UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended:December 31, 2004
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to ______________
Commission file number:0-16214
ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
Delaware | 14-0462060 | |||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||
1373 Broadway, Albany, New York | 12204 | |||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |||||
---|---|---|---|---|---|---|
Class A Common Stock ($0.001 par value) | New York Stock Exchange and Pacific Stock Exchange |
(Title of Class) |
DOCUMENTS INCORPORATED BY REFERENCE | PART | |||||
---|---|---|---|---|---|---|
Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 12, 2005. | III |
13
TABLE OF CONTENTS
PART I | ||||||||||
Item 1. | Business | 15 | ||||||||
Item 2. | Properties | 20 | ||||||||
Item 3. | Legal Proceedings | 20 | ||||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 23 | ||||||||
PART II | ||||||||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | 24 | ||||||||
Item 6. | Selected Financial Data | 25 | ||||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||||||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 40 | ||||||||
Item 8. | Financial Statements and Supplementary Data | 41 | ||||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 77 | ||||||||
Item 9A. | Controls and Procedures | 77 | ||||||||
Item 9B. | Other Information | 77 | ||||||||
PART III | ||||||||||
Item 10. | Directors and Executive Officers of the Registrant | 78 | ||||||||
Item 11. | Executive Compensation | 78 | ||||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management | 78 | ||||||||
Item 13. | Certain Relationships and Related Transactions | 79 | ||||||||
Item 14. | Principal Accountant Fees and Services | 79 | ||||||||
PART IV | ||||||||||
Item 15. | Exhibits and Financial Statement Schedules | 80 |
14
PART I
Item 1. BUSINESS
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Sales | ||||||||||||||
Engineered Fabrics | $ | 740,824 | $ | 733,316 | $ | 697,790 | ||||||||
Albany Door Systems | 112,773 | 101,331 | 92,477 | |||||||||||
Applied Technologies | 66,205 | 53,296 | 42,232 | |||||||||||
Consolidated total | $ | 919,802 | $ | 887,943 | $ | 832,499 |
Industry Factors
15
International Operations
Marketing, Customers, and Backlog
16
petrochemicals, as well as textile belts used in the tannery and textile businesses. Each of these technologies is based in the Registrant’s core competencies in textiles, structures, coatings, and specialty materials.
Research and Development
Raw Materials and Inventory
Competition
17
Employees
Executive Officers of Registrant
Name | Age | Position | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Frank R. Schmeler | 66 | Chairman of the Board and Chief Executive Officer | ||||||||
William M. McCarthy | 54 | Executive Vice President — PMC | ||||||||
Michael C. Nahl | 62 | Executive Vice President and Chief Financial Officer | ||||||||
Thomas H. Curry | 56 | Group Vice President — PMC Americas | ||||||||
Daniel Halftermeyer | 43 | Group Vice President — PMC Europe | ||||||||
Hartmut Peters | 63 | Group Vice President — PMC Asia and Pacific | ||||||||
Dieter Polt | 62 | Group Vice President — Albany Door Systems and Applied Technologies | ||||||||
Frank Kolf | 59 | Senior Vice President — Administration and Development | ||||||||
John C. Standish | 41 | Senior Vice President — Manufacturing | ||||||||
Richard A. Carlstrom | 61 | Vice President — Controller | ||||||||
David C. Michaels | 49 | Vice President — Treasury and Tax | ||||||||
Kenneth C. Pulver | 61 | Vice President — Corporate Communications | ||||||||
Charles J. Silva Jr. | 45 | Vice President — General Counsel | ||||||||
Thomas H. Hagoort | 72 | Secretary |
18
1997 to March 1, 2005, and Technical Director — Dryer Fabrics from 1993 to 1997. He held various technical and management positions in St. Stephen, South Carolina and Selestat, France from 1987 to 1993.
19
Governance Committees of the Board of Directors are available at the Corporate Governance section of the Registrant’s website (www.albint.com). Stockholders may obtain a copy of any of these documents, without charge, from the Registrant’s Investor Relations Department. The Registrant’s Investor Relations Department may be contacted at:
Investor Relations Department Albany International Corp. Post Office Box 1907 Albany, New York 12201-1907 Telephone: (518) 445-2284 Fax: (518) 447-6343 E-mail: investor_relations@albint.com |
Item 2. | PROPERTIES |
Item 3. LEGAL PROCEEDINGS
20
twenty to over two hundred defendants, and the complaints usually fail to identify the plaintiffs’ work history or the nature of the plaintiffs’ alleged exposure to Albany’s products. In cases in which work histories have been provided, approximately one-third of the claimants have alleged time spent in a paper mill, and only a portion of those claimants have alleged time spent in a paper mill to which Albany is believed to have supplied asbestos-containing products.
Brandon Drying Fabrics, Inc.
21
that Abney ceased production of asbestos-containing fabrics prior to the 1978 transaction. Although Brandon manufactured and sold dryer fabrics under its own name subsequent to the asset purchase, none of such fabrics contained asbestos. Under the terms of the Assets Purchase Agreement between Brandon and Abney, Abney agreed to indemnify, defend, and hold Brandon harmless from any actions or claims on account of products manufactured by Abney and its related corporations prior to the date of the sale, whether or not the product was sold subsequent to the date of the sale. It appears that Abney has since been dissolved. Nevertheless, a representative of Abney has been notified of the pendency of these actions and demand has been made that it assume the defense of these actions. Because Brandon did not manufacture asbestos-containing products, and because it does not believe that it was the legal successor to, or otherwise responsible for obligations of, Abney with respect to products manufactured by Abney, it believes it has strong defenses to the claims that have been asserted against it. In some instances, plaintiffs have voluntarily dismissed claims against it, while in others it has entered into what it considers to be reasonable settlements. As of February 11, 2005, Brandon has resolved, by means of settlement or dismissal, 6,923 claims for a total of $152,499. Brandon’s insurance carriers initially agreed to pay 88.2% of the total indemnification and defense costs related to these proceedings, subject to the standard reservation of rights. The remaining 11.8% of the costs has been borne directly by Brandon. During 2004, Brandon’s insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings.
Mount Vernon
22
negotiation and modification. The Company cannot predict whether any proposal will be offered as legislation or, if so, whether such proposal will ultimately be enacted into law.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
23
PART II
Item 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
Quarter Ended | March 31 | June 30 | September 30 | December 31 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | ||||||||||||||||||
Cash dividends per share | $ | 0.07 | $ | 0.07 | $ | 0.08 | $ | 0.08 | ||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | $ | 35.00 | $ | 33.75 | $ | 33.60 | $ | 35.16 | ||||||||||
Low | $ | 26.40 | $ | 27.20 | $ | 28.65 | $ | 28.19 | ||||||||||
2003 | ||||||||||||||||||
Cash dividends per share | $ | 0.055 | $ | 0.055 | $ | 0.07 | $ | 0.07 | ||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | $ | 23.67 | $ | 27.76 | $ | 31.82 | $ | 34.20 | ||||||||||
Low | $ | 20.30 | $ | 22.00 | $ | 26.62 | $ | 29.46 |
Period | Total number of shares purchased | Average price paid | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 1 to 31, 2004 | 764,300 | $ | 27.68 | not applicable | not applicable | |||||||||||||
April 1 to 30, 2004 | 65,700 | 29.88 | not applicable | not applicable | ||||||||||||||
July 1 to 31, 2004 | 1,489,943 | 28.87 | not applicable | not applicable | ||||||||||||||
November 1 to 30, 2004 | 500,000 | 30.00 | not applicable | not applicable |
24
Item 6. SELECTED FINANCIAL DATA
(in thousands, except per share amounts) | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Summary of Operations | ||||||||||||||||||||||
Net sales | $ | 919,802 | $ | 887,943 | $ | 832,499 | $ | 853,493 | $ | 870,365 | ||||||||||||
Cost of goods sold | 557,742 | 526,757 | 492,217 | 514,098 | 533,080 | |||||||||||||||||
Restructuring charges, net (3) | 54,058 | 21,751 | — | 21,892 | — | |||||||||||||||||
Operating income | 40,504 | 85,614 | 102,088 | 84,112 | 103,634 | |||||||||||||||||
Interest expense, net | 14,636 | 15,074 | 17,536 | 28,916 | 41,822 | |||||||||||||||||
Income before income taxes | 12,329 | 69,878 | 79,549 | 52,363 | 62,567 | |||||||||||||||||
Income taxes | 2,450 | 15,720 | 25,041 | 19,374 | 25,027 | |||||||||||||||||
Income before cumulative effect changes in accounting principles | 10,385 | 54,055 | 54,778 | 33,331 | 38,085 | |||||||||||||||||
Cumulative effect of changes in accounting principles, net of tax (1) (2) | — | — | (5,837 | ) | (1,129 | ) | — | |||||||||||||||
Net income | 10,385 | 54,055 | 48,941 | 32,202 | 38,085 | |||||||||||||||||
Basic earnings per share | 0.32 | 1.64 | 1.52 | 1.04 | 1.24 | |||||||||||||||||
Diluted earnings per share | 0.31 | 1.61 | 1.50 | 1.03 | 1.24 | |||||||||||||||||
Dividends declared per share | 0.30 | 0.25 | 0.205 | 0.05 | — | |||||||||||||||||
Weighted average number of shares outstanding — basic | 32,575 | 32,889 | 32,126 | 31,089 | 30,632 | |||||||||||||||||
Capital expenditures | 57,129 | 51,849 | 31,678 | 25,831 | 36,866 | |||||||||||||||||
Financial position | ||||||||||||||||||||||
Cash | $ | 58,982 | $ | 78,822 | $ | 18,799 | $ | 6,153 | $ | 5,359 | ||||||||||||
Cash surrender value of life insurance, net | 34,583 | 32,399 | 29,282 | 1,862 | 10,981 | |||||||||||||||||
Property, plant and equipment, net | 378,170 | 370,280 | 346,073 | 339,102 | 387,658 | |||||||||||||||||
Total assets | 1,155,760 | 1,138,923 | 1,011,521 | 931,929 | 1,112,252 | |||||||||||||||||
Current liabilities | 209,218 | 178,511 | 186,494 | 186,072 | 222,034 | |||||||||||||||||
Long-term debt | 213,615 | 214,894 | 221,703 | 248,146 | 398,087 | |||||||||||||||||
Total noncurrent liabilities | 395,765 | 405,757 | 424,429 | 429,213 | 565,301 | |||||||||||||||||
Total liabilities | 604,983 | 584,268 | 610,923 | 615,285 | 787,335 | |||||||||||||||||
Shareholders’ equity | 550,777 | 554,655 | 400,598 | 316,644 | 324,917 |
(1) | In 2002, as a result of adopting the provisions of FAS No.142,Goodwill and 0ther Intangible Assets, the Company recorded a charge of $5,837,000 for the write-off of goodwill in the Applied Technologies segment, representing the cumulative effect of this change in accounting principle. |
(2) | In 2001, as a result of adopting the provisions of FAS No. 133, Accounting for Derivative Instruments and Hedging Activities, the Company recorded a charge of $1,129,000 related to a lease with an embedded derivative, representing the cumulative effect of this change in accounting principle. |
(3) | In 2001, 2003 and 2004, the Company recorded restructuring charges related to cost reduction initiatives. |
25
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Critical Accounting Policies and Assumptions
26
including changes in interest rates, in making these assumptions. Changes in the related pension and postretirement benefit costs or credits may occur in the future due to changes in the assumptions. The amount of annual pension plan funding and annual expense is subject to many variables, including the investment return on pension plan assets and interest rates. Weakness in investment returns and low interest rates could result in the Company making equal or greater pension plan contributions in future years, as compared to 2004. Including anticipated contributions for all pension plans, the Company has classified $27.7 million of its accrued pension liability as a current liability at December 31, 2004.
