-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nyn6Np9hlOlnCuGw43W1XABGo2j1Sz+Bu/dJnUW26FoUHo0gKgtGGM+W6A4BWzUR MniQ9vajBOwgkPpETC2W+A== 0000891092-03-002967.txt : 20031027 0000891092-03-002967.hdr.sgml : 20031027 20031027080224 ACCESSION NUMBER: 0000891092-03-002967 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031027 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20031027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALBANY INTERNATIONAL CORP /DE/ CENTRAL INDEX KEY: 0000819793 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILS, MAN MADE FIBER & SILK [2221] IRS NUMBER: 140462060 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10026 FILM NUMBER: 03957470 BUSINESS ADDRESS: STREET 1: 1373 BROADWAY CITY: ALBANY STATE: NY ZIP: 12204 BUSINESS PHONE: 5184452200 MAIL ADDRESS: STREET 1: 1373 BROADWAY CITY: ALBANY STATE: NY ZIP: 12204 FORMER COMPANY: FORMER CONFORMED NAME: ALBINT INC DATE OF NAME CHANGE: 19870924 8-K 1 e15997_8k.txt FORM 8-K U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: October 27, 2003 (Date of earliest event reported) ALBANY INTERNATIONAL CORP. (Exact name of registrant as specified in its charter) Delaware 0-16214 14-0462060 (State or other jurisdiction (Commission (IRS employer of incorporation) file number) identification no.) 1373 Broadway, Albany, New York 12204 (518) 445-2200 (Address and telephone number of the registrant's principal executive offices) Item 9. Information Provided Under Item 12 (Results of Operations and Financial Condition) The following information is furnished pursuant to Item 12, "Disclosure of Results of Operations and Financial Condition." On October 27, 2003, Albany International issued a news release announcing its financial results for the fiscal quarter ended September 30, 2003. A copy of the news release is furnished as Exhibit 99.1 to this report. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ALBANY INTERNATIONAL CORP. By: /s/ Michael C. Nahl ------------------------------------- Name: Michael C. Nahl Title: Senior Vice President and Chief Financial Officer Date: October 27, 2003 Index to Exhibits Exhibit Number Description of Document - -------------- ----------------------- 99.1 News release, dated October 27, 2003 issued by Albany International Corp. EX-99.1 3 e15997ex99_1.txt PRESS RELEASE Exhibit 99.1 TO BUSINESS EDITOR: Albany International Reports Third-Quarter 2003 Earnings of 20 Cents Per Share After Restructuring Charges of 30 Cents Per Share Third-Quarter Highlights -- Net income was $0.20 per share, after restructuring charges of $0.30 per share, compared to $0.44 per share, for the same period last year. -- Net sales were $208.7 million, an increase of 1.7 percent compared to the same period last year. -- Operating income, after restructuring charges of $14.3 million, was $11.3 million, compared to $26.9 million in the third quarter of 2002. -- Net cash provided by operations was $27.8 million during the quarter and was $92.1 million through nine months. ALBANY, N.Y., Oct. 27 /PRNewswire-FirstCall/ -- Albany International Corp. (NYSE/PCX/FWB: AIN) reported third-quarter net income per share of $0.20, compared to $0.44 for the same period last year. Net income for the third quarter of 2003 was reduced by restructuring charges of $0.30 per share and reflects the first major steps of the $30 million cost reduction initiative announced in January of 2003. Net sales increased $3.6 million, or 1.7 percent compared to the same period last year. Excluding the effect of changes in currency translation rates, net sales were down 5.2 percent. Following is a table of third-quarter net sales by segment and the effect of changes in currency translation rates. (in thousands) Net sales as reported Increase in third quarter three months ended 2003 net sales due to September 30, changes in currency 2003 2002 translation rates Engineered Fabrics $172,925 $172,218 $10,924 Albany Door Systems 23,109 22,360 2,372 Applied Technologies 12,709 10,575 879 Total $208,743 $205,153 $14,175 Gross profit was 41.3 percent of net sales in the third quarter of both 2003 and 2002. Selling, technical, general, and research expenses increased 5.1 percent compared to the same period last year, but decreased 1.0 percent excluding the effect of changes in currency translation rates. Operating income was $11.3 million, compared to $26.9 million in the third quarter of 2002. Operating income for the third quarter of 2003 was reduced by restructuring charges of $14.3 million, which include a $12.1 million non-cash charge for plant and equipment write-downs and $2.2 million for severance and other restructuring costs. Changes in currency translation rates had the effect of increasing third-quarter operating income by $2.2 million. Other income/expense, net, was $2.1 million of income for the quarter, compared to $0.8 million of expense in the third quarter of 2002. The difference in 2003 is due principally to currency hedging activities. Third-quarter income tax expense decreased due to lower income before income taxes and a reduction