Exhibit 99.1
TO BUSINESS EDITOR:
Albany International Reports Third-Quarter 2003 Earnings of 20 Cents
Per Share After Restructuring Charges of 30 Cents Per Share
Third-Quarter Highlights
-- Net income was $0.20 per share, after restructuring charges of
$0.30 per share, compared to $0.44 per share, for the same period
last year.
-- Net sales were $208.7 million, an increase of 1.7 percent compared to
the same period last year.
-- Operating income, after restructuring charges of $14.3 million, was
$11.3 million, compared to $26.9 million in the third quarter of
2002.
-- Net cash provided by operations was $27.8 million during the quarter
and was $92.1 million through nine months.
ALBANY, N.Y., Oct. 27 /PRNewswire-FirstCall/ -- Albany International Corp.
(NYSE/PCX/FWB: AIN) reported third-quarter net income per share of $0.20,
compared to $0.44 for the same period last year. Net income for the third
quarter of 2003 was reduced by restructuring charges of $0.30 per share and
reflects the first major steps of the $30 million cost reduction initiative
announced in January of 2003.
Net sales increased $3.6 million, or 1.7 percent compared to the same
period last year. Excluding the effect of changes in currency translation rates,
net sales were down 5.2 percent.
Following is a table of third-quarter net sales by segment and the effect
of changes in currency translation rates.
(in thousands) Net sales as reported Increase in third quarter
three months ended 2003 net sales due to
September 30, changes in currency
2003 2002 translation rates
Engineered Fabrics $172,925 $172,218 $10,924
Albany Door Systems 23,109 22,360 2,372
Applied Technologies 12,709 10,575 879
Total $208,743 $205,153 $14,175
Gross profit was 41.3 percent of net sales in the third quarter of both
2003 and 2002.
Selling, technical, general, and research expenses increased 5.1 percent
compared to the same period last year, but decreased 1.0 percent excluding the
effect of changes in currency translation rates.
Operating income was $11.3 million, compared to $26.9 million in the third
quarter of 2002. Operating income for the third quarter of 2003 was reduced by
restructuring charges of $14.3 million, which include a $12.1 million non-cash
charge for plant and equipment write-downs and $2.2 million for severance and
other restructuring costs. Changes in currency translation rates had the effect
of increasing third-quarter operating income by $2.2 million.
Other income/expense, net, was $2.1 million of income for the quarter,
compared to $0.8 million of expense in the third quarter of 2002. The difference
in 2003 is due principally to currency hedging activities.
Third-quarter income tax expense decreased due to lower income before
income taxes and a reduction of the estimated effective income tax rate from 35
percent in the third quarter of last year to 30 percent this year. The Company
expects the effective income tax rate to remain at 30 percent for the balance of
2003.
For the first nine months of 2003, net sales were 7.0 percent higher than
the same period last year. Excluding the effect of changes in currency
translation rates, 2003 net sales decreased 0.9 percent. Net income per share
for the first nine months of 2003 was $1.33, compared to $0.97 for the same
period of 2002. Net income for the nine-month period was affected by a favorable
income tax adjustment in the first quarter that increased net income by $0.16
per share and by restructuring charges in each of the first three quarters that
decreased net income by $0.34 per share. Net income per share for the first
quarter of 2002 included a charge of $0.18 related to the adoption of Financial
Accounting Standard No. 142, "Goodwill and Other Intangible Assets."
During the third quarter, the Company reduced total debt by $12.0 million.
In addition, the $200 million currently outstanding under the Company's existing
$500 million credit facility was reclassified on the Company's balance sheet
during the third quarter from "long-term debt" to "current maturities of
long-term debt," reflecting the fact that this facility is scheduled to expire
in August 2004. The Company has initiated steps to replace this facility with a
slightly smaller facility sometime in early 2004.
During the third quarter of 2003, the Company decided it would record
compensation expense for the fair value of any stock options granted after
December 31, 2002. No options were granted during the nine-month period ended
September 30, 2003. The expense for any new stock options will be recorded over
the vesting period of the options, normally five years. The impact of expensing
options cannot currently be determined, since stock options are granted at the
discretion of the Board of Directors.