Overview
27
Industry Trends
Challenges, Risks and Opportunities
28
net sales on research expenses, and expects to spend similar amounts in future periods. Failure to maintain or increase the product and service value delivered to customers in future periods could have a material impact on sales in this segment.
Foreign Currency
29
Review of Operations
Total Company
Net sales as reported Year ended December 31, | Percent change | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2004 | 2003 | Increase in 2004 net sales due to changes in currency translation rates | As reported | Excluding currency rate effect | ||||||||||||||||||
Engineered Fabrics | $ | 740,824 | $ | 733,316 | $ | 33,149 | 1.0 | % | –3.5 | % | |||||||||||||
Albany Door Systems | 112,773 | 101,331 | 8,498 | 11.3 | % | 2.9 | % | ||||||||||||||||
Applied Technologies | 66,205 | 53,296 | 3,022 | 24.2 | % | 18.6 | % | ||||||||||||||||
Total | $ | 919,802 | $ | 887,943 | $ | 44,669 | 3.6 | % | –1.4 | % |
Years ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2004 | 2003 | |||||||||
Operating Income | |||||||||||
Engineered Fabrics | $ | 96,421 | $ | 143,440 | |||||||
Albany Door Systems | 3,515 | (1,024 | ) | ||||||||
Applied Technologies | 11,558 | 6,065 | |||||||||
Research expense | (27,436 | ) | (26,353 | ) | |||||||
Unallocated expenses | (43,554 | ) | (36,514 | ) | |||||||
Operating income | $ | 40,504 | $ | 85,614 | |||||||
Restructuring Costs by Segment | |||||||||||
Engineered Fabrics | $ | 52,664 | $ | 18,219 | |||||||
Albany Door Systems | 1,265 | 2,351 | |||||||||
Applied Technologies | (15 | ) | 677 | ||||||||
Corporate and other | 144 | 504 | |||||||||
Consolidated total | $ | 54,058 | $ | 21,751 |
30
31
Engineered Fabrics segment
Albany Door Systems segment
Applied Technologies segment
32
Total Company
Net sales as reported Year ended December 31, | Percent change | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2003 | 2002 | Increase in 2003 net sales due to changes in currency translation rates | As reported | Excluding currency rate effect | ||||||||||||||||||
Engineered Fabrics | $ | 733,316 | $ | 697,790 | $ | 55,663 | 5.1 | % | –2.9 | % | |||||||||||||
Albany Door Systems | 101,331 | 92,477 | 13,291 | 9.6 | % | –4.8 | % | ||||||||||||||||
Applied Technologies | 53,296 | 42,232 | 3,203 | 26.2 | % | 18.6 | % | ||||||||||||||||
Total | $ | 887,943 | $ | 832,499 | $ | 72,157 | 6.7 | % | –2.0 | % |
33
Year ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2003 | 2002 | |||||||||
Operating Income | |||||||||||
Engineered Fabrics | $ | 143,440 | $ | 161,875 | |||||||
Albany Door Systems | (1,024 | ) | 1,093 | ||||||||
Applied Technologies | 6,065 | 3,311 | |||||||||
Research expense | (26,353 | ) | (24,918 | ) | |||||||
Unallocated expenses | (36,514 | ) | (39,273 | ) | |||||||
Operating income | $ | 85,614 | $ | 102,088 | |||||||
Restructuring Costs by Segment | |||||||||||
Engineered Fabrics | $ | 18,219 | $ | — | |||||||
Albany Door Systems | 2,351 | — | |||||||||
Applied Technologies | 677 | — | |||||||||
Corporate | 504 | — | |||||||||
Consolidated total | $ | 21,751 | $ | — |
Engineered Fabrics segment
34
the operating rates of the paper and paperboard industries might be expected to rise as a result of the reductions in capacity produced by their consolidations, reported operating rates in the United States improved only slightly for paper and declined for paperboard. In Europe, operating rates remained soft. Growth in the paper and paperboard industry, the Company’s principal market, was flat in most regions except Asia.
Albany Door Systems segment
Applied Technologies segment
International Activities
Liquidity and Capital Resources
35
36
commitments. The Company’s ability to borrow additional amounts under the credit agreement is conditional upon the absence of any defaults as well as the absence of any material adverse change. As of December 31, 2004, the Company’s leverage ratio under the agreement was 1.11 to 1.00, and the interest coverage ratio was 9.48 to 1.00.
37
Payments Due by Period | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) | Total | Less than One year | One to Three years | Three to Five years | After Five years | ||||||||||||||||||
Total debt | $ | 229.6 | $ | 15.9 | $ | 12.3 | $ | 201.4 | $ | — | |||||||||||||
Interest payments (a) | 9.7 | 8.2 | 1.4 | 0.1 | — | ||||||||||||||||||
Pension plan contributions (b) | 27.7 | 27.7 | — | — | — | ||||||||||||||||||
Other postretirement benefits (c) | 44.8 | 7.6 | 17.2 | 20.0 | — | ||||||||||||||||||
Restructuring accruals | 10.3 | 9.2 | 0.1 | 0.5 | 0.5 | ||||||||||||||||||
Other noncurrent liabilities (d) | — | — | — | — | — | ||||||||||||||||||
Operating leases | 42.5 | 15.4 | 20.6 | 5.5 | 1.0 | ||||||||||||||||||
$ | 364.6 | $ | 84.0 | $ | 51.6 | $ | 227.5 | $ | 1.5 |
(a) | The terms of variable rate debt arrangements, including interest rates and maturities, are included in Note 6 of Notes to Consolidated Financial Statements. The Company used interest rate swap agreements to fix the rate of interest on $200 million of variable rate debt at 7.17% through the maturity of the swaps in June and August 2005. Making the assumption that the Company maintains $200 million of variable rate debt until the swaps mature, and no changes in variable interest rates occur, the Company would expect to incur additional interest on that debt of approximately $7.2 million in 2005 and an additional $1.0 million of interest on other debt. Estimates of interest on the $200 million beyond the maturity of the swaps is not provided due to many factors that could affect the reliability of those estimates. The Company expects variable interest rates to change in future periods, but cannot predict the nature, timing, or magnitude of such changes. |
(b) | The Company’s largest pension plan is in the United States. Although no contributions are currently required, the Company’s planned contribution of $20 million in 2005 is included in this schedule and, additionally, $7.7 million is included for plans outside of the United States. The amount of contributions after 2005 is subject to many variables including return of pension plan assets, interest rates, and tax and employee benefit laws. Therefore, contributions beyond 2005 are not included in this schedule. |
(c) | Estimated payments for Other postretirement benefits for the next five years is based on the assumption that employer cash payments will increase by 8% after 2005. No estimate of the payments after five years has been made due to many uncertainties. |
(d) | Estimated payments for deferred compensation and other noncurrent liabilities of $25.6 million are not included in this table due to the uncertain timing of the ultimate cash settlement. |
Recent Accounting Pronouncements
38
Outlook
39
Forward-Looking Statements and non-GAAP measures
Item 7a. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
40
Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | 42 | |||||
Consolidated Statements of Income and Retained Earnings for the years ended December 31, 2004, 2003, and 2002 | 44 | |||||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2004, 2003, and 2002 | 45 | |||||
Consolidated Balance Sheets as of December 31, 2004 and 2003 | 46 | |||||
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003, and 2002 | 47 | |||||
Notes to Consolidated Financial Statements | 48 | |||||
Quarterly Financial Data | 76 |
41
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Albany International Corp.
We have completed an integrated audit of Albany International Corp.’s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.
Consolidated financial statements and financial statement schedule
Internal control over financial reporting
42
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Albany, New York
March 9, 2005
43
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the years ended December 31,
(in thousands, except per share amounts)
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Statements of Income | ||||||||||||||
Net sales | $ | 919,802 | $ | 887,943 | $ | 832,499 | ||||||||
Cost of goods sold | 557,742 | 526,757 | 492,217 | |||||||||||
Gross profit | 362,060 | 361,186 | 340,282 | |||||||||||
Selling and general expenses | 210,348 | 198,610 | 188,347 | |||||||||||
Technical and research expenses | 57,150 | 55,211 | 49,847 | |||||||||||
Restructuring, net | 54,058 | 21,751 | — | |||||||||||
Operating income | 40,504 | 85,614 | 102,088 | |||||||||||
Interest income | (2,150 | ) | (2,232 | ) | (3,084 | ) | ||||||||
Interest expense | 16,786 | 17,306 | 20,620 | |||||||||||
Other expense/(income), net | 13,539 | 662 | 5,003 | |||||||||||
Income before income taxes | 12,329 | 69,878 | 79,549 | |||||||||||
Income taxes | 2,450 | 15,720 | 25,041 | |||||||||||
Income before equity in earnings/(losses) of associated companies | 9,879 | 54,158 | 54,508 | |||||||||||
Equity in earnings/(losses) of associated companies | 506 | (103 | ) | 270 | ||||||||||
Income before cumulative effect of change in accounting principle, net of taxes | 10,385 | 54,055 | 54,778 | |||||||||||
Cumulative effect of change in accounting principle, net of taxes | — | — | (5,837 | ) | ||||||||||
Net income | 10,385 | 54,055 | 48,941 | |||||||||||
Retained Earnings | ||||||||||||||
Retained earnings, beginning of year | 433,407 | 387,609 | 345,273 | |||||||||||
Less dividends | 9,735 | 8,257 | 6,605 | |||||||||||
Retained earnings, end of year | $ | 434,057 | $ | 433,407 | $ | 387,609 | ||||||||
Earnings per share — basic: | ||||||||||||||
Income before cumulative effect of change in accounting principle | $ | 0.32 | $ | 1.64 | $ | 1.70 | ||||||||
Cumulative effect of change in accounting principle | — | — | (0.18 | ) | ||||||||||
Net income | $ | 0.32 | $ | 1.64 | $ | 1.52 | ||||||||
Earnings per share — diluted: | ||||||||||||||
Income before cumulative effect of change in accounting principle | $ | 0.31 | $ | 1.61 | $ | 1.68 | ||||||||
Cumulative effect of change in accounting principle | — | — | (0.18 | ) | ||||||||||
Net income | $ | 0.31 | $ | 1.61 | $ | 1.50 | ||||||||
Dividends per share | $ | 0.30 | $ | 0.25 | $ | 0.205 |
The accompanying notes are an integral part of the consolidated financial statements.
44
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31,
(in thousands)
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net income | $ | 10,385 | $ | 54,055 | $ | 48,941 | ||||||||
Other comprehensive income/(loss), before tax: | ||||||||||||||
Foreign currency translation adjustments | 52,933 | 81,935 | 48,690 | |||||||||||
Hedges of net investments in non-U.S. subsidiaries | 1,537 | (235 | ) | (1,810 | ) | |||||||||
Pension liability adjustments — before tax effect | (70 | ) | (5,668 | ) | (34,815 | ) | ||||||||
Derivative valuation adjustment — before tax effect | 9,926 | 7,084 | (8,484 | ) | ||||||||||
Income taxes related to items of other comprehensive income/(loss): | ||||||||||||||
Hedges of net investments in non-U.S. subsidiaries | (569 | ) | 87 | 670 | ||||||||||
Pension liability adjustments | 1,280 | 2,052 | 12,882 | |||||||||||
Derivative valuation adjustment | (3,871 | ) | (2,331 | ) | 3,138 | |||||||||
Comprehensive income | $ | 71,551 | $ | 136,979 | $ | 69,212 |
The accompanying notes are an integral part of the consolidated financial statements.
