SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Exact name of registrant as specified in its charter)
Delaware | 14-0462060 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
1373 Broadway, Albany, New York | 12204 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ]
Page No. | ||||||||||
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Part I | Financial information | |||||||||
Item 1. Financial Statements (unaudited) | ||||||||||
Consolidated statements of income — three and nine months ended September 30, 2007 and 2006 | 1 | |||||||||
Consolidated balance sheets — September 30, 2007 and December 31, 2006 | 2 | |||||||||
Consolidated statements of cash flows — three and nine months ended September 30, 2007 and 2006 | 3 | |||||||||
Notes to consolidated financial statements | 4–26 | |||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27–44 | |||||||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 45 | |||||||||
Item 4. Controls and Procedures | 45 | |||||||||
Part II | Other information | |||||||||
Item 1. Legal Proceedings | 46–48 | |||||||||
Item 1A. Risk Factors | 49 | |||||||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 49 | |||||||||
Item 3. Defaults upon Senior Securities | 49 | |||||||||
Item 4. Submission of Matters to a Vote of Security Holders | 49 | |||||||||
Item 5. Other Information | 49 | |||||||||
Item 6. Exhibits | 49 |
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2007 | 2006 | 2007 | 2006 | |||||||||||||||||
$276,252 | $242,838 | Net sales | $ | 801,259 | $ | 755,691 | ||||||||||||||
182,463 | 149,537 | Cost of goods sold | 512,476 | 454,405 | ||||||||||||||||
93,789 | 93,301 | Gross profit | 288,783 | 301,286 | ||||||||||||||||
78,067 | 69,521 | Selling, technical, general and research expenses | 235,379 | 219,147 | ||||||||||||||||
13,512 | 4,096 | Restructuring and other | 28,233 | 4,096 | ||||||||||||||||
2,210 | 19,684 | Operating income | 25,171 | 78,043 | ||||||||||||||||
3,861 | 1,738 | Interest expense, net | 10,873 | 6,329 | ||||||||||||||||
1,840 | 2,169 | Other expense, net | 2,861 | 2,941 | ||||||||||||||||
(3,491 | ) | 15,777 | (Loss)/income before income taxes | 11,437 | 68,773 | |||||||||||||||
185 | 1,253 | Income tax expense | 1,168 | 16,990 | ||||||||||||||||
(3,676 | ) | 14,524 | (Loss)/income before associated companies | 10,269 | 51,783 | |||||||||||||||
(195 | ) | (196 | ) | Equity in (losses)/earnings of associated companies | (430 | ) | 47 | |||||||||||||
($3,871 | ) | $14,328 | Net (loss)/income | $ | 9,839 | $ | 51,830 | |||||||||||||
(Losses)/earnings per share: | ||||||||||||||||||||
($0.13 | ) | $0.49 | Basic | $ | 0.33 | $ | 1.73 | |||||||||||||
($0.13 | ) | $0.48 | Diluted | $ | 0.33 | $ | 1.70 | |||||||||||||
Shares used in computing (losses)/earnings per share: | ||||||||||||||||||||
29,492 | 29,103 | Basic | 29,380 | 30,017 | ||||||||||||||||
29,492 | 29,594 | Diluted | 29,790 | 30,539 | ||||||||||||||||
$0.11 | $0.10 | Dividends per share | $ | 0.32 | $ | 0.29 |
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited) September 30, 2007 | December 31, 2006 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||
Cash and cash equivalents | $ | 46,767 | $ | 68,237 | ||||||
Accounts receivable, net | 232,551 | 202,611 | ||||||||
Inventories | 252,134 | 224,210 | ||||||||
Income taxes receivable and deferred | 44,322 | 23,586 | ||||||||
Prepaid expenses | 16,009 | 10,552 | ||||||||
Total current assets | 591,783 | 529,196 | ||||||||
Property, plant and equipment, net | 459,888 | 397,521 | ||||||||
Investments in associated companies | 5,973 | 6,634 | ||||||||
Intangibles | 11,754 | 9,343 | ||||||||
Goodwill | 189,559 | 172,890 | ||||||||
