votes. For purposes of determining the number of votes
cast with respect to any voting matter, only those cast "for" or "against"
are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the Meeting. With
respect to all matters (other than the election of directors), abstentions
and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve a majority of the votes cast.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is
voted by delivery to the Company of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy
by mail, or by telephone, or by using the Internet will not prevent you
from voting in person at the Annual Meeting should you be present and wish
to do so.
ELECTION OF DIRECTORS
The Company's Restated Bylaws give the Board the power to set the
number of directors at no less than one nor more than twenty-one. The size
of the Company's Board is currently set at six. On May 14, 2003, the terms
of Peter E. Bennett, John J. Henry and Chapin Nolen will expire. Messrs.
Bennett, Henry and Nolen will not be nominated for re-election to the Board
of Directors at the May 14, 2003 Annual Meeting. Directors hold office
until the next annual meeting of stockholders and until their successors
are elected and have qualified.
Unless otherwise directed, proxies in the accompanying form will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will
be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may
be unable to serve or will or may withdraw from nomination. With the
exception of Bryant R. Riley, all of the following nominees are current
directors of the Company whose terms end at the 2003 Annual Meeting.
Information concerning the nominees for directors is set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD OF DIRECTORS'
NOMINEES FOR DIRECTORS TO BE ELECTED BY THE HOLDERS OF COMMON STOCK.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
THOMAS A. BRAND has been a director of the Company since November
1997. Since January 1994, Mr. Brand has been an instructor at the
University of Phoenix and a consultant to the composite materials industry.
Since August 2000, he has been a director of Reinhold Industries, Inc., a
manufacturer of advanced custom composite components, sheet molding
compounds and graphic arts and industrial rollers for a variety of
applications in the United States and Europe. From 1983 to 1992, he was
Senior Vice President/General Manager of Fiberite Advanced Materials, a
business unit of ICI-PLC. From 1964 to 1983, Mr. Brand served as Vice
President/General Manager, Fiberite West Coast Corp., which is a division
of Fiberite Corporation. Age: 69.
PETER R. MATHEWSON has been a director of the Company since January
1997 and has been President, Chief Executive Officer and Chairman of the
Board of the Company since January 2000. From 1990 until December 31, 1999,
he served as Vice President of the Company (or its predecessors). Since
January 1997, Mr. Mathewson has also served as President and Chief
Operating Officer of Aldila Golf Corp., the Company's operating subsidiary
that conducts its core golf operations. Mr. Mathewson has been with the
Company (or its predecessors) since September 1973 and has held various
positions, including: plant manager, production manager, shipping and
receiving supervisor, and purchasing agent. Age: 52.
LLOYD I. MILLER, III has been a director of the Company since
September 4, 2001. Mr. Miller has been a registered investment advisor
since 1990, and he is a director of Denny's Corporation and Stamps.com Inc.
Mr. Miller also serves as a director of American Banknote Corp. Age: 48.
BRYANT R. RILEY. Mr. Riley is the founder and has been the Chief
Executive Officer of B. Riley & Co., Inc. since January 1997. B. Riley &
Co., a member of the NASD, provides research and trading ideas primarily to
institutional investors. Age 36.
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the
business and affairs of the Company, as provided by Delaware law, and
conducts its business through meetings of the Board and three standing
committees: Executive, Audit and Compensation. In August 2002, the Board of
Directors of the Company approved a resolution to combine the Stock Option
and Compensation Committees of the Board of Directors of the Company in
order to tie the granting of stock options with the annual compensation of
the employees of the Company. Accordingly, the Stock Option Committee and
the Compensation Committee of the Board of Directors of the Company were
combined into one committee and the committee was designated as the
Compensation Committee. In addition, from time to time, special committees
may be established under the direction of the Board when necessary to
address specific issues. The Company has no nominating or similar
committee.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors of the Company held five meetings in fiscal
2002. Each director attended 75% or more of the aggregate of (i) meetings
of the Board held during the period for which he served as a director and
(ii) meetings of all committees held during the period for which he served
on those committees.
The EXECUTIVE COMMITTEE of the Board has the authority, between
meetings of the Board of Directors, to exercise all powers and authority of
the Board in the management of the business and affairs of the Company that
may be lawfully delegated to it under Delaware law. The Committee is
chaired by Peter R. Mathewson and its other members are Peter E. Bennett
and Lloyd I. Miller, III. It is anticipated that at the meeting of the
Board of Directors immediately following the Annual Meeting of
Stockholders, a new Executive Committee member will be appointed to replace
Mr. Bennett, who is not standing for re-election to the Board of Directors.
The Executive Committee held no meetings in fiscal 2002.
The AUDIT COMMITTEE is currently comprised of John J. Henry, as
chairman, Peter E. Bennett and Chapin Nolen. It is anticipated that at the
meeting of the Board of Directors immediately following the Annual Meeting
of Stockholders, new members will be appointed to the Audit Committee to
replace Messrs. Henry, Bennett and Nolen, who are not standing for
re-election to the Board of Directors. The Audit Committee held four
meetings in fiscal 2002. See "Report of Audit Committee" for a description
of its responsibilities and activities.
The COMPENSATION COMMITTEE is charged with the responsibility of
supervising and administering the Company's compensation policies,
management awards, reviewing salaries, approving significant changes in
salaried employee benefits, and recommending to the Board such other forms
of remuneration as it deems appropriate. The Compensation Committee also
determines individuals to whom stock options will be granted under the
Company's 1994 Stock Incentive Plan, the terms on which such options will
be granted, and to administer the 1994 Stock Incentive Plan. The
Compensation Committee also retains administrative responsibility over the
Company's 1992 Stock Option Plan. The Compensation Committee is currently
comprised of Thomas A. Brand, who is the chairman, Chapin Nolen and John J.
Henry, who are independent, "non-employee directors" (within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act")).
It is anticipated that at the meeting of the Board of Directors immediately
following the Annual Meeting of Stockholders, new members will be appointed
to the Compensation Committee to replace Messrs. Nolen and Henry, who are
not standing for re-election to the Board of Directors. The Compensation
Committee held three meetings in fiscal 2002.
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the accounting firm of Deloitte & Touche LLP to
audit the Company's financial statements for, and otherwise act as the
Company's independent accountants with respect to, the fiscal year ending
December 31, 2003. Deloitte & Touche LLP has acted as independent
accountants for the Company since the fiscal year ended December 31, 1991.
In accordance with the Board's resolution, its selection of Deloitte &
Touche LLP as the Company's independent accountants for the current fiscal
year is being presented to stockholders for ratification at the Annual
Meeting. The Company knows of no direct or material indirect financial
interest of Deloitte & Touche LLP in the Company or any connection of that
firm with the Company in the capacity of promoter, underwriter, voting
trustee, officer or employee.
Representatives of Deloitte & Touche LLP will be present at the
Meeting, will have an opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
INDEPENDENT ACCOUNTANT FEES
AUDIT FEES
Listed below are the aggregate fees billed to the Company for the
fiscal year ended December 31, 2002, by the Company's principal accounting
firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu,
and their respective affiliates (collectively, "Deloitte & Touche").
Audit Fees (a) $141,500
========
Financial Information Systems Design
and Implementation Fees (b) $ -0-
========
Audit Related Fees (c) $41,085
Other Non-Audit Related Fees (d) 48,195
--------
All Other Fees $89,280
=======
(a) Audit fees include audit of consolidated financial
statements, quarterly reviews, review of annual report on
Form 10-K, consents, attendance at audit committee and
stockholder meetings and review of proxy statement for
annual meeting.
(b) Deloitte & Touche did not bill any fees for the professional
services described in Paragraph (c)(4)(ii) of Rule 2-01 of
Regulation S-X.
(c) Includes fees for audit of employee benefit plan - $13,700;
audit of foreign statutory report - $14,700; accounting
consultations - $12,685.
(d) Includes fees for tax services - $48,195 (i.e., tax planning
and consultations, tax return preparation, etc.)
The Audit Committee has concluded that Deloitte & Touche LLP did not
provide any services that adversely impacted its independence.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On June 4, 2002, the Company effected a one-for-three reverse stock
split (the "Reverse Stock Split") of the Company's Common Stock. All
historical information in this Proxy Statement relating to the Company's
Common Stock, share prices, options, and similar matters prior to June 4,
2002 has been restated to give effect to the Reverse Stock Split.
