SECURITIES AND EXCHANGE COMMISSION
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
DOCUMENTS INCORPORATED BY REFERENCE | PART | |||||
---|---|---|---|---|---|---|
Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 12, 2006. | III |
PART I | ||||||||||||||
Item 1. | Business | 19 | ||||||||||||
Item 1A. | Risk Factors | 25 | ||||||||||||
Item 1B. | Unresolved Staff Comments | 30 | ||||||||||||
Item 2. | Properties | 30 | ||||||||||||
Item 3. | Legal Proceedings | 31 | ||||||||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 33 | ||||||||||||
PART II | ||||||||||||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | 34 | ||||||||||||
Item 6. | Selected Financial Data | 35 | ||||||||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 36 | ||||||||||||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 51 | ||||||||||||
Item 8. | Financial Statements and Supplementary Data | 52 | ||||||||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 91 | ||||||||||||
Item 9A. | Controls and Procedures | 91 | ||||||||||||
Item 9B. | Other Information | 91 | ||||||||||||
PART III | ||||||||||||||
Item 10. | Directors and Executive Officers of the Registrant | 92 | ||||||||||||
Item 11. | Executive Compensation | 92 | ||||||||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 92 | ||||||||||||
Item 13. | Certain Relationships and Related Transactions | 93 | ||||||||||||
Item 14. | Principal Accountant Fees and Services | 93 | ||||||||||||
PART IV | ||||||||||||||
Item 15. | Exhibits and Financial Statement Schedules | 94 |
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Sales | ||||||||||||||
Paper Machine Clothing | $ | 741,628 | $ | 696,277 | $ | 693,349 | ||||||||
Applied Technologies | 120,595 | 110,752 | 93,263 | |||||||||||
Albany Door Systems | 116,487 | 112,773 | 101,331 | |||||||||||
Consolidated total | $ | 978,710 | $ | 919,802 | $ | 887,943 |
industry. Primaloft® synthetic down is used in high-end retail home furnishings and outerwear applications. The Albany Engineered Composites businesses serve a wide variety of needs for specialty materials and structure needs for applications from aerospace to industrial tooling. Albany’s Industrial Process Technologies businesses focus on wet and dry filtration products for process industries such as mining and petrochemicals, as well as textile belts used in the tannery and textile businesses. Each of these technologies is based in the Company’s core competencies in textiles, structures, coatings, and specialty materials.
Name | Age | Position | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Joseph G. Morone | 52 | President and Chief Executive Officer | ||||||||
William M. McCarthy | 55 | Executive Vice President — Global Planning, Engineering, and Procurement | ||||||||
Michael C. Nahl | 63 | Executive Vice President and Chief Financial Officer | ||||||||
Thomas H. Curry | 57 | Group Vice President — PMC Americas | ||||||||
Daniel A. Halftermeyer | 44 | Group Vice President — PMC Europe | ||||||||
Hartmut Peters | 64 | Group Vice President — PMC Asia and Pacific | ||||||||
Dieter Polt | 63 | Group Vice President — Albany Door Systems and Applied Technologies | ||||||||
Frank Kolf | 59 | Senior Vice President — Global Procurement and Supply Chain Management | ||||||||
John C. Standish | 42 | Senior Vice President — Manufacturing, Americas Business Corridor | ||||||||
Richard A. Carlstrom | 62 | Vice President — Controller | ||||||||
David C. Michaels | 50 | Vice President — Treasury and Tax | ||||||||
Kenneth C. Pulver | 62 | Vice President — Global Marketing and Communications | ||||||||
Charles J. Silva Jr. | 46 | Vice President — General Counsel | ||||||||
Christopher J. Connally | 53 | Corporate Treasurer | ||||||||
Thomas H. Hagoort | 73 | Secretary |
President and General Manager, Vice President — Marketing, and Technical Director. From 1988 to 1991 he was Technical Director for Continental Europe — Press Fabrics.
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 |
other foreign currencies. As a result, changes in the relative values of U.S. dollars, euros and such other currencies impact reported net sales and operating income. If the value of the euro or other currencies were to decline relative to the U.S. dollar, the Company’s reported net sales and operating income could decline. In some locations, the profitability of transactions is affected by the fact that sales are denominated in a currency different from the currency in which the costs to manufacture and distribute the products are denominated. These sales are typically denominated in U.S. dollars while the manufacturing costs are based mainly on currencies that have in the past strengthened, and may in the future strengthen, against the U.S. dollar. While the Company may enter into foreign currency or other derivative contracts from time to time in order to mitigate volatility in the Company’s earnings that can be caused by changes in currency exchange rates, these mitigation measures may not be effective.
manufacturing facility in China, in additional forming fabric capacity in Korea and Brazil, and in additional dryer fabric capacity at the Company’s existing plant in Panyu, China. The new facility in China will serve as the headquarters of the Company’s Pacific Business Corridor and will initially house world-class manufacturing operations for forming and press fabrics.
understanding of the insurance policies available, how settlement amounts have been allocated to various policies, its recent settlement experience, the absence of any judgments against the Company or Brandon, the ratio of paper mill claims to total claims filed, and the defenses available, the Company currently does not anticipate any material liability relating to the resolution of the aforementioned pending proceedings in excess of existing insurance limits. Consequently, the Company currently does not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results 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.
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 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | ||||||||||||||||||
Cash dividends per share | $ | 0.08 | $ | 0.08 | $ | 0.09 | $ | 0.09 | ||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | $ | 34.50 | $ | 33.27 | $ | 37.65 | $ | 39.21 | ||||||||||
Low | $ | 29.80 | $ | 30.00 | $ | 32.25 | $ | 36.01 | ||||||||||
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 |
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 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
June 1 to 30, 2005 | 50,973 | $ | 30.91 | 50,973 | not applicable |
(in thousands, except per share amounts) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Summary of Operations | ||||||||||||||||||||||
Net sales | $ | 978,710 | $ | 919,802 | $ | 887,943 | $ | 832,499 | $ | 853,493 | ||||||||||||
Cost of goods sold | 586,700 | 557,742 | 526,757 | 492,217 | 514,098 | |||||||||||||||||
Restructuring charges, net (3) | — | 54,058 | 21,751 | — | 21,892 | |||||||||||||||||
Operating income | 115,999 | 40,504 | 85,614 | 102,088 | 84,112 | |||||||||||||||||
Interest expense, net | 10,583 | 14,636 | 15,074 | 17,536 | 28,916 | |||||||||||||||||
Income before income taxes | 100,763 | 12,329 | 69,878 | 79,549 | 52,363 | |||||||||||||||||
Income taxes | 29,420 | 2,450 | 15,720 | 25,041 | 19,374 | |||||||||||||||||
Income before cumulative effect of changes in accounting principles | 71,852 | 10,385 | 54,055 | 54,778 | 33,331 | |||||||||||||||||
Cumulative effect of changes in accounting principles, net of tax (1) (2) | — | — | — | (5,837 | ) | (1,129 | ) | |||||||||||||||
Net income | 71,852 | 10,385 | 54,055 | 48,941 | 32,202 | |||||||||||||||||
Basic earnings per share | 2.25 | 0.32 | 1.64 | 1.52 | 1.04 | |||||||||||||||||
Diluted earnings per share | 2.22 | 0.31 | 1.61 | 1.50 | 1.03 | |||||||||||||||||
Dividends declared per share | 0.34 | 0.30 | 0.25 | 0.205 | 0.05 | |||||||||||||||||
Weighted average number of shares outstanding — basic | 31,921 | 32,575 | 32,889 | 32,126 | 31,089 | |||||||||||||||||
Capital expenditures | 43,293 | 57,129 | 51,849 | 31,678 | 25,831 | |||||||||||||||||
Financial position | ||||||||||||||||||||||
Cash | $ | 72,771 | $ | 58,982 | $ | 78,822 | $ | 18,799 | $ | 6,153 | ||||||||||||
Cash surrender value of life insurance, net | 37,778 | 34,583 | 32,399 | 29,282 | 1,862 | |||||||||||||||||
Property, plant and equipment, net | 335,446 | 378,170 | 370,280 | 346,073 | 339,102 | |||||||||||||||||
Total assets | 1,087,047 | 1,155,760 | 1,138,923 | 1,011,521 | 931,929 | |||||||||||||||||
Current liabilities | 175,123 | 209,218 | 178,511 | 186,494 | 186,072 | |||||||||||||||||
Long-term debt | 162,597 | 213,615 | 214,894 | 221,703 | 248,146 | |||||||||||||||||
Total noncurrent liabilities | 337,006 | 395,765 | 405,757 | 424,429 | 429,213 | |||||||||||||||||
Total liabilities | 512,129 | 604,983 | 584,268 | 610,923 | 615,285 | |||||||||||||||||
Shareholders’ equity | 574,918 | 550,777 | 554,655 | 400,598 | 316,644 |
(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. |
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
the assumption. As indicated in Note 13 of Notes to Consolidated Financial Statements, at September 30, 2005, the measurement date for pension plans, the largest portion of pension plan assets (45% for the U.S. plan and 72% for non-U.S. plans) was invested in equities. For the U.S. pension plan mortality assumption, the Company uses the 1983 Group Annuity Mortality assumption updated to 1993. The Company has studied its actual mortality data for a recent six year period and found it to be consistent with that mortality table. Weakness in investment returns and low interest rates, or deviations in results from other assumptions, could result in the Company making equal or greater pension plan contributions in future years, as compared to 2005. Including anticipated contributions for all pension plans, the Company has classified $26.5 million of its accrued pension liability as a current liability at December 31, 2005. Actual contributions for 2005 totaled $16.9 million.