Comments on Operations
Chairman and Chief Executive Officer Frank Schmeler commented, "Weakness
in global paper and paperboard markets and other industrial markets continued to
have a negative impact on demand for our products as our customers reduced
capacity and limited production and capital spending. Sales were also adversely
affected by our previously disclosed decision to decline certain sales
opportunities that do not meet minimum profit objectives. The Company continues
to focus on the development of new and improved products that meet our
customers' needs and support improved earnings for the Company.
"Restructuring charges of $0.30 per share in the third quarter were
principally due to our announced plans to close a press fabrics plant and a
high-performance door plant in North America and the partial closure of an
engineered products operation in Europe. These actions are part of our $30
million cost reduction initiative.
"Net cash provided by operating activities was $27.8 million during the
third quarter of 2003, compared to $37.2 million for the same period of 2002.
Excluding the effects of changes in currency translation rates, inventories
decreased $1.3 million and accounts receivable increased $1.3 million during the
third quarter of 2003. For the first nine months of each year, net cash provided
by operating activities was $92.1 million in 2003 compared to $69.7 million in
2002.
Engineered Fabrics
"Third-quarter 2003 net sales for the Engineered Fabrics segment increased
0.4 percent compared to the same period last year. Excluding the effect of
changes in currency translation rates, net sales decreased 5.9 percent compared
to the third quarter of 2002.
"Global paper operating rates remained weak. Although paperboard operating
rates improved in the United States and parts of Europe, the improvement
resulted from a reduction of capacity that, in turn, slightly reduced the
consumption of paper machine clothing and negatively affected our sales.
Overall, the paper and paperboard market outlook in response to economic trends
is reported unchanged.
Albany Door Systems
"Economic conditions continued to adversely affect sales of our
high-performance doors. Compared to the third quarter of 2002, net sales
increased 3.3 percent, but decreased 7.3 percent excluding the effect of changes
in currency translation rates.
"In the United States and Europe, weak economic conditions continued to
affect capital spending for high-performance doors by our customers. However,
our after-market and service businesses continued to grow.
"The consolidations of our door manufacturing operation in North America
and our sectional door businesses in Germany were completed during the quarter.
These and other efficiency improvements and cost reductions, combined with the
introduction of new products, should provide improved results in future
quarters.
Applied Technologies
"Net sales in the Applied Technologies segment increased 20.2 percent
compared to the third quarter of last year and increased 11.9 percent excluding
the effect of changes in currency translation rates. Sales of tannery, textile,
and filtration products for power generation applications, increased during the
quarter as compared to the same period last year. In addition, the expansion of
PrimaLoft(R) premium synthetic insulation into the European market should
provide continued growth for this product.
"With stronger sales and the benefit of cost reductions already in place,
this segment has shown steady improvement."
Looking Ahead
Mr. Schmeler continued, "There is some reported industry optimism for
improvement in the paper and paperboard markets in 2004. However, we have not
seen any sustained improvement to date, and we are continuing with our plans to
balance productive capacity with customer demand, improve efficiency, and reduce
costs.
"The restructuring efforts announced by the Company during the quarter
will focus our North American and European manufacturing in fewer plants with
modern equipment, which should result in improved efficiency, output, and
product quality. As previously reported, we expect additional significant
charges associated with the $30 million cost reduction initiative in the first
half of 2004.
"Customer demand for technologies that will positively impact their
operations is driving our product development and application efforts. Product
innovation efforts underway in several areas are expected to produce growth
opportunities for our major markets. These activities will continue in each of
our business segments.
"The Asia/Pacific region remains the world's fastest growing market for
paper and paperboard. We continue our focus on this market and recently
reorganized our management structure to support our expanding operations in the
region. This should position the Company to take advantage of the opportunities
presented by the region's rapid growth.
"The Company anticipates 2003 capital expenditures to total approximately
$55 million for the full year, and currently expects a comparable level of
capital expenditures during 2004. As we remove capacity and relocate production
to centralized operations, short-term inventory increases are expected to ensure
continuity of product supply to our customers.