of the estimated effective income tax rate from 35 percent in the third quarter of last year to 30 percent this year. The Company expects the effective income tax rate to remain at 30 percent for the balance of 2003. For the first nine months of 2003, net sales were 7.0 percent higher than the same period last year. Excluding the effect of changes in currency translation rates, 2003 net sales decreased 0.9 percent. Net income per share for the first nine months of 2003 was $1.33, compared to $0.97 for the same period of 2002. Net income for the nine-month period was affected by a favorable income tax adjustment in the first quarter that increased net income by $0.16 per share and by restructuring charges in each of the first three quarters that decreased net income by $0.34 per share. Net income per share for the first quarter of 2002 included a charge of $0.18 related to the adoption of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets." During the third quarter, the Company reduced total debt by $12.0 million. In addition, the $200 million currently outstanding under the Company's existing $500 million credit facility was reclassified on the Company's balance sheet during the third quarter from "long-term debt" to "current maturities of long-term debt," reflecting the fact that this facility is scheduled to expire in August 2004. The Company has initiated steps to replace this facility with a slightly smaller facility sometime in early 2004. During the third quarter of 2003, the Company decided it would record compensation expense for the fair value of any stock options granted after December 31, 2002. No options were granted during the nine-month period ended September 30, 2003. The expense for any new stock options will be recorded over the vesting period of the options, normally five years. The impact of expensing options cannot currently be determined, since stock options are granted at the discretion of the Board of Directors. Comments on Operations Chairman and Chief Executive Officer Frank Schmeler commented, "Weakness in global paper and paperboard markets and other industrial markets continued to have a negative impact on demand for our products as our customers reduced capacity and limited production and capital spending. Sales were also adversely affected by our previously disclosed decision to decline certain sales opportunities that do not meet minimum profit objectives. The Company continues to focus on the development of new and improved products that meet our customers' needs and support improved earnings for the Company. "Restructuring charges of $0.30 per share in the third quarter were principally due to our announced plans to close a press fabrics plant and a high-performance door plant in North America and the partial closure of an engineered products operation in Europe. These actions are part of our $30 million cost reduction initiative. "Net cash provided by operating activities was $27.8 million during the third quarter of 2003, compared to $37.2 million for the same period of 2002. Excluding the effects of changes in currency translation rates, inventories decreased $1.3 million and accounts receivable increased $1.3 million during the third quarter of 2003. For the first nine months of each year, net cash provided by operating activities was $92.1 million in 2003 compared to $69.7 million in 2002. Engineered Fabrics "Third-quarter 2003 net sales for the Engineered Fabrics segment increased 0.4 percent compared to the same period last year. Excluding the effect of changes in currency translation rates, net sales decreased 5.9 percent compared to the third quarter of 2002. "Global paper operating rates remained weak. Although paperboard operating rates improved in the United States and parts of Europe, the improvement resulted from a reduction of capacity that, in turn, slightly reduced the consumption of paper machine clothing and negatively affected our sales. Overall, the paper and paperboard market outlook in response to economic trends is reported unchanged. Albany Door Systems "Economic conditions continued to adversely affect sales of our high-performance doors. Compared to the third quarter of 2002, net sales increased 3.3 percent, but decreased 7.3 percent excluding the effect of changes in currency translation rates. "In the United States and Europe, weak economic conditions continued to affect capital spending for high-performance doors by our customers. However, our after-market and service businesses continued to grow. "The consolidations of our door manufacturing operation in North America and our sectional door businesses in Germany were completed during the quarter. These and other efficiency improvements and cost reductions, combined with the introduction of new products, should provide improved results in future quarters. Applied Technologies "Net sales in the Applied Technologies segment increased 20.2 percent compared to the third quarter of last year and increased 11.9 percent excluding the effect of changes in currency translation rates. Sales of