45
CONSOLIDATED BALANCE SHEETS
At December 31,
(in thousands, except share data)
2004 | 2003 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 58,982 | $ | 78,822 | ||||||
Accounts receivable, less allowance for doubtful accounts ($9,931 in 2004; $8,673 in 2003) | 144,950 | 151,157 | ||||||||
Note receivable | 18,955 | 21,814 | ||||||||
Inventories | 185,530 | 177,528 | ||||||||
Prepaid expenses | 8,867 | 8,067 | ||||||||
Deferred taxes | 26,526 | 33,314 | ||||||||
Total current assets | 443,810 | 470,702 | ||||||||
Property, plant and equipment, at cost, net | 378,170 | 370,280 | ||||||||
Investments in associated companies | 6,456 | 5,278 | ||||||||
Intangibles | 14,207 | 15,790 | ||||||||
Goodwill | 171,622 | 159,543 | ||||||||
Deferred taxes | 87,848 | 63,657 | ||||||||
Cash surrender value of life insurance | 34,583 | 32,399 | ||||||||
Other assets | 19,064 | 21,274 | ||||||||
Total assets | $ | 1,155,760 | $ | 1,138,923 | ||||||
Liabilities | ||||||||||
Current liabilities: | ||||||||||
Notes and loans payable | $ | 14,617 | $ | 5,250 | ||||||
Accounts payable | 43,378 | 35,080 | ||||||||
Accrued liabilities | 120,263 | 122,550 | ||||||||
Current maturities of long-term debt | 1,340 | 1,949 | ||||||||
Income taxes payable and deferred | 29,620 | 13,682 | ||||||||
Total current liabilities | 209,218 | 178,511 | ||||||||
Long-term debt | 213,615 | 214,894 | ||||||||
Other noncurrent liabilities | 147,268 | 153,811 | ||||||||
Deferred taxes and other credits | 34,882 | 37,052 | ||||||||
Total liabilities | 604,983 | 584,268 | ||||||||
Commitments and Contingencies | — | — | ||||||||
Shareholders’ Equity | ||||||||||
Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued | — | — | ||||||||
Class A Common Stock, par value $.001 per share; authorized 100,000,000 shares; issued 33,176,872 in 2004 and 32,548,938 in 2003 | 33 | 33 | ||||||||
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 3,236,476 in 2004 and 2003 | 3 | 3 | ||||||||
Additional paid-in capital | 296,045 | 280,734 | ||||||||
Retained earnings | 434,057 | 433,407 | ||||||||
Accumulated items of other comprehensive income: | ||||||||||
Translation adjustments | (11,711 | ) | (65,613 | ) | ||||||
Derivative valuation adjustment | (2,785 | ) | (8,840 | ) | ||||||
Pension liability adjustment | (38,369 | ) | (39,579 | ) | ||||||
677,273 | 600,145 | |||||||||
Less treasury stock, at cost | 126,496 | 45,490 | ||||||||
Total shareholders’ equity | 550,777 | 554,655 | ||||||||
Total liabilities and shareholders’ equity | $ | 1,155,760 | $ | 1,138,923 |
The accompanying notes are an integral part of the consolidated financial statements.
46
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(in thousands)
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | ||||||||||||||
Net income | $ | 10,385 | $ | 54,055 | $ | 48,941 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Equity in (earnings)/losses of associated companies | (506 | ) | 103 | (270 | ) | |||||||||
Depreciation | 51,843 | 51,003 | 47,478 | |||||||||||
Amortization | 3,372 | 5,091 | 5,385 | |||||||||||
Provision for deferred income taxes, other credits and long-term liabilities | (16,652 | ) | (6,908 | ) | (21,094 | ) | ||||||||
Provision for write-off of equipment | 17,099 | 14,671 | — | |||||||||||
Provision for impairment of investment | 4,000 | — | — | |||||||||||
Cumulative effect of change in accounting principle | — | — | 5,837 | |||||||||||
Increase in cash surrender value of life insurance, net of premiums paid | (1,958 | ) | (1,998 | ) | (569 | ) | ||||||||
Change in unrealized currency transaction gains and losses | 8,004 | (8,286 | ) | (1,933 | ) | |||||||||
Gain on disposition of assets | (285 | ) | (513 | ) | (2,688 | ) | ||||||||
Shares contributed to ESOP | 5,505 | 5,398 | 4,635 | |||||||||||
Tax benefit of options exercised | 1,473 | 2,289 | 1,672 | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | 9,747 | 15,685 | 21,974 | |||||||||||
Note receivable | 2,859 | (1,739 | ) | 1,028 | ||||||||||
Inventories | 642 | 3,171 | 17,687 | |||||||||||
Prepaid expenses | (300 | ) | (894 | ) | (1,885 | ) | ||||||||
Accounts payable | 3,029 | (4,544 | ) | (10,653 | ) | |||||||||
Accrued liabilities | (5,518 | ) | 12,457 | (5,671 | ) | |||||||||
Income taxes payable | 9,638 | (9,294 | ) | 8,346 | ||||||||||
Other, net | (552 | ) | 1,777 | 605 | ||||||||||
Net cash provided by operating activities | 101,825 | 131,524 | 118,825 | |||||||||||
Investing Activities | ||||||||||||||
Purchases of property, plant and equipment | (57,129 | ) | (51,849 | ) | (31,678 | ) | ||||||||
Purchased software | (879 | ) | (1,072 | ) | (1,465 | ) | ||||||||
Proceeds from sale of assets | 5,416 | 2,653 | 6,373 | |||||||||||
Cash received from life insurance policy terminations | 863 | — | — | |||||||||||
Repayments of loans from life insurance policies | — | — | (25,934 | ) | ||||||||||
Premiums paid for life insurance | (1,089 | ) | (1,118 | ) | (1,159 | ) | ||||||||
Net cash used in investing activities | (52,818 | ) | $ | (51,386 | ) | (53,863 | ) | |||||||
Financing Activities | ||||||||||||||
Proceeds from borrowings | 68,005 | 45,833 | 60,208 | |||||||||||
Principal payments on debt | (60,724 | ) | (59,709 | ) | (106,446 | ) | ||||||||
Purchase of treasury shares | (81,135 | ) | — | — | ||||||||||
Proceeds from options exercised | 8,284 | 17,559 | 14,950 | |||||||||||
Debt issuance costs | (1,555 | ) | — | — | ||||||||||
Dividends paid | (9,570 | ) | (7,692 | ) | (6,391 | ) | ||||||||
Net cash used in financing activities | (76,695 | ) | (4,009 | ) | (37,679 | ) | ||||||||
Effect of exchange rate changes on cash flows | 7,848 | (16,106 | ) | (14,637 | ) | |||||||||
(Decrease)/increase in cash and cash equivalents | (19,840 | ) | 60,023 | 12,646 | ||||||||||
Cash and cash equivalents at beginning of year | 78,822 | 18,799 | 6,153 | |||||||||||
Cash and cash equivalents at end of year | $ | 58,982 | $ | 78,822 | $ | 18,799 |
The accompanying notes are an integral part of the consolidated financial statements.
47
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies
Estimates
Revenue Recognition
Cost of Goods Sold
Selling, General and Technical Expenses
Translation of Financial Statements
48
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1. Accounting Policies — (Continued)
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Losses/(gains) included in: | ||||||||||||||
Selling and general expenses | $ | 758 | $ | — | $ | 2,771 | ||||||||
Other expense/(income), net | 1,559 | (8,218 | ) | (2,680 | ) | |||||||||
Total transaction losses/(gains) | $ | 2,317 | $ | (8,218 | ) | $ | 91 |
Research Expense
Cash and Cash Equivalents
Inventories
(in thousands) | 2004 | 2003 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Raw materials | $ | 31,998 | $ | 29,805 | ||||||
Work in process | 57,470 | 53,936 | ||||||||
Finished goods | 96,062 | 93,787 | ||||||||
Total inventories | $ | 185,530 | $ | 177,528 |
Property, Plant and Equipment
49
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1. Accounting Policies — (Continued)
Goodwill, Intangibles and Other Assets
Cash Surrender Value of Life Insurance
Stock-Based Compensation
Derivatives
50
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1. Accounting Policies — (Continued)
Income Taxes
Pension and Postretirement Benefit Plans
51
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1. Accounting Policies — (Continued)
assumptions, including discount rates and expected return on plan assets, which are updated on an annual basis at the beginning of each fiscal year. The Company considers current market conditions, including changes in interest rates, in making these assumptions.
Change in Classification
Earnings Per Share
Recent Accounting Pronouncements
52
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2. Earnings Per Share
(in thousands, except market price data) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Income available to common shareholders: | ||||||||||||||
Income available to common shareholders | $ | 10,385 | $ | 54,055 | $ | 48,941 | ||||||||
Weighted average number of shares: | ||||||||||||||
Weighted average number of shares used in basic earnings per share calculations | 32,575 | 32,889 | 32,126 | |||||||||||
Effect of dilutive securities: stock options | 599 | 622 | 509 | |||||||||||
Weighted average number of shares used in diluted earnings per share calculations | 33,174 | 33,511 | 32,635 | |||||||||||
Average market price of common stock used for calculation of diluted shares | $ | 30.96 | $ | 27.13 | $ | 23.41 | ||||||||
Option shares that were not included in the computation of 2002 diluted earnings per share because to do so would have been antidilutive | — | — | 250 |
3. Property, Plant and Equipment
(in thousands) | 2004 | 2003 | Estimated useful life | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Land and land improvements | $ | 35,520 | $ | 32,983 | 25 years for improvements | ||||||||||
Buildings | 208,268 | 194,348 | 25 to 40 years | ||||||||||||
Machinery and equipment | 684,985 | 633,910 | 10 years | ||||||||||||
Furniture and fixtures | 36,424 | 33,730 | 5 years | ||||||||||||
Computer and other equipment | 7,567 | 7,070 | 3 to 10 years | ||||||||||||
Construction in progress | — | 4,219 | |||||||||||||
972,764 | 906,260 | ||||||||||||||
Accumulated depreciation | 594,594 | 535,980 | |||||||||||||
$ | 378,170 | $ | 370,280 |
4. Goodwill and Intangibles
53
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
4. Goodwill and Intangibles — (Continued)
effect of a change in accounting principle in the accompanying consolidated statements of income and retained earnings. There was no tax effect from this charge. As required by FAS No. 142, the Company performed its annual test for impairment during the second quarters of 2002, 2003 and 2004, and determined that there was no impairment of goodwill in the Engineered Fabrics or Albany Door Systems segments.