The following table sets forth certain information regarding the
shares of Common Stock beneficially owned as of March 27, 2003 by (a) each
person or entity who, insofar as the Company has been able to ascertain,
beneficially owned more than 5% of the Company's Common Stock as of such
date, (b) each of the directors of the Company and nominees for directors,
(c) the Company's Chief Executive Officer and the two other most highly
compensated executive officers of the Company for the fiscal year ended
December 31, 2002 (the "Named Executive Officers") and (d) all current
directors and executive officers of the Company, as a group (8 persons).
Except as otherwise indicated, the business address for each person is c/o
Aldila, Inc., 13450 Stowe Drive, Poway, California 92064.
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME OWNED(1) SHARES(1)
------------------------------------ ------------ ----------
J. Carlo Cannell D/B/A Cannell Capital, 494,082 10.0%
Capital, LLC (2)........................
Dimensional Fund Advisors Inc. (3)........ 275,096 5.2%
Acquisitor Holdings (Bermuda) Ltd.(4)..... 267,633 5.4%
The PNC Financial Services Group Inc.(5).. 316,001 6.4%
Bryant R. Riley (6)....................... 570,517 11.5%
Peter E. Bennett (7)...................... 35,442 *
Thomas A. Brand (8)....................... 17,106 *
Robert J. Cierzan (9)..................... 54,824 1.1%
John J. Henry (10)........................ 31,508 *
Peter R. Mathewson (11)................... 75,011 1.5%
Lloyd I. Miller, III (12)................. 920,071 18.6%
Chapin Nolen (13)......................... 42,108 *
Michael J. Rossi (14)..................... 26,458 *
All directors and executive officers
as a group (8 persons) (15)............. 1,202,528 23.3%
- ------------------
* The percentage of shares of Common Stock beneficially owned does
not exceed one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed
to have "beneficial ownership" of any shares of Common Stock which
such person has the right to acquire within 60 days following March
27, 2003. For purposes of computing the percentage of outstanding
shares of Common Stock held by each person or group of persons
named above, any security which such person or persons has or have
the right to acquire within 60 days following March 27, 2003 is
deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other
person.
(2) Based on a joint filing of a Schedule 13G, dated January 10, 2000,
as amended by Amendment No. 1, dated September 27, 2001, Amendment
No. 2, dated February 14, 2002, and as further amended by Amendment
No. 3, dated February 10, 2003 (the "Cannell 13G"), Cannell
Capital, LLC ("Cannell"), which is an investment advisor and J.
Carlo Cannell ("Managing Member") each have shared dispositive and
shared voting power with respect to 494,082 shares of Common Stock
of the Company. Based on the Cannell 13G, Cannell's beneficial
ownership of the Common Stock of the Company is direct as a result
of its discretionary authority to buy, sell, and vote shares of
such Common Stock for its investment advisory clients. Managing
Member's beneficial ownership of the Common Stock of the Company is
indirect as a result of Managing Member's ownership and management
of Cannell. The address of Cannell's and Managing Member's
principal office is 150 California Street, Fifth Floor, San
Francisco, California 94111.
(3) Based on a Schedule 13G, dated February 2, 2001, as amended by
Amendment No. 1, dated January 30, 2002, and as further amended by
Amendment No. 2, dated February 3, 2003 (the "Dimensional 13G"),
Dimensional Fund Advisors Inc. ("Dimensional"), which is an
investment advisor, has sole voting and dispositive power over
257,096 shares of Common Stock of the Company. Based on the
Dimensional 13G, all shares of Common Stock of the Company are
owned by advisory clients of Dimensional, no one of which to the
knowledge of Dimensional owns more than 5% of such shares.
Dimensional disclaims beneficial ownership of all such shares.
Dimensional's principal office is located at 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401.
(4) Based on a Schedule 13D, October 7, 2002, by Acquisitor Holdings
(Bermuda) Ltd. ("Acquisitor"), a company incorporated in Bermuda,
Acquisitor has sole voting and dispositive power over 267,633
shares of Common Stock of the Company. Acquisitor's principal
office is located at Clarendon House, 2 Church Street, Hamilton HM
11, Bermuda.
(5) Based on a Schedule 13G, dated February 12, 2001, as amended by
Amendment No. 1, dated February 12, 2002, and as further amended by
Amendment No. 2, dated February 12, 2003 (the "PNC 13G"), The PNC
Financial Services Group, Inc., together with certain of its
subsidiaries reported therein, collectively ("PNC Group"), the PNC
Group has beneficial ownership of 316,001 shares of Common Stock of
the Company, 27,500 of which the PNC Group has sole voting and
dispositive power, and 288,501 of which the PNC Group has shared
voting and dispositive power. Based on the PNC 13G, 288,501 of the
316,001 shares are held in Trust Accounts created by an Amended and
Restated Trust Agreement, dated September 20, 1983, in which Lloyd
I. Miller, Jr. was Grantor and for which PNC Bank National
Association ("PNC BNA") serves as Trustee. Lloyd I. Miller, III and
PNC BNA have shared voting power with respect to these shares of
Common Stock held in the Trust Accounts pursuant to an Investment
Advisory Agreement dated as of April 1, 1997. PNC Group's and PNC
BNA's principal office is located at One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, PA 15222.
(6) Based upon a 13G, dated May 31, 2002, as amended by Amendment No. 1
dated October 25, 2002, filed by SACC Partners LP ("SACC"), Riley
Investment Management LLC ("RIM"), a registered investment adviser
that will soon convert to SEC registration, B. Riley & Co., Inc.
("BRC"), an NASD member broker-dealer, and Bryant R. Riley, Mr.
Riley may be deemed to beneficially own 570,517 shares of Common
Stock of the Company, of which, 111,949 shares of Common Stock of
the Company may be deemed to be beneficially owned by BRC, 458,568
shares of Common Stock of the Company may be deemed to be
beneficially owned by SACC and 458,568 shares of Common Stock of
the Company may be deemed to be beneficially owned by RIM.
(7) Includes options to acquire 25,442 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Bennett
also has options to purchase 6,668 shares of Common Stock that will
not have vested within 60 days following March 27, 2003.
(8) Includes options to acquire 15,440 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Brand also
had options to purchase 6,668 shares of Common Stock that will not
have vested within 60 days following March 27, 2003.
(9) Includes options to acquire 31,666 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Cierzan
also has options to purchase 20,668 shares of Common Stock that
will not have vested within 60 days following March 27, 2003. All
of the currently owned shares are owned by Robert J. Cierzan and
Lynn M. Cierzan, JTWROS.
(10) Includes options to acquire 25,442 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Henry also
has options to purchase 6,668 shares of Common Stock that will not
have vested within 60 days following March 27, 2003.
(11) Includes options to acquire 54,167 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Mathewson
also has options to purchase 30,629 shares of Common Stock that
will not have vested within 60 days following March 27, 2003.
(12) Mr. Miller has beneficial ownership of 920,071 shares of Common
Stock of the Company, of which he has sole voting and dispositive
power over 430,809 shares and of which he has shared voting and
dispositive power over 489,262 shares which number is inclusive of
the shares shown in footnote number 5 above as beneficially owned
by PNC Group, PNC Bancorp and BNC BNA. Mr. Miller also has options
to purchase 5,848 shares of Common Stock that will not have vested
within 60 days following March 27, 2003.
(13) Includes options to acquire 25,442 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Nolen also
has options to purchase 6,668 shares of Common Stock that will not
have vested within 60 days following March 27, 2003. All of the
currently owned shares are owned directly by the Nolen Millennium
LLC, a Delaware limited liability company ("Nolen LLC"), of which
Mr. Nolen has a 15.8% membership interest and shares the remaining
membership interests with his two adult daughters. As a result of
his position as sole manager of Nolen LLC, Mr. Nolen may be deemed
to beneficially own the shares of Common Stock held by Nolen LLC.
(14) Includes options to acquire 26,391 shares of Common Stock that will
have vested within 60 days following March 27, 2003. Mr. Rossi also
has options to purchase 8,196 shares of Common Stock that will not
have vested within 60 days following March 27, 2003.