Percent change | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales as reported December 31, | |||||||||||||||||||||||
(in thousands) | 2005 | 2004 | Increase in 2005 net sales due to changes in currency translation rates | As reported | Excluding currency rate effect | ||||||||||||||||||
Paper Machine Clothing | $ | 741,628 | $ | 696,277 | $ | 12,395 | 6.5 | % | 4.7 | % | |||||||||||||
Applied Technologies | 120,595 | 110,752 | 2,278 | 8.9 | % | 6.8 | % | ||||||||||||||||
Albany Door Systems | 116,487 | 112,773 | 377 | 3.3 | % | 3.0 | % | ||||||||||||||||
Total | $ | 978,710 | $ | 919,802 | $ | 15,050 | 6.4 | % | 4.8 | % |
Net sales | Operating income | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year ended December 31, 2004 | |||||||||||||||||||||||||||
(in thousands) | As originally reported for 2004 | Segment change | As restated | As originally reported for 2004 | Segment change | As restated | |||||||||||||||||||||
Paper Machine Clothing | $ | 740,824 | $ | (44,547 | ) | $ | 696,277 | $ | 96,421 | $ | 2,836 | $ | 99,257 | ||||||||||||||
Applied Technologies | 66,205 | 44,547 | 110,752 | 11,558 | (3,488 | ) | 8,070 | ||||||||||||||||||||
Albany Door Systems | 112,773 | — | 112,773 | 3,516 | — | 3,516 | |||||||||||||||||||||
Unallocated expenses | — | — | — | (70,991 | ) | 652 | (70,339 | ) | |||||||||||||||||||
Consolidated total | $ | 919,802 | $ | — | $ | 919,802 | $ | 40,504 | $ | — | $ | 40,504 |
Years ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2005 | 2004 | |||||||||
Operating Income | |||||||||||
Paper Machine Clothing | $ | 167,176 | $ | 99,257 | |||||||
Applied Technologies | 18,356 | 8,070 | |||||||||
Albany Door Systems | 7,579 | 3,516 | |||||||||
Research expense | (28,059 | ) | (27,436 | ) | |||||||
Unallocated expenses | (49,053 | ) | (42,903 | ) | |||||||
Operating income | $ | 115,999 | $ | 40,504 | |||||||
Restructuring Costs by Segment | |||||||||||
Paper Machine Clothing | $ | — | $ | 46,497 | |||||||
Applied Technologies | — | 6,152 | |||||||||
Albany Door Systems | — | 1,265 | |||||||||
Corporate and other | — | 144 | |||||||||
Consolidated total | $ | — | $ | 54,058 |
Percent change | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales as reported Years ended December 31, | |||||||||||||||||||||||
(in thousands) | 2004 | 2003 | Increase in 2004 net sales due to changes in currency translation rates | As reported | Excluding currency rate effect | ||||||||||||||||||
Paper Machine Clothing | $ | 696,277 | $ | 693,349 | $ | 31,051 | 0.4 | % | –4.1 | % | |||||||||||||
Applied Technologies | 110,752 | 93,263 | 5,120 | 18.8 | % | 13.3 | % | ||||||||||||||||
Albany Door Systems | 112,773 | 101,331 | 8,498 | 11.3 | % | 2.9 | % | ||||||||||||||||
Total | $ | 919,802 | $ | 887,943 | $ | 44,669 | 3.6 | % | –1.4 | % |
Net sales | Operating income | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year ended December 31, 2003 | |||||||||||||||||||||||||||
(in thousands) | As originally reported for 2003 | Segment change | As restated | As originally reported for 2003 | Segment change | As restated | |||||||||||||||||||||
Paper Machine Clothing | $ | 733,316 | $ | (39,967 | ) | $ | 693,349 | $ | 143,439 | $ | (990 | ) | $ | 142,449 | |||||||||||||
Applied Technologies | 53,296 | 39,967 | 93,263 | 6,065 | 990 | 7,055 | |||||||||||||||||||||
Albany Door Systems | 101,331 | — | 101,331 | (1,024 | ) | — | (1,024 | ) | |||||||||||||||||||
Unallocated expenses | — | — | — | (62,866 | ) | — | (62,866 | ) | |||||||||||||||||||
Consolidated total | $ | 887,943 | $ | — | $ | 887,943 | $ | 85,614 | $ | — | $ | 85,614 |
Year ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2004 | 2003 | |||||||||
Operating Income | |||||||||||
Paper Machine Clothing | $ | 99,257 | $ | 142,449 | |||||||
Applied Technologies | 8,070 | 7,055 | |||||||||
Albany Door Systems | 3,516 | (1,024 | ) | ||||||||
Research expense | (27,436 | ) | (26,353 | ) | |||||||
Unallocated expenses | (42,903 | ) | (36,513 | ) | |||||||
Operating income | $ | 40,504 | $ | 85,614 | |||||||
Restructuring Costs by Segment | |||||||||||
Paper Machine Clothing | $ | 46,497 | $ | 15,908 | |||||||
Applied Technologies | 6,152 | 2,989 | |||||||||
Albany Door Systems | 1,265 | 2,351 | |||||||||
Corporate and other | 144 | 503 | |||||||||
Consolidated total | $ | 54,058 | $ | 21,751 |
and $150 million of long-term indebtedness to Prudential Securities. Company subsidiaries outside of the United States may also maintain working capital lines with local banks, but borrowings under such local facilities tend not to be significant.
sheet and provides the Company with the financial flexibility to pursue shareholder value initiatives. These initiatives include the ability to make investments in existing businesses as well as the ability to repurchase shares of the Company’s stock. Business investments may take the form of increased capital expenditures in the Paper Machine Clothing segment as well as strategic acquisitions to provide growth in other businesses in which the Company has a sustainable competitive advantage.
January 2006 and the second is expected to occur before year-end 2006. The acquisition reflects management’s confidence that the Company’s proprietary technology in advanced composites represents a sustainable basis for long-term competitive advantage.
Payments Due by Period | |||||||||||||||||||||||
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(in millions) | Total | Less than One year | One to Three years | Three to Five years | After Five years | ||||||||||||||||||
Total debt | $ | 169.8 | $ | 7.2 | $ | 12.4 | $ | 0.2 | $ | 150.0 | |||||||||||||
Interest payments (a) | 81.4 | 8.9 | 16.5 | 16.0 | 40.0 | ||||||||||||||||||
Pension plan contributions (b) | 26.5 | 26.5 | — | — | — | ||||||||||||||||||
Other postretirement benefits (c) | 33.4 | 5.7 | 12.8 | 14.9 | — | ||||||||||||||||||
Restructuring accruals | 3.6 | 3.0 | 0.5 | 0.1 | — | ||||||||||||||||||
Other noncurrent liabilities (d) | — | — | — | — | — | ||||||||||||||||||
Operating leases | 32.6 | 13.0 | 16.2 | 3.3 | 0.1 | ||||||||||||||||||
$ | 347.3 | $ | 64.3 | $ | 58.4 | $ | 34.5 | $ | 190.1 |
(a) | The terms of variable rate debt arrangements, including interest rates and maturities, are included in Note 6 of Notes to Consolidated Financial Statements. |
(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 2006 is included in this schedule and, additionally, $6.5 million is included for plans outside of the United States. The amount of contributions after 2006 is subject to many variables, including return of pension plan assets, interest rates, and tax and employee benefit laws. Therefore, contributions beyond 2006 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 2006. No estimate of the payments after five years has been provided due to many uncertainties. |
(d) | Estimated payments for deferred compensation and other noncurrent liabilities of $17.5 million are not included in this table due to the uncertain timing of the ultimate cash settlement. |
Company’s income during the fourth quarter of 2005, is expected to continue for the foreseeable future. In addition, net sales and operating income are expected to be reduced in 2006 by approximately $8 million and $3 million, respectively, due to an anticipated change in inventory practices associated with a major customer.