Deferred taxes | 106,712 | 112,280 | ||||||||
Cash surrender value of life insurance policies | 42,861 | 41,197 | ||||||||
Other assets | 53,187 | 37,486 | ||||||||
Total assets | $ | 1,461,717 | $ | 1,306,547 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Notes and loans payable | $ | 21,673 | $ | 12,510 | ||||||
Accounts payable | 55,198 | 50,214 | ||||||||
Accrued liabilities | 140,882 | 101,995 | ||||||||
Current maturities of long-term debt | 1,225 | 11,167 | ||||||||
Income taxes payable and deferred | 6,662 | 20,099 | ||||||||
Total current liabilities | 225,640 | 195,985 | ||||||||
Long-term debt | 411,560 | 354,587 | ||||||||
Other noncurrent liabilities | 219,641 | 219,774 | ||||||||
Deferred taxes and other credits | 53,964 | 37,076 | ||||||||
Total liabilities | 910,805 | 807,422 | ||||||||
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 34,819,384 in 2007 and 34,518,870 in 2006. | 35 | 35 | ||||||||
Class B Common Stock, par value $.001 per share; authorized 25,000,000 shares; issued and outstanding 3,236,098 in 2007 and 2006 | 3 | 3 | ||||||||
Additional paid in capital | 325,976 | 316,164 | ||||||||
Retained earnings | 539,539 | 541,602 | ||||||||
Accumulated items of other comprehensive income: | ||||||||||
Translation adjustments | 26,944 | (18,348 | ) | |||||||
Pension liability adjustment | (82,562 | ) | (81,071 | ) | ||||||
809,935 | 758,385 | |||||||||
Less treasury stock (Class A), at cost (8,530,066 shares in 2007 and 8,540,882 in 2006) | 259,023 | 259,260 | ||||||||
Total shareholders’ equity | 550,912 | 499,125 | ||||||||
Total liabilities and shareholders’ equity | $ | 1,461,717 | $ | 1,306,547 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 | 2006 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | 9,839 | $ | 51,830 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Equity in losses/(earnings) of associated companies | 430 | (47 | ) | ||||||||
Depreciation | 43,020 | 40,348 | |||||||||
Amortization | 3,605 | 3,096 | |||||||||
Provision for deferred income taxes, other credits and long-term liabilities | (2,925 | ) | (17,067 | ) | |||||||
Provision for write-off of equipment | 3,452 | 506 | |||||||||
Increase in cash surrender value of life insurance | (2,146 | ) | (2,562 | ) | |||||||
Unrealized currency transaction gains and losses | (273 | ) | 2,112 | ||||||||
Shares contributed to ESOP | 4,065 | 5,209 | |||||||||
Stock option expense | 602 | 1,154 | |||||||||
Excess tax benefit of options exercised | (1,088 | ) | (697 | ) | |||||||
Issuance of shares under long-term incentive plan | 937 | — | |||||||||
Changes in operating assets and liabilities, net of business acquisition: | |||||||||||
Accounts receivable | (16,895 | ) | (61,728 | ) | |||||||
Note receivable | — | 17,827 | |||||||||
Inventories | (18,804 | ) | (24,093 | ) | |||||||
Income taxes prepaid and receivable | (16,076 | ) | — | ||||||||
Prepaid expenses | (4,570 | ) | (2,139 | ) | |||||||
Accounts payable | 922 | (2,632 | ) | ||||||||
Accrued liabilities | 33,449 | 15,333 | |||||||||
Income taxes payable | 1,667 | (1,155 | ) | ||||||||
Other, net | 61 | (4,200 | ) | ||||||||
Net cash provided by operating activities | 39,272 | 21,095 | |||||||||
INVESTING ACTIVITIES | |||||||||||
Purchases of property, plant and equipment | (90,684 | ) | (54,334 | ) | |||||||
Purchased software | (11,687 | ) | (306 | ) | |||||||
Acquisitions, net of cash acquired | (9,592 | ) | (7,918 | ) | |||||||
Cash received from life insurance policy terminations | 1,470 | — | |||||||||
Premiums paid for life insurance policies | (988 | ) | — | ||||||||
Net cash (used in) investing activities | (111,481 | ) | (62,558 | ) | |||||||