(15) Includes beneficial ownership of shares of Common Stock subject to
options exercisable within 60 days following March 27, 2003 and
includes the shares held by Nolen LLC.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's Common
Stock to file with the Securities and Exchange Commission (the "SEC")
reports of ownership and changes in ownership of Common Stock and other
equity securities of the Company on Forms 3, 4 and 5. Based on a review of
such forms and written representations of reporting persons, the Company
believes that during the fiscal year ended December 31, 2002, its officers
and directors and holders of more than 10% of the Company's Common Stock
complied with all applicable Section 16(a) filing requirements.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company. Information about Mr. Mathewson is
presented in "ELECTION OF DIRECTORS -- Nominees for Election by Holders of
Common Stock." Officers are appointed by and serve at the discretion of the
Board. Except as otherwise indicated, the positions listed are with Aldila,
Inc.
Name Age Position
- ---- --- --------
Peter R. Mathewson 52 Chairman of the Board of Directors, Chief
Executive Officer, President and Director;
President and Chief Operating Officer of
Aldila Golf Corp.
Robert J. Cierzan 56 Vice President, Finance, Secretary and
Treasurer
Michael J. Rossi 49 Vice President, Sales and Marketing of
Aldila Golf Corp.
The principal occupations and positions for the past five years, and
in certain cases prior years, of the executive officers of the Company who
are not also nominees for election as a director, are as follows:
Robert J. Cierzan has been Secretary and Treasurer of Aldila (or its
predecessors) since January 1991 and Vice President, Finance since March
1989. From September 1988 to February 1989, Mr. Cierzan held the position
of Executive Vice President-Finance at Illinois Coil Spring Company, a
diversified manufacturer of springs, automotive push-pull controls and
rubber products.
Michael J. Rossi has been the Vice President, Sales and Marketing of
Aldila Golf Corp. since March 24, 1997 when he joined the Company. Prior to
that, from August 1994 to March 1997, Mr. Rossi was the Vice President and
General Manager of Fujikura Composite America which manufactures graphite
golf shafts and is a wholly owned subsidiary of Fujikura Rubber Limited, a
Japanese publicly held company. From November 1989 to August 1994, he was
Vice President, Sales and Marketing for True Temper Sports, a division of
the Black & Decker Corporation which manufactures steel golf shafts.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation (cash and non-cash, plan and non-plan) paid to each of the
Named Executive Officers for services rendered in all capacities to the
Company during the three fiscal years ended December 31, 2002, 2001 and
2000.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
-------------------------------------------- --------------
Securities
Other Annual Underlying
Name and Principal Position Fiscal Year Base Salary Bonus Compensation Options
- ----------------------------- --------------- --------------- --------- ---------------- --------------
Peter R. Mathewson 2002 $262,000 -- -- 22,295(1)
Chairman of the Board and 2001 250,000 -- -- 25,000
Chief Executive Officer; 2000 249,000 $247,000 -- 8,334
President and
Chief Operating Officer,
Aldila Golf Corp.
Robert J. Cierzan 2002 $193,000 -- -- 17,334(1)
Vice President, Finance; 2001 183,000 -- -- 10,000
Secretary and Treasurer 2000 175,000 $174,000 -- 5,000
Michael J. Rossi 2002 $180,000 -- -- 5,418(1)
Vice President - Sales and 2001 172,000 -- -- 8,334
Marketing, Aldila Golf. Corp. 2000 163,400 $162,000 -- 4,167
(1) The number of stock option awards listed in this column for fiscal
2002 consists of options granted on December 31, 2002 pursuant to the
Company's tender offer to exchange certain previously outstanding
stock options. See "Report on Repricing of Stock Options," below.
Stock Option Grants. The following table sets forth information
concerning the grant of stock options during the fiscal year ended December
31, 2002 to each of the Named Executive Officers.
OPTION GRANTS
IN THE FISCAL YEAR ENDED DECEMBER 31, 2002
Individual Grants
-------------------------------------------------------------
Percent of
Total Potential Realizable
Options Value at Assumed
Granted to Annual Rates of
Employees Exercise or Stock Price
Options in Fiscal Base Price Expiration Appreciation for
Name Granted(1) Year 2002(2) (per share) Date (3) Option Term - 10 yr.
- -------------------- ------------ -------------- ------------- ------------ ----------------------
5%(4) 10%(4)
---------- ----------
Peter R. Mathewson 22,295 24.2% $1.61 12/31/12 $22,574 $57,207
Robert J. Cierzan 17,334 18.8% 1.61 12/31/12 17,551 44,478
Michael J. Rossi 5,418 5.9% 1.61 12/31/12 5,486 13,902
- ---------------------------------------
(1) These options were granted on December 31, 2002 pursuant to the
Company's 1994 Stock Incentive Plan, as amended and restated (the
"1994 Stock Incentive Plan") and pursuant to the Company's tender
offer to exchange certain previously outstanding stock options (the
"Offer to Exchange"). See "Report on Repricing of Stock Options,"
below. One-third of the total number of options granted are
exercisable on the first anniversary of the option grant date and
thereafter, an additional one-third of the total number of options
granted are exercisable on each of the second and third anniversaries
of the option grant.
(2) In fiscal 2002, the Company granted a total of 92,101 options to its
employees under the Company's 1994 Stock Incentive Plan of which
73,345 options were granted under the 1994 Stock Incentive Plan
pursuant to the Offer to Exchange. The number of options used in
calculating the percentages above was 92,101.
(3) The options granted under the Company's 1994 Stock Incentive Plan
generally expire on the earliest of (a) the tenth anniversary of the
date of grant, (b) if the Optionee's employment is terminated as a
result of death, disability, retirement or within two years after a
change in control, one year following termination of employment, (c)
if the optionee's employment is terminated for any other reason, 30
days following termination of employment or (d) the exercise in full
of the option.
(4) The assumed 5% and 10% annual rates of appreciation over the term of
the options are set forth in accordance with rules and regulations
adopted by the SEC and do not represent the Company's estimate of
stock price appreciation.
Aggregated Option Exercises. The following table sets forth
information (on an aggregated basis) concerning each exercise of stock
options during the fiscal year ended December 31, 2002 by each of the Named
Executive Officers and the fiscal year-end value of unexercised options.
The Company has no outstanding stock appreciation rights, either
freestanding or in tandem with options.
AGGREGATE OPTION EXERCISES
IN THE FISCAL YEAR ENDED DECEMBER 31, 2002 AND
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying "In-the-Money"
Unexercised Options Options at Fiscal
Shares at Fiscal Year-End Year-End(1)
Acquired Value ----------------------------- -----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------ ------------ ------------- --------------- ------------- ---------------
Peter R. Mathewson -- -- 43,056 41,740 -- --
Robert J. Cierzan -- -- 26,666 25,668 -- --
Michael J. Rossi -- -- 22,224 12,363 -- --
- ------------------------------------------------------------------------------
(1) Options are "in-the-money" at the fiscal year-end if the fair market
value of the underlying securities on such date exceeds the exercise
price of the option. None of the Named Executive Officer's options
were "in-the-money" at December 31, 2002.
REPORT ON REPRICING OF STOCK OPTIONS
On May 30, 2002, the Company announced a voluntary stock option
exchange program (the "Offer to Exchange") pursuant to which the Company
offered to exchange outstanding options to purchase shares of the Company's
Common Stock having an exercise price per share of $13.32 held by eligible
employees of the Company or one of the Company's subsidiaries (other than
any person serving solely as a non-employee member of the Company's Board
of Directors), for new options (the "New Options") to purchase the
Company's Common Stock with an exercise price equal to the average of the
high and low reported sale price of Aldila's Common Stock on the Nasdaq
National Market on the date the New Options were granted. The options
available for exchange under the Offer to Exchange had been granted under
the 1994 Stock Incentive Plan. The New Options were granted under the 1994
Incentive Plan on December 31, 2002 with substantially the same terms and
conditions as the exchanged options. The New Options entitle a holder to
purchase 25% of the number of shares of Company Common Stock that were
subject to the tendered options. The Offer to Exchange also required any
person tendering an option grant for exchange to also tender all option
grants with a lower exercise price received by that person during the six
months immediately prior to the date the options accepted for exchange were
cancelled.