Report of Independent Registered Public Accounting Firm | 53 | |||||
Consolidated Statements of Income and Retained Earnings for the years ended December 31, 2005, 2004, and 2003 | 55 | |||||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2005, 2004, and 2003 | 56 | |||||
Consolidated Balance Sheets as of December 31, 2005 and 2004 | 57 | |||||
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003 | 58 | |||||
Notes to Consolidated Financial Statements | 59 | |||||
Quarterly Financial Data | 90 |
Albany, New York
March 1, 2006
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the years ended December 31,
(in thousands, except per share amounts)
2005 | 2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Statements of Income | ||||||||||||||
Net sales | $ | 978,710 | $ | 919,802 | $ | 887,943 | ||||||||
Cost of goods sold | 586,700 | 557,742 | 526,757 | |||||||||||
Gross profit | 392,010 | 362,060 | 361,186 | |||||||||||
Selling and general expenses | 217,242 | 210,348 | 198,610 | |||||||||||
Technical and research expenses | 58,769 | 57,150 | 55,211 | |||||||||||
Restructuring, net | — | 54,058 | 21,751 | |||||||||||
Operating income | 115,999 | 40,504 | 85,614 | |||||||||||
Interest income | (2,256 | ) | (2,150 | ) | (2,232 | ) | ||||||||
Interest expense | 12,839 | 16,786 | 17,306 | |||||||||||
Other expense, net | 4,653 | 13,539 | 662 | |||||||||||
Income before income taxes | 100,763 | 12,329 | 69,878 | |||||||||||
Income taxes | 29,420 | 2,450 | 15,720 | |||||||||||
Income before equity in earnings/(losses) of associated companies | 71,343 | 9,879 | 54,158 | |||||||||||
Equity in earnings/(losses) of associated companies | 509 | 506 | (103 | ) | ||||||||||
Net income | 71,852 | 10,385 | 54,055 | |||||||||||
Retained Earnings | ||||||||||||||
Retained earnings, beginning of year | 434,057 | 433,407 | 387,609 | |||||||||||
Less dividends | 10,891 | 9,735 | 8,257 | |||||||||||
Retained earnings, end of year | $ | 495,018 | $ | 434,057 | $ | 433,407 | ||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 2.25 | $ | 0.32 | $ | 1.64 | ||||||||
Diluted | $ | 2.22 | $ | 0.31 | $ | 1.61 | ||||||||
Dividends per share | $ | 0.34 | $ | 0.30 | $ | 0.25 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31,
(in thousands)
2005 | 2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net income | $ | 71,852 | $ | 10,385 | $ | 54,055 | ||||||||
Other comprehensive (loss)/income, before tax: | ||||||||||||||
Foreign currency translation adjustments | (61,151 | ) | 52,933 | 81,935 | ||||||||||
Hedges of net investments in non-U.S. subsidiaries | 2,717 | 1,537 | (235 | ) | ||||||||||
Pension liability adjustments | (1,448 | ) | (70 | ) | (5,668 | ) | ||||||||
Derivative valuation adjustment | 4,566 | 9,926 | 7,084 | |||||||||||
Income taxes related to items of other comprehensive (loss)/income: | ||||||||||||||
Hedges of net investments in non-U.S. subsidiaries | (1,060 | ) | (569 | ) | 87 | |||||||||
Pension liability adjustments | (523 | ) | 1,280 | 2,052 | ||||||||||
Derivative valuation adjustment | (1,781 | ) | (3,871 | ) | (2,331 | ) | ||||||||
Other comprehensive (loss)/income, after tax | (58,680 | ) | 61,166 | 82,924 | ||||||||||
Comprehensive income | $ | 13,172 | $ | 71,551 | $ | 136,979 |
CONSOLIDATED BALANCE SHEETS
At December 31,
(in thousands, except share data)
2005 | 2004 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 72,771 | $ | 58,982 | ||||||
Accounts receivable, less allowance for doubtful accounts ($5,848 in 2005; $8,308 in 2004) | 132,247 | 144,950 | ||||||||
Note receivable | 17,827 | 18,955 | ||||||||
Inventories | 194,398 | 185,530 | ||||||||
Prepaid expenses | 7,892 | 8,867 | ||||||||
Deferred taxes | 22,012 | 26,526 | ||||||||
Total current assets | 447,147 | 443,810 | ||||||||
Property, plant and equipment, at cost, net | 335,446 | 378,170 | ||||||||
Investments in associated companies | 6,403 | 6,456 | ||||||||
Intangibles | 12,076 | 14,207 | ||||||||
Goodwill | 153,001 | 171,622 | ||||||||
Deferred taxes | 75,875 | 87,848 | ||||||||
Cash surrender value of life insurance | 37,778 | 34,583 | ||||||||
Other assets | 19,321 | 19,064 | ||||||||
Total assets | $ | 1,087,047 | $ | 1,155,760 | ||||||
Liabilities | ||||||||||
Current liabilities: | ||||||||||
Notes and loans payable | $ | 6,151 | $ | 14,617 | ||||||
Accounts payable | 36,775 | 40,870 | ||||||||
Accrued liabilities | 116,395 | 122,771 | ||||||||
Current maturities of long-term debt | 1,009 | 1,340 | ||||||||
Income taxes payable and deferred | 14,793 | 29,620 | ||||||||
Total current liabilities | 175,123 | 209,218 | ||||||||
Long-term debt | 162,597 | 213,615 | ||||||||
Other noncurrent liabilities | 144,905 | 147,268 | ||||||||
Deferred taxes | 29,504 | 34,882 | ||||||||
Total liabilities | 512,129 | 604,983 | ||||||||
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 34,176,010 in 2005 and 33,176,872 in 2004 | 34 | 33 | ||||||||
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 3,236,476 in 2005 and 2004 | 3 | 3 | ||||||||
Additional paid-in capital | 319,372 | 296,045 | ||||||||
Retained earnings | 495,018 | 434,057 | ||||||||
Accumulated items of other comprehensive income: | ||||||||||
Translation adjustments | (71,205 | ) | (11,711 | ) | ||||||
Derivative valuation adjustment | — | (2,785 | ) | |||||||
Pension liability adjustment | (40,340 | ) | (38,369 | ) | ||||||
702,882 | 677,273 | |||||||||
Less treasury stock, at cost | 127,964 | 126,496 | ||||||||
Total shareholders’ equity | 574,918 | 550,777 | ||||||||
Total liabilities and shareholders’ equity | $ | 1,087,047 | $ | 1,155,760 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(in thousands)
2005 | 2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Activities | ||||||||||||||
Net income | $ | 71,852 | $ | 10,385 | $ | 54,055 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Equity in (earnings)/losses of associated companies | (509 | ) | (506 | ) | 103 | |||||||||
Depreciation | 51,339 | 51,843 | 51,003 | |||||||||||
Amortization | 4,106 | 3,372 | 5,091 | |||||||||||
Provision for deferred income taxes, other credits and long-term liabilities | 10,787 | (16,652 | ) | (6,908 | ) | |||||||||
Provision for write-off of equipment | 2,827 | 17,099 | 14,671 | |||||||||||
Provision for impairment of investment | — | 4,000 | — | |||||||||||
Increase in cash surrender value of life insurance | (2,171 | ) | (1,958 | ) | (1,998 | ) | ||||||||
Change in unrealized currency transaction gains and losses | (4,520 | ) | 8,004 | (8,286 | ) | |||||||||
Gain on disposition of assets | — | (285 | ) | (513 | ) | |||||||||
Shares contributed to ESOP | 5,357 | 5,505 | 5,398 | |||||||||||
Tax benefit of options exercised | 3,469 | 1,473 | 2,289 | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | 4,550 | 9,747 | 15,685 | |||||||||||
Note receivable | 1,128 | 2,859 | (1,739 | ) | ||||||||||
Inventories | (17,155 | ) | 642 | 3,171 | ||||||||||
Prepaid expenses | 2,285 | (300 | ) | (894 | ) | |||||||||
Accounts payable | (421 | ) | 3,029 | (4,544 | ) | |||||||||
Accrued liabilities | (445 | ) | (5,518 | ) | 12,457 | |||||||||
Income taxes payable | (5,617 | ) | 9,638 | (9,294 | ) | |||||||||
Other, net | (4,490 | ) | (552 | ) | 1,777 | |||||||||
Net cash provided by operating activities | 122,372 | 101,825 | 131,524 | |||||||||||
Investing Activities | ||||||||||||||
Purchases of property, plant and equipment | (43,293 | ) | (57,129 | ) | (51,849 | ) | ||||||||
Purchased software | (2,533 | ) | (879 | ) | (1,072 | ) | ||||||||
Proceeds from sale of assets | 5,067 | 5,416 | 2,653 | |||||||||||
Cash received from life insurance policy terminations | — | 863 | — | |||||||||||
Premiums paid for life insurance | (1,022 | ) | (1,089 | ) | (1,118 | ) | ||||||||
Net cash used in investing activities | (41,781 | ) | (52,818 | ) | (51,386 | ) | ||||||||
Financing Activities | ||||||||||||||
Proceeds from borrowings | 176,430 | 68,005 | 45,833 | |||||||||||
Principal payments on debt | (235,455 | ) | (60,724 | ) | (59,709 | ) | ||||||||
Purchase of treasury shares | (1,576 | ) | (81,135 | ) | — | |||||||||
Proceeds from options exercised | 14,455 | 8,284 | 17,559 | |||||||||||
Debt issuance costs | — | (1,555 | ) | — | ||||||||||
Dividends paid | (10,489 | ) | (9,570 | ) | (7,692 | ) | ||||||||
Net cash used in financing activities | (56,635 | ) | (76,695 | ) | (4,009 | ) | ||||||||
Effect of exchange rate changes on cash flows | (10,167 | ) | 7,848 | (16,106 | ) | |||||||||
Increase/(decrease) in cash and cash equivalents | 13,789 | (19,840 | ) | 60,023 | ||||||||||
Cash and cash equivalents at beginning of year | 58,982 | 78,822 | 18,799 | |||||||||||