(in thousands) | Balance at December 31, 2003 | Amortization | Currency translation/other | Balance at December 31, 2004 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortizable intangible assets: | ||||||||||||||||||
Patents | $ | 3,526 | $ | 544 | $ | 359 | $ | 3,341 | ||||||||||
Trade names | 3,769 | 581 | 259 | 3,447 | ||||||||||||||
Total | 7,295 | 1,125 | 618 | 6,788 | ||||||||||||||
Deferred pension costs | 8,495 | — | (1,076 | ) | 7,419 | |||||||||||||
Total intangibles | $ | 15,790 | $ | 1,125 | $ | (458 | ) | $ | 14,207 | |||||||||
Unamortized intangible assets: | ||||||||||||||||||
Goodwill | $ | 159,543 | $ | — | $ | 12,079 | $ | 171,622 |
(in thousands) | Balance at January 1, 2003 | Amortization | Currency translation/other | Balance at December 31, 2003 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortizable intangible assets: | ||||||||||||||||||
Patents | $ | 3,566 | $ | 588 | $ | 548 | $ | 3,526 | ||||||||||
Trade names | 3,241 | 415 | 943 | 3,769 | ||||||||||||||
Total | 6,807 | 1,003 | 1,491 | 7,295 | ||||||||||||||
Deferred pension costs | 9,467 | — | (972 | ) | 8,495 | |||||||||||||
Total intangibles | $ | 16,274 | $ | 1,003 | $ | 519 | $ | 15,790 | ||||||||||
Unamortized intangible assets: | ||||||||||||||||||
Goodwill | $ | 137,146 | $ | — | $ | 22,397 | $ | 159,543 |
(in thousands) Year | Annual Amortization | |||||
---|---|---|---|---|---|---|
2005 | $ | 1,100 | ||||
2006 | 1,100 | |||||
2007 | 1,100 | |||||
2008 | 1,100 | |||||
2009 | 856 |
54
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
5. Accrued Liabilities
(in thousands) | 2004 | 2003 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Salaries and wages | $ | 15,670 | $ | 15,632 | ||||||
Accrual for compensated absences | 14,361 | 13,227 | ||||||||
Employee benefits | 13,000 | 18,597 | ||||||||
Pension liability — current portion (see Note 13) | 27,693 | 23,640 | ||||||||
Postretirement medical benefits — current portion | 7,644 | 6,576 | ||||||||
Interest rate swaps — current portion (see Note 6) | 4,565 | 10,108 | ||||||||
Returns and allowances | 8,072 | 6,928 | ||||||||
Interest | 1,204 | 1,242 | ||||||||
Restructuring costs — current portion (see Note 16) | 9,189 | 8,538 | ||||||||
Other | 18,865 | 18,062 | ||||||||
$ | 120,263 | $ | 122,550 |
6. | Financial Instruments |
(in thousands) | 2004 | 2003 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
January 2004 credit agreement with borrowings outstanding at an average interest rate of 3.19% in 2004 and 2.19% in 2003 | $ | 200,000 | $ | 200,000 | ||||||
Various notes and mortgages relative to operations principally outside the United States, at an average rate of 5.81% in 2004 and 6.61% in 2003, due in varying amounts through 2008 | 2,321 | 3,244 | ||||||||
Industrial revenue financings at an average interest rate of 6.73% in 2004 and 6.58% in 2003, due in varying amounts through 2009 | 11,294 | 11,650 | ||||||||
$ | 213,615 | $ | 214,894 |
55
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
6. Financial Instruments — (Continued)
provided its leverage ratio would not exceed 2.50 to 1.00 after giving pro forma effect to the acquisition. If any bank in the lending group is unable to meet its commitment to lend, the Company may be unable to borrow the full amount. The Company does not expect that any of the banks in the bank group will be unable to meet their commitments. The Company’s ability to borrow additional amounts under the credit agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change. Based on the maximum leverage ratio as of December 31, 2004, the Company would have been able to borrow an additional $260 million under the loan agreement. As of December 31, 2004, the Company’s leverage ratio under the agreement was 1.11 to 1.00 and the interest coverage ratio was 9.48 to 1.00.
56
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
6. Financial Instruments — (Continued)
financing a portion of the purchase price, the Company performs certain administrative functions for the QSPE, including collecting the accounts receivable, in exchange for a fee. The securitization program can be terminated at any time, with thirty days notice, by the Company or the unrelated third party.
(in thousands, except interest rates) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amounts included in the change in Accounts receivable in the Statements of Cash Flows: | ||||||||||||||
Proceeds from new securitizations | $ | 370,424 | $ | 371,957 | $ | 380,552 | ||||||||
Amounts recognized in the Balance Sheets: | ||||||||||||||
Note receivable from QSPE at year end | $ | 18,955 | $ | 21,814 | $ | 20,075 | ||||||||
Interest rate on note receivable from QSPE at year end | 2.92 | % | 1.57 | % | 2.41 | % | ||||||||
Amounts recognized in the Statements of Income: | ||||||||||||||
Servicing fees received, included in Other expense/(income), net | $ | 34 | $ | 37 | $ | 36 | ||||||||
Discount expense, included in Other expense/(income), net | $ | 2,566 | $ | 1,848 | $ | 2,053 |
7. Commitments and Contingencies
57
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
7. Commitments and Contingencies — (Continued)
58
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
7. Commitments and Contingencies — (Continued)
Brandon Drying Fabrics, Inc.
Mount Vernon
59
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
7. Commitments and Contingencies — (Continued)
of operations or cash flows of the Company. Although the Company cannot predict the number and timing of future claims, based on the foregoing factors and the trends in claims against it to date, the Company does not anticipate that additional claims likely to be filed against it in the future will have a material adverse effect on its financial position, results of operations or cash flows. However, the Company is aware that litigation is inherently uncertain, especially when the outcome is dependent primarily on determinations of factual matters to be made by juries. The Company is also aware that numerous other defendants in asbestos cases, as well as others who claim to have knowledge and expertise on the subject, have found it difficult to anticipate the outcome of asbestos litigation, the volume of future asbestos claims and the anticipated settlement values of those claims. For these reasons, there can be no assurance that the foregoing conclusions will not change.
8. Other Noncurrent Liabilities
(in thousands) | 2004 | 2003 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Pension liabilities | $ | 56,206 | $ | 62,080 | ||||||
Postretirement benefits other than pensions | 65,264 | 61,277 | ||||||||
Deferred compensation (see Note 15) | 9,434 | 10,656 | ||||||||
Interest rate swaps (see Note 6) | — | 4,384 | ||||||||
Other | 16,364 | 15,414 | ||||||||
$ | 147,268 | $ | 153,811 |
9. Shareholders’ Equity
60
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
9. Shareholders’ Equity — (Continued)
Class A Common Stock | Class B Common Stock | Treasury Stock Class A | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Shares | Amount | Shares | Amount | Additional Paid-in Capital | Shares | Amount | ||||||||||||||||||||||||||
Balance: January 1, 2002 | 27,712 | $ | 28 | 5,867 | $ | 6 | $ | 234,213 | 2,197 | $ | 45,651 | ||||||||||||||||||||||
Shares contributed to ESOP | 197 | — | — | — | 4,635 | — | — | ||||||||||||||||||||||||||
Conversion of Class B shares to Class A shares | 259 | — | (259 | ) | — | — | — | — | |||||||||||||||||||||||||
Options exercised | 815 | 1 | — | — | 16,621 | — | — | ||||||||||||||||||||||||||
Shares issued to Directors | — | — | — | — | 15 | (3 | ) | (75 | ) | ||||||||||||||||||||||||
Balance: December 31, 2002 | 28,983 | 29 | 5,608 | 6 | 255,484 | 2,194 | 45,576 | ||||||||||||||||||||||||||
Shares contributed to ESOP | 209 | — | — | — | 5,398 | — | — | ||||||||||||||||||||||||||
Conversion of Class B shares to Class A shares | 2,371 | 3 | (2,371 | ) | (3 | ) | — | — | |||||||||||||||||||||||||
Options exercised | 986 | 1 | — | — | 19,847 | — | — | ||||||||||||||||||||||||||
Shares issued to Directors | — | — | — | — | 5 | (4 | ) | (86 | ) | ||||||||||||||||||||||||
Balance: December 31, 2003 | 32,549 | 33 | 3,237 | 3 | 280,734 | 2,190 | 45,490 | ||||||||||||||||||||||||||
Shares contributed to ESOP | 177 | — | — | — | 5,505 | — | — | ||||||||||||||||||||||||||
Purchase of treasury shares | — | — | — | — | — | 2,820 | 81,135 | ||||||||||||||||||||||||||
Options exercised | 451 | — | — | — | 9,756 | — | — | ||||||||||||||||||||||||||
Shares issued to Directors | — | — | — | — | 50 | (6 | ) | (129 | ) | ||||||||||||||||||||||||
Balance: December 31, 2004 | 33,177 | $ | 33 | 3,237 | $ | 3 | $ | 296,045 | 5,004 | $ | 126,496 |
10. Other Expense/(Income), Net
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Currency transactions (Note 1) | $ | 1,559 | $ | (8,218 | ) | $ | (2,680 | ) | ||||||
Costs associated with sale of accounts receivable (Note 6) | 2,566 | 1,848 | 2,053 | |||||||||||
Investment write-off (Note 1) | 4,000 | — | — | |||||||||||
Debt finance fee write-off | 874 | — | — | |||||||||||
License fee expense/(income), net | 2,428 | 1,086 | (286 | ) | ||||||||||
Amortization of debt issuance costs and loan origination fees | 1,099 | 2,790 | 2,093 | |||||||||||
Other | 1,013 | 3,156 | 3,823 | |||||||||||
$ | 13,539 | $ | 662 | $ | 5,003 |
61
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
11. Income Taxes
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Loss)/income before income taxes: | ||||||||||||||
U.S. | $ | (10,738 | ) | $ | 2,107 | $ | 24,527 | |||||||
Non-U.S. | 23,067 | 67,771 | 55,022 | |||||||||||
$ | 12,329 | $ | 69,878 | $ | 79,549 | |||||||||
Income tax provision/(benefit): | ||||||||||||||
Current: | ||||||||||||||
Federal | $ | 1,283 | $ | (5,407 | ) | $ | 7,892 | |||||||
State | 349 | 375 | 539 | |||||||||||
Non-U.S. | 10,781 | 17,698 | 23,571 | |||||||||||
12,413 | 12,666 | 32,002 | ||||||||||||
Deferred: | ||||||||||||||
Federal | (6,444 | ) | 1,588 | 1,169 | ||||||||||
State | (292 | ) | (256 | ) | 709 | |||||||||
Non-U.S. | (3,227 | ) | 1,722 | (8,839 | ) | |||||||||
(9,963 | ) | 3,054 | (6,961 | ) | ||||||||||
Total provision for income taxes | $ | 2,450 | $ | 15,720 | $ | 25,041 |
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net effect of temporary differences | $ | (4,608 | ) | $ | 7,427 | $ | (433 | ) | ||||||
Adjustments to deferred tax assets and liabilities for enacted changes in tax laws and rates | 446 | 1,321 | 1,232 | |||||||||||
Benefit of tax loss carry-forward | (5,801 | ) | (5,694 | ) | (7,760 | ) | ||||||||
$ | (9,963 | ) | $ | 3,054 | $ | (6,961 | ) |
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
U.S. federal statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
State taxes, net of federal benefit | 2.0 | 1.5 | 1.0 | |||||||||||
Non-U.S. tax rates | (55.0 | ) | (14.5 | ) | (3.2 | ) | ||||||||
Repatriation of non-U.S. earnings | 15.4 | 2.2 | 2.8 | |||||||||||
Non-US statutory tax rate changes | 3.6 | 1.9 | 1.5 | |||||||||||
Addition to valuation allowance for non-U.S. taxes | 55.9 | 6.4 | — | |||||||||||
Favorable resolution of contingency related to prior years | (37.4 | ) | (7.5 | ) | (3.5 | ) | ||||||||
Nondeductible compensation | 14.0 | — | — | |||||||||||
Research and development tax credits | (10.9 | ) | (1.4 | ) | (0.9 | ) | ||||||||
Other | (2.7 | ) | (1.1 | ) | (1.2 | ) | ||||||||
Effective income tax rate | 19.9 | % | 22.5 | % | 31.5 | % |
62
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
11. Income Taxes — (Continued)
U.S. | Non-U.S. | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2004 | 2003 | 2004 | 2003 | |||||||||||||||
Current deferred tax assets: | |||||||||||||||||||
Accounts receivable | $ | 74 | $ | 392 | $ | 1,139 | $ | 1,341 | |||||||||||
Inventories | 3,134 | 7,149 | — | — | |||||||||||||||
Tax credits carry-forward | 12,714 | 7,638 | — | — | |||||||||||||||
Tax losses carry-forward | 683 | 7,444 | — | 274 | |||||||||||||||
Restructuring costs | 2,440 | 4,096 | — | — | |||||||||||||||
Deferred compensation | 702 | — | — | — | |||||||||||||||
Other | 922 | 1,284 | 4,718 | 3,696 | |||||||||||||||
Total current deferred tax assets | 20,669 | 28,003 | 5,857 | 5,311 | |||||||||||||||
Noncurrent deferred tax assets: | |||||||||||||||||||
Sale leaseback transaction | 1,276 | 1,353 | — | — | |||||||||||||||
Deferred compensation | 3,651 | 8,949 | — | — | |||||||||||||||
Depreciation and amortization | 2,423 | (6,368 | ) | 1,261 | 2,061 | ||||||||||||||
Post-retirement benefits | 35,555 | 27,165 | 2,097 | 2,573 | |||||||||||||||
Tax loss carryforward | 868 | 868 | 41,785 | 27,866 | |||||||||||||||
Impairment of investment | 1,560 | — | — | — | |||||||||||||||
Derivative valuation adjustment | 1,780 | 5,652 | — | — | |||||||||||||||
Other | 1,945 | (40 | ) | 6,102 | 371 | ||||||||||||||
Noncurrent deferred tax assets before valuation allowance | 49,058 | 37,579 | 51,245 | 32,871 | |||||||||||||||
Less: valuation allowance | — | — | (12,455 | ) | (6,793 | ) | |||||||||||||
Total non-current deferred tax assets | 49,058 | 37,579 | 38,790 | 26,078 | |||||||||||||||
Total deferred tax assets | $ | 69,727 | $ | 65,582 | $ | 44,647 | $ | 31,389 | |||||||||||
Current deferred tax liabilities: | |||||||||||||||||||
Inventory | $ | — | $ | — | $ | 6,146 | $ | — | |||||||||||
Other | — | — | 7,204 | 763 | |||||||||||||||
Total current deferred tax liabilities | — | — | 13,350 | 763 | |||||||||||||||
NonCurrent deferred tax liabilities: | |||||||||||||||||||
Difference between book and tax depreciation | — | — | 27,674 | 28,640 | |||||||||||||||
Other | — | — | 7,208 | 8,412 | |||||||||||||||
Total noncurrent deferred tax liabilities | — | — | 34,882 | 37,052 | |||||||||||||||
Total deferred tax liabilities | $ | — | $ | — | $ | 48,232 | $ | 37,815 | |||||||||||
Net deferred tax asset/(liability) | $ | 69,727 | $ | 65,582 | $ | (3,585 | ) | $ | (6,426 | ) |
63
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
11. Income Taxes — (Continued)
$7,100,000 against deferred tax assets for non-U.S. net operating losses carryforward. The Company intends to maintain the valuation allowance for these net operating losses carryforward until sufficient evidence exists to support the reversal of the valuation allowance.