The Offer to Exchange expired on June 28, 2002, at which time the
Company accepted for exchange and cancellation options to purchase an
aggregate of 311,679 shares of its Common Stock, representing 100% of the
shares subject to options that were eligible for exchange in the Offer to
Exchange. On December 31, 2002, the Company granted New Options to acquire
73,345 shares of Common Stock at an exercise price of $1.61 per share,
which price was equal to the average of the high and low reported sale
price of the Company Common Stock on the Nasdaq National Market on the date
the New Options were granted. One-third of the total number of New Options
are exercisable on the first anniversary of the option grant date and
thereafter, an additional one-third of the total number of New Options
granted are exercisable on each of the second and third anniversaries of
the option grant.
The Compensation Committee and the Board of Directors determined that
the cancellation and grant of New Options pursuant to the Offer of Exchange
would provide a better incentive for employees, including the Named
Executive Officers, to remain with the Company and contribute to the
attainment of the Company's business and financial objectives. In light of
the above, the Compensation Committee and the Board of Directors believed
that the repricing was in the best interest of the Company and its
stockholders.
The following table reflects the participation of any executive
officer in the Offer to Exchange:
TEN-YEAR OPTION REPRICINGS
Number of
Securities Market Length of
Underling Price Exercise Original
Options/SARs of Stock at Price at Option Term
Repriced Time of Time of New Remaining at
or Repricing Repricing or Exercise Date of
Amended or Amendment Amendment Price Repricing or
Name Date (#) ($) ($) ($) Amendment
- ---------------- --------- -------------- ------------ ---------------- ----- --------------------
Peter R. Mathewson 12/31/02 5,000 $1.61 $37.68 $1.61 1 yr, 6 mos, 27 days
Chairman of the 12/31/02 8,334 1.61 18.00 1.61 2 yrs, 5 mos, 11 days
Board and Chief 12/31/02 13,334 1.61 13.98 1.61 3 yrs, 5 mos, 17 days
Executive Officer; 12/31/02 33,334 1.61 14.82 1.61 4 yrs, 7 days
President and Chief 12/31/02 20,834 1.61 14.40 1.61 4 yrs, 5 mos, 6 days
Operating Officer, 12/31/02 8,334 1.61 21.18 1.61 5 yrs, 5 mos, 6 days
Aldila Golf Corp.
Robert J. Cierzan 12/31/02 5,000 $1.61 $37.68 $1.61 1 yr, 6 mos, 27 days
Vice President, 12/31/02 6,000 1.61 18.00 1.61 2 yrs, 5 mos, 11 days
Finance; Secretary 12/31/02 11,667 1.61 13.98 1.61 3 yrs, 5 mos, 17 days
and Treasurer 12/31/02 41,667 1.61 14.40 1.61 4 yrs, 5 mos, 6 days
12/31/02 5,000 1.61 21.18 1.61 5 yrs, 5 mos, 6 days
Michael J. Rossi 12/31/02 13,334 $1.61 $14.40 $1.61 4 yrs, 5 mos, 6 days
Vice President - 12/31/02 8,334 1.61 21.18 1.61 5 yrs, 5 mos, 6 days
Sales and Marketing,
Aldila Golf Corp.
Respectfully submitted,
Thomas A. Brand, Chairman
Chapin Nolen
John J. Henry
DIRECTOR COMPENSATION
Directors, other than management directors (Peter R. Mathewson),
currently receive for their service as directors $2,000 per quarter, $1,000
per Board meeting attended and $500 per committee meeting attended. Each
director, including each management director and other directors not
receiving directors' fees, is reimbursed for his or her out-of-pocket
expenses arising from attendance at meetings of the Board or committees
thereof.
Pursuant to the Company's 1994 Stock Incentive Plan, in May 2002, each
of the non-employee directors who had more than one year of service (Peter
E. Bennett, Thomas A. Brand, John J. Henry and Chapin Nolen) received an
annual stock option grant of 3,334 shares. Under the 1994 Stock Incentive
Plan, each non-employee director with more than one year of service
(currently, Messrs. Bennett, Brand, Henry, Miller and Nolen) would receive
additional options to acquire 3,334 shares annually on the last trading day
in the month of May.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into a Severance Protection Agreement (the
"Severance Agreement") in March 1999, with each of the Named Executive
Officers. All capitalized terms in the description below have the same
meaning as in the Severance Agreement. Pursuant to the Severance Agreement,
in the case of termination of employment as a result of death, by the
Company for Cause or Disability, or by the Executive other than for Good
Reason, the Executive is entitled to his Accrued Compensation. In the case
of termination for any other reason, the Executive is entitled to the
following: (i) Accrued Compensation and a Pro Rata Bonus for the year of
termination (typically computed based on the average bonus paid for the
prior two years), (ii) a lump sum payment equal to twice the sum of the
Executive's then annual base salary and his average bonus for the prior two
years, (iii) continued provision of insurance (including life, disability
and medical) for two years, "grossed up" to cover any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, and (iv) a lump sum
equal to two years' automobile allowance (or the length of the automobile
lease, if longer, in the case of automobiles leased by the Company for the
Executive's use). These payments are in lieu of any other severance benefit
to which the Executive would otherwise have been entitled. Upon a
Change-in-Control, regardless of whether the Executive's employment has
terminated, the Company is required to contribute to a grantor trust an
amount sufficient to fund the payments under clauses (i), (ii), and (iv)
above.
"Change-in-Control" means (1) an acquisition of 40% of the Company's
Common Stock, (2) the failure of the individuals who, as of February 27,
1999, are members of the Board of Directors (the "Incumbent Board") to
constitute at least two-thirds of the members of the Board, unless the
election of any new director is approved by a vote of at least two-thirds
of the Incumbent Board, subject to certain other qualifications, (3) the
completion of a merger where the existing stockholders and Board of
Directors do not retain control of the surviving company, or (4) the
liquidation or sale of substantially all the assets of the Company.
Except as provided above and except for the provisions of the 1994
Stock Incentive Plan and related agreements thereto, there are no
compensatory plans or arrangements with respect to any of the above
executive officers (including each of the Named Executive Officers) which
are triggered by, or result from, the resignation, retirement or any other
termination of such executive officer's employment, a change-in-control of
the Company or a change in such executive officer's responsibilities
following a change-in-control.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Introduction. In August 2002, the Board of Directors of the Company
approved a resolution to combine the Stock Option and Compensation
Committees of the Board of Directors of the Company in order to tie the
granting of stock options with the annual compensation of the employees of
the Company. Accordingly, the Stock Option Committee and the Compensation
Committee of the Board of Directors of the Company were combined into one
committee and designated as the Compensation Committee. Subsequent to the
combination of the two committees, the Compensation Committee of the Board
of Directors in 2002 was comprised of Thomas A. Brand, John J. Henry and
Chapin Nolen.
Compensation Objectives and Policies. The principle objectives of the
Company's executive compensation committee are to: (i) support the
achievement of desired Company performance, (ii) align the executive
officers' interests with the success of the Company and with the interests
of the Company's stockholders and (iii) provide compensation that will
attract and retain superior talent and reward performance. These objectives
are principally achieved through compensation in the form of annual base
salaries, bonuses and equity investment opportunities. In line with these
objectives, the Company's executive compensation system consists generally
of base salary, bonuses based on corporate performance under the Company's
Executive Bonus Plan (the "Bonus Plan"), and the grant of stock options
under the 1994 Stock Incentive Plan.
Executive officers generally receive salary increases at the time of
their respective employment anniversaries as approved by the Compensation
Committee, taking into consideration the recommendations of the Company's
Chairman and Chief Executive Officer. In 2002, due to the overall financial
performance of the Company, executive officer salaries were increased by
5%. In deciding to provide salary increases at this level to the executive
officers, the Compensation Committee took into account the overall
performance of the Company in recent years in the face of increasing market
pressures, including declining unit prices that have been negatively
impacting the Company's gross margins and an overall drop in sales of golf
equipment by many of the Company's customers. The Compensation Committee
also considered efforts taken by management to improve performance and
control costs in light of these market factors.
Principally as a result of the market conditions in 2002, the Company
did not perform at a level that warranted any bonuses under the Company's
Bonus Plan as described below.