Cash and cash equivalents at end of year | $ | 72,771 | $ | 58,982 | $ | 78,822 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Gains)/losses included in: | ||||||||||||||
Selling and general expenses | $ | (1,690 | ) | $ | 758 | — | ||||||||
Other (income)/expense, net | (2,472 | ) | 1,559 | (8,218 | ) | |||||||||
Total transaction (gains)/losses | $ | (4,162 | ) | $ | 2,317 | $ | (8,218 | ) |
(in thousands) | 2005 | 2004 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Raw materials | $ | 33,559 | $ | 31,998 | ||||||
Work in process | 55,039 | 57,470 | ||||||||
Finished goods | 105,800 | 96,062 | ||||||||
Total inventories | $ | 194,398 | $ | 185,530 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except market price data) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net income available to common shareholders | $ | 71,852 | $ | 10,385 | $ | 54,055 | ||||||||
Weighted average number of shares: | ||||||||||||||
Weighted average number of shares used in calculating basic net income per share | 31,921 | 32,575 | 32,889 | |||||||||||
Effect of dilutive stock-based compensation plans: | ||||||||||||||
Stock options | 433 | 599 | 622 | |||||||||||
Long-term incentive plan | 49 | — | — | |||||||||||
Weighted average number of shares used in calculating diluted net income per share | 32,403 | 33,174 | 33,511 | |||||||||||
Average market price of common stock used for calculation of dilutive shares | $ | 34.33 | $ | 30.96 | $ | 27.13 | ||||||||
Net income per share: | ||||||||||||||
Basic | $ | 2.25 | $ | 0.32 | $ | 1.64 | ||||||||
Diluted | $ | 2.22 | $ | 0.31 | $ | 1.61 | ||||||||
Option shares that were not included in the computation of diluted net income per share because to do so would have been antidilutive | — | — | — |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | Estimated useful life | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Land and land improvements | $ | 32,117 | $ | 35,520 | 25 years for improvements | ||||||||
Buildings | 184,046 | 208,268 | 25 to 40 years | ||||||||||
Machinery and equipment | 641,843 | 684,985 | 10 years | ||||||||||
Furniture and fixtures | 27,257 | 36,424 | 5 years | ||||||||||
Computer and other equipment | 7,089 | 7,567 | 3 to 10 years | ||||||||||
Property, plant and equipment, gross | 892,352 | 972,764 | |||||||||||
Accumulated depreciation | (556,906 | ) | (594,594 | ) | |||||||||
Property, plant and equipment, net | $ | 335,446 | $ | 378,170 |
(in thousands) | Balance at December 31, 2004 | Amortization | Currency translation/other | Balance at December 31, 2005 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized intangible assets: | ||||||||||||||||||
Patents | $ | 3,341 | $ | (434 | ) | $ | (151 | ) | $ | 2,756 | ||||||||
Trade names | 3,447 | (618 | ) | (171 | ) | 2,658 | ||||||||||||
Deferred pension costs | 7,419 | — | (757 | ) | 6,662 | |||||||||||||
Total amortized intangible assets | $ | 14,207 | $ | (1,052 | ) | $ | (1,079 | ) | $ | 12,076 | ||||||||
Unamortized intangible assets: | ||||||||||||||||||
Goodwill | $ | 171,622 | — | $ | (18,621 | ) | $ | 153,001 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | Balance at January 1, 2004 | Amortization | Currency translation/other | Balance at December 31, 2004 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized intangible assets: | ||||||||||||||||||
Patents | $ | 3,526 | $ | 544 | $ | 359 | $ | 3,341 | ||||||||||
Trade names | 3,769 | 581 | 259 | 3,447 | ||||||||||||||
Deferred pension costs | 8,495 | — | (1,076 | ) | 7,419 | |||||||||||||
Total amortized intangible assets | $ | 15,790 | $ | 1,125 | $ | (458 | ) | $ | 14,207 | |||||||||
Unamortized intangible assets: | ||||||||||||||||||
Goodwill | $ | 159,543 | — | $ | 12,079 | $ | 171,622 |
Year | Annual amortization (in thousands) | |||||
---|---|---|---|---|---|---|
2006 | $ | 1,100 | ||||
2007 | 1,100 | |||||
2008 | 1,100 | |||||
2009 | 1,100 | |||||
2010 | 500 |
(in thousands) | 2005 | 2004 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Salaries and wages | $ | 19,506 | $ | 15,670 | ||||||
Accrual for compensated absences | 15,461 | 14,361 | ||||||||
Employee benefits | 13,481 | 13,000 | ||||||||
Pension liability — current portion (see Note 13) | 26,533 | 27,693 | ||||||||
Postretirement medical benefits — current portion | 5,726 | 7,644 | ||||||||
Interest rate swaps — current portion (see Note 6) | — | 4,565 | ||||||||
Returns and allowances | 11,791 | 9,695 | ||||||||
Interest | 1,689 | 1,204 | ||||||||
Restructuring costs — current portion (see Note 16) | 2,997 | 9,189 | ||||||||
Dividends | 2,910 | 2,510 | ||||||||
Other | 16,301 | 17,240 | ||||||||
$ | 116,395 | $ | 122,771 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
October 2005 private placement with a fixed interest rate of 5.34%, due in years 2013 through 2017 | $ | 150,000 | — | |||||||
January 2004 credit agreement with borrowings outstanding at an average interest rate of 3.19% in 2004 | — | 200,000 | ||||||||
Various notes and mortgages relative to operations principally outside the United States, at an average rate of 5.91% in 2005 and 5.81% in 2004, due in varying amounts through 2008 | 2,312 | 3,305 | ||||||||
Industrial revenue financings at an average interest rate of 6.89% in 2005 and 6.73% in 2004, due in varying amounts through 2009 | 11,294 | 11,650 | ||||||||
Long-term debt | 163,606 | 214,955 | ||||||||
Less: current portion | (1,009 | ) | (1,340 | ) | ||||||
Long-term debt, net of current portion | $ | 162,597 | $ | 213,615 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except interest rates) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amounts included in the change in Accounts receivable in the Statements of Cash Flows: | ||||||||||||||
Proceeds from new securitizations | $ | 411,127 | $ | 370,424 | $ | 371,957 | ||||||||
Amounts recognized in the Balance Sheets: | ||||||||||||||
Note receivable from QSPE at year end | $ | 17,827 | $ | 18,955 | $ | 21,814 | ||||||||
Interest rate on note receivable from QSPE at year end | 4.90 | % | 2.92 | % | 1.57 | % | ||||||||
Amounts recognized in the Statements of Income: | ||||||||||||||
Servicing fees received, included in Other expense, net | $ | 35 | $ | 34 | $ | 37 | ||||||||
Discount expense, included in Other expense, net | $ | 2,966 | $ | 2,566 | $ | 1,848 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Pension liabilities | $ | 54,194 | $ | 56,206 | ||||||
Postretirement benefits other than pensions | 73,233 | 65,264 | ||||||||
Deferred compensation (Note 15) | 5,681 | 9,434 | ||||||||
Other | 11,797 | 16,364 | ||||||||
$ | 144,905 | $ | 147,268 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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, 2003 | 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 | ||||||||||||||||||||||||
Shares contributed to ESOP | 157 | — | — | — | 5,357 | — | — | ||||||||||||||||||||||||
Purchase of treasury shares | — | — | — | — | — | 51 | 1,577 | ||||||||||||||||||||||||
Options exercised | 842 | 1 | — | — | 17,923 | — | — | ||||||||||||||||||||||||
Shares issued to Directors | — | — | — | — | 47 | (5 | ) | (109 | ) | ||||||||||||||||||||||
Balance: December 31, 2005 | 34,176 | $ | 34 | 3,237 | $ | 3 | $ | 319,372 | 5,050 | $ | 127,964 |
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Currency transactions (Note 1) | $ | (2,472 | ) | $ | 1,559 | $ | (8,218 | ) | ||||||
Costs associated with sale of accounts receivable (Note 6) | 2,966 | 2,566 | 1,848 | |||||||||||
Investment write-off (Note 1) | — | 4,000 | — | |||||||||||
Debt finance fee write-off | — | 874 | — | |||||||||||
License fee expense, net | 992 | 2,428 | 1,086 | |||||||||||
Amortization of debt issuance costs and loan origination fees | 1,553 | 1,099 | 2,790 | |||||||||||
Other | 1,614 | 1,013 | 3,156 | |||||||||||
$ | 4,653 | $ | 13,539 | $ | 662 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Income/(loss) before income taxes: | ||||||||||||||
U.S. | $ | 19,777 | $ | (10,738 | ) | $ | 2,107 | |||||||
Non-U.S. | 80,986 | 23,067 | 67,771 | |||||||||||
$ | 100,763 | $ | 12,329 | $ | 69,878 | |||||||||
Income tax provision/(benefit): | ||||||||||||||
Current: | ||||||||||||||
Federal | $ | 5,205 | $ | 1,283 | $ | (5,407 | ) | |||||||
State | 1,130 | 349 | 375 | |||||||||||
Non-U.S. | 23,435 | 10,781 | 17,698 | |||||||||||
29,770 | 12,413 | 12,666 | ||||||||||||
Deferred: | ||||||||||||||
Federal | 4,263 | (6,444 | ) | 1,588 | ||||||||||
State | 262 | (292 | ) | (256 | ) | |||||||||
Non-U.S. | (4,875 | ) | (3,227 | ) | 1,722 | |||||||||
(350 | ) | (9,963 | ) | 3,054 | ||||||||||
Total provision for income taxes | $ | 29,420 | $ | 2,450 | $ | 15,720 |
Net effect of temporary differences | $ | (200 | ) | $ | (4,608 | ) | $ | 7,427 | ||||||