FINANCING ACTIVITIES | |||||||||||
Proceeds from borrowings | 83,697 | 209,530 | |||||||||
Principal payments on debt | (28,104 | ) | (16,488 | ) | |||||||
Purchase of treasury shares | — | (131,499 | ) | ||||||||
Purchase of call options on common stock | — | (47,688 | ) | ||||||||
Sale of common stock warrants | — | 32,961 | |||||||||
Proceeds from options exercised | 2,958 | 2,428 | |||||||||
Excess tax benefit of options exercised | 1,088 | 697 | |||||||||
Debt issuance costs | — | (5,434 | ) | ||||||||
Dividends paid | (9,088 | ) | (8,533 | ) | |||||||
Net cash provided by financing activities | 50,551 | 35,974 | |||||||||
Effect of exchange rate changes on cash flows | 188 | 3,503 | |||||||||
(Decrease) in cash and cash equivalents | (21,470 | ) | (1,986 | ) | |||||||
Cash and cash equivalents at beginning of year | 68,237 | 72,771 | |||||||||
Cash and cash equivalents at end of period | $ | 46,767 | $ | 70,785 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | ||||||
---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | September 30, 2007 | | December 31, 2006 | ||||||
Finished goods | $ | 123,315 | $ | 120,158 | ||||||
Work in process | 69,561 | 59,738 | ||||||||
Raw material and supplies | 59,258 | 44,314 | ||||||||
Total inventories | $ | 252,134 | $ | 224,210 |
| | | | | | | | | | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | Balance at December 31, 2006 | | Amortization | | Currency translation | | Other Changes | | Balance at September 30, 2007 | ||||||||||||
Amortized intangible assets: | ||||||||||||||||||||||
Trade names | $ | 2,339 | ($377 | ) | $ | 16 | $ | 230 | $ | 2,208 | ||||||||||||
Patents | 2,450 | (276 | ) | 17 | — | 2,191 | ||||||||||||||||
Customer contracts | 4,202 | (555 | ) | — | 3,310 | 6,957 | ||||||||||||||||
Technology | 352 | (24 | ) | — | 70 | 398 | ||||||||||||||||
Total amortized intangible assets | $ | 9,343 | ($1,232 | ) | $ | 33 | $ | 3,610 | $ | 11,754 | ||||||||||||
Unamortized intangible assets: | ||||||||||||||||||||||
Goodwill | $ | 172,890 | — | $ | 11,988 | $ | 4,681 | $ | 189,559 |
Company has not completed its purchase price allocation for deferred taxes that relate to the R-Bac acquisition.
| | | |||
---|---|---|---|---|---|
Year | | Annual amortization (in thousands) | |||
2007 | $2,200 | ||||
2008 | 2,500 | ||||
2009 | 2,300 | ||||
2010 | 1,900 | ||||
2011 | 900 | ||||
$9,800 |
| | | | | | | | | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
(in thousands) | | 2007 | | 2006 | | 2007 | | 2006 | ||||||||||
Currency transactions | $ | 104 | $ | 344 | ($589 | ) | ($1,939 | ) | ||||||||||
Debt costs | 537 | 552 | 1,436 | 1,480 | ||||||||||||||
Securitization program | — | 573 | — | 2,254 | ||||||||||||||
Other miscellaneous expense | 1,199 | 700 | 2,014 | 1,146 | ||||||||||||||
Total | $ | 1,840 | $ | 2,169 | $ | 2,861 | $ | 2,941 |
| | | | | | | | | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
(in thousands, except market price data) | | 2007 | | 2006 | | 2007 | | 2006 | ||||||||||
Net (loss)/income available to common shareholders | ($3,871 | ) | $ | 14,328 | $ | 9,839 | $ | 51,830 | ||||||||||
Weighted average number of shares: | ||||||||||||||||||
Weighted average number of shares used in calculating basic (losses)/earnings per share | 29,492 | 29,103 | 29,380 | 30,017 | ||||||||||||||
Effect of dilutive stock-based compensation plans: | ||||||||||||||||||
Stock options | — | 442 | 389 | 473 | ||||||||||||||
Long-term incentive plan | — | 49 | 21 | 49 | ||||||||||||||
Weighted average number of shares used in calculating diluted (losses)/earnings per share | 29,492 | 29,594 | 29,790 | 30,539 | ||||||||||||||