tannery, textile, and filtration products for power generation applications, increased during the quarter as compared to the same period last year. In addition, the expansion of PrimaLoft(R) premium synthetic insulation into the European market should provide continued growth for this product. "With stronger sales and the benefit of cost reductions already in place, this segment has shown steady improvement." Looking Ahead Mr. Schmeler continued, "There is some reported industry optimism for improvement in the paper and paperboard markets in 2004. However, we have not seen any sustained improvement to date, and we are continuing with our plans to balance productive capacity with customer demand, improve efficiency, and reduce costs. "The restructuring efforts announced by the Company during the quarter will focus our North American and European manufacturing in fewer plants with modern equipment, which should result in improved efficiency, output, and product quality. As previously reported, we expect additional significant charges associated with the $30 million cost reduction initiative in the first half of 2004. "Customer demand for technologies that will positively impact their operations is driving our product development and application efforts. Product innovation efforts underway in several areas are expected to produce growth opportunities for our major markets. These activities will continue in each of our business segments. "The Asia/Pacific region remains the world's fastest growing market for paper and paperboard. We continue our focus on this market and recently reorganized our management structure to support our expanding operations in the region. This should position the Company to take advantage of the opportunities presented by the region's rapid growth. "The Company anticipates 2003 capital expenditures to total approximately $55 million for the full year, and currently expects a comparable level of capital expenditures during 2004. As we remove capacity and relocate production to centralized operations, short-term inventory increases are expected to ensure continuity of product supply to our customers. "Prospects for continued strong cash flows in 2004 remain good, particularly in the second half as we complete the $30 million cost reduction program. We are continuing to evaluate which alternative uses for cash would be most beneficial to our shareholders. "Delivering value remains the Company's highest priority and drives all our activities. We believe focusing on product and process innovation, coupled with the efforts of the entire Albany team to improve all our internal operations, will provide value to our customers and improve returns to our shareholders." The Company plans a live webcast to discuss third-quarter 2003 earnings today at 9:00 a.m. Eastern Time. For access, go to www.albint.com. Albany International is the world's largest producer of paper machine clothing and high performance doors, with manufacturing plants in 15 countries and sales worldwide. Additional information about the Company's businesses and products is available at www.albint.com. This release contains certain items that may be considered to be non-GAAP financial measures. Such items are provided because management believes that, when presented together with the GAAP items to which they relate, they can provide additional useful information to investors regarding the registrant's financial condition, results of operations, and cash flows. The effect of changes in currency translation rates is calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. That amount is then compared to the U.S. dollar amount reported in the current period. Forward-looking statements in this release or in the webcast, including statements about future sales, earnings, cash flows, possible uses for cash, pricing, markets, cost reductions, new products and process improvements, paper industry consolidation and outlook, inventory and accounts receivable reduction, capital expenditures, refinancing, tax rates, and depreciation and amortization are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations and are subject to various risks and uncertainties, including, but not limited to, economic conditions affecting the paper industry and other risks and uncertainties set forth in the Company's 2002 Annual Report to Shareholders and subsequent filings with the Securities and Exchange Commission. ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 $208,743 $205,153 Net sales $642,714 $600,876 122,460 120,460 Cost of goods sold 372,440 349,292 86,283 84,693 Gross profit 270,274 251,584 Selling, technical, general 60,716 57,792 and research expenses 186,774 177,287 Restructuring and other 14,317 - charges, net 15,999 - 11,250 26,901 Operating income 67,501 74,297 3,910 4,537 Interest expense, net 11,316 13,173 (2,115) 776 Other (income)/expense, net 1,232 4,507 9,455 21,588 Income before income taxes 54,953 56,617 2,809 7,556 Income taxes 11,243 19,816 Income before associated 6,646 14,032 companies 43,710 36,801 Equity in earnings of (96) 145 associated companies (191) 208 Income before cumulative effect of change in accounting 6,550 14,177 principle 43,519 37,009 Cumulative effect of change in accounting principle, - - net of taxes - (5,837) 6,550 14,177 Net income 43,519 31,172 Retained earnings, beginning 420,995 359,060 of period 387,609 345,273 (2,328) (1,616) Dividends declared (5,911) (4,824) Retained earnings, end of $425,217 $371,621 period $425,217 $371,621 Earnings per share - basic: Income before cumulative effect of change in $0.20 $0.44 accounting principle $1.33 $1.15 Cumulative effect of change 0.00 0.00 in accounting principle 0.00 (0.18) $0.20 $0.44 Net income $1.33 $0.97 Earnings per share - diluted: Income before cumulative effect of change in $0.19 $0.43 accounting principle $1.31 $1.14 Cumulative effect of change 0.00 0.00 in accounting principle 0.00 (0.18) $0.19 $0.43 Net income $1.31 $0.96 Average number of shares used in basic earnings per share 33,064 32,306 computations 32,705 32,045 Average number of shares used in diluted earnings per share 33,766 32,707 computations 33,273 32,615 $0.07 $0.05 Dividend per share $0.18 $0.15 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) September 30, December 31, 2003 2002 ASSETS Cash and cash equivalents $63,505 $18,799 Accounts receivable, net 148,560 135,339 Note receivable 21,204 20,075 Inventories: Finished goods 90,860 90,766 Work in process 52,680 44,763 Raw material and supplies 32,937 28,534 176,477 164,063 Deferred taxes 34,477 43,439 Prepaid expenses 9,890 7,173 Total current assets 454,113 388,888 Property, plant and equipment, net 345,631 346,073 Investments in associated companies 5,046 4,849 Intangibles 16,353 16,274 Goodwill 149,589 137,146 Deferred taxes 66,520 65,574 Other assets 54,309 52,717 Total assets $1,091,561 $1,011,521 LIABILITIES AND SHAREHOLDERS' EQUITY Notes and loans payable $6,051 $12,224 Accounts payable 33,793 39,624 Accrued liabilities 121,913 101,510 Current maturities of long-term debt 201,042 1,914 Income taxes payable and deferred 26,471 31,222 Total current liabilities 389,270 186,494 Long-term debt 15,723 221,703 Other noncurrent liabilities 145,035 168,765 Deferred taxes and other credits 34,235 33,961 Total liabilities 584,263 610,923 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 32,253,837 in 2003 and 28,983,057 in 2002 32 29 Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 3,236,476 in 2003 and 5,607,576 in 2002 3 6 Additional paid in capital 273,914 255,484 Retained earnings 425,217 387,609 Accumulated items of other comprehensive income: Translation adjustments (99,874) (147,400) Derivative valuation adjustment (10,540) (13,592) Pension liability adjustment (35,962) (35,962) 552,790 446,174 Less treasury stock (Class A), at cost (2,190,139 shares in 2003 and 2,193,793 shares in 2002) 45,492 45,576 Total shareholders' equity 507,298 400,598 Total liabilities and shareholders' equity $1,091,561 $1,011,521 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Nine Months Ended September 30, 2003 2002 OPERATING ACTIVITIES Net income $43,519 $31,172 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings of associated companies 191 (208) Depreciation 38,742 35,172 Amortization 3,687 3,544 Provision for deferred income taxes, other credits and long-term liabilities (6,731) (8,302) Provision for impairment of plants and equipment 12,143 - Provision for impairment of goodwill - 5,837 Increase in cash surrender value of life insurance (1,082) (821) Unrealized currency transaction gains (4,255) (866) Gain on disposition of assets (486) (2,920) Shares contributed to ESOP 4,451 3,680 Tax benefit of options exercised 1,291 1,672 Changes in operating assets and liabilities: Accounts receivable 8,484 3,833 Sale of accounts receivable (2,476) 7,770 Note receivable (1,130) (4,464) Inventories (1,444) 5,832 Prepaid expenses (2,717) (4,348) Accounts payable (5,831) (9,846) Accrued liabilities 11,859 (3,135) Income taxes payable (4,751) 2,135 Other, net (1,392) 3,993 Net cash provided by operating activities 92,072 69,730 INVESTING ACTIVITIES Purchases of property, plant and equipment (29,951) (18,834) Purchased software (613) (404) Proceeds from sale of assets 4,336 4,645 Premiums paid for life insurance policies (1,118) (1,159) Net cash used in investing activities (27,346) (15,752) FINANCING ACTIVITIES Proceeds from borrowings 40,582 47,984 Principal payments on debt (54,304) (68,691) Dividends paid (5,367) (4,776) Proceeds from options exercised 12,683 14,931 Net cash used in financing activities (6,406) (10,552) Effect of exchange rate changes on cash flows (13,614) 7,864 Increase in cash and cash equivalents 44,706 51,290 Cash and cash equivalents at beginning of year 18,799 6,153 Cash and cash equivalents at end of period $63,505 $57,443 SOURCE Albany International Corp. -0- 10/27/2003 /CONTACT: Kenneth C. Pulver, Vice President-Corporate Communications, Albany International Corp., +1-518-445-2214/ /First Call Analyst: / /FCMN Contact: / /Web site: http://www.albint.com/ (AIN) -----END PRIVACY-ENHANCED MESSAGE-----