Adjustments to deferred tax assets and liabilities for enacted changes in tax laws and rates | 244 | 446 | 1,321 | |||||||||||
Adjustments to beginning of the year valuation allowance balance for changes in circumstances | (4,132 | ) | — | — | ||||||||||
Net expense/(benefit) of tax loss carryforwards | 3,738 | (5,801 | ) | (5,694 | ) | |||||||||
$ | (350 | ) | $ | (9,963 | ) | $ | 3,054 |
2005 | 2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
U.S. federal statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
State taxes, net of federal benefit | 0.8 | 2.0 | 1.5 | |||||||||||
Non-U.S. tax rates | (11.8 | ) | (55.0 | ) | (14.5 | ) | ||||||||
Repatriation of non-U.S. earnings | 4.8 | 15.4 | 2.2 | |||||||||||
Non-U.S. statutory tax rate changes | 0.2 | 3.6 | 1.9 | |||||||||||
Net (reversal)/addition to valuation allowances for non-U.S. taxes | (0.7 | ) | 55.9 | 6.4 | ||||||||||
Net favorable resolution of contingencies related to prior years | (0.4 | ) | (37.4 | ) | (7.5 | ) | ||||||||
Nondeductible compensation | — | 14.0 | — | |||||||||||
Research and development and other tax credits | (1.7 | ) | (10.9 | ) | (1.4 | ) | ||||||||
Other | 3.0 | (2.7 | ) | (1.1 | ) | |||||||||
Effective income tax rate | 29.2 | % | 19.9 | % | 22.5 | % |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
U.S. | Non-U.S. | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2005 | 2004 | 2005 | 2004 | |||||||||||||||
Current deferred tax assets: | |||||||||||||||||||
Accounts receivable | $ | 84 | $ | 74 | $ | 1,621 | $ | 1,139 | |||||||||||
Inventories | 1,017 | 3,134 | — | — | |||||||||||||||
Tax credits carryforward | 10,742 | 12,714 | — | — | |||||||||||||||
Tax losses carryforward | 683 | 683 | — | — | |||||||||||||||
Restructuring costs | 1,493 | 2,440 | — | — | |||||||||||||||
Deferred compensation | 700 | 702 | — | — | |||||||||||||||
Other | 38 | 922 | 5,634 | 4,718 | |||||||||||||||
Total current deferred tax assets | 14,757 | 20,669 | 7,255 | 5,857 | |||||||||||||||
Noncurrent deferred tax assets: | |||||||||||||||||||
Sale leaseback transaction | 5 | 1,276 | — | — | |||||||||||||||
Deferred compensation | 3,160 | 3,651 | — | — | |||||||||||||||
Depreciation and amortization | 3,898 | 2,423 | — | 1,261 | |||||||||||||||
Postretirement benefits | 33,770 | 35,555 | 6,228 | 2,097 | |||||||||||||||
Tax loss carryforward | — | 868 | 36,209 | 41,785 | |||||||||||||||
Impairment of investment | 1,560 | 1,560 | — | — | |||||||||||||||
Derivative valuation adjustment | — | 1,780 | — | — | |||||||||||||||
Other | 696 | 1,945 | 641 | 6,102 | |||||||||||||||
Noncurrent deferred tax assets before valuation allowance | 43,089 | 49,058 | 43,078 | 51,245 | |||||||||||||||
Less: valuation allowance | — | — | (10,292 | ) | (12,455 | ) | |||||||||||||
Total noncurrent deferred tax assets | 43,089 | 49,058 | 32,786 | 38,790 | |||||||||||||||
Total deferred tax assets | $ | 57,846 | $ | 69,727 | $ | 40,041 | $ | 44,647 | |||||||||||
Current deferred tax liabilities: | |||||||||||||||||||
Inventory | — | — | 112 | 6,146 | |||||||||||||||
Other | — | — | 4,110 | 7,204 | |||||||||||||||
Total current deferred tax liabilities | — | — | 4,222 | 13,350 | |||||||||||||||
Noncurrent deferred tax liabilities: | |||||||||||||||||||
Difference between book and tax depreciation | — | — | 22,849 | 27,674 | |||||||||||||||
Other | — | — | 6,655 | 7,208 | |||||||||||||||
Total noncurrent deferred tax liabilities | — | — | 29,504 | 34,882 | |||||||||||||||
Total deferred tax liabilities | — | — | $ | 33,726 | $ | 48,232 | |||||||||||||
Net deferred tax asset/(liability) | $ | 57,846 | $ | 69,727 | $ | 6,315 | $ | (3,585 | ) |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | ||||||||||||||
Paper Machine Clothing | $ | 741,628 | $ | 696,277 | $ | 693,349 | ||||||||
Applied Technologies | 120,595 | $ | 110,752 | 93,263 | ||||||||||
Albany Door Systems | 116,487 | 112,773 | 101,331 | |||||||||||
Consolidated total | $ | 978,710 | $ | 919,802 | $ | 887,943 | ||||||||
Depreciation and amortization | ||||||||||||||
Paper Machine Clothing | $ | 45,076 | $ | 45,741 | $ | 47,562 | ||||||||
Applied Technologies | 5,168 | 4,870 | 2,588 | |||||||||||
Albany Door Systems | 1,432 | 1,507 | 1,550 | |||||||||||
Corporate | 3,769 | 3,097 | 4,394 | |||||||||||
Consolidated total | $ | 55,445 | $ | 55,215 | $ | 56,094 | ||||||||
Operating income/(loss) | ||||||||||||||
Paper Machine Clothing | $ | 167,176 | $ | 99,257 | $ | 142,449 | ||||||||
Applied Technologies | 18,356 | 8,070 | 7,055 | |||||||||||
Albany Door Systems | 7,579 | 3,516 | (1,024 | ) | ||||||||||
Research expense | (28,059 | ) | (27,436 | ) | (26,353 | ) | ||||||||
Unallocated expenses | (49,053 | ) | (42,903 | ) | (36,513 | ) | ||||||||
Operating income before reconciling items | 115,999 | 40,504 | 85,614 | |||||||||||
Reconciling items: | ||||||||||||||
Interest income | 2,256 | �� | 2,150 | 2,232 | ||||||||||
Interest expense | (12,839 | ) | (16,786 | ) | (17,306 | ) | ||||||||
Other expense, net | (4,653 | ) | (13,539 | ) | (662 | ) | ||||||||
Consolidated income before income taxes | $ | 100,763 | $ | 12,329 | $ | 69,878 | ||||||||
Restructuring costs included in segment operating income: | ||||||||||||||
Paper Machine Clothing | — | $ | 46,497 | $ | 15,908 | |||||||||
Applied Technologies | — | 6,152 | 2,989 | |||||||||||
Albany Door Systems | — | 1,265 | 2,351 | |||||||||||
Corporate and other | — | 144 | 503 | |||||||||||
Consolidated total | — | $ | 54,058 | $ | 21,751 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating assets | ||||||||||||||
Paper Machine Clothing | $ | 1,266,283 | $ | 1,378,133 | $ | 1,321,179 | ||||||||
Applied Technologies | 129,129 | 128,660 | 121,096 | |||||||||||
Albany Door Systems | 73,019 | 80,340 | 80,994 | |||||||||||
Reconciling items: | ||||||||||||||
Accumulated depreciation | (556,906 | ) | (594,594 | ) | (535,980 | ) | ||||||||
Deferred tax assets | 97,887 | 114,374 | 96,971 | |||||||||||
Investment in associated companies | 6,403 | 6,456 | 5,278 | |||||||||||
Other | 71,232 | 42,391 | 49,385 | |||||||||||
Consolidated total assets | $ | 1,087,047 | $ | 1,155,760 | $ | 1,138,923 | ||||||||
Capital expenditures | ||||||||||||||
Paper Machine Clothing | $ | 39,843 | $ | 46,890 | $ | 42,671 | ||||||||
Applied Technologies | 2,716 | 9,474 | 6,911 | |||||||||||
Albany Door Systems | 634 | 609 | 2,080 | |||||||||||
Corporate | 100 | 156 | 187 | |||||||||||
Consolidated total | $ | 43,293 | $ | 57,129 | $ | 51,849 |
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | ||||||||||||||
United States | $ | 348,244 | $ | 309,517 | $ | 311,254 | ||||||||
Canada | 73,628 | 67,834 | 62,721 | |||||||||||
Sweden | 85,528 | 86,691 | 78,659 | |||||||||||
Germany | 99,090 | 115,288 | 118,733 | |||||||||||
France | 76,677 | 72,891 | 65,612 | |||||||||||
Other countries | 295,543 | 267,581 | 250,964 | |||||||||||
Consolidated total | $ | 978,710 | $ | 919,802 | $ | 887,943 | ||||||||
Property, plant and equipment, at cost, net | ||||||||||||||
United States | $ | 88,548 | $ | 82,914 | $ | 102,262 | ||||||||
Canada | 28,449 | 24,498 | 15,993 | |||||||||||
Sweden | 49,366 | 62,734 | 52,767 | |||||||||||
Germany | 49,341 | 59,342 | 60,258 | |||||||||||
France | 31,527 | 35,906 | 29,179 | |||||||||||
Other countries | 88,215 | 112,776 | 109,821 | |||||||||||
Consolidated total | $ | 335,446 | $ | 378,170 | $ | 370,280 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As of December 31, 2005 | As of December 31, 2004 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Pension Plans | Other Benefits | Pension Plans | Other Benefits | |||||||||||||||
Benefit obligation, beginning of year | $ | 349,316 | $ | 131,376 | $ | 298,777 | $ | 116,092 | |||||||||||
Service cost | 6,241 | 3,776 | 8,135 | 3,180 | |||||||||||||||
Interest cost | 18,795 | 7,997 | 18,648 | 7,289 | |||||||||||||||
Plan participants’ contributions | 465 | 1,097 | 1,068 | 1,099 | |||||||||||||||
Plan amendments | 226 | (46,254 | ) | — | — | ||||||||||||||
Actuarial loss | 28,494 | 21,869 | 8,155 | 12,459 | |||||||||||||||
Liabilities for plans not previously included | 6,965 | — | 26,270 | — | |||||||||||||||
Curtailments | — | — | (7,299 | ) | — | ||||||||||||||
Settlements | (34,401 | ) | — | — | — | ||||||||||||||
Special termination benefits | — | — | 785 | — | |||||||||||||||
Benefits paid | (16,891 | ) | (9,492 | ) | (17,555 | ) | (8,743 | ) | |||||||||||
Foreign currency changes | (13,383 | ) | — | 12,332 | — | ||||||||||||||
Benefit obligation, end of year | $ | 345,828 | $ | 110,370 | $ | 349,316 | $ | 131,376 | |||||||||||
Accumulated benefit obligation | $ | 310,942 | — | $ | 318,648 | — | |||||||||||||
Weighted average assumptions used to determine benefit obligations, end of year: | |||||||||||||||||||