Effect of stock-based compensation plans that were not included in the computation of diluted earnings per share because to do so would have been antidilutive | 398 | — | — | — | ||||||||||||||
Average market price of common stock used for calculation of dilutive shares | $ | 39.11 | $ | 35.70 | $ | 37.16 | $ | 37.48 | ||||||||||
(Losses)/earnings per share: | ||||||||||||||||||
Basic | ($0.13 | ) | $ | 0.49 | $ | 0.33 | $ | 1.73 | ||||||||||
Diluted | ($0.13 | ) | $ | 0.48 | $ | 0.33 | $ | 1.70 |
| | | | | | | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Class A Shares | | Class B Shares | | Less: Class A Treasury shares | | Net shares Outstanding | |||||||||||
December 31, 2006 | 34,518,870 | 3,236,098 | (8,540,882 | ) | 29,214,086 | |||||||||||||
March 31, 2007 | 34,633,542 | 3,236,098 | (8,540,882 | ) | 29,328,758 | |||||||||||||
June 30, 2007 | 34,750,275 | 3,236,098 | (8,530,066 | ) | 29,456,307 | |||||||||||||
September 30, 2007 | 34,819,384 | 3,236,098 | (8,530,066 | ) | 29,525,416 |
| | | | | | | | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
(in thousands) | | 2007 | | 2006 | | 2007 | | 2006 | |||||||||||
Net (loss)/income | ($3,871 | ) | $ | 14,328 | $ | 9,839 | $ | 51,830 | |||||||||||
Other comprehensive income: | |||||||||||||||||||
Foreign currency translation adjustments | 27,425 | 7,462 | 45,292 | 36,198 | |||||||||||||||
Amortization of pension liability adjustment, after tax | (497 | ) | — | (1,491 | ) | — | |||||||||||||
Other comprehensive income, net of tax | 26,928 | 7,462 | 43,801 | 36,198 | |||||||||||||||
Comprehensive income | $ | 23,057 | $ | 21,790 | $ | 53,640 | $ | 88,028 |
| | | | | | | | | | | | | | | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | Class A Common Stock | | Class B Common Stock | | Additional paid in capital | | Retained earnings | | Accumulated items of other comprehensive income | | Treasury stock | | Total Shareholders’ Equity | ||||||||||||||||
December 31, 2006 | $ | 35 | $ | 3 | $ | 316,164 | $ | 541,602 | ($99,419 | ) | ($259,260 | ) | $ | 499,125 | ||||||||||||||||
Net income | 9,839 | 9,839 | ||||||||||||||||||||||||||||
Shares contributed to ESOP | 4,065 | 4,065 | ||||||||||||||||||||||||||||
Proceeds from options exercised | 2,958 | 2,958 | ||||||||||||||||||||||||||||
Dividends declared | (9,413 | ) | (9,413 | ) | ||||||||||||||||||||||||||
Stock option expense | 602 | 602 | ||||||||||||||||||||||||||||
Tax benefit of options exercised | 1,088 | 1,088 | ||||||||||||||||||||||||||||
Issuance of shares under long-term incentive plan | 937 | 937 | ||||||||||||||||||||||||||||
Cumulative change in liability for unrecognized tax benefits | (2,491 | ) | (2,491 | ) | ||||||||||||||||||||||||||
Amortization of pension liability adjustment | (1,491 | ) | (1,491 | ) | ||||||||||||||||||||||||||
Cumulative translation adjustment/other | 162 | 2 | 45,292 | 237 | 45,693 | |||||||||||||||||||||||||
September 30, 2007 | $ | 35 | $ | 3 | $ | 325,976 | $ | 539,539 | ($55,618 | ) | ($259,023 | ) | $ | 550,912 |
| | | | | | | | | |||||||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
(in thousands) | | 2007 | | 2006 | | 2007 | | 2006 | |||||||||||
Net Sales | |||||||||||||||||||
Paper Machine Clothing | $ | 193,377 | $ | 178,209 | $ | 564,348 | $ | 556,568 | |||||||||||
Applied Technologies | 45,512 | 35,240 | 131,729 | 110,847 | |||||||||||||||
Albany Door Systems | 37,363 | 29,389 | 105,182 | 88,276 | |||||||||||||||
Consolidated total | $ | 276,252 | $ | 242,838 | $ | 801,259 | $ | 755,691 | |||||||||||
Operating Income | |||||||||||||||||||
Paper Machine Clothing | $ | 17,324 | $ | 29,030 | $ | 68,134 | $ | 106,532 | |||||||||||