Bonus awards to be granted under the Bonus Plan were predicated on the
actual financial performance of the Company at the end of the Company's
fiscal year as compared to the target financial performance objectives
established by the Compensation Committee in late 2001 based on the
Company's 2002 operating plan. The bonuses to be awarded were dependent
upon the Company achieving a specified dollar amount of pretax profits and
increased to the extent pretax profits exceeded that minimum level and
achieved various higher levels. The bonus for each participant was set at a
percentage of the participant's base salary, with the percentage depending
on what level of pretax profits the Company achieved. In establishing the
targets and proposed bonuses, the Committee determined that it was
important that the bonus payment structure be designed to reward executive
officers for high levels of performance by the Company, weighted so that
superior performance (viewed against the performance then expected in
accordance with management's internal projections for 2002 performance as
approved by the Board of Directors) would result in substantially higher
bonuses than would result from merely acceptable performance. While a
substantial portion of the bonus was subject solely to the Company
attaining its quantitative objectives, a portion of the total bonus award
was also subject to a discretionary modifier determined by the Chairman and
Chief Executive Officer allowing him to reduce the bonus if the executive's
individual performance so warranted. As indicated above, the Company's
pre-tax profits did not meet the minimum thresholds in the Bonus Plan, and
no bonuses were paid under the Bonus Plan for 2002. The Company will
continue to make the Bonus Plan available to its executive officers for
2003.
The Compensation Committee believes that overall 2002 executive
compensation levels adequately reflected (i) each executive's business
results and performance in his area of responsibility, (ii) each
executive's contribution to the overall management team and (iii) each
executive's then-expected future contributions to the Company.
The Board of Directors believes that executive officers who are in a
position to make a substantial contribution to the long-term success of the
Company and to build stockholder value should have a significant stake in
the Company's on-going success. To this end, the Company's compensation
objectives have been designed to be achieved through significant stock
ownership in the Company by executive officers in addition to base salary
and bonus payments.
The purpose of the 1994 Stock Incentive Plan is to provide an
additional incentive to employees to work to maximize stockholder value and
to facilitate broadening and increasing stock ownership by executives and
other key employees. In 2002, options to purchase an aggregate of 92,101
shares were granted to employees of the Company as a group. Of this total,
options to purchase an aggregate of 45,047 shares were granted to the Named
Executive Officers in connection with the Company's stock option exchange
offer in which higher priced options to purchase a total of 180,172 shares
were cancelled. See "Report on Repricing of Stock Options." The Stock
Option Committee believes that these stock option grants were appropriate
in light of the policy of the Board of Directors that significant equity
ownership by executive officers is an important contributor to aligning the
interests of executive officers with those of the stockholders of the
Company, and the number of options awarded to individual officers were set
based on the Stock Option Committee's perception, in part in light of
recommendations by the Company's Chairman and Chief Executive Officer, as
to each officer's ability to affect the Company's overall future
performance. The Named Executive Officers collectively hold options to
acquire 171,717 shares.
During 2002, the Company recognized that many of its then-outstanding
options, particularly those issued more than a few years ago, had exercise
prices substantially in excess of recent trading prices for the Company's
common stock. As a result, the Board of Directors determined that the
purpose of having issued these options was frustrated and that their value
to the Company was quite limited, because such options had little to no
current value as an incentive to retain and motivate the Company's
employees, including the Named Executive Officers, or to encourage
significant employee stock ownership, and were unlikely to have such value
in the foreseeable future. In recognition of these facts, upon the
recommendation of the Stock Option Committee (prior to its combination with
the Compensation Committee), the Board of Directors authorized an exchange
offer to be made to current employees, including the Named Executive
Officers (but not the non-management directors), under which employees
could elect to have their higher priced options--those unlikely to be
"in-the-money" for the foreseeable future--cancelled and replaced at least
six months and a day later with a substantially smaller number of options
at the then current market price. The other outstanding options, including
those held by non-management directors and those that, while not currently
"in-the-money," were closer to being "in-the-money," were unaffected by the
exchange offer. The exchange offer commenced on May 30, 2002 and expired on
June 28, 2002. However, in order to assure that the option exchange program
served its primary purpose of assuring the continued service of its
employees, including the Named Executive Officers, no participant was
eligible to receive a replacement option for his or her cancelled option
unless that individual continued in the Company's employment until the
grant date of the replacement option. On December 31, 2002, pursuant to the
terms of the exchange offer, new stock options were granted to employees
who had tendered options for cancellation in the offer, including options
to purchase an aggregate of 45,047 shares granted to the Named Executive
Officers. See "Report on Repricing of Stock Options." The Compensation
Committee believes that the exchange offer increased the value of the
option program to the Company and its stockholders, while decreasing the
total number of outstanding options significantly.
The Stock Option Committee believes that these newly granted options,
including the options granted in the Offer to Exchange and together with
the shares and options previously made available to executive officers,
have provided significant incentives for executives to increase the value
of the Company for the benefit of all stockholders and have offered
executives significant opportunities to profit personally from their
efforts to increase that value.
The Compensation Committee has considered the impact of Section 162(m)
of the Internal Revenue Code on its executive compensation decisions.
Section 162(m) generally disallows a federal income tax deduction to any
publicly-held corporation for compensation paid to the chief executive
officer and the four other most highly compensated executive officers to
the extent that such compensation in a taxable year exceeds $1 million.
Section 162(m), however, does not disallow a deduction for qualified
"performance-based compensation" the material terms of which are disclosed
to and approved by stockholders. The Company's Bonus Plan does not qualify
as performance-based compensation for the purposes of Section 162(m),
although the 1994 Stock Incentive Plan so qualifies. During 2002, the
Compensation Committee believed it unlikely that any executive officer of
the Company would receive in excess of $1 million in compensation, other
than performance-based compensation, and the Compensation Committee
believes it is unlikely that any executive officer will receive in excess
of that amount in 2003. As a result, the Compensation Committee has not
taken any steps to qualify the bonus plan as performance-based
compensation, although it anticipates that the Company would do so before
any executive receives salary, bonus and other non-performance based
compensation in excess of $1 million.
Compensation of Chief Executive Officer. Peter R. Mathewson's
compensation during 2002 as Chairman of the Board and Chief Executive
Officer was reviewed in connection with the Compensation Committee's
overall review of executive officer compensation. Based on current economic
conditions of the market and the Company, the Compensation Committee did
not propose to increase Mr. Mathewson's base salary for 2003. As described
above, Mr. Mathewson also did not receive any bonus under the Bonus Plan.
On December 31, 2002, pursuant to the Offer to Exchange, Mr. Mathewson was
granted options to purchase 22,295 shares of Common Stock in exchange for
options to purchase 89,170 shares of Common Stock which were tendered to
and cancelled by the Company. Other than in connection with the Offer to
Exchange, Mr. Mathewson did not receive any other grant of stock options in
2002. The Stock Option Committee believed that this number of options was
appropriate in light of the importance of Mr. Mathewson's position to the
Company and his level of stock ownership. The Compensation Committee also
continues to believe that Mr. Mathewson's participation in the Bonus Plan
in conjunction with his stock ownership and employee stock options have
provided substantial incentives for him to create stockholder value.
The Compensation and Stock Option Committee Report on Executive
Compensation shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act and shall not otherwise be deemed filed under such Acts.
Respectfully submitted,
Thomas A. Brand, Chairman
Chapin Nolen
John J. Henry
REPORT OF AUDIT COMMITTEE
The Audit Committee currently consists of John J. Henry (chairman),
Peter E. Bennett, and Chapin Nolen, all of whom are independent directors
meeting the requirements of the NASDAQ rules. It held four meetings during
fiscal 2002. The Audit Committee operates under a written charter adopted
by the Board of Directors on May 10, 2000 which was included as an exhibit
to the Company's proxy statement for its 2001 Annual Meeting. On December
31, 2002 the Board of Directors approved and adopted a revised Charter, a
copy of which is attached hereto as Appendix A.
Under its charter, the Audit Committee's principal responsibilities
are to (a) retain, set the compensation of and monitor the independence of
the Company's independent accountants, currently Deloitte & Touche LLP, (b)
oversee the performance of the Company's independent accountants and
members of Company management involved with finance and accounting
functions, (c) monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance, accounting and
legal compliance, (d) oversee the Company's accounting policies and staff
and review and approve related party transactions, and (e) provide an
avenue of communication among the independent accountants, Company
management and the Board of Directors. The Company's management remains
directly responsible for the Company's disclosure controls, internal
controls and the financial reporting process, and the Company's independent
accountants are responsible for performing an independent audit of the
Company's financial statements in accordance with generally accepted
auditing standards and to issue a report on the Company's financial
statements, as well as to review the Company's quarterly financial
statements. The Audit Committee has the principal responsibility to monitor
and oversee these processes, although the Board of Directors retains
ultimate responsibility for the performance of the Company's independent
accountants and management.