Discount rate | 5.32 | % | 5.70 | % | 5.69 | % | 5.75 | % | |||||||||||
Weighted average rate of compensation increase | 3.44 | % | 3.50 | % | 3.44 | % | 3.50 | % |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | 1 percentage point increase | 1 percentage point decrease | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Effect on postretirement benefit obligation | $ | 14,536 | $ | (11,873 | ) |
As of December 31, 2005 | As of December 31, 2004 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Pension Plans | Other Benefits | Pension Plans | Other Benefits | |||||||||||||||
Fair value of plan assets, beginning of year | $ | 238,604 | — | $ | 184,770 | — | |||||||||||||
Actual return on plan assets, net of expenses | 30,653 | — | 19,229 | — | |||||||||||||||
Assets related to plans not previously included | — | — | 16,041 | — | |||||||||||||||
Settlements | (34,401 | ) | — | — | — | ||||||||||||||
Employer contributions | 16,937 | 8,395 | 28,609 | 7,644 | |||||||||||||||
Plan participants’ contributions | 465 | 1,097 | 1,068 | 1,099 | |||||||||||||||
Benefits paid | (16,801 | ) | (9,492 | ) | (17,384 | ) | (8,743 | ) | |||||||||||
Management expenses | (90 | ) | — | (171 | ) | — | |||||||||||||
Foreign currency changes | (5,000 | ) | — | 6,442 | — | ||||||||||||||
Fair value of plan assets, end of year | $ | 230,368 | — | $ | 238,604 | — |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As of December 31, 2005 | As of December 31, 2004 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | Pension Plans | Other Benefits | Pension Plans | Other Benefits | |||||||||||||||
Fair value of plan assets | $ | 230,368 | $ | — | $ | 238,604 | $ | — | |||||||||||
Benefit obligation | (345,828 | ) | (110,370 | ) | (349,316 | ) | (131,376 | ) | |||||||||||
Funded status | (115,460 | ) | (110,370 | ) | (110,712 | ) | (131,376 | ) | |||||||||||
Amounts not yet recognized: | |||||||||||||||||||
Unrecognized net actuarial loss | 98,089 | 82,385 | 90,058 | 65,036 | |||||||||||||||
Unrecognized net transition obligation | 162 | — | 127 | — | |||||||||||||||
Unrecognized prior service cost (credit) | 6,500 | (50,974 | ) | 7,292 | (6,568 | ) | |||||||||||||
Fourth quarter contributions | 3,167 | — | 2,058 | — | |||||||||||||||
Accrued benefit cost, end of year | $ | (7,542 | ) | $ | (78,959 | ) | $ | (11,177 | ) | $ | (72,908 | ) | |||||||
Amounts recognized in the statement of financial position consist of the following: | |||||||||||||||||||
Prepaid benefit cost | $ | 2,255 | $ | — | $ | 2,482 | $ | — | |||||||||||
Accrued benefit cost | (80,727 | ) | (78,959 | ) | (83,899 | ) | (72,908 | ) | |||||||||||
Intangible asset | 6,662 | — | 7,419 | — | |||||||||||||||
Accumulated other comprehensive income before tax | 64,268 | — | 62,821 | — | |||||||||||||||
Net amount recognized | $ | (7,542 | ) | $ | (78,959 | ) | $ | (11,177 | ) | $ | (72,908 | ) |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Pension Plans | Other Benefits | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||||
Components of net periodic benefit cost: | |||||||||||||||||||||||||||
Service cost | $ | 6,241 | $ | 8,135 | $ | 6,473 | $ | 3,776 | $ | 3,180 | $ | 2,794 | |||||||||||||||
Interest cost | 18,795 | 18,648 | 16,575 | 7,997 | 7,289 | 6,743 | |||||||||||||||||||||
Expected return on assets | (16,875 | ) | (14,984 | ) | (12,491 | ) | — | — | — | ||||||||||||||||||
Amortization of prior service cost (credit) | 1,046 | 979 | 972 | (1,848 | ) | (947 | ) | (947 | ) | ||||||||||||||||||
Amortization of transition obligation | 32 | 110 | 78 | — | — | — | |||||||||||||||||||||
Amortization of net actuarial loss | 5,533 | 5,831 | 3,338 | 4,520 | 3,178 | 1,943 | |||||||||||||||||||||
Settlement | 1,003 | — | — | — | — | — | |||||||||||||||||||||
Curtailment gain | — | (347 | ) | — | — | — | — | ||||||||||||||||||||
Net periodic benefit cost | $ | 15,776 | $ | 18,372 | $ | 14,945 | $ | 14,445 | $ | 12,700 | $ | 10,533 | |||||||||||||||
Special termination benefits | — | $ | 785 | — | — | — | — | ||||||||||||||||||||
Weighted average assumptions use to determine net cost: | |||||||||||||||||||||||||||
Discount rate — U.S. Plans | 5.75 | % | 6.00 | % | 6.75 | % | 5.63 | % | 6.00 | % | 6.75 | % | |||||||||||||||
Discount rate — non U.S. Plans | 4.79 | % | 5.61 | % | 5.62 | % | — | — | — | ||||||||||||||||||
Expected return on plan assets — U.S. Plans | 8.50 | % | 8.50 | % | 8.50 | % | — | — | — | ||||||||||||||||||
Expected return on plan assets — non-U.S. Plans | 7.04 | % | 6.52 | % | 6.33 | % | — | — | — | ||||||||||||||||||
Rate of compensation increase — U.S. Plans | 3.50 | % | 3.50 | % | 3.50 | % | 3.50 | % | 3.50 | % | 4.50 | % | |||||||||||||||
Rate of compensation increase — non-U.S. Plans | 3.36 | % | 3.37 | % | 3.27 | % | — | — | — |
(in thousands) | 1 percentage point increase | 1 percentage point decrease | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Effect on total of service and interest cost | $ | 2,263 | $ | (1,786 | ) |
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 2006 | 2005 | 2004 | Target Allocation 2006 | 2005 | 2004 | |||||||||||||||||||||
Fixed income | 10 | % | 6 | % | 13 | % | 20 | % | 20 | % | 41 | % | |||||||||||||||
Equities | 45 | % | 49 | % | 52 | % | 72 | % | 72 | % | 55 | % | |||||||||||||||
Real Estate | 8 | % | 6 | % | 5 | % | 3 | % | 3 | % | 1 | % | |||||||||||||||
Cash | — | 7 | % | 2 | % | 5 | % | 5 | % | 3 | % | ||||||||||||||||
Other (1) | 37 | % | 32 | % | 28 | % | — | — | — | ||||||||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(1) | Includes hedged equity and absolute return strategies, and private equity |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Projected benefit obligation exceeds plan assets | Accumulated benefit obligation exceeds plan assets | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | 2005 | 2004 | 2005 | 2004 | |||||||||||||||
Projected benefit obligation | $ | 330,864 | $ | 301,706 | $ | 330,864 | $ | 301,706 | |||||||||||
Accumulated benefit obligation | 297,368 | 272,178 | 297,368 | 272,178 | |||||||||||||||
Fair value of plan assets | 214,004 | 189,470 | 214,004 | 189,470 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | Pension plans | Other benefits before subsidy | Other benefits government subsidy | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected employer contributions in the next fiscal year | $ | 26,533 | $ | 5,726 | $ | 666 | ||||||||
Expected benefit payments | ||||||||||||||
2006 | $ | 17,255 | $ | 5,726 | $ | 666 | ||||||||
2007 | 16,445 | 6,150 | 740 | |||||||||||
2008 | 17,316 | 6,458 | 828 | |||||||||||
2009 | 16,968 | 6,741 | 919 | |||||||||||
2010 | 17,448 | 7,077 | 998 | |||||||||||
2011–2015 | 100,066 | 40,345 | 6,090 |
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Change in cumulative translation adjustments | $ | (59,494 | ) | $ | 53,902 | $ | 81,787 | |||||||
Other noncurrent liabilities | (9,471 | ) | 5,002 | 7,881 | ||||||||||
Deferred taxes | 1,179 | 101 | (382 | ) | ||||||||||
Long-term debt | (40 | ) | 36 | 128 | ||||||||||
Accounts receivable | 12,673 | (11,544 | ) | (23,216 | ) | |||||||||
Inventories | 8,287 | (8,644 | ) | (16,636 | ) | |||||||||
Investments in associated companies | 562 | (672 | ) | (631 | ) | |||||||||
Property, plant and equipment, net | 27,225 | (24,561 | ) | (39,301 | ) | |||||||||
Goodwill and intangibles | 18,882 | (13,130 | ) | (23,843 | ) | |||||||||
Other | (9,970 | ) | 7,358 | (1,893 | ) | |||||||||
Effect of exchange rate changes | $ | (10,167 | ) | $ | 7,848 | $ | (16,106 | ) |
(in thousands) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Translation of non-U.S. subsidiaries | $ | (80,627 | ) | $ | 52,436 | $ | 83,216 | |||||||
Gain/(loss) on long-term intercompany loans | 19,476 | 498 | (1,281 | ) | ||||||||||
Gain/(loss) on derivative contracts designated as hedge | 1,657 | 968 | (148 | ) | ||||||||||
Effect of exchange rate changes | $ | (59,494 | ) | $ | 53,902 | $ | 81,787 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Class A Common Stock. Options are normally exercisable in five cumulative annual amounts beginning 12 months after date of grant. Option exercise prices were normally equal to and were not permitted to be less than the market value on the date of grant. The option granted by the Board in 1997 is not exercisable unless the Company’s share 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) | 2005 | 2004 | 2003 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net income, as reported | $ | 71,852 | $ | 10,385 | $ | 54,055 | ||||||||
Deduct: | ||||||||||||||
Total stock-based employee compensation expense determined under fair value based method for all awards, net of taxes | 1,473 | 2,402 | 2,694 | |||||||||||