Applied Technologies | 3,702 | 3,648 | 12,640 | 13,903 | |||||||||||||||
Albany Door Systems | (99 | ) | 1,054 | (556 | ) | 3,518 | |||||||||||||
Research expense | (5,896 | ) | (4,841 | ) | (16,610 | ) | (16,405 | ) | |||||||||||
Unallocated expenses | (12,821 | ) | (9,207 | ) | (38,437 | ) | (29,505 | ) | |||||||||||
Operating income before reconciling items | 2,210 | 19,684 | 25,171 | 78,043 | |||||||||||||||
Reconciling items: | |||||||||||||||||||
Interest expense, net | (3,861 | ) | (1,738 | ) | (10,873 | ) | (6,329 | ) | |||||||||||
Other (expense), net | (1,840 | ) | (2,169 | ) | (2,861 | ) | (2,941 | ) | |||||||||||
Consolidated (loss)/income before income taxes | ($3,491 | ) | $ | 15,777 | $ | 11,437 | $ | 68,773 |
| | | | | | | | | | | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, 2007 | Three Months Ended September 30, 2006 | ||||||||||||||||||||||
Operating income effect of: | |||||||||||||||||||||||
(in thousands) | | Restructuring and other | | Idle capacity costs at plants closing | | Performance improvement initiatives | | Total | | Restructuring and other | |||||||||||||
Paper Machine Clothing | ($13,204 | ) | ($2,331 | ) | ($3,190 | ) | ($18,725 | ) | ($3,022 | ) | |||||||||||||
Applied Technologies | — | — | (452 | ) | (452 | ) | — | ||||||||||||||||
Albany Door Systems | — | — | (1,085 | ) | (1,085 | ) | — | ||||||||||||||||
Research | (308 | ) | — | — | (308 | ) | — | ||||||||||||||||
Unallocated | — | — | (1,798 | ) | (1,798 | ) | (1,074 | ) | |||||||||||||||
Consolidated total | ($13,512 | ) | ($2,331 | ) | ($6,525 | ) | ($22,368 | ) | ($4,096 | ) |
| | | | | | | | | | | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nine Months Ended September 30, 2007 | Nine Months Ended September 30, 2006 | ||||||||||||||||||||||
Operating income effect of: | |||||||||||||||||||||||
(in thousands) | | Restructuring and other | | Idle capacity costs at plants closing | | Performance improvement initiatives | | Total | | Restructuring and other | |||||||||||||
Paper Machine Clothing | ($23,091 | ) | ($2,331 | ) | ($5,768 | ) | ($31,190 | ) | ($3,022 | ) | |||||||||||||
Applied Technologies | — | — | (452 | ) | (452 | ) | — | ||||||||||||||||
Albany Door Systems | (2,224 | ) | — | (1,085 | ) | (3,309 | ) | — | |||||||||||||||
Research | (308 | ) | — | — | (308 | ) | — | ||||||||||||||||
Unallocated | (2,610 | ) | — | (5,894 | ) | (8,504 | ) | (1,074 | ) | ||||||||||||||
Consolidated total | ($28,233 | ) | ($2,331 | ) | ($13,199 | ) | ($43,763 | ) | ($4,096 | ) |
| | | | | | | | | | | | | ||||||||||||||
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Three Months Ended September 30, 2006 | Nine Months Ended September 30, 2006 | |||||||||||||||||||||||||
(in thousands) | | As orginally Reported | | Reclassification | | As Adjusted | | As orginally Reported | | Reclassification | | As Adjusted | ||||||||||||||
Operating income | ||||||||||||||||||||||||||
Paper Machine Clothing | $ | 30,139 | ($1,109 | ) | $ | 29,030 | $ | 110,927 | ($4,395 | ) | $ | 106,532 | ||||||||||||||
Applied Technologies | 4,178 | (530 | ) | 3,648 | 15,433 | (1,530 | ) | 13,903 | ||||||||||||||||||
Albany Door Systems | 1,549 | (495 | ) | 1,054 | 5,048 | (1,530 | ) | 3,518 | ||||||||||||||||||
Research expense | (7,333 | ) | 2,492 | (4,841 | ) | (23,869 | ) | 7,464 | (16,405 | ) | ||||||||||||||||
Unallocated expenses | (8,849 | ) | (358 | ) | (9,207 | ) | (29,496 | ) | (9 | ) | (29,505 | ) | ||||||||||||||
Consolidated total | $ | 19,684 | $ | — | $ | 19,684 | $ | 78,043 | $ | — | $ | 78,043 |
costs had been borne directly by Brandon. During 2004, Brandon’s insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings.