12. Operating Segment and Geographic Data
64
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12. Operating Segment and Geographic Data — (Continued)
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | ||||||||||||||
Engineered Fabrics | $ | 740,824 | $ | 733,316 | $ | 697,790 | ||||||||
Albany Door Systems | 112,773 | 101,331 | 92,477 | |||||||||||
Applied Technologies | 66,205 | 53,296 | 42,232 | |||||||||||
Consolidated total | $ | 919,802 | $ | 887,943 | $ | 832,499 | ||||||||
Depreciation and amortization | ||||||||||||||
Engineered Fabrics | $ | 46,723 | $ | 46,084 | $ | 44,815 | ||||||||
Albany Door Systems | 1,506 | 1,860 | 2,136 | |||||||||||
Applied Technologies | 3,690 | 3,731 | 2,122 | |||||||||||
Corporate | 3,296 | 4,419 | 3,790 | |||||||||||
Consolidated total | $ | 55,215 | $ | 56,094 | $ | 52,863 | ||||||||
Operating income/(loss) | ||||||||||||||
Engineered Fabrics | $ | 96,421 | $ | 143,440 | $ | 161,875 | ||||||||
Albany Door Systems | 3,515 | (1,024 | ) | 1,093 | ||||||||||
Applied Technologies | 11,558 | 6,065 | 3,311 | |||||||||||
Research expense | (27,436 | ) | (26,353 | ) | (24,918 | ) | ||||||||
Unallocated expenses | (43,554 | ) | (36,514 | ) | (39,273 | ) | ||||||||
Operating income before reconciling items | 40,504 | 85,614 | 102,088 | |||||||||||
Reconciling items: | ||||||||||||||
Interest income | 2,150 | 2,232 | 3,084 | |||||||||||
Interest expense | (16,786 | ) | (17,306 | ) | (20,620 | ) | ||||||||
Other expense, net | (13,539 | ) | (662 | ) | (5,003 | ) | ||||||||
Consolidated income before income taxes | $ | 12,329 | $ | 69,878 | $ | 79,549 | ||||||||
Restructuring costs included in segment operating income: | ||||||||||||||
Engineered Fabrics | $ | 52,664 | $ | 18,219 | $ | — | ||||||||
Albany Door Systems | 1,265 | 2,351 | — | |||||||||||
Applied Technologies | (15 | ) | 677 | — | ||||||||||
Corporate and other | 144 | 504 | — | |||||||||||
Consolidated total | $ | 54,058 | $ | 21,751 | $ | — |
65
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12. Operating Segment and Geographic Data — (Continued)
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating assets | ||||||||||||||
Engineered Fabrics | $ | 1,416,854 | $ | 1,320,179 | $ | 1,164,610 | ||||||||
Albany Door Systems | 80,340 | 80,994 | 69,938 | |||||||||||
Applied Technologies | 94,477 | 98,646 | 90,162 | |||||||||||
Reconciling items: | ||||||||||||||
Accumulated depreciation | (594,594 | ) | (535,980 | ) | (438,859 | ) | ||||||||
Deferred tax assets | 114,374 | 96,971 | 109,013 | |||||||||||
Investment in associated companies | 6,456 | 5,278 | 4,849 | |||||||||||
Other | 37,853 | 72,835 | 11,808 | |||||||||||
Consolidated total assets | $ | 1,155,760 | $ | 1,138,923 | $ | 1,011,521 | ||||||||
Capital expenditures | ||||||||||||||
Engineered Fabrics | $ | 53,704 | $ | 46,682 | $ | 30,042 | ||||||||
Albany Door Systems | 609 | 2,080 | 993 | |||||||||||
Applied Technologies | 2,753 | 2,900 | 551 | |||||||||||
Corporate | 63 | 187 | 92 | |||||||||||
Consolidated total | $ | 57,129 | $ | 51,849 | $ | 31,678 |
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | ||||||||||||||
United States | $ | 309,521 | $ | 311,245 | $ | 322,609 | ||||||||
Canada | 67,834 | 62,731 | 58,566 | |||||||||||
Sweden | 108,427 | 91,108 | 78,470 | |||||||||||
Germany | 115,288 | 106,713 | 101,297 | |||||||||||
France | 72,981 | 65,526 | 54,487 | |||||||||||
Other countries | 245,751 | 250,620 | 217,070 | |||||||||||
Consolidated total | $ | 919,802 | $ | 887,943 | $ | 832,499 | ||||||||
Property, plant and equipment, at cost, net | ||||||||||||||
United States | $ | 82,914 | $ | 102,262 | $ | 118,908 | ||||||||
Canada | 24,498 | 15,993 | 15,866 | |||||||||||
Sweden | 62,734 | 52,767 | 49,833 | |||||||||||
Germany | 59,342 | 60,258 | 62,512 | |||||||||||
France | 35,906 | 29,179 | 20,676 | |||||||||||
Other countries | 112,776 | 109,821 | 78,278 | |||||||||||
Consolidated total | $ | 378,170 | $ | 370,280 | $ | 346,073 |
66
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Pensions and Other Postretirement Benefit Plans
Pension Plans
Other Postretirement Benefits
As of December 31, 2004 | As of December 31, 2003 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Pension Plans | Other Benefits | Pension Plans | Other Benefits | |||||||||||||||
Benefit obligation, beginning of year | $ | 298,777 | $ | 116,092 | $ | 250,841 | $ | 102,070 | |||||||||||
Service cost | 8,135 | 3,180 | 6,473 | 2,794 | |||||||||||||||
Interest cost | 18,648 | 7,289 | 16,575 | 6,743 | |||||||||||||||
Plan participants’ contributions | 1,068 | 1,099 | 850 | 1,058 | |||||||||||||||
Actuarial loss | 8,155 | 12,460 | 19,727 | 10,947 | |||||||||||||||
Liabilities related to plans not previously included | 26,270 | — | — | — | |||||||||||||||
Curtailments | (7,299 | ) | — | — | — | ||||||||||||||
Special termination benefits | 785 | — | — | — | |||||||||||||||
Benefits paid | (17,555 | ) | (8,743 | ) | (14,876 | ) | (7,520 | ) | |||||||||||
Foreign currency changes | 12,332 | — | 19,187 | — | |||||||||||||||
Benefit obligation, end of year | $ | 349,316 | $ | 131,377 | $ | 298,777 | $ | 116,092 | |||||||||||
Accumulated benefit obligation | $ | 318,648 | $ | — | $ | 270,525 | $ | — | |||||||||||
Weighted average assumptions used to determine benefit obligations, end of year: | |||||||||||||||||||
Discount rate | 5.69 | % | 5.75 | % | 5.85 | % | 6.00 | % | |||||||||||
Weighted average rate of compensation increase | 3.44 | % | 3.50 | % | 3.41 | % | 3.50 | % |
67
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Pensions and Other Postretirement Benefit Plans — (Continued)
(in thousands) | 1 percentage point increase | 1 percentage point decrease | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Effect on postretirement benefit obligation | $ | 19,315 | $ | (15,558 | ) |
As of December 31, 2004 | As of December 31, 2003 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Pension Plans | Other Benefits | Pension Plans | Other Benefits | |||||||||||||||
Fair value of plan assets, beginning of year | $ | 184,770 | $ | — | $ | 143,154 | $ | — | |||||||||||
Actual return on plan assets (net of expenses) | 19,229 | — | 18,199 | — | |||||||||||||||
Employer contributions | 28,609 | 7,644 | 26,885 | 6,462 | |||||||||||||||
Plan participants’ contributions | 1,068 | 1,099 | 850 | 1,058 | |||||||||||||||
Assets related to plans not previously included | 16,041 | — | — | — | |||||||||||||||
Benefits paid | (17,555 | ) | (8,743 | ) | (14,876 | ) | (7,520 | ) | |||||||||||
Foreign currency changes | 6,442 | — | 10,558 | — | |||||||||||||||
Fair value of plan assets, end of year | $ | 238,604 | $ | — | $ | 184,770 | $ | — |
68
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Pensions and Other Postretirement Benefit Plans — (Continued)
As of December 31, 2004 | As of December 31, 2003 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Pension Plans | Other Benefits | Pension Plans | Other Benefits | |||||||||||||||
Fair value of plan assets | $ | 238,604 | $ | — | $ | 184,770 | $ | — | |||||||||||
Benefit obligation | (349,316 | ) | (131,376 | ) | (298,777 | ) | (116,092 | ) | |||||||||||
Funded status | (110,712 | ) | (131,376 | ) | (114,007 | ) | (116,092 | ) | |||||||||||
Amounts not yet recognized: | |||||||||||||||||||
Unrecognized net actuarial loss | 90,058 | 65,036 | 90,552 | 55,754 | |||||||||||||||
Unrecognized prior service cost | 7,292 | (6,568 | ) | 7,872 | (7,515 | ) | |||||||||||||
Unrecognized net transition obligation | 127 | — | 194 | — | |||||||||||||||
Fourth quarter contributions | 2,058 | — | 2,926 | — | |||||||||||||||
(Accrued) benefit cost, end of year | $ | (11,177 | ) | $ | (72,908 | ) | $ | (12,463 | ) | $ | (67,853 | ) | |||||||
Amounts recognized in the statement of financial position consist of the following: | |||||||||||||||||||
Prepaid benefit cost | $ | 2,482 | $ | — | $ | 2,012 | $ | — | |||||||||||
Accrued benefit cost | (83,899 | ) | (72,908 | ) | (85,720 | ) | (67,853 | ) | |||||||||||
Intangible asset | 7,419 | — | 8,495 | — | |||||||||||||||
Accumulated other comprehensive income before tax | 62,821 | — | 62,750 | — | |||||||||||||||
Net amount recognized | $ | (11,177 | ) | $ | (72,908 | ) | $ | (12,463 | ) | $ | (67,853 | ) |
Pension Plans | Other Benefits | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||||
Components of net periodic benefit cost: | |||||||||||||||||||||||||||
Service cost | $ | 8,135 | $ | 6,473 | $ | 5,693 | $ | 3,180 | $ | 2,794 | $ | 2,213 | |||||||||||||||
Interest cost | 18,648 | 16,575 | 14,576 | 7,289 | 6,743 | 6,010 | |||||||||||||||||||||
Expected return on plan assets | (14,984 | ) | (12,491 | ) | (13,518 | ) | — | — | — | ||||||||||||||||||