Net income, pro forma | $ | 70,379 | $ | 7,983 | $ | 51,361 | ||||||||
Basic net income per share: | ||||||||||||||
As reported | $ | 2.25 | $ | 0.32 | $ | 1.64 | ||||||||
Pro forma | 2.20 | 0.25 | 1.56 | |||||||||||
Diluted earnings per share: | ||||||||||||||
As reported | $ | 2.22 | $ | 0.31 | $ | 1.61 | ||||||||
Pro forma | 2.17 | 0.24 | 1.53 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2005 | 2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares under option January 1 | 2,345,500 | 2,823,630 | 3,834,225 | |||||||||||
Options granted | — | — | — | |||||||||||
Options canceled | 50,040 | 27,300 | 24,460 | |||||||||||
Options exercised | 842,340 | 450,830 | 986,135 | |||||||||||
Shares under option at December 31 | 1,453,120 | 2,345,500 | 2,823,630 | |||||||||||
Options exercisable at December 31 | 1,019,420 | 1,673,560 | 1,846,040 | |||||||||||
Shares available for future option grants | 515,455 | 463,165 | 436,615 |
2005 | 2004 | 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares under option January 1 | $ | 19.13 | $ | 19.01 | $ | 18.69 | ||||||||
Options granted | — | — | — | |||||||||||
Options canceled | 19.50 | 18.50 | 18.15 | |||||||||||
Options exercised | 7.16 | 18.39 | 17.80 | |||||||||||
Shares under option December 31 | 20.26 | 19.13 | 19.01 | |||||||||||
Options exercisable December 31 | 18.90 | 18.12 | 18.28 |
Outstanding Options | Exercisable Options | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Exercise Price Range | Number | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | ||||||||||||||||||
$10.56 | 99,870 | 13.3 | $ | 10.56 | 99,870 | $ | 10.56 | ||||||||||||||||
$15.00–$15.69 | 99,450 | 10.8 | 15.51 | 99,450 | 15.51 | ||||||||||||||||||
$16.25–$16.75 | 59,300 | 5.0 | 16.48 | 59,300 | 16.48 | ||||||||||||||||||
$18.63–$18.75 | 62,400 | 7.7 | 18.73 | 62,400 | 18.73 | ||||||||||||||||||
$19.38 | 91,250 | 10.6 | 19.38 | 91,250 | 19.38 | ||||||||||||||||||
$19.75 | 82,200 | 10.1 | 19.75 | 82,200 | 19.75 | ||||||||||||||||||
$20.45–$20.63 | 501,100 | 14.4 | 20.55 | 317,400 | 20.53 | ||||||||||||||||||
$22.25 | 207,550 | 8.7 | 22.25 | 207,550 | 22.25 | ||||||||||||||||||
$25.56 | 250,000 | 11.8 | 25.56 | — | — | ||||||||||||||||||
1,453,120 | 11.7 | $ | 20.26 | 1,019,420 | $ | 18.90 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands) | Total restructuring costs incurred | Termination and other costs | Plant and equipment write-downs | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Paper Machine Clothing | $ | 62,405 | $ | 39,594 | $ | 22,811 | ||||||||
Applied Technologies | 9,141 | 6,688 | 2,453 | |||||||||||
Albany Door Systems | 3,616 | 2,632 | 984 | |||||||||||
Other | 647 | 647 | — | |||||||||||
Total | $ | 75,809 | $ | 49,561 | $ | 26,248 |
(in thousands) | December 31, 2004 | Payments | Currency translation/other | December 31, 2005 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination costs | $ | 6,270 | $ | (3,074 | ) | $ | (1,833 | ) | $ | 1,363 | ||||||||
Other restructuring costs | 646 | (268 | ) | (288 | ) | 90 | ||||||||||||
Total | $ | 6,916 | $ | (3,342 | ) | $ | (2,121 | ) | $ | 1,453 |
(in thousands) | January 1, 2004 | 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 |
(in thousands) | January 1, 2004 | Payments | Currency translation/other | December 31, 2005 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination costs | $ | 1,781 | $ | (704 | ) | $ | (34 | ) | $ | 1,043 | ||||||||
Lease obligations | 1,651 | (302 | ) | (197 | ) | 1,152 | ||||||||||||
Total | $ | 3,432 | $ | (1,006 | ) | $ | (231 | ) | $ | 2,195 |
(in thousands) | January 1, 2004 | 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 |
(unaudited)
(in millions except per share amounts) | 1st | 2nd | 3rd | 4th | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | ||||||||||||||||||
Net sales | $ | 241.1 | $ | 247.4 | $ | 242.3 | $ | 247.9 | ||||||||||
Gross profit | 98.3 | 101.2 | 99.6 | 92.9 | ||||||||||||||
Net income | 18.9 | 20.4 | 18.5 | 14.1 | ||||||||||||||
Basic earnings per share | 0.60 | 0.64 | 0.58 | 0.44 | ||||||||||||||
Diluted earnings per share | 0.59 | 0.63 | 0.57 | 0.43 | ||||||||||||||
Cash dividends per share | 0.08 | 0.08 | 0.09 | 0.09 | ||||||||||||||
Class A Common Stock prices: | ||||||||||||||||||
High | 34.50 | 33.27 | 37.65 | 39.21 | ||||||||||||||
Low | 29.80 | 30.00 | 32.25 | 36.01 | ||||||||||||||
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 | $ | 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 |
The Company’s Class A Common Stock is traded principally on the New York Stock Exchange. |
At December 31, 2005, there were approximately 5,400 shareholders. |
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
/s/ Joseph G. Morone, Ph.D. Joseph G. Morone, Ph.D. President and Chief Executive Officer and Director (Principal Executive Officer) | /s/ Michael C. Nahl Michael C. Nahl Executive Vice President and Chief Financial Officer (Principal Financial Officer) | /s/ Richard A. Carlstrom Richard A. Carlstrom Vice President and Controller (Principal Accounting Officer) |
(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 Company 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 website (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 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND RELATED STOCKHOLDER MATTERS |
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 | 1,203,120 | (1) | $ | 19.16 | 965,454 | (2)(3)(4) | ||||||||
Equity compensation plans not approved by security holders | 250,000 | $ | 25.56 | — | ||||||||||
Total | 1,453,120 | $ | 20.26 | 965,454 | (2)(3)(4) |
(1) | Does not include 49,001 shares that may be issued pursuant to 2005 performance incentive awards granted to certain executive officers pursuant to the 2005 Incentive Plan. Such awards are not “exercisable”, but will be paid out to the recipients in accordance with their terms, subject to certain conditions. See “Long Term Incentive Plans — Awards in Last Fiscal Year” on page 15 for a description of these awards. |
(2) | Reflects (a) the number of shares for which options may be granted as of January 1, 2006 under the Company’s 1998 Stock Option Plan (“the 1998 Plan”) and (b) the number of shares that may be issued as of January 1, 2006 pursuant to future awards under the 2005 Incentive Plan. Additional shares of Class A Common Stock are available for issuance under the 1998 Plan (see note 3 below) and the 2005 Incentive Plan (see note 4 below), as well as under the Directors’ Annual Retainer Plan (see note 5 below). |
(3) | Includes 515,455 shares available for future option grants under the 1998 Plan. The 1998 Plan allows the Board from time to time to increase the amount of shares available for future option grants, provided that it may not be increased by more than 500,000 in any calendar 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 2,012,455. |
(4) | Includes 450,999 shares available for future issuance under the 2005 Incentive Plan. The 2005 Incentive Plan allows the Board from time to time to increase the number of shares that may be issued pursuant to awards granted under that Plan, provided that the number of shares so added may not exceed 500,000 in any one calendar year, and provided further that the total number of shares then available for issuance under the Plan shall not exceed 1,000,000 at any time. Shares of Common Stock covered by awards granted under the 2005 Incentive Plan are only counted as used to the extent they are actually issued and delivered. Accordingly, if an award is settled for cash, or if shares are withheld to pay any exercise price or to satisfy any tax-withholding requirement, only shares issued (if any), net of shares withheld, will be deemed delivered for purposes of determining the number of shares available under the Plan. If shares are issued subject to conditions that may result in the forfeiture, cancellation or return of such shares to the Company, any shares forfeited, cancelled or returned shall be treated as not issued. If shares are tendered to the Company in payment of any obligation in connection with an award, the number of shares tendered shall be added to the number of shares available under the 2005 Incentive Plan. In addition, if the Company uses cash received in payment of the exercise price or purchase price in connection with any award to repurchase shares, the shares so repurchased will be added to the aggregate number of shares available under the 2005 Incentive Plan. Assuming full exercise by the Board of its power to increase annually the number of shares available under the 2005 Incentive Plan, the maximum number of additional shares that could yet be issued pursuant to the Plan awards (including those set forth in column (c) above) would be 4,950,999. |