The Audit Committee is charged with meeting at least four times each
year, at a minimum, including a meeting following preparation of quarterly
and annual financial statements, to review these financial statements with
management and the independent accountants. Company management has
represented to the Audit Committee that the Company's financial statements
for the fiscal year 2002 were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed these financial statements with management and the Company's
independent accountants. The Audit Committee also discussed with the
Company's independent accountants matters required to be discussed by the
Statement on Auditing Standards No. 61 (communications with audit
committees).
The Company's independent accountants also provided to the Audit
Committee the written disclosure required by Independence Standards Board
Standard No. 1 (independence discussions with audit committees), and the
Audit Committee discussed with the independent accountants the accounting
firm's independence. The Audit Committee also considered whether non-audit
services provided by the independent accountants during the last fiscal
year were compatible with maintaining the independent accountants'
independence.
The Audit Committee is assigned the responsibility to (1) supervise
the internal accounting policies and procedures in order to assess the
adequacy of internal accounting and financial reporting controls, (2)
review with the independent accountant the Company's financial statements
and audit process and (3) review all proposed transactions between the
Company and its directors and officers, and any immediate family member or
affiliate of any of its directors and officers, or any other affiliate of
the Company that is not a subsidiary of the Company. The Audit Committee is
also responsible for recommending the independent accountants to be
retained by the Company for each fiscal year and has recommended that
Deloitte & Touche LLP be nominated for approval by the stockholders for
fiscal 2003.
Based upon the Audit Committee's discussion with management and the
Company's independent accountants and the Audit Committee's review of the
representations of management and the report of the independent accountants
to the Audit Committee, the Audit Committee has recommended to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002 filed with the Securities and Exchange Commission.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and shall not otherwise be deemed filed
under such Acts.
Respectfully submitted,
John J. Henry, Chairman
Peter E. Bennett
Chapin Nolen
PERFORMANCE GRAPH FOR ALDILA, INC. COMMON STOCK
The performance graph for the Company's Common Stock compares the
cumulative total return (assuming reinvestment of dividends) on the
Company's Common Stock with (i) the Center for Research in Security Prices
("CRSP") Index for NASDAQ Stock Market (U.S. Companies) (the "Market
Index") and (ii) the CRSP Index for NASDAQ Stocks (SIC 3940 - 3949) --
Dolls, Toys, Games and Sporting and Athletic Goods (the "Peer Index"),
assuming an investment of $100 on December 31, 1997 in each of the Common
Stock, the stock comprising the Market Index and the stock comprising the
Peer Index.
[GRAPH OMITTED]
INDEXED/CUMULATIVE RETURN
-------------------------------------------------
12/31 12/31 12/31 12/31 12/31
COMPANY/INDEX 1998 1999 2000 2001 2002
------------- ----- ----- ----- ----- -----
Aldila 57.1 31.4 30.0 24.0 11.6
Market Index 141.0 261.5 157.4 124.9 86.3
Peer Index 44.6 36.0 47.4 87.9 92.0
NOTES:
A. The index levels are derived from compounded daily returns that
include all dividends.
B. The index levels for the Company, the Market Index and the Peer Index
were each set to 100 at December 31, 1997.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31,
2002 (the "2002 Annual Report") is included with the mailing of this Proxy
Statement. The 2002 Annual Report contains consolidated financial
statements of the Company and its subsidiaries and the report thereon of
Deloitte & Touche LLP, the Company's current independent accountants.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Mellon
Investor Services, 400 South Hope Street, 4th Floor, Los Angeles,
California 90071, has been retained to solicit proxies by mail, telephone,
internet or personal solicitation for a fee of $6,500 plus expenses. The
Company has also arranged for reimbursement, at the rate suggested by the
New York Stock Exchange, of brokerage houses, nominees, custodians and
fiduciaries for the forwarding of proxy materials to the beneficial owners
of shares held of record. Proxies may also be solicited by directors,
officers and employees of the Company, but such persons will not be
specially compensated for such services.
PROPOSALS OF STOCKHOLDERS
If a stockholder desires to have a proposal included in the proxy
materials for the 2004 Annual Meeting of Stockholders, such proposal shall
conform to the applicable proxy rules of the SEC concerning the submission
and content of proposals and must be received by December 11, 2003 at the
executive offices of the Company, 13450 Stowe Drive, Poway, California
92064, Attention: Secretary. The Company's receipt of notice of a
stockholder's intent to submit a proposal outside of Rule 14a-8 at the 2003
Annual Meeting of Stockholders after February 24, 2004 will be considered
untimely under Rule 14a-4(c)(1).
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements
and other information with the SEC. Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's Regional
Offices located at 233 Broadway, New York, New York 10279 and 175 W.
Jackson Blvd., Suite 900, Chicago, Illinois 60604. Copies of such materials
can be obtained by mail from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates or, at no
charge, may be obtained at the SEC's web site: http://www.sec.gov. In
addition, such material may also be inspected and copied at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006-1500.
OTHER MATTERS
The Board knows of no matters other than those listed in the attached
Notice of Annual Meeting which are likely to be brought before the Meeting.
However, if any other matter properly comes before the Meeting, the persons
named on the enclosed proxy card will vote the proxy in accordance with
their best judgment on such matter.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
Robert J. Cierzan
Secretary
April 14, 2003
APPENDIX A
----------
ALDILA, INC.
AUDIT COMMITTEE CHARTER
The Board of Directors of Aldila, Inc. (including, where appropriate,
its direct and indirect subsidiaries, the "Company") has established an
Audit Committee (the "Committee") with general responsibility and specific
duties as described below.
I. COMPOSITION
The Committee shall consist of not less than three Directors who shall
individually and collectively meet the requirements relating to membership
on audit committees as set forth in the Securities Exchange Act of 1934
(the "Exchange Act"), the rules and regulations of the Securities and
Exchange Commission and the rules governing listing on any securities
exchange or market on which the Company's securities are listed or traded
(the "Applicable Rules"). In addition, it is the policy of the Company that
at least one member of the Committee shall qualify as a "financial expert"
as that term is used in Section 407 of the Sarbanes-Oxley Act of 2002
("Sarbanes-Oxley") and as it is defined in the Applicable Rules, and in
furtherance of this policy the Company shall use its reasonable best
efforts to maintain on the Board a "financial expert" eligible and willing
to serve on the Committee at all times. Furthermore, each member of the
Committee shall be free from any relationship with the Company or its
affiliates (whether or not such relationship would otherwise disqualify
such member from serving on the Committee under Applicable Rules) that, in
the opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. Committee members and
the Chair of the Committee shall be appointed by the Board of Directors.
The only compensation a member of the Committee may receive from the
Company for any reason is compensation for service on the Board of
Directors and any committees thereof (including the Committee), as set by
the Board of Directors in compliance with Applicable Rules.
To the extent it deems necessary or appropriate in the performance of
its duties, the Committee shall have direct access, at the expense of the
Company, to the independent accounting firm retained by the Company to
conduct audits as to its financial statements (the "Independent
Accountant"), the Chief Financial Officer of the Company and any other
member of the management of the Company ("Management"), and the Company's
legal counsel and other outside advisors.
II. RESPONSIBILITY
The Committee's responsibility is to assist the Board of Directors in
fulfilling its fiduciary responsibilities as to accounting policies and
reporting practices of the Company, including providing oversight of the
Independent Accountant.
The Committee's primary responsibilities are the following:
1. Retaining, setting the compensation of and monitoring the
independence of the Independent Accountant;
2. Overseeing the performance of the Independent Accountant and
members of Management involved with finance and accounting functions;
3. Monitoring the integrity of the Company's financial reporting
process and systems of internal controls regarding finance, accounting and
legal compliance;
4. Overseeing the Company's accounting policies and staff;
5. Providing an avenue of communication among the Independent
Accountant, Management, and the Board of Directors; and
6. Reviewing and approving related party transactions.
The Independent Accountant and the members of Management responsible
for internal accounting and audit functions report directly to the
Committee (in the case of members of Management, in addition to any
internal reporting responsibilities they may also have).
While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements are complete and
accurate and are presented in accordance with generally accepted accounting
principles. These are the responsibility of Management and the Independent
Accountant.