Amortization of prior service cost (credit) | 979 | 972 | 936 | (947 | ) | (947 | ) | (947 | ) | ||||||||||||||||||
Amortization of net actuarial loss | 5,831 | 3,338 | 1,113 | 3,178 | 1,943 | 1,401 | |||||||||||||||||||||
Amortization of transition obligation | 110 | 78 | 8 | — | — | — | |||||||||||||||||||||
Curtailment (gain) | (347 | ) | — | — | — | — | — | ||||||||||||||||||||
Net periodic benefit cost | $ | 18,372 | $ | 14,945 | $ | 8,808 | $ | 12,700 | $ | 10,533 | $ | 8,677 | |||||||||||||||
Special termination benefits | $ | 785 | $ | — | $ | 1,083 | $ | — | $ | — | $ | — | |||||||||||||||
Weighted average assumptions used to determine net cost: | |||||||||||||||||||||||||||
Discount rate | 5.85 | % | 6.44 | % | 6.84 | % | 6.00 | % | 6.75 | % | 7.25 | % | |||||||||||||||
Expected return on plan assets — U.S. plans | 8.50 | % | 8.50 | % | 9.50 | % | — | — | — | ||||||||||||||||||
Expected return on plan assets — non-U.S. plans | 6.52 | % | 6.33 | % | 6.42 | % | — | — | — | ||||||||||||||||||
Rate of compensation increase | 3.41 | % | 3.40 | % | 4.75 | % | 3.50 | % | 4.50 | % | 4.50 | % |
69
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Pensions and Other Postretirement Benefit Plans — (Continued)
(in thousands) | 1 percentage point increase | 1 percentage point decrease | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Effect on total of service and interest cost | $ | 1,903 | $ | (1,491 | ) |
United States Plan | Non-U.S. Plans | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Percentage of plan assets at plan measurement date | Percentage of plan assets at plan measurement date | |||||||||||||||||||||||||||
Asset category | Target Allocation 2005 | 2004 | 2003 | Target Allocation 2005 | 2004 | 2003 | ||||||||||||||||||||||
Fixed income | 10 | % | 13 | % | 21 | % | 41 | % | 41 | % | 48 | % | ||||||||||||||||
Equities | 45 | % | 52 | % | 62 | % | 55 | % | 55 | % | 48 | % | ||||||||||||||||
Real Estate | 8 | % | 5 | % | 1 | % | 1 | % | 1 | % | 2 | % | ||||||||||||||||
Cash | — | % | 2 | % | 16 | % | 3 | % | 3 | % | 2 | % | ||||||||||||||||
Other (1) | 37 | % | 28 | % | — | % | — | % | — | % | — | % | ||||||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(1) | Includes hedged equity and absolute return strategies, and private equity |
Projected benefit obligation exceeds plan assets | Accumulated benefit obligation exceeds plan assets | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2004 | 2003 | 2004 | 2003 | |||||||||||||||
Projected benefit obligation | $ | 301,706 | $ | 286,701 | $ | 301,706 | $ | 286,701 | |||||||||||
Accumulated benefit obligation | 272,178 | 259,514 | 272,178 | 259,514 | |||||||||||||||
Fair value of plan assets | 189,470 | 172,386 | 189,470 | 172,386 |
70
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Pensions and Other Postretirement Benefit Plans — (Continued)
(in thousands) | Pension plans | Other benefits | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Expected employer contributions in the next fiscal year | $ | 27,693 | $ | 7,644 | ||||||
Expected benefit payments | ||||||||||
2005 | $ | 17,088 | $ | 5,401 | ||||||
2006 | 17,387 | 5,909 | ||||||||
2007 | 18,812 | 6,432 | ||||||||
2008 | 19,043 | 6,888 | ||||||||
2009 | 18,554 | 7,338 | ||||||||
2010–2014 | 106,086 | 44,001 |
14. | Translation Adjustments |
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Change in cumulative translation adjustments | $ | 53,902 | $ | 81,787 | $ | 47,550 | ||||||||
Other noncurrent liabilities | 5,002 | 7,881 | 6,343 | |||||||||||
Deferred taxes | 101 | (382 | ) | (3,257 | ) | |||||||||
Long-term debt | 36 | 128 | 308 | |||||||||||
Accounts receivable | (11,544 | ) | (23,216 | ) | (12,226 | ) | ||||||||
Inventories | (8,644 | ) | (16,636 | ) | (7,674 | ) | ||||||||
Investments in associated companies | (672 | ) | (631 | ) | (340 | ) | ||||||||
Property, plant and equipment, net | (24,561 | ) | (39,301 | ) | (26,940 | ) | ||||||||
Goodwill and intangibles | (13,130 | ) | (23,843 | ) | (17,216 | ) | ||||||||
Other | 7,358 | (1,893 | ) | (1,185 | ) | |||||||||
Effect of exchange rate changes | $ | 7,848 | $ | (16,106 | ) | $ | (14,637 | ) |
(in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Translation of non-U.S. subsidiaries | $ | 52,436 | $ | 83,216 | $ | 54,485 | ||||||||
Gain/(loss) on long-term intercompany loans | 498 | (1,281 | ) | (5,795 | ) | |||||||||
Gain/(loss) on derivative contracts designated as hedge | 968 | (148 | ) | (1,140 | ) | |||||||||
Effect of exchange rate changes | $ | 53,902 | $ | 81,787 | $ | 47,550 |
15. | Stock Options and Incentive Plans |
71
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15. Stock Options and Incentive Plans — (Continued)
price reaches $48 per share and exercise is then limited to 10% of the total number of shares multiplied by the number of full years of employment elapsed since the grant date. During 2000, the Board of Directors approved an amendment to increase the period after retirement to exercise options from 5 years to 10 years. This amendment, however, does not change the original termination date of each option. Unexercised options generally terminate twenty years after the date of grant for all plans.
(in thousands, except per share amounts) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Pro forma stock-based employee compensation cost, net of taxes | $ | 2,402 | $ | 2,694 | $ | 2,115 | ||||||||
Net income, as reported | $ | 10,385 | $ | 54,055 | $ | 48,941 | ||||||||
Net income, pro forma | 7,983 | 51,361 | 46,826 | |||||||||||
Basic earnings per share, as reported | $ | 0.32 | $ | 1.64 | $ | 1.52 | ||||||||
Basic earnings per share, pro forma | 0.25 | 1.56 | 1.46 | |||||||||||
Diluted earnings per share, as reported | $ | 0.31 | $ | 1.61 | $ | 1.50 | ||||||||
Diluted earnings per share, pro forma | 0.24 | 1.53 | 1.43 | |||||||||||
Weighted average fair value per share of options granted: | — | — | $ | 10.64 | ||||||||||
Assumptions used in determining value of options granted: | ||||||||||||||
Cash dividend yield | — | — | 1.1 | % | ||||||||||
Expected volatility | — | — | 28.3 | % | ||||||||||
Risk free interest rates | — | — | 3.4%–5.0% |
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares under option January 1 | 2,823,630 | 3,834,225 | 4,296,695 | |||||||||||
Options granted | — | — | 413,500 | |||||||||||
Options canceled | 27,300 | 24,460 | 62,180 | |||||||||||
Options exercised | 450,830 | 986,135 | 813,790 | |||||||||||
Shares under option at December 31 | 2,345,500 | 2,823,630 | 3,834,225 | |||||||||||
Options exercisable at December 31 | 1,673,560 | 1,846,040 | 2,493,215 | |||||||||||
Shares available for future option grants | 463,165 | 436,615 | 443,655 |
72
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15. Stock Options and Incentive Plans — (Continued)
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares under option January 1 | $ | 19.01 | $ | 18.69 | $ | 18.42 | ||||||||
Options granted | — | — | 20.63 | |||||||||||
Options canceled | 18.50 | 18.15 | 16.98 | |||||||||||
Options exercised | 18.39 | 17.80 | 18.37 | |||||||||||
Shares under option December 31 | $ | 19.13 | $ | 19.01 | $ | 18.69 | ||||||||
Options exercisable December 31 | $ | 18.12 | $ | 18.28 | $ | 18.16 |
Outstanding Options | Exercisable Options | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Exercise Price Range | Number | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | ||||||||||||||||||
$10.56–11.00 | 179,350 | 15.2 | $ | 10.56 | 127,310 | $ | 10.56 | ||||||||||||||||
15.00–15.70 | 408,250 | 7.9 | 15.50 | 408,250 | 15.50 | ||||||||||||||||||
16.25–16.75 | 211,300 | 5.8 | 16.61 | 211,300 | 16.61 | ||||||||||||||||||
18.20–18.70 | 11,900 | 7.1 | 18.63 | 11,900 | 18.63 | ||||||||||||||||||
18.75–19.00 | 65,200 | 8.9 | 18.75 | 65,200 | 18.75 | ||||||||||||||||||
19.38–20.00 | 253,350 | 11.7 | 19.55 | 253,350 | 19.55 | ||||||||||||||||||
20.25–20.50 | 322,050 | 16.3 | 20.45 | 176,250 | 20.45 | ||||||||||||||||||
20.51–20.75 | 348,800 | 17.0 | 20.63 | 124,700 | 20.63 | ||||||||||||||||||
22.00–22.50 | 295,300 | 9.2 | 22.25 | 295,300 | 22.25 | ||||||||||||||||||
25.00–26.00 | 250,000 | 12.8 | 25.56 | — | — | ||||||||||||||||||
2,345,500 | 11.9 | $ | 19.13 | 1,673,560 | $ | 18.12 |
73
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15. Stock Options and Incentive Plans — (Continued)
Company matches between 50% and 100% of each dollar contributed by employees up to 10% of their wages, in the form of Class A Common Stock, which is contributed to an Employee Stock Ownership Plan. The investment of employee contributions to the plan is self-directed. The cost of the plan amounted to $4,212,000 in 2004, $4,110,000 in 2003, and $4,144,000 in 2002.