(5) | The Directors’ Annual Retainer Plan provides that the aggregate dollar amount of the annual retainer payable for service as a member of the Company’s Board of Directors is $90,000. Currently, $20,000 of this total is required to be paid in shares of Class A Common Stock, 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 the 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. If the proposal to adopt a new Directors’ Annual Retainer Plan is approved by the stockholders, the portion of the annual retainer payable in shares of Class A Common Stock will be increased to $50,000. |
(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, 2005: Schedule II — Valuation and Qualifying Accounts | |||||
(a)(3) | Exhibits | |||||
3(a) | Certificate of Incorporation of Company. (3) | |||||
3(b) | Bylaws of Company. (9) | |||||
4(a) | Article IV of Certificate of Incorporation of Company (included in Exhibit 3(a)). | |||||
4(b) | Specimen Stock Certificate for Class A Common Stock. (1) |
10(i)(i) | Credit Agreement, dated as of August 11, 1999 (the “Credit Agreement”), among the Company, 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 Company 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)(i)(g) | Amendment No. 7, dated as of September 28, 2005, to the Receivables Sale Agreement. (21) | |||||
10(j)(ii) | Purchase and Sale Agreement, dated as of September 28, 2001, among the Company, 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(j)(ii)(c) | Amendment No. 3, dated as of May 1, 2005, to Exhibit A of the Purchase and Sale Agreement. (19) | |||||
10(k)(i) | Five-Year Revolving Credit Agreement, dated as of January 8, 2004, among the Company, 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) | ||||||
10(k)(ii) | Note Agreement and Guaranty between the Company and the Prudential Insurance Company of America and certain other purchasers named therein, dated as of October 25, 2005. (22) |
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) | |||||
10(l)(iii) | Amendment No. 1, dated as of November 30, 2005, to the 2003 Restricted Stock Unit Plan (24) | |||||
10(l)(iv) | Amendment No. 2, dated as of February 15, 2006, to the 2003 Restricted Stock Unit Plan (25) |
10(m)(i) | Form of Stock Option Agreement, dated as of August 1, 1983, between the Company 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 Company 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) | |||||
10(m)(viii) | 2005 Incentive Plan. (20) | |||||
10(m)(ix) | Form of 2005 Performance Bonus Agreement. (20) | |||||
10(m)(x) | Form of 2006 Performance Bonus Agreement. (26) |
10(n) | Pension Equalization Plan adopted April 16, 1986, naming two current executive officers and one former executive officer of Company 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) | |||||
10(o)(vi) | Excerpt from the Company’s Corporate Governance Guidelines describing director compensation. (23) |
10(p) | Code of Ethics. Filed herewith. (15) | |||||
10(q) | Directors Pension Plan, amendment dated as of January 12, 2005 (18) | |||||
10(r) | Employment agreement, dated May 12, 2005, between the Company and Joseph G. Morone. (20) | |||||
10(s) | Employment letter, dated June 21, 2001, with Dieter Polt. Filed herewith. | |||||
13 | Annual Report to Security Holders for the year ended December 31, 2005. Filed herewith. | |||||
21 | Subsidiaries of Company. Filed herewith. | |||||
23 | Consent of PricewaterhouseCoopers LLP. Filed herewith. | |||||
24 | Powers of Attorney. Filed herewith. | |||||
31(a) | Certification of Joseph G. Morone 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 Joseph G. Morone 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. |
(1) | Previously filed as an Exhibit to the Company’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 Company’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 Company’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 Company’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 Company’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 Company’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 Company’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 Company’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 Company’s Quarterly Report on Form 10-Q dated November 14, 2005, which previously filed Exhibit is incorporated by reference herein. |
(10) | Previously filed as an Exhibit to the Company’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 Company’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 Company’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 Company’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 Company’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 Company’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 to the Company’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 to the Company’s Current Report on Form 8-K filed November 23, 2004, which previously filed Exhibit is incorporated by reference herein. |
(18) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed January 13, 2005, which previously filed Exhibit is incorporated by reference herein. |
(19) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed May 2, 2005, which previously filed Exhibit is incorporated by reference herein. |
20. | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed May 18, 2005, which previously filed Exhibit is incorporated by reference herein. |
(21) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed September 29, 2005, which previously filed Exhibit is incorporated by reference herein. |
(22) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed October 26, 2005, which previously filed Exhibit is incorporated by reference herein. |
(23) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed February 23, 2006, which previously filed Exhibit is incorporated by reference herein. |
(24) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed December 6, 2005, which previously filed Exhibit is incorporated by reference herein. |
(25) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed February 21, 2006, which previously filed Exhibit is incorporated by reference herein. |
(26) | Previously filed as an Exhibit to the Company’s Current Report on Form 8-K filed February 22, 2006, which previously filed Exhibit is incorporated by reference herein. |
by | /s/ Michael C. Nahl Michael C. Nahl Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Signature | Title | Date | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
* Joseph G. Morone | President and Chief Executive Officer and Director (Principal Executive Officer) | March 1, 2006 | ||||||||
/s/ Michael C. Nahl Michael C. Nahl | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | March1, 2006 | ||||||||
* Richard A. Carlstrom | Vice President — Controller (Principal Accounting Officer) | March 1, 2006 | ||||||||
* Frank R. Schmeler | Chairman of the Board | March 1, 2006 | ||||||||
* Thomas R. Beecher Jr. | Director | March 1, 2006 | ||||||||
* Paula H.J. Cholmondeley | Director | March 1, 2006 | ||||||||
* Erland E. Kailbourne | Director | March 1, 2006 | ||||||||
* Francis L. McKone | Director | March 1, 2006 | ||||||||
* Juhani Pakkala | Director | March 1, 2006 | ||||||||
* Christine L. Standish | Director | March 1, 2006 | ||||||||
* John C. Standish | Director | March 1, 2006 | ||||||||
* John F. Cassidy | Director | March 1, 2006 | ||||||||
*By /s/ Michael C. Nahl Michael C. Nahl Attorney-in-fact | March 1, 2006 |
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: | ||||||||||||||||||||||
2005 | $ | 8,308 | $ | 1,027 | $ | (3,487 | ) | $ | 5,848 | |||||||||||||
2004 | 6,968 | 2,130 | (790 | ) | 8,308 | |||||||||||||||||
2003 | 11,790 | 2,841 | (7,663 | ) (B) | 6,968 | |||||||||||||||||
Allowance for inventory obsolescence | �� | |||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2005 | $ | 7,236 | $ | 2,325 | $ | (3,113 | ) | $ | 6,448 | |||||||||||||
2004 | 8,626 | 2,111 | (3,501 | ) | 7,236 | |||||||||||||||||
2003 | 7,105 | 3,872 | (2,351 | ) | 8,626 | |||||||||||||||||
Allowance for sales returns | ||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2005 | $ | 9,695 | $ | 9,847 | $ | (7,751 | ) | $ | 11,791 | |||||||||||||
2004 | 8,633 | 10,204 | (9,142 | ) | 9,695 | |||||||||||||||||
2003 | 7,635 | 7,749 | (6,751 | ) | 8,633 | |||||||||||||||||
Valuation allowance deferred tax assets | ||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||
2005 | $ | 12,455 | $ | 4,100 | $ | (6,263 | ) | $ | 10,292 | |||||||||||||
2004 | 6,793 | 7,100 | (1,438 | ) | 12,455 | |||||||||||||||||
2003 | 1,690 | 4,500 | 603 | 6,793 |
(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. |