Although the Independent Accountant performs its services at the
direction of and under the supervision of the Committee, nothing in this
Charter should be deemed as restricting the ability of the Board of
Directors as a whole or Management, on the one hand, and the Independent
Accountant, on the other hand, to communicate directly with each other
should either desire to do so.
In fulfilling its responsibilities, the Committee is empowered, to the
extent it deems it to be appropriate, (a) to retain persons having special
competence to provide the Committee with needed assistance (including
lawyers, other accountants or financial experts), whether or not such
persons have been otherwise engaged by or on behalf of the Company or the
Board of Directors to provide services and (b) to conduct investigations.
The cost of any such retention or investigation will be borne by the
Company. The Committee is entitled to rely on the advice of, and
information received from, Management and outside advisors to the Company,
the Board of Directors or the Committee to the same extent as is the Board
of Directors. The Committee is not responsible for resolving disagreements
between Management and any of the outside advisors to the Company, the
Board of Directors or the Committee or among the outside advisors to the
Company, the Board of Directors or the Committee, except to the extent that
this Charter makes the final determination as to the matter in question the
responsibility of the Committee.
III. MEETINGS
The Committee shall meet at least four times a year (following
preparation of, and prior to the public release of, quarterly and annual
financial reports), with such additional meetings as circumstances or the
need to fulfill its responsibilities under this Charter require.
IV. ATTENDANCE
All members of the Committee should endeavor to be present, in person
or by telephone, at all meetings; however, a majority of the members of the
Committee shall constitute a quorum. The Chief Financial Officer of the
Company and representatives of the Independent Accountant will normally
attend each meeting (with such other members of Management as the Chair of
the Committee may request being made available to attend any meeting),
although the Chair of the Committee may excuse non-Committee members from
all or any portion of a meeting.
V. MINUTES OF MEETINGS
Minutes of each meeting shall be prepared and sent to Committee
members and to Company Directors who are not members of the Committee and
shall be included in the minute books of the Company.
VI. AUTHORITY AND SPECIFIC DUTIES
The Committee is granted the authority and assigned the responsibility
to do the following:
A. RETENTION AND SUPERVISION OF INDEPENDENT ACCOUNTANT
1. Appoint, determine the compensation of, and oversee the work of the
Independent Accountant. The Committee shall have the sole authority to
retain and replace the Independent Accountant, and it shall have the sole
authority to approve in advance all audit engagement arrangements,
including fees, and any significant non-audit relationships with the
Independent Accountant. The Committee shall not permit the retention of the
Independent Accountant to perform services prohibited under Applicable
Rules. Approval by the Committee of any non-audit services to be provided
by the Independent Accountant must be disclosed in the Company's periodic
reports filed under the Exchange Act.
2. Ensure the independence of the Independent Accountant in accordance
with Applicable Rules and any rules governing the accounting profession and
the provision of auditing services. To assist in satisfying this
responsibility, the Committee shall obtain annually from the Independent
Accountant a written list of all relationships with and professional
services provided to the Company and its related entities. The Committee
shall review and discuss with the Independent Accountant all significant
relationships the Independent Accountant has with the Company that may
affect the Independent Accountant's objectivity and independence.
3. Monitor and evaluate the quality of the services provided by the
Independent Accountant. To assist in satisfying this responsibility, the
Committee shall obtain and review with the Independent Accountant no less
frequently than annually a report from the Independent Accountant as to its
internal quality control procedures, any material issues raised by the most
recent internal quality control review, or peer review, of the Independent
Accountant, any material issues raised by any inquiry by governmental or
professional authorities within the preceding five years respecting one or
more independent audits carried out by the Independent Accountant. This
evaluation will include an evaluation of the individual members of the
audit team then assigned to work on the Company's accounting matters. In
connection with this evaluation, the Committee shall solicit the views of
Management as to the qualifications and performance of the Independent
Accountant.
4. Require the Independent Accountant to inform the Committee as to
any matters as to which its national office was consulted by the audit team
in connection with the audit of the Company's financial statements, and, if
deemed appropriate by the Committee, to review any such matter with the
Independent Accountant's national office.
5. Ensure that the lead audit partner of the Independent Accountant
and the audit partner responsible for reviewing the audit are rotated at
least every five years. The Committee may also, regardless of any such
rule, request that the Independent Accountant change the lead audit partner
or reviewing partner at any time. Determine whether the Company should have
a policy of requiring that the Independent Accountant itself be rotated
periodically and determine what any such policy should be.
6. Set hiring policies for the employment by the Company of any
employee or former employee of the current or any prior Independent
Accountant and approve any such employment not in compliance with such
policies.
7. Upon the commencement of the operations of the Public Company
Accounting Oversight Board established under Section 101 of Sarbanes-Oxley
(the "Oversight Board"), provide oversight of compliance by the Company and
the Independent Accountant with any requirements imposed by the Oversight
Board. The Committee should request and receive assurances from the
Independent Accountant that it has complied with Section 10A of the
Exchange Act, the rules and policies of the Oversight Board and all other
Applicable Rules.
B. SUPERVISION OF INTERNAL ACCOUNTING POLICIES AND PROCEDURES
8. Review with Management and the Independent Accountant the Company's
policies and procedures, as appropriate, in order to assess the adequacy of
internal accounting and financial reporting controls.
9. Become familiar with the accounting and reporting principles and
practices applied by the Company in preparing its financial statements.
10. Review the quality and adequacy of the Company's financial
accounting personnel, including receiving reports from the Independent
Accountant as to its views and recommendations regarding the financial
accounting personnel. Make recommendations to the Board of Directors as to
any changes or additions to the Company's financial accounting personnel
that the Committee deems appropriate.
11. Receive, investigate and, if appropriate, respond to complaints
regarding the Company's accounting practices, internal accounting controls,
and auditing matters. The Committee will maintain procedures for employees
and others to submit such complaints on a confidential and/or anonymous
basis, which it will disseminate to all employees of the Company and make
available to employees of the Independent Accountant and others with
knowledge of the Company's accounting practices, internal accounting
controls, and auditing matters and will maintain procedures for retaining
copies of any such complaints.
C. REVIEW OF COMPANY'S FINANCIAL STATEMENTS AND AUDIT PROCESS
12. Review with the Independent Accountant and approve, prior to the
annual audit, the scope and general extent of the Independent Accountant's
audit examinations. In connection with this review, the Committee will
discuss with the Independent Accountant the factors to be considered by the
Independent Accountant in determining the scope of the audit, including
major risk factors. The Committee will seek confirmation that the
examination will be in accordance with generally accepted auditing
standards.
13. Review with Management and the Independent Accountant, upon
completion of the annual audit, financial results for the year prior to
their release to the public. Specifically, the Committee will discuss with
the Independent Accountant the matters required to be discussed by the
Statement on Auditing Standards No. 61 relating to the conduct of the
year-end audit.
The review with the Independent Accountant will include a meeting
without any member of Management or other advisor to the Company present,
in which the Committee will discuss, among other things, any difficulties
the Independent Accountant experienced in the audit, any limitations that
were placed on the scope or nature of its audit procedures, its views as to
the adequacy of internal controls and the quality of the Company's
Management responsible for accounting functions, any issues raised by the
audit not resolved to the satisfaction of the Independent Accountant. The
Committee will also invite the Independent Accountant to raise any other
issues relevant to the duties of the Committee that have not otherwise been
raised.
The Committee will request copies of all material written
correspondence between the Independent Accountant and Management relating
to the Company's financial statements and the performance by the
Independent Accountant of its services, audit or otherwise.
14. Review with Management and the Independent Accountant, upon
completion of quarterly financial statements, financial results for the
quarter prior to their release to the public.
15. Approve any significant change in the Company's accounting
policies (whether or not required by changes in generally accepted
accounting principles), any significant restatement of previously publicly
disclosed financial statements, or any significant write-off of assets by
the Company. The Committee will review any such changes, restatements or
write-offs proposed or suggested by the Independent Accountant but rejected
by Management.
16. Review and discuss with Management and, to the extent desirable,
the Independent Accountant and legal advisors to the Company proposed
financial disclosure by the Company in Forms 10-K, 10-Q and (to the extent
practicable given filing deadlines) 8-K, in Schedules 14A and 14C, in any
registration statement under the Securities Act of 1933, in any press
release or otherwise in advance of filing or public disclosure. Without
limiting the scope of this review, it shall include a review of the
proposed disclosure in Management's Discussion and Analysis of Financial
Condition and Results of Operations. The Committee will recommend whether
the audited financial statements should be included in the Company's Form
10-K.