| | | | | | | | | ||||||||||
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Pension Plans | Other Benefits | |||||||||||||||||
(in thousands) | | 2007 | | 2006 | | 2007 | | 2006 | ||||||||||
Service cost | $ | 1,773 | $ | 1,761 | $ | 641 | $ | 654 | ||||||||||
Interest cost | 5,334 | 4,471 | 1,540 | 1,459 | ||||||||||||||
Expected return on plan assets | (5,513 | ) | (4,405 | ) | — | — | ||||||||||||
Amortization: | ||||||||||||||||||
Transition obligation | 8 | 27 | — | — | ||||||||||||||
Prior service cost/(credit) | 209 | 237 | (1,052 | ) | (1,138 | ) | ||||||||||||
Net actuarial loss | 1,108 | 1,361 | 891 | 1,092 | ||||||||||||||
Net periodic benefit costs | $ | 2,919 | $ | 3,452 | $ | 2,020 | $ | 2,067 |
| | | | | | | | | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Pension Plans | Other Benefits | |||||||||||||||||
(in thousands) | | 2007 | | 2006 | | 2007 | | 2006 | ||||||||||
Service cost | $ | 5,569 | $ | 5,283 | $ | 1,923 | $ | 1,962 | ||||||||||
Interest cost | 15,872 | 13,413 | 4,620 | 4,378 | ||||||||||||||
Expected return on plan assets | (16,293 | ) | (13,215 | ) | — | — | ||||||||||||
Amortization: | ||||||||||||||||||
Transition obligation | 24 | 81 | — | — | ||||||||||||||
Prior service cost/(credit) | 661 | 711 | (3,156 | ) | (3,414 | ) | ||||||||||||
Net actuarial loss | 3,838 | 4,083 | 2,673 | 3,275 | ||||||||||||||
Net periodic benefit costs | $ | 9,671 | $ | 10,356 | $ | 6,060 | $ | 6,201 |
benefit and other postretirement benefit plan. Effective December 31, 2008, FAS No. 158 will require plan assets and benefit obligations to be measured at December 31. The Company currently performs this measurement at September 30 for its retirement plan. In addition, beginning in the fourth quarter of 2007, the Standard will eliminate the use of a three-month lag period when recognizing the impact of curtailments or settlements, and instead, recognize these amounts in the period in which they occur.
| | | | | ||||||
---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | September 30, 2007 | | December 31, 2006 | ||||||
Convertible notes issued in March 2006 with fixed interest rates of 2.25%, due in year 2026. | $ | 180,000 | $ | 180,000 | ||||||
Private placement with a fixed interest rate of 5.34%, due in years 2013 through 2017. | 150,000 | 150,000 | ||||||||
April 2006 credit agreement with borrowings outstanding at an average interest rate of 6.15% in 2007 and 5.82% in 2006. | 81,000 | 23,000 | ||||||||
Various notes and mortgages relative to operations principally outside the United States, at an average rate of 5.59% in 2007 and 5.81% in 2006 due in varying amounts through 2021. | 1,127 | 1,822 | ||||||||
Industrial revenue financings at an average interest rate of 1.75% in 2007 and 7.06% in 2006, due in varying amounts through 2009. | 658 | 10,932 | ||||||||
Long term debt | 412,785 | 365,754 | ||||||||
Less: current portion | (1,225 | ) | (11,167 | ) | ||||||
Long term debt, net of current portion | $ | 411,560 | $ | 354,587 |
| | | | | | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | Total restructuring costs incurred | | Termination and other costs | | Plant and equipment writedowns | ||||||||
Paper Machine Clothing | $ | 23,396 | $ | 19,827 | $ | 3,569 | ||||||||
Albany Door Systems | 2,227 | 2,227 | — | |||||||||||
Corporate Headquarters | 2,610 | 2,610 | — | |||||||||||
Total | $ | 28,233 | $ | 24,664 | $ | 3,569 |
| | | | | | | | | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | Restructuring charges accrued | | Payments | | Currency translation/other | | September 30, 2007 | ||||||||||
Termination costs | $ | 21,147 | ($5,855 | ) | ($483 | ) | $ | 14,809 | ||||||||||
Other restructuring costs | 3,517 | (2,549 | ) | (45 | ) | 923 | ||||||||||||
Total | $ | 24,664 | ($8,404 | ) | ($528 | ) | $ | 15,732 |
of Financial Condition and Results of Operations
lower average prices in Western Europe were more than offset by significantly higher volumes and orders year to date were 11.8% higher than the same period in 2006.
| | | | | | | | | | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three months ended September 30, | ||||||||||||||||||||||
(in thousands) | | 2007 | | 2006 | | Percent change | | Increase due to changes in currency translation rates | | Percent change Excluding currency rate effect | ||||||||||||
Paper Machine Clothing | $ | 193,377 | $ | 178,209 | 8.5 | % | $ | 6,251 | 5.0 | % | ||||||||||||
Applied Technologies | 45,512 | 35,240 | 29.1 | % | 1,958 | 23.6 | % | |||||||||||||||
Albany Door Systems | 37,363 | 29,389 | 27.1 | % | 2,384 | 19.0 | % | |||||||||||||||
Consolidated total | $ | 276,252 | $ | 242,838 | 13.8 | % | $ | 10,593 | 9.4 | % |
| | | | | | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | | Total restructuring costs incurred | | Termination and other costs | | Plant and equipment writedowns | ||||||||
Paper Machine Clothing | $ | 23,396 | $ | 19,827 | $ | 3,569 | ||||||||
Albany Door Systems | 2,227 | 2,227 | — | |||||||||||
Corporate Headquarters | 2,610 | 2,610 | — | |||||||||||
Total | $ | 28,233 | $ | 24,664 | $ | 3,569 |
| | | | | | | | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
(in thousands) | | 2007 | | 2006 | | 2007 | | 2006 | |||||||||||
Operating Income | |||||||||||||||||||
Paper Machine Clothing | $ | 17,324 | $ | 29,030 | $ | 68,134 | $ | 106,532 | |||||||||||
Applied Technologies | 3,702 | 3,648 | 12,640 | 13,903 | |||||||||||||||
Albany Door Systems | (99 | ) | 1,054 | (556 | ) | 3,518 | |||||||||||||
Research expense | (5,896 | ) | (4,841 | ) | (16,610 | ) | (16,405 | ) | |||||||||||
Unallocated expenses | (12,821 | ) | (9,207 | ) | (38,437 | ) | (29,505 | ) | |||||||||||
Operating income before reconciling items | 2,210 | 19,684 | 25,171 | 78,043 | |||||||||||||||
Reconciling items: | |||||||||||||||||||
Interest expense, net | (3,861 | ) | (1,738 | ) | (10,873 | ) | (6,329 | ) | |||||||||||
Other (expense)/income, net | (1,840 | ) | (2,169 | ) | (2,861 | ) | (2,941 | ) | |||||||||||
Consolidated (loss)/income before income taxes | ($3,491 | ) | $ | 15,777 | $ | 11,437 | $ | 68,773 |
| | | | | | | | | | | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, 2007 | Three Months Ended September 30, 2006 | ||||||||||||||||||||||
Operating income effect of: | |||||||||||||||||||||||
(in thousands) | | Restructuring and other | | Idle capacity costs at plants closing | | Performance improvement initiatives | | Total | | Restructuring and other | |||||||||||||
Paper Machine Clothing | ($13,204 | ) | ($2,331 | ) | ($3,190 | ) | ($18,725 | ) | ($3,022 | ) | |||||||||||||
Applied Technologies | — | — | (452 | ) | (452 | ) | — | ||||||||||||||||
Albany Door Systems | — | — | (1,085 | ) | (1,085 | ) | — | ||||||||||||||||
Research | (308 | ) | — | — | (308 | ) | — | ||||||||||||||||
Unallocated | — | — | (1,798 | ) | (1,798 | ) | (1,074 | ) | |||||||||||||||
Consolidated total | ($13,512 | ) | ($2,331 | ) | ($6,525 | ) | ($22,368 | ) | ($4,096 | ) |
| | | | | | | | | | | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nine Months Ended September 30, 2007 | Nine Months Ended September 30, 2006 | ||||||||||||||||||||||
Operating income effect of: | |||||||||||||||||||||||
(in thousands) | | Restructuring and other | | Idle capacity costs at plants closing | | Performance improvement initiatives | | Total | | Restructuring and other | |||||||||||||
Paper Machine Clothing | ($23,091 | ) | ($2,331 | ) | ($5,768 | ) | ($31,190 | ) | ($3,022 | ) | |||||||||||||
Applied Technologies | — | — | (452 | ) | (452 | ) | — | ||||||||||||||||
Albany Door Systems | (2,224 | ) | — | (1,085 | ) | (3,309 | ) | — | |||||||||||||||
