-----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, PP+iulrFFMEpnyo8bELnaIxITCm3Cc9tGUbnq7zeaczm6IKSM8ms6tvfdOzXHLH2 IbVOsmb0TlIhXRpmBSTZMQ== 0000891092-04-000285.txt : 20040126 0000891092-04-000285.hdr.sgml : 20040126 20040126165646 ACCESSION NUMBER: 0000891092-04-000285 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040126 ITEM INFORMATION: FILED AS OF DATE: 20040126 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: 04543857 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 e16686_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: January 26, 2004 (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 12. Results of Operations and Financial Condition On January 26, 2004, Albany International issued a news release announcing its financial results for the fiscal quarter ended December 31, 2003. A copy of the news release is furnished as Exhibit 99.1 to this report. The information in this report shall not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 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: January 26, 2004 Index to Exhibits Exhibit Number Description of Document - -------------- ----------------------- 99.1 News release, dated January 26, 2004 issued by Albany International Corp. EX-99.1 3 e16686ex99_1.txt PRESS RELEASE Exhibit 99.1 Albany International Reports 2003 Earnings Per Share of $1.64 After Restructuring Charges of $0.46 Financial Highlights * For the full-year 2003, net income was $1.64 per share after restructuring charges of $0.46 per share, compared to $1.52 per share for 2002. * Fourth-quarter 2003 net income was $0.32 per share after restructuring charges of $0.12 per share, compared to $0.55 per share for the same period last year. * Net cash provided by operating activities was $36.0 million for the fourth quarter of 2003 and $128.1 million for the full year. ALBANY, N.Y., Jan. 26 /PRNewswire-FirstCall/ -- Albany International Corp. (NYSE/PCX/FWB: AIN) reported 2003 net income per share of $1.64, compared to $1.52 for 2002. Net income for 2003 included restructuring charges of $0.46 per share, reflecting the ongoing impact of the $30 million cost reduction initiative announced in January of 2003. Fourth-quarter 2003 net income was $0.32 per share after restructuring charges of $0.12 per share, compared to $0.55 per share for the same period last year. The following table provides key components of earnings per share: Fourth Quarter Full Year (Per share amounts) 2003 2002 2003 2002 Earnings before restructuring charges and the cumulative effect of accounting change $0.44 $0.55 $2.10 $1.70 Restructuring charges -0.12 -- -0.46 -- Cumulative effect of accounting change -- -- -- -0.18 Net income $0.32 $0.55 $1.64 $1.52 Net sales for the fourth quarter of 2003 increased $11.1 million, or 5.2 percent, compared to the same period last year. Excluding the effect of changes in currency translation rates, net sales were down 5.7 percent. Following is a table of fourth-quarter net sales by segment and the effect of changes in currency translation rates: Increase in fourth-quarter 2003 Net sales as reported net sales due to (In thousands) three months ended December 31 changes in currency translation rates 2003 2002 Engineered Fabrics $181,297 $178,068 $18,002 Albany Door Systems 30,155 26,937 3,967 Applied Technologies 14,806 10,166 1,350 Total $226,258 $215,171 $23,319 Gross profit was 40.2 percent of net sales in the fourth quarter of 2003, compared to 41.2 percent in the same quarter of 2002. Gross profit in the fourth quarter was negatively affected by sales mix and the increasing strength of the euro relative to the U.S. dollar, which reduced the gross profit on products exported from Europe and sold in U.S. dollars. Excluding those effects, gross profit as a percentage of net sales was 41.2 percent in the fourth quarter of 2003. For the full year, gross profit as a percentage of net sales was 41.6 percent in 2003 and 41.7 percent in 2002. As a result of a number of initiatives including efficiency improvements, the Company expects gross profit as a percentage of net sales to improve during 2004 as compared to the full-year 2003. Fourth-quarter 2003 selling, technical, general, and research expenses increased 10.1 percent compared to the same period last year, but increased only 0.3 percent excluding the effect of changes in currency translation rates. Operating income was $18.1 million, compared to $27.8 million in the fourth quarter of 2002. The following table highlights key components of operating income: Fourth Quarter Full Year (In millions) 2003 2002 2003 2002 Operating income before reconciling items $21.6 $27.8 $108.0 $102.1 Reconciling items: Restructuring charges -5.8 -- -21.8 -- Currency effect on European exports -1.7 -- -9.4 -- Effect of changes in currency translation rates 4.0 -- 8.8 -- Operating income as reported $18.1 $27.8 $85.6 $102.1 The decrease in fourth-quarter operating income before reconciling items is primarily attributable to lower net sales, excluding the effects of changes in currency translation rates. The decrease in net sales had the effect of reducing earnings per share by $0.11 per share. Other income/expense, net, was $0.6 million of income for the quarter, compared to $0.5 million of expense in the fourth quarter of 2002. The