"Prospects for continued strong cash flows in 2004 remain good,
particularly in the second half as we complete the $30 million cost reduction
program. We are continuing to evaluate which alternative uses for cash would be
most beneficial to our shareholders.
"Delivering value remains the Company's highest priority and drives all
our activities. We believe focusing on product and process innovation, coupled
with the efforts of the entire Albany team to improve all our internal
operations, will provide value to our customers and improve returns to our
shareholders."
The Company plans a live webcast to discuss third-quarter 2003 earnings
today at 9:00 a.m. Eastern Time. For access, go to www.albint.com.
Albany International is the world's largest producer of paper machine
clothing and high performance doors, with manufacturing plants in 15 countries
and sales worldwide. Additional information about the Company's businesses and
products is available at www.albint.com.
This release contains certain items that may be considered to be non-GAAP
financial measures. Such items are provided because management believes that,
when presented together with the GAAP items to which they relate, they can
provide additional useful information to investors regarding the registrant's
financial condition, results of operations, and cash flows.
The effect of changes in currency translation rates is calculated by
converting amounts reported in local currencies into U.S. dollars at the
exchange rate of a prior period. That amount is then compared to the U.S. dollar
amount reported in the current period.
Forward-looking statements in this release or in the webcast, including
statements about future sales, earnings, cash flows, possible uses for cash,
pricing, markets, cost reductions, new products and process improvements, paper
industry consolidation and outlook, inventory and accounts receivable reduction,
capital expenditures, refinancing, tax rates, and depreciation and amortization
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on current expectations
and are subject to various risks and uncertainties, including, but not limited
to, economic conditions affecting the paper industry and other risks and
uncertainties set forth in the Company's 2002 Annual Report to Shareholders and
subsequent filings with the Securities and Exchange Commission.
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
$208,743 $205,153 Net sales $642,714 $600,876
122,460 120,460 Cost of goods sold 372,440 349,292
86,283 84,693 Gross profit 270,274 251,584
Selling, technical, general
60,716 57,792 and research expenses 186,774 177,287
Restructuring and other
14,317 - charges, net 15,999 -
11,250 26,901 Operating income 67,501 74,297
3,910 4,537 Interest expense, net 11,316 13,173
(2,115) 776 Other (income)/expense, net 1,232 4,507
9,455 21,588 Income before income taxes 54,953 56,617
2,809 7,556 Income taxes 11,243 19,816
Income before associated
6,646 14,032 companies 43,710 36,801
Equity in earnings of
(96) 145 associated companies (191) 208
Income before cumulative effect
of change in accounting
6,550 14,177 principle 43,519 37,009
Cumulative effect of change
in accounting principle,
- - net of taxes - (5,837)
6,550 14,177 Net income 43,519 31,172
Retained earnings, beginning
420,995 359,060 of period 387,609 345,273
(2,328) (1,616) Dividends declared (5,911) (4,824)
Retained earnings, end of
$425,217 $371,621 period $425,217 $371,621
Earnings per share - basic:
Income before cumulative
effect of change in
$0.20 $0.44 accounting principle $1.33 $1.15
Cumulative effect of change
0.00 0.00 in accounting principle 0.00 (0.18)
$0.20 $0.44 Net income $1.33 $0.97
Earnings per share - diluted:
Income before cumulative
effect of change in
$0.19 $0.43 accounting principle $1.31 $1.14
Cumulative effect of change
0.00 0.00 in accounting principle 0.00 (0.18)
$0.19 $0.43 Net income $1.31 $0.96
Average number of shares used
in basic earnings per share
33,064 32,306 computations 32,705 32,045
Average number of shares used
in diluted earnings per share
33,766 32,707 computations 33,273 32,615