Research | (308 | ) | — | — | (308 | ) | — | ||||||||||||||||
Unallocated | (2,610 | ) | — | (5,894 | ) | (8,504 | ) | (1,074 | ) | ||||||||||||||
Consolidated total | ($28,233 | ) | ($2,331 | ) | ($13,199 | ) | ($43,763 | ) | ($4,096 | ) |
| | | | | | | | | | | | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, 2006 | Nine Months Ended September 30, 2006 | ||||||||||||||||||||||||||
(in thousands) | | As orginally Reported | | Reclassification | | As Adjusted | | As orginally Reported | | Reclassification | | As Adjusted | |||||||||||||||
Operating income | |||||||||||||||||||||||||||
Paper Machine Clothing | $ | 30,139 | ($1,109 | ) | $ | 29,030 | $ | 110,927 | ($4,395 | ) | $ | 106,532 | |||||||||||||||
Applied Technologies | 4,178 | (530 | ) | 3,648 | 15,433 | (1,530 | ) | 13,903 | |||||||||||||||||||
Albany Door Systems | 1,549 | (495 | ) | 1,054 | 5,048 | (1,530 | ) | 3,518 | |||||||||||||||||||
Research expense | (7,333 | ) | 2,492 | (4,841 | ) | (23,869 | ) | 7,464 | (16,405 | ) | |||||||||||||||||
Unallocated expenses | (8,849 | ) | (358 | ) | (9,207 | ) | (29,496 | ) | (9 | ) | (29,505 | ) | |||||||||||||||
Consolidated total | $ | 19,684 | $ | — | $ | 19,684 | $ | 78,043 | $ | — | $ | 78,043 |
| | | | | | | | | | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nine months ended September 30, | ||||||||||||||||||||||
(in thousands) | | 2007 | | 2006 | | Percent change | | Increase due to changes in currency translation rates | | Percent change Excluding currency rate effect | ||||||||||||
Paper Machine Clothing | $ | 564,348 | $ | 556,568 | 1.4 | % | $ | 16,598 | –1.6 | % | ||||||||||||
Applied Technologies | 131,729 | 110,847 | 18.8 | % | 5,029 | 14.3 | % | |||||||||||||||
Albany Door Systems | 105,182 | 88,276 | 19.2 | % | 6,740 | 11.5 | % | |||||||||||||||
Consolidated total | $ | 801,259 | $ | 755,691 | 6.0 | % | $ | 28,367 | 2.3 | % |
of 2006, to $68.1 million for the same period of 2007, principally due to higher costs in 2007 for restructuring and performance improvement initiatives.
Agreement, the Company may purchase its Common Stock or pay dividends to the extent its leverage ratio remains at or below 3.50 to 1.00; under the Prudential Agreement, such payments or purchases are permitted to the extent that the leverage ratio remains at or below 3.00 to 1.00.
Critical Accounting Policies and Assumptions
(a) | Disclosure controls and procedures. |
(b) | Changes in internal control over financial reporting. |
scheduling the settlement conference for several months. Consequently, the Company believes that the effects of the new order will not be fully known or realized for some time.
$152,499. Brandon’s insurance carriers initially agreed to pay 88.2% of the total indemnification and defense costs related to these proceedings, subject to the standard reservation of rights. The remaining 11.8% of the costs had been borne directly by Brandon. During 2004, Brandon’s insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings.
Item 3. | Defaults Upon Senior Securities None |
Item 4. | Submission of Matters to a Vote of Security Holders None |
Item 5. | Other Information None |
Exhibit No. | Description | |||
---|---|---|---|---|
31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act. | |||
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act. | |||
32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) | |||
99.1 | Quantitative and qualitative disclosures about market risks as reported at December 31, 2006. |
(Registrant)
By | /s/ Michael C. Nahl Michael C. Nahl Executive Vice President and Chief Financial Officer (Principal Financial Officer) |