difference in 2003 is due principally to currency hedging activities. The Company's currency hedging program is intended to protect the U.S. dollar equivalent value of certain projected future cash flows and to partially offset the effects of volatility on its financial statements. Fourth-quarter income tax expense was $4.5 million in 2003, compared to $5.2 million in 2002. In the fourth quarter of 2002, income tax expense was reduced by $2.8 million related to the favorable resolution of certain income tax contingencies, causing the income tax rate in that quarter to be 23 percent of pre-tax income. The effective income tax rate in the fourth quarter of 2003 was 30 percent, and the Company expects the 2004 effective income tax rate not to exceed 30 percent. For the full-year 2003, net sales were 6.5 percent higher than 2002 net sales. Excluding the effect of changes in currency translation rates, net sales were down 2.2 percent. Following is a table of net sales by segment and the effect of changes in currency translation rates: Net sales as reported Increase in 2003 net sales year ended December 31, due to changes in (In thousands) 2003 2002 currency translation rates Engineered Fabrics $717,104 $682,991 $54,451 Albany Door Systems 99,655 91,185 13,019 Applied Technologies 52,213 41,871 3,159 Total $868,972 $816,047 $70,629 On January 8, 2004, the Company entered into a new, five-year $460 million revolving credit facility with a group of banks. The new facility, which is unsecured, replaced a $500 million facility that had been secured by a pledge of shares of certain subsidiaries. At the closing, the Company borrowed $200 million under the new facility and repaid an equal amount to satisfy the old facility. Based upon the maximum leverage ratio permitted under the new facility, the Company is currently permitted to borrow an additional $260 million. The new credit agreement permits the Company to purchase shares of Common Stock at any time, as long as the Company's Leverage Ratio (as defined in the credit agreement) does not exceed 2.25 to 1.00 after the purchase. The agreement also permits the Company to make acquisitions, provided that the Leverage Ratio does not exceed 2.50 to 1.00 after giving effect to any such acquisition. As of December 31, 2003, the Company's Leverage Ratio under the new agreement would have been 0.97 to 1.00. In accordance with generally accepted accounting principles, the Company expects to take a charge in the first quarter of 2004 of $0.9 million for the write-off of remaining deferred financing costs related to the old credit facility. Net cash provided by operating activities was $36.0 million during the fourth quarter of 2003, compared to $49.1 million for the same period of 2002. For the full year, net cash provided by operating activities was $128.1 million compared to $118.8 million in 2002. Prospects for continued strong cash flows in 2004 remain good, particularly as the Company realizes additional savings from the $30 million cost reduction program. The Company is continuing to evaluate which alternative uses of cash would be most beneficial to our shareholders. In January 1998, the Board of Directors authorized the purchase of 3,000,000 shares of Class A Common Stock, in the open market or otherwise, at such prices as management may from time to time consider to be advantageous, and 1,616,900 shares were purchased. No purchases have been made under this authorization since October 1, 1998. Management remains authorized to purchase up to 1,383,100 shares without further announcement. Comments on Operations Chairman and Chief Executive Officer Frank Schmeler commented, "Despite a very difficult business environment, which adversely affected our sales and earnings results for the fourth quarter, the Company reported improved earnings for the full year. Although stronger economic indicators were reported in some geographic regions during the fourth quarter, our paper and paperboard customers continued to reduce capacity and limit production. The resulting impact on demand for our products adversely affected sales of engineered fabrics. Sales of high-performance doors were similarly affected as industrial customers continued constraints on capital spending. The Company continued to focus on new product introductions in our Engineered Fabrics and High Performance Door segments during the quarter. The new developments should provide new value opportunities for our customers and benefits for our businesses. Net sales in our Applied Technologies segment improved for both the quarter and the full year and also reflected the effect of new product developments. The Company's strong full-year results reflect our continuing ability to generate cash and control costs, despite challenging business conditions and the additional efforts required to successfully implement the restructuring program. "On January 22, 2004, we announced a manufacturing consolidation plan affecting two paper machine clothing facilities in Europe. Under the plan, we would discontinue the manufacture of dryer fabrics at our facility in Bury, England, but would continue making process belts in that location. The production of dryer fabrics would be relocated to our recently expanded and modernized dryer fabric facility in