16. | Restructuring |
(in thousands) | Total restructuring costs incurred | Termination and other costs | Plant and equipment write-downs | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Engineered Fabrics | $ | 70,883 | $ | 45,362 | $ | 25,521 | ||||||||
Albany Door Systems | 3,616 | 2,632 | 984 | |||||||||||
Applied Technologies | 662 | 662 | — | |||||||||||
Other | 648 | 648 | — | |||||||||||
Total | $ | 75,809 | $ | 49,304 | $ | 26,505 |
(in thousands) | December 31, 2003 | Charged to expense | Payments | Currency translation/other | December 31, 2004 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination costs | $ | 4,374 | $ | 36,387 | $ | (34,465 | ) | $ | (26 | ) | $ | 6,270 | ||||||||||
Other restructuring costs | 837 | 2,806 | (2,127 | ) | (870 | ) | 646 | |||||||||||||||
Total | $ | 5,211 | $ | 39,193 | $ | (36,592 | ) | $ | (896 | ) | $ | 6,916 |
74
Albany International Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
16. Restructuring — (Continued)
(in thousands) | January 1, 2003 | Charged to expense | Payments | Currency translation/other | December 31, 2003 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination costs | $ | — | $ | 7,604 | $ | (3,466 | ) | $ | 236 | $ | 4,374 | |||||||||||
Other restructuring costs | — | 1,157 | (176 | ) | (144 | ) | 837 | |||||||||||||||
$ | — | $ | 8,761 | $ | (3,642 | ) | $ | 92 | $ | 5,211 |
(in thousands) | December 31, 2003 | Payments | Currency translation/other | December 31, 2004 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination costs | $ | 2,677 | $ | (993 | ) | $ | 97 | $ | 1,781 | |||||||||
Plant rationalization costs | 155 | — | (155 | ) | — | |||||||||||||
Lease obligations | 1,988 | (1,023 | ) | 686 | 1,651 | |||||||||||||
Total | $ | 4,820 | $ | (2,016 | ) | $ | 628 | $ | 3,432 |
(in thousands) | January 1, 2003 | Payments | Currency translation/other | December 31, 2003 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination costs | $ | 5,311 | $ | (3,022 | ) | $ | 388 | $ | 2,677 | |||||||||
Plant rationalization costs | 551 | (396 | ) | — | 155 | |||||||||||||
Lease obligations | 3,571 | (1,927 | ) | 344 | 1,988 | |||||||||||||
$ | 9,433 | $ | (5,345 | ) | $ | 732 | $ | 4,820 |
75
Quarterly Financial Data
(unaudited)
(in millions except per share amounts) | 1st | 2nd | 3rd | 4th | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | ||||||||||||||||||
Net sales | $ | 231.3 | $ | 227.2 | $ | 222.9 | $ | 238.4 | ||||||||||
Gross profit | 91.8 | 88.1 | 87.3 | 94.9 | ||||||||||||||
Restructuring, net | 11.6 | 31.1 | 2.6 | 8.8 | ||||||||||||||
Net income/(loss) | 3.3 | (15.4 | ) | 10.5 | 12.0 | |||||||||||||
Basic earnings/(loss) per share | 0.10 | (0.47 | ) | 0.33 | 0.38 | |||||||||||||
Diluted earnings/(loss) per share | 0.10 | (0.47 | ) | 0.32 | 0.38 | |||||||||||||
Cash dividends per share | 0.07 | 0.07 | 0.08 | 0.08 | ||||||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | 35.00 | 33.75 | 33.60 | 35.16 | ||||||||||||||
Low | 26.40 | 27.20 | 28.65 | 28.19 | ||||||||||||||
2003 | ||||||||||||||||||
Net sales (a) | $ | 214.7 | $ | 228.5 | $ | 213.4 | $ | 231.3 | ||||||||||
Gross profit | 90.3 | 93.7 | 86.3 | 90.9 | ||||||||||||||
Restructuring, net | 0.8 | 0.9 | 14.3 | 5.8 | ||||||||||||||
Net income | 21.0 | 16.0 | 6.6 | 10.5 | ||||||||||||||
Basic earnings per share | 0.65 | 0.49 | 0.20 | 0.32 | ||||||||||||||
Diluted earnings per share | 0.64 | 0.48 | 0.19 | 0.31 | ||||||||||||||
Cash dividends per share | 0.055 | 0.055 | 0.07 | 0.07 | ||||||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | 23.67 | 27.76 | 31.82 | 34.20 | ||||||||||||||
Low | 20.30 | 22.00 | 26.62 | 29.46 | ||||||||||||||
2002 | ||||||||||||||||||
Net sales (a) | $ | 195.6 | $ | 208.0 | $ | 209.1 | $ | 219.8 | ||||||||||
Gross profit | 80.5 | 86.4 | 84.7 | 88.7 | ||||||||||||||
Income before cumulative effect of a change in accounting principle | 8.9 | 13.9 | 14.2 | 17.8 | ||||||||||||||
Net income | 3.0 | 13.9 | 14.2 | 17.8 | ||||||||||||||
Earnings per share before cumulative effect of a change in accounting principle | 0.28 | 0.43 | 0.44 | 0.55 | ||||||||||||||
Basic earnings per share | 0.10 | 0.43 | 0.44 | 0.55 | ||||||||||||||
Diluted earnings per share before cumulative effect of a change in accounting principle | 0.27 | 0.43 | 0.43 | 0.55 | ||||||||||||||
Diluted earnings per share | 0.09 | 0.43 | 0.43 | 0.54 | ||||||||||||||
Cash dividends per share | 0.05 | 0.05 | 0.05 | 0.055 | ||||||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | 30.10 | 29.88 | 26.11 | 21.60 | ||||||||||||||
Low | 20.77 | 24.18 | 18.93 | 16.96 |
(a) | In 2004, the Company changed its classification of costs for shipping and handling. Prior to 2004, such amounts were recorded as a reduction to revenues. In 2004, these amounts were reclassified into Cost of goods sold. Net sales for 2003 and 2002 have been restated to conform to the current presentation. The Company’s Class A Common Stock is traded principally on the New York Stock Exchange. At December 31, 2004, there were approximately 5,500 shareholders. |
76
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Item 9A. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Management’s Report on Internal Control over Financial Reporting
/s/ Frank R. Schmeler | /s/ Michael C. Nahl | /s/ Richard A. Carlstrom | ||||||||
Frank R. Schmeler Chairman and Chief Executive Officer (Principal Executive Officer) | Michael C. Nahl Executive Vice President and Chief Financial Officer (Principal Financial Officer) | Richard A. Carlstrom Vice President and Controller (Principal Accounting Officer) |
Item 9B. | OTHER INFORMATION |
77
PART III
Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
(a) | Directors. The information set out in the section captioned “Election of Directors” in the Proxy Statement is incorporated herein by reference. |
(b) | Audit Committee Financial Expert. The information set out in the section captioned “Committees” in the Proxy Statement is incorporated herein by reference. |
(c) | Executive Officers of Registrant. Information about the officers of the Registrant is set forth in Item 1 above. |
(d) | Code of Ethics. The Company has adopted a Code of Ethics that applies to its Chief Executive Officer, Chief Financial Officer and Controller. A copy of the Code of Ethics is filed as Exhibit 10(p) and is available at the Corporate Governance section of the Company’s Web site (www.albint.com). A copy of the Code of Ethics may be obtained, without charge, by writing to: Investor Relations Department, Albany International Corp., P.O. Box 1907, Albany, New York 12201. Any amendment to the Code of Ethics will be disclosed by posting the amended Code of Ethics on the Company’s website. Any waiver of any provision of the Code of Ethics will be disclosed by the filing of a Form 8K. |
Item 11. | EXECUTIVE COMPENSATION |
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS |
Equity Compensation Plan Information
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | Weighted average exercise price of outstanding options, warrants, and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) | (b) | (c) | ||||||||||||
Equity compensation plans approved by security holders | 2,095,500 | $ | 17.23 | 436,165 | (1,2,3) | |||||||||
Equity compensation plans not approved by security holders | 250,000 | $ | 25.56 | — | ||||||||||
Total | 2,345,500 | $ | 18.12 | 463,165 | (1,2,3) |
(1) | Reflects only the number of shares for which options may be granted as of January 1, 2005 under the Registrant’s 1998 Stock Option Plan (“the 1998 Plan”). Additional shares of Class A Common Stock are available for issuance under the 1998 Plan (see note 2 below) as well as under the Registrant’s Directors Retainer Plan (see note 3 below). |
(2) | The 1998 Plan allows the Registrant’s Board of Directors to increase the amount of shares available for future option grants, from time to time, provided that it may not be increased by more than 500,000 in any calendar |
78
year and that no such increase may cause the total number of shares then available for option to exceed 1,000,000. If options granted under the 1998 Plan expire or are terminated or surrendered without having been exercised, the shares of Class A Common Stock subject thereto may again be optioned. Assuming full exercise by the Board of its power to increase annually the number of shares available for options, the maximum number of additional shares that could yet be issued upon exercise of future option grants pursuant to the 1998 Plan (including those set forth in column (c) above) would be 2,436,615. |
(3) | The Directors Retainer Plan provides that the aggregate dollar amount of the annual retainer payable for service as a member of the Board is $60,000. Of this total, $20,000 is paid in shares of Class A Common Stock of the Registrant, the exact number of shares to be paid for any year being determined on the basis of the per share closing price of such stock on the day of the Annual Meeting at which the election of directors for such year occurs, as shown in the composite index published for such day in the Wall Street Journal, rounded down to the nearest whole share. |
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
79
PART IV
Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a)(1) | Financial Statements. The consolidated financial statements included in the Annual Report are incorporated in Item 8. |
(a)(2) | Schedule. The following financial statement schedule for each of the three years in the period ended December 31, 2004: Schedule II — Valuation and Qualifying Accounts |
(a)(3) | Exhibits |
3(a) | Certificate of Incorporation of Registrant. (3) |
3(b) | Bylaws of Registrant. (9) |
4(a) | Article IV of Certificate of Incorporation of Registrant (included in Exhibit 3(a)). |
4(b) | Specimen Stock Certificate for Class A Common Stock. (1) |
Credit Agreement
10(i)(i) | Credit Agreement, dated as of August 11, 1999 (the “Credit Agreement”), among the Registrant, certain banks listed therein, the Chase Manhattan Bank as Administrative Agent, Chase Manhattan International Limited as London Agent, Citibank N.A. as Syndication Agent, and Banc One Capital Markets, Inc. as Documentation Agent. (8) |
10(i)(ii) | Amendment No. 1, dated as of December 22, 1999, to the Credit Agreement. (10) |
10(i)(iii) | Amendment No. 2, dated as of October 1, 2002, to the Credit Agreement. (11) |
10(j)(i) | Receivables Sale Agreement, dated as of September 28, 2001, among the Registrant as the Collection Agent, Albany International Receivables Corporation as the Seller, ABN AMRO Bank N.V., as the Agent the Committed Purchasers party thereto, and Amsterdam Funding Corporation. (10) |
10(j)(i)(a) | Amendment No. 1, dated as of September 27, 2002, to the Receivables Sale Agreement. (11) |
10(j)(i)(b) | Amendment No. 2, dated as of October 25, 2002, to the Receivables Sale Agreement. (11) |
10(j)(i)(c) | Amendment No. 3, dated as of September 26, 2003, to the Receivables Sale Agreement. (12) |
10(j)(i)(d) | Amendment No. 4, dated as of December 31, 2003, to the Receivables Sale Agreement. (15) |
10(j)(i)(e) | Amendment No. 5, dated as of September 24, 2004, to the Receivables Sale Agreement. (16) |
10(j)(i)(f) | Amendment No. 6, dated as of November 23, 2004 to the Receivables Sale Agreement. (17) |