$0.07 $0.05 Dividend per share $0.18 $0.15
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, December 31,
2003 2002
ASSETS
Cash and cash equivalents $63,505 $18,799
Accounts receivable, net 148,560 135,339
Note receivable 21,204 20,075
Inventories:
Finished goods 90,860 90,766
Work in process 52,680 44,763
Raw material and supplies 32,937 28,534
176,477 164,063
Deferred taxes 34,477 43,439
Prepaid expenses 9,890 7,173
Total current assets 454,113 388,888
Property, plant and equipment, net 345,631 346,073
Investments in associated companies 5,046 4,849
Intangibles 16,353 16,274
Goodwill 149,589 137,146
Deferred taxes 66,520 65,574
Other assets 54,309 52,717
Total assets $1,091,561 $1,011,521
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $6,051 $12,224
Accounts payable 33,793 39,624
Accrued liabilities 121,913 101,510
Current maturities of long-term
debt 201,042 1,914
Income taxes payable and deferred 26,471 31,222
Total current liabilities 389,270 186,494
Long-term debt 15,723 221,703
Other noncurrent liabilities 145,035 168,765
Deferred taxes and other credits 34,235 33,961
Total liabilities 584,263 610,923
Commitments and Contingencies - -
SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00 per share;
authorized 2,000,000 shares; none issued - -
Class A Common Stock, par value $.001 per
share; authorized 100,000,000 shares;
issued 32,253,837 in 2003 and 28,983,057
in 2002 32 29
Class B Common Stock, par value $.001 per
share; authorized 25,000,000 shares;
issued and outstanding 3,236,476 in 2003
and 5,607,576 in 2002 3 6
Additional paid in capital 273,914 255,484
Retained earnings 425,217 387,609
Accumulated items of other
comprehensive income:
Translation adjustments (99,874) (147,400)
Derivative valuation adjustment (10,540) (13,592)
Pension liability adjustment (35,962) (35,962)
552,790 446,174
Less treasury stock (Class A), at
cost (2,190,139 shares in 2003
and 2,193,793 shares in 2002) 45,492 45,576
Total shareholders' equity 507,298 400,598
Total liabilities and
shareholders' equity $1,091,561 $1,011,521
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
September 30,
2003 2002
OPERATING ACTIVITIES
Net income $43,519 $31,172
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in earnings of associated companies 191 (208)
Depreciation 38,742 35,172
Amortization 3,687 3,544
Provision for deferred income
taxes, other credits and long-term
liabilities (6,731) (8,302)
Provision for impairment of plants and
equipment 12,143 -
Provision for impairment of goodwill - 5,837
Increase in cash surrender value of
life insurance (1,082) (821)
Unrealized currency transaction gains (4,255) (866)
Gain on disposition of assets (486) (2,920)
Shares contributed to ESOP 4,451 3,680
Tax benefit of options exercised 1,291 1,672
Changes in operating assets and liabilities:
Accounts receivable 8,484 3,833
Sale of accounts receivable (2,476) 7,770
Note receivable (1,130) (4,464)
Inventories (1,444) 5,832
Prepaid expenses (2,717) (4,348)
Accounts payable (5,831) (9,846)
Accrued liabilities 11,859 (3,135)
Income taxes payable (4,751) 2,135
Other, net (1,392) 3,993
Net cash provided by operating
activities 92,072 69,730
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (29,951) (18,834)
Purchased software (613) (404)
Proceeds from sale of assets 4,336 4,645
Premiums paid for life insurance
policies (1,118) (1,159)
Net cash used in investing activities (27,346) (15,752)
FINANCING ACTIVITIES
Proceeds from borrowings 40,582 47,984
Principal payments on debt (54,304) (68,691)
Dividends paid (5,367) (4,776)
Proceeds from options exercised 12,683 14,931
Net cash used in financing activities (6,406) (10,552)
Effect of exchange rate changes on
cash flows (13,614) 7,864
Increase in cash and cash equivalents 44,706 51,290
Cash and cash equivalents at beginning
of year 18,799 6,153
Cash and cash equivalents at end of period $63,505 $57,443
SOURCE Albany International Corp.
-0- 10/27/2003
/CONTACT: Kenneth C. Pulver, Vice President-Corporate Communications,
Albany International Corp., +1-518-445-2214/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.albint.com/
(AIN)