Finland. In addition, we would discontinue all manufacturing at our press fabric and forming fabric plants in Dieren, the Netherlands, and relocate this production to other Albany International plants. These actions are subject to consultation with works councils and trade unions in accordance with local law. Subject to compliance with the local law, we expect these actions to be completed during the third quarter of 2004. Engineered Fabrics (This segment includes Paper Machine Clothing (PMC), used in the manufacture of paper and paperboard products, and Engineered Products for the nonwovens and pulp industries.) "Fourth-quarter net sales for the Engineered Fabrics segment increased 1.8 percent compared to the same period last year. Excluding the effect of changes in currency translation rates, fourth-quarter net sales decreased 8.3 percent compared to the same period in 2002. Although 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. Albany Door Systems (This segment includes sales of High Performance Doors and replacement door parts to a wide variety of industrial customers and door service.) "Economic conditions continue to have an adverse affect on sales of our high-performance doors. Compared to the fourth quarter of 2002, sales in this segment increased 11.9 percent, but decreased 2.8 percent excluding the effect of changes in currency translation rates. Door sales remained sluggish as increases in our customers' capital spending have yet to materialize. The ongoing cost reduction activities had a positive impact on segment earnings. Applied Technologies (This segment includes a diverse collection of materials and structural- component businesses including insulation for personal outerwear and home furnishings (PrimaLoft); specialty materials and composite structures for aircraft and other applications (Techniweave); specialty filtration products for wet and dry applications (Industrial Process Technologies); industrial insulation products (High Performance Materials); and products for high- temperature personal protection and aerospace applications (Advanced Thermal Protection).) "Fourth-quarter 2003 net sales in the Applied Technologies segment increased 45.6 percent compared to the same period last year and increased 32.4 percent excluding the effect of changes in currency translation rates. New products and market opportunities are driving growth in this segment. For example, the expansion of PrimaLoft(R) premium synthetic insulation into the European and Japanese markets is providing continued growth for this product. Fourth-quarter results for the segment benefited from the effects of implemented cost reductions. Looking Ahead "Although the reported improvements in the general economy have not yet resulted in significant improvements in our customers' markets, we maintain a cautiously optimistic view of 2004. Further improvements in efficiency, and opportunities for new product and process development, should result from our restructuring activities. Their successful completion will require the continued best efforts and full support of all of our people. As previously reported, we expect significant charges associated with these restructuring steps to occur in the first and second quarters of 2004. "Our paper and paperboard customers are asking us to assist them in improving their operations through paper machine clothing improvements. They understand the significant impact that improved PMC products can have on the quality of paper and paperboard and on the cost and efficiency of the paper and paperboard manufacturing processes. Among the strategic objectives for all of our businesses is the continued search for solutions that will benefit both our customers and our shareholders. "The Company expects capital expenditures to total approximately $55 million in 2004. Investments in new equipment are intended principally to maximize the benefits of the relocation of production to centralized locations. Depreciation for 2004, after giving effect to proposed plant closures, is projected to be approximately $50 million, and amortization is projected to be approximately $5 million. "Our focus on delivering value contributed to improved returns for our shareholders and benefits to our customers in 2003. Some customers have identified millions of dollars in savings through the application of our value-driven products and services. We intend to maintain and sharpen this focus during 2004." The Company plans a live webcast to discuss fourth-quarter and full-year 2003 earnings on Tuesday, January 27, 2004, 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 and its 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, capital expenditures, 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 (unaudited) (in thousands except per share data) Three Months Ended Year Ended December 31, December 31, 2003 2002 2003 2002 $226,258 $215,171 Net sales $868,972 $816,047 135,346 126,473 Cost of goods sold 507,786 475,765 90,912 88,698 Gross profit 361,186 340,282 Selling, technical, general and research 67,047 60,907 expenses 253,821 238,194 5,752 - Restructuring 21,751 - 18,113 27,791 Operating income 85,614 102,088 3,758 4,363 Interest expense, net 15,074 17,536 Other (income)/expense, (570) 496 net 662 5,003 Income before income 