10(j)(ii) | Purchase and Sale Agreement, dated as of September 28, 2001, among the Registrant, Geschmay Corp., Albany International Research Co., Albany International Techniweave, Inc., Albany International Canada Inc., M&I Door Systems Ltd., as Originators, and Albany International Receivables Corporation as Buyer. (11) |
10(j)(ii)(a) | Amendment No. 1, dated as of March 1, 2002, to Exhibit A of the Purchase and Sale Agreement. (11) |
10(j)(ii)(b) | Amendment No. 2, dated as of July 1, 2003, to Exhibit A of the Purchase and Sale Agreement. (12) |
10(k)(I) | Five-Year Revolving Credit Agreement, dated as of January 8, 2004, among the Registrant, certain banks listed therein, JP Morgan Chase Bank as the Administrative Agent, J.P. Morgan Europe Limited as the London Agent, J.P. Morgan Securities Inc. as Lead Arranger and Sole Bookrunner, Fleet National Bank and ABN AMRO Bank N.V. as Co-Syndication Agents, and Sumitomo Mitsui Banking Corp., New York, and Wachovia Bank, N.A., as Co-Documentation Agents. (13) |
80
Restricted Stock Units
10(l)(i) | 2003 Restricted Stock Unit Plan, as adopted November 13, 2003. (15) |
10(l)(ii) | 2003 Form of Restricted Stock Unit Award, as adopted November 13, 2003. (14) |
Stock Options
10(m)(i) | Form of Stock Option Agreement, dated as of August 1, 1983, between the Registrant and each of five employees, together with schedule showing the names of such employees and the material differences among the Stock Option Agreements with such employees. (1) |
10(m)(ii) | Form of Amendment of Stock Option Agreement, dated as of July 1, 1987, between the Registrant and each of the five employees identified in the schedule referred to as Exhibit 10(m)(i). (1) |
10(m)(iii) | 1988 Stock Option Plan. (2) |
10(m)(iv) | 1992 Stock Option Plan. (4) |
10(m)(v) | 1997 Executive Stock Option Agreement. (6) |
10(m)(vi) | 1998 Stock Option Plan. (7) |
10(m)(vii) | 1998 Stock Option Plan, as amended and restated as of August 7, 2003. (12) |
Executive Compensation
10(n) | Pension Equalization Plan adopted April 16, 1986, naming two current executive officers and one former executive officer of Registrant as “Participants” thereunder. (1) |
10(n)(i) | Supplemental Executive Retirement Plan, adopted as of January 1, 1994, as amended and restated as of June 30, 2002. (15) |
10(n)(ii) | Annual Bonus Program. (1) |
10(o)(I) | Form of Executive Deferred Compensation Plan adopted September 1, 1985, as amended and restated as of August 8, 2001. (10) |
10(o)(ii) | Form of Directors’ Deferred Compensation Plan adopted September 1, 1985, as amended and restated as of August 8, 2001. (10) |
10(o)(iii) | Deferred Compensation Plan of Albany International Corp., as amended and restated as of August 8, 2001. (11) |
10(o)(iv) | Centennial Deferred Compensation Plan, as amended and restated as of August 8, 2001. (10) |
10(o)(v) | Directors Annual Retainer Plan, as amended and restated as of May 10, 2001. |
10(o)(v) | Directors Annual Retainer Plan, as amended and restated as of August 7, 2003. |
10(o)(v) | Directors Annual Retainer Plan, as amended and restated as of May 6, 2004. (12) |
Other Exhibits
10(p) | Code of Ethics. (15) |
13 | Annual Report to Security Holders for the year ended December 31, 2004. Filed herewith. |
21 | Subsidiaries of Registrant. Filed herewith. |
23 | Consent of PricewaterhouseCoopers LLP. Filed herewith. |
24 | Powers of Attorney. Filed herewith. |
81
31(a) | Certification of Frank R. Schmeler required pursuant to Rule 13a-14(a) or Rule 15d-14(a). Filed herewith. |
31(b) | Certification of Michael C. Nahl required pursuant to Rule 13a-14(a) or Rule 15d-14(a). Filed herewith. |
32(a) | Certification of Frank R. Schmeler and Michael C. Nahl required pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. Furnished herewith. |
All other schedules and exhibits are not required or are inapplicable and, therefore, have been omitted.
(1) | Previously filed as an Exhibit to the Registrant’s Registration Statement on Form S-1, No. 33-16254, as amended, declared effective by the Securities and Exchange Commission on September 30, 1987, which previously filed Exhibit is incorporated by reference herein. |
(2) | Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K dated August 8, 1988, which previously filed Exhibit is incorporated by reference herein. |
(3) | Previously filed as an Exhibit to the Registrant’s Registration Statement on Form 8-A, File No. 1-10026, declared effective by the Securities and Exchange Commission on August 26, 1988 (as to The Pacific Stock Exchange, Inc.), and on September 7, 1988 (as to The New York Stock Exchange, Inc.), which previously filed Exhibit is incorporated by reference herein. |
(4) | Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K dated January 18, 1993, which previously filed Exhibit is incorporated by reference herein. |
(5) | Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K dated March 15, 1996, which previously filed Exhibit is incorporated by reference herein. |
(6) | Previously filed as an Exhibit to the Registrant’s Annual Report on Form 10-K dated March 16, 1998, which previously filed Exhibit is incorporated by reference herein. |
(7) | Previously filed as an Exhibit to the Registrant’s Quarterly Report on Form 10-Q dated August 10, 1998, which previously filed Exhibit is incorporated by reference herein. |
(8) | Previously filed as an Exhibit to the Registrant’s Current Report on form 8-K dated September 21, 1999, which previously filed Exhibit is incorporated by reference herein. |
(9) | Previously filed as an Exhibit to the Registrant’s Quarterly Report on Form 10-Q dated November 10, 1999, which previously filed Exhibit is incorporated by reference herein. |
(10) | Previously filed as an Exhibit to the Registrant’s Quarterly Report on Form 10-Q dated November 12, 2001, which previously filed Exhibit is incorporated by reference herein. |
(11) | Previously filed as an Exhibit to the Registrant’s Annual Report on Form 10-K dated March 21, 2003, which previously filed Exhibit is incorporated by reference herein. |
(12) | Previously filed as an Exhibit to the Registrant’s Quarterly Report on Form 10-Q dated August 4, 2004, which previously filed Exhibit is incorporated by reference herein. |
(13) | Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed January 22, 2004, which previously filed Exhibit is incorporated by reference herein. |
(14) | Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed November 5, 2004, which previously filed Exhibit is incorporated by reference herein. |
(15) | Previously filed as an Exhibit to the Registrant’s Annual Report on Form 10-K dated March 11, 2004, which previously filed Exhibit is incorporated by reference herein. |
(16) | Previously filed as an Exhibit the Registrant’s Current Report on Form 8-K filed September 27, 2004, which previously filed Exhibit is incorporated by reference herein. |
(17) | Previously filed as an Exhibit the Registrant’s Current Report on Form 8-K filed November 23, 2004, which previously filed Exhibit is incorporated by reference herein. |
82
SIGNATURES
by | /s/ Michael C. Nahl Michael C. Nahl Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
83
Signature | Title | Date | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
* Frank R. Schmeler | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | March 9, 2005 | ||||||||
/s/ Michael C. Nahl Michael C. Nahl | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | March 9, 2005 | ||||||||
* Richard A. Carlstrom | Vice President — Controller (Principal Accounting Officer) | March 9, 2005 | ||||||||
* Thomas R. Beecher Jr. | Director | March 9, 2005 | ||||||||
* Paula H. J. Cholmondeley | Director | March 9, 2005 | ||||||||
* Erland E. Kailbourne | Director | March 9, 2005 | ||||||||
* Francis L. McKone | Director | March 9, 2005 | ||||||||
* Joseph G. Morone, Ph.D. | Director | March 9, 2005 | ||||||||
* Hugh J. Murphy | Director | March 9, 2005 | ||||||||
* Juhani Pakkala | Director | March 9, 2005 | ||||||||
* Christine L. Standish | Director | March 9, 2005 | ||||||||
* John C. Standish | Director | March 9, 2005 | ||||||||
* Barbara P. Wright | Director | March 9, 2005 | ||||||||
*By /s/ Michael C. Nahl Michael C. Nahl |
84
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Description | Balance at Beginning of Period | Charged to Expense | Other (A) | Balance at End of Period | ||||||||||||||||||
Allowance for doubtful accounts | ||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2004 | $ | 8,673 | $ | 2,130 | $ | (872 | ) | $ | 9,931 | |||||||||||||
2003 | 11,790 | 2,841 | (5,958 | ) (B) | 8,673 | |||||||||||||||||
2002 | 10,488 | 2,651 | (1,349 | ) | 11,790 | |||||||||||||||||
Allowance for inventory obsolescence | ||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2004 | $ | 8,626 | $ | 2,111 | $ | (3,501 | ) | $ | 7,236 | |||||||||||||
2003 | 7,105 | 3,872 | (2,351 | ) | 8,626 | |||||||||||||||||
2002 | 7,707 | 2,584 | (3,186 | ) | 7,105 | |||||||||||||||||
Allowance for sales returns | ||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2004 | $ | 6,928 | $ | 10,204 | $ | (9,060 | ) | $ | 8,072 | |||||||||||||
2003 | 7,635 | 7,749 | (8,456 | ) | 6,928 | |||||||||||||||||
2002 | 6,380 | 8,438 | (7,183 | ) | 7,635 | |||||||||||||||||
Valuation allowance for deferred tax assets | ||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2004 | $ | 6,793 | $ | 7,100 | $ | (1,438 | ) | $ | 12,455 | |||||||||||||
2003 | 1,690 | 4,500 | 603 | 6,793 | ||||||||||||||||||
2002 | 2,139 | — | (449 | ) | 1,690 |
(A) | Amounts sold, written off or recovered, and the effect of changes in currency translation rates, are included in Column D. |
(B) | The decrease in allowance for doubtful accounts in 2003 includes the reduction of the allowance in North America that is no longer required because the accounts receivable in that region are sold, without recourse. See Note 6 of Notes to Consolidated Financial Statements. |
85
CORPORATE INFORMATION
Transfer Agent, Dividend Distribution Agent, and Registrar
For assistance with shareholder account questions such as change of address, lost certificates, change of ownership, dividend reinvestment plan, and other similar matters, contact:
For Mail/Deliveries
Shareholder Communications Team
Computershare Investor Services LLC
Two North LaSalle St., Mezzanine Level
Chicago, Illinois 60602-3702
Telephone: (312) 360-5395
Fax: (312) 601-4332
Email: web.queries@computershare.com
On the Web
Shareholders can access account information and shareholder services online at
www.computershare.com/contact_us.
Notice of Annual Meeting
The Annual Meeting of the Company’s shareholders will be held on Thursday, May 12, 2005, at 10:00 a.m. at Albany International Corp., 1373 Broadway, Albany, New York.
Stock Listing
Albany International is listed on the New York Stock Exchange, Pacific Stock Exchange, and Frankfurt Stock Exchange (Symbol AIN). Stock tables in newspapers and financial publications list Albany International as “AlbanyInt.”
Equal Employment Opportunity
Albany International, as a matter of policy, does not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, age, physical or mental disability, or status as a disabled or Vietnam-era veteran. This policy of nondiscrimination is applicable to matters of hiring, upgrading, promotions, transfers, layoffs, terminations, rates of pay, selection for training, recruitment, and recruitment advertising. The Company maintains affirmative action programs to implement its EEO policy.
93
This page is intentionally left blank.
94