17. In furtherance of its other duties and responsibilities under
Applicable Rules and this Charter, inform itself regularly through meetings
and discussions with the Independent Accountant and Management as to the
following issues related to the Company's financial statements:
o Critical accounting policies, practices and estimates (including
significant reserves and accruals), and, in the case of
estimates, the basis for the estimates and the ramifications of
alternative reasonably likely results;
o Any changes in accounting policies or principles that have been
contemplated or adopted or that are expected to be required or
considered in future periods;
o Any alternative treatments of financial information within
generally accepted accounting principles discussed between the
Independent Accountant and Management and the ramifications of
the adoption of the alternative treatments;
o Any significant litigation or other loss contingency that could
have a significant impact on the Company's financial condition or
results of operation;
o Any significant items in any open years that have been, or could
be expected to be, raised by the Internal Revenue Service or any
other taxing authority; the adequacy of tax accruals;
o Any legal, regulatory or accounting initiative that could have an
impact on the Company's results or financial condition;
o The Company's guidelines, policies, practices and historical
experience with respect to risk assessment and risk management;
o The nature of any material correcting adjustments identified by
the Independent Accountant;
o Any off-balance sheet financing structures employed by the
Company; and
o Any use of "pro forma," "adjusted" or other non-generally
accepted accounting principles financial information in
connection with the Company's reported financial statements
(including in summary form in press releases).
18. To the extent required by Applicable Rules, resolve any dispute
between the Independent Accountant and Management as to the appropriate
accounting treatment of any item or type or group of items.
19. Cause the issuance of a press release announcing any going concern
qualification in any audit opinion issued by the Independent Accountant.
20. Review Management's internal control report prior to its inclusion
in the Company's Form 10-K.
D. RELATED PARTY TRANSACTIONS
21. Review all proposed transactions between the Company and (1) any
of its directors and officers, (2) any immediate family member of any of
its directors and officers, (3) any entity that is an affiliate of any of
its directors, officers or their immediate family members, (4) any other
affiliate of the Company that is not a subsidiary of the Company. Review
any other transaction that is deemed to be a "related party transaction"
under Applicable Rules or that may not be entered into without audit
committee approval under Applicable Rules. For purposes of this Charter,
the terms "director," "officer," "immediate family member" and "affiliate"
include all persons covered by such terms as defined under Applicable
Rules, and "subsidiary" means any entity as to which the Company has the
right or ability to elect at least one-half of the members of the board of
directors or comparable governing body or the right to receive at least
one-half of the assets available for distribution to equity holders upon
liquidation. Transactions covered by this paragraph will not include any
compensation paid to directors and officers approved by the Board of
Directors Compensation Committee or paid in the ordinary course under
Company plans or policies applicable to all employees or the reimbursement
under the Company's standard reimbursement policies of expenses occurred by
directors and officers in the ordinary course of the performance of their
duties. The transactions covered by this paragraph are referred to in this
Charter as "related party transactions."
22. In conducting its review of a proposed related party transaction,
the Committee will seek information regarding the terms of the proposed
transaction, the ability of the Company to enter into a comparable
transaction on the same or better terms, the rationale for pursuing the
related party transaction, and the extent to which the terms of the
transaction were determined at arms' length or were subject to influence by
a related party. After this review, the Committee may approve the
transaction; the Company will not pursue any related party transaction not
approved by the Committee.
23. Not less than annually, review the performance under and results
of any related party transactions previously approved by it.
24. Review and approve any contributions to not-for-profit
organizations on which any of its directors and officers or any immediate
family member of any of its directors and officers serve as directors or
executive officers or that are being made at the request of any of the
Company's directors, officers or any immediate family member of any
director or officer, whether or not, in the case of its directors, such
contribution would disqualify the director from being deemed "independent"
for any purpose.
E. OTHER
25. Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
26. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy statement.
27. Meet with the Independent Accountant, the Company's Chief
Financial Officer or other members of Management in separate executive
sessions, if desirable, to discuss any matters that the Committee or these
other persons believe should be discussed privately with the Committee.
28. Review with the Independent Accountant any problems or
difficulties the Independent Accountant may have encountered, including
those identified in any management letter, and the appropriateness of the
Company's response to such problems or difficulties.
29. Perform such other functions as may be required by Applicable
Rules or any other law, the Company's Certificate of Incorporation or the
Company's Bylaws or as may be assigned to the Committee, with its
concurrence, by the Board.
30. Review this Charter annually and make recommendations to the Board
of Directors as to any appropriate updates.
31. In performing any of the duties outlined above, take such actions
and perform such other investigations and analyses as the Committee deems
appropriate, whether or not the actions, investigations and analyses are
specifically authorized or required by this Charter.
* * * * * *
A copy of this Charter will be attached as an appendix to the
Company's proxy statement for the first annual meeting of its stockholders
following its adoption or any subsequent material amendment thereof and at
least once every three years (or as often as may be required under
Applicable Rules) thereafter and will be included in its then current form
on the Company's website.
As adopted by the Board of Directors of the Company
December 31, 2002
ALDILA, INC.
The undersigned stockholder of ALDILA, INC. hereby appoints PETER R.
MATHEWSON and ROBERT J. CIERZAN, or either of them, Proxies of the
undersigned, each with full power to act without the other and with the
power of substitution, to represent the undersigned at the Annual Meeting
of Stockholders of Aldila, Inc., to be held at the Rancho Bernardo Inn,
17550 Bernardo Oaks Drive, San Diego, California 92128 on Wednesday, May
14, 2003 at 10:30 a.m. (Pacific time), and at any adjournments or
postponements thereof, and to vote all shares of stock of the Company
standing in the name of the undersigned with all the powers the undersigned
would possess if personally present, in accordance with the instructions
below and on the reverse hereof, and, in their discretion, upon such other
business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY WILL BE VOTED ON THE REVERSE HEREOF, AND WILL BE VOTED IN
FAVOR OF PROPOSALS 1, 2 AND 3, IF NO INSTRUCTIONS ARE INDICATED.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
- -----------------------------------------------------
ADDRESS CHANGE/COMMENTS
MARK THE CORRESPONDING BOX ON THE REVERSE SIDE
FOLD AND DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. |_| Please mark here
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS. for address change
or comments
SEE REVERSE SIDE
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS. FOR all WITHHOLD 2. Ratification of the |_| |_| |_|
nominees AUTHORITY appointment of Deloitte &
listed to vote Touche LLP as the
(except as for all independent accountants of
marked to nominees the Company.
the contrary) listed
|_| |_| 3. In their discretion, the |_| |_| |_|
Proxies are authorized to
vote upon such other business
as may properly come before
the meeting or any
adjournment thereof.
Nominees: 01 Thomas A. Brand, 02 Peter R. Mathewson, 03 Lloyd I. Miller, III
and 04 Bryant R. Riley
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
I PLAN TO ATTEND THE MEETING |_|
- ----------------------------------------------------------------------
The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders to be held
May 14, 2003 and the Proxy Statement furnished
herewith.
Signature(s) Date
-------------------------------------------------- ------------
Please sign as name appears hereon, date and return the proxy card promptly
using the enclosed envelope. When signing as attorney, executor,
administrator, trustee or guardian, give full title as such. If more than
one name appears hereon, all parties should sign.
FOLD AND DETACH HERE
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING ARE AVAILABLE THROUGH 11PM EASTERN TIME
THE DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE SAME MANNER
AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
---------------------------- ----------------------------------- ---------------------------
INTERNET TELEPHONE MAIL
HTTP://WWW.EPROXY.COM/ALDA 1-800-435-6710
Mark, sign and date
Use the Internet to vote Use any touch-tone telephone to your proxy card
your proxy. Have your OR vote your proxy. Have your proxy OR and
proxy card in hand when card in hand when you call. You return it in the
you access the web site. will be prompted to enter your enclosed postage-paid
You will be prompted to control number, located in the envelope.
enter your control number, box below, and then follow the
located in the box below, directions given.
to create and submit an
electronic ballot.
---------------------------- ----------------------------------- ---------------------------
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.