14,925 22,932 taxes 69,878 79,549 4,478 5,225 Income taxes 15,720 25,041 Income before associated 10,448 17,707 companies 54,158 54,508 Equity in earnings of 88 62 associated companies (103) 270 Income before cumulative effect of change in 10,536 17,769 accounting principle 54,055 54,778 Cumulative effect of change in accounting - - principle, net of taxes - (5,837) 10,536 17,769 Net income 54,055 48,941 Retained earnings, 425,217 371,621 beginning of period 387,609 345,273 (2,346) (1,781) Dividends declared (8,257) (6,605) Retained earnings, $433,407 $387,609 end of period $433,407 $387,609 Earnings per share - basic: Income before cumulative effect of change in $0.32 $0.55 accounting principle $1.64 $1.70 Cumulative effect of change 0.00 0.00 in accounting principle 0.00 (0.18) $0.32 $0.55 Net income $1.64 $1.52 Earnings per share - diluted: Income before cumulative effect of change in $0.31 $0.54 accounting principle $1.61 $1.68 Cumulative effect of change 0.00 0.00 in accounting principle 0.00 (0.18) $0.31 $0.54 Net income $1.61 $1.50 Average number of shares used in basic earnings 33,437 32,366 per share computations 32,889 32,126 Average number of shares used in diluted earnings 34,168 32,707 per share computations 33,514 32,635 $0.07 $0.055 Dividend per share $0.25 $0.205 ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) December 31, December 31, 2003 2002 ASSETS Cash and cash equivalents $78,822 $18,799 Accounts receivable, net 151,157 135,339 Note receivable 21,814 20,075 Inventories: Finished goods 93,787 90,766 Work in process 53,936 44,763 Raw material and supplies 29,805 28,534 177,528 164,063 Deferred taxes 33,314 43,439 Prepaid expenses 8,067 7,173 Total current assets 470,702 388,888 Property, plant and equipment, net 370,280 346,073 Investments in associated companies 5,278 4,849 Intangibles 15,790 16,274 Goodwill 159,543 137,146 Deferred taxes 70,450 65,574 Cash surrender value of life insurance policies 32,399 29,282 Other assets 21,274 23,435 Total assets $1,145,716 $1,011,521 LIABILITIES AND SHAREHOLDERS' EQUITY Notes and loans payable $5,250 $12,224 Accounts payable 35,080 39,624 Accrued liabilities 122,550 101,510 Current maturities of long-term debt 1,949 1,914 Income taxes payable and deferred 20,475 31,222 Total current liabilities 185,304 186,494 Long-term debt 214,894 221,703 Other noncurrent liabilities 153,811 168,765 Deferred taxes and other credits 37,052 33,961 Total liabilities 591,061 610,923 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 32,548,938 in 2003 and 28,983,057 in 2002 33 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 280,734 255,484 Retained earnings 433,407 387,609 Accumulated items of other comprehensive income: Translation adjustments (65,613) (147,400) Derivative valuation adjustment (8,840) (13,592) Pension liability adjustment (39,579) (35,962) 600,145 446,174 Less treasury stock (Class A), at cost (2,190,038 shares in 2003 and 2,193,793 shares in 2002) 45,490 45,576 Total shareholders' equity 554,655 400,598 Total liabilities and shareholders' equity $1,145,716 $1,011,521 ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Year Ended December 31, 2003 2002 OPERATING ACTIVITIES Net income $54,055 $48,941 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings of associated companies 103 (270) Depreciation 51,003 47,478 Amortization 5,091 5,385 Provision for deferred income taxes, other credits and long- term liabilities (6,908) (21,094) Provision for impairment of buildings and equipment 11,390 - Provision for impairment of goodwill - 5,837 Increase in cash surrender value of life insurance (1,998) (569) Unrealized currency transaction gains (8,286) (1,933) Gain on disposition of assets (678) (2,688) Shares contributed to ESOP 5,398 4,635 Tax benefit of options exercised 2,289 1,672 Changes in operating assets and liabilities: Accounts receivable 17,819 14,737 Sale of accounts receivable (2,134) 7,237 Note receivable (1,739) 1,028 Inventories 3,171 17,687 Prepaid expenses (894) (1,885) Accounts payable (4,544) (10,653) Accrued liabilities 12,457 (5,671) Income taxes payable (9,294) 8,346 Other, net 1,777 605 Net cash provided by operating activities 128,078 118,825 INVESTING ACTIVITIES Purchases of property, plant and equipment (52,564) (31,678) Purchased software (1,072) (1,465) Proceeds from sale of assets 6,814 6,373 Repayments of loans from life insurance policies - (25,934) Premiums paid for life insurance policies (1,118) (1,159) Net cash used in investing activities (47,940) (53,863) FINANCING ACTIVITIES Proceeds from borrowings 45,833 60,208 Principal payments on debt (59,709) (106,446) Dividends paid (7,692) (6,391) Proceeds from options exercised 17,559 14,950 Net cash used in financing activities (4,009) (37,679) Effect of exchange rate changes on cash flows (16,106) (14,637) Increase in cash and cash equivalents 60,023 12,646 Cash and cash equivalents at beginning of year 18,799 6,153 Cash and cash equivalents at end of period $78,822 $18,799 SOURCE Albany International -0- 01/26/2004 /CONTACT: Kenneth C. Pulver, Vice President-Corporate Communications of Albany International, +1-518-445-2214/ /Web site: http://www.albint.com / (AIN) CO: Albany International ST: New York IN: PAP FAS HOU SU: ERN CCA -----END PRIVACY-ENHANCED MESSAGE-----