Exhibit 99.1
Albany International Reports 2003 Earnings Per Share of $1.64 After
Restructuring Charges of $0.46
Financial Highlights
* For the full-year 2003, net income was $1.64 per share after
restructuring charges of $0.46 per share, compared to $1.52 per share
for 2002.
* Fourth-quarter 2003 net income was $0.32 per share after restructuring
charges of $0.12 per share, compared to $0.55 per share for the same
period last year.
* Net cash provided by operating activities was $36.0 million for the
fourth quarter of 2003 and $128.1 million for the full year.
ALBANY, N.Y., Jan. 26 /PRNewswire-FirstCall/ -- Albany International Corp.
(NYSE/PCX/FWB: AIN) reported 2003 net income per share of $1.64, compared to
$1.52 for 2002. Net income for 2003 included restructuring charges of $0.46
per share, reflecting the ongoing impact of the $30 million cost reduction
initiative announced in January of 2003. Fourth-quarter 2003 net income was
$0.32 per share after restructuring charges of $0.12 per share, compared to
$0.55 per share for the same period last year. The following table provides
key components of earnings per share:
Fourth Quarter Full Year
(Per share amounts) 2003 2002 2003 2002
Earnings before restructuring
charges and the cumulative
effect of accounting change $0.44 $0.55 $2.10 $1.70
Restructuring charges -0.12 -- -0.46 --
Cumulative effect of
accounting change -- -- -- -0.18
Net income $0.32 $0.55 $1.64 $1.52
Net sales for the fourth quarter of 2003 increased $11.1 million, or 5.2
percent, compared to the same period last year. Excluding the effect of
changes in currency translation rates, net sales were down 5.7 percent.
Following is a table of fourth-quarter net sales by segment and the effect of
changes in currency translation rates:
Increase in
fourth-quarter 2003
Net sales as reported net sales due to
(In thousands) three months ended December 31 changes in currency
translation rates
2003 2002
Engineered Fabrics $181,297 $178,068 $18,002
Albany Door Systems 30,155 26,937 3,967
Applied Technologies 14,806 10,166 1,350
Total $226,258 $215,171 $23,319
Gross profit was 40.2 percent of net sales in the fourth quarter of 2003,
compared to 41.2 percent in the same quarter of 2002. Gross profit in the
fourth quarter was negatively affected by sales mix and the increasing
strength of the euro relative to the U.S. dollar, which reduced the gross
profit on products exported from Europe and sold in U.S. dollars. Excluding
those effects, gross profit as a percentage of net sales was 41.2 percent in
the fourth quarter of 2003. For the full year, gross profit as a percentage
of net sales was 41.6 percent in 2003 and 41.7 percent in 2002. As a result
of a number of initiatives including efficiency improvements, the Company
expects gross profit as a percentage of net sales to improve during 2004 as
compared to the full-year 2003.
Fourth-quarter 2003 selling, technical, general, and research expenses
increased 10.1 percent compared to the same period last year, but increased
only 0.3 percent excluding the effect of changes in currency translation
rates.
Operating income was $18.1 million, compared to $27.8 million in the
fourth quarter of 2002. The following table highlights key components of
operating income:
Fourth Quarter Full Year
(In millions) 2003 2002 2003 2002
Operating income before
reconciling items $21.6 $27.8 $108.0 $102.1
Reconciling items:
Restructuring charges -5.8 -- -21.8 --
Currency effect
on European exports -1.7 -- -9.4 --
Effect of changes in currency
translation rates 4.0 -- 8.8 --
Operating income as reported $18.1 $27.8 $85.6 $102.1
The decrease in fourth-quarter operating income before reconciling items
is primarily attributable to lower net sales, excluding the effects of changes
in currency translation rates. The decrease in net sales had the effect of
reducing earnings per share by $0.11 per share.
Other income/expense, net, was $0.6 million of income for the quarter,
compared to $0.5 million of expense in the fourth quarter of 2002. The
difference in 2003 is due principally to currency hedging activities. The
Company's currency hedging program is intended to protect the U.S. dollar
equivalent value of certain projected future cash flows and to partially
offset the effects of volatility on its financial statements.
Fourth-quarter income tax expense was $4.5 million in 2003, compared to
$5.2 million in 2002. In the fourth quarter of 2002, income tax expense was
reduced by $2.8 million related to the favorable resolution of certain income
tax contingencies, causing the income tax rate in that quarter to be 23
percent of pre-tax income. The effective income tax rate in the fourth
quarter of 2003 was 30 percent, and the Company expects the 2004 effective
income tax rate not to exceed 30 percent.
For the full-year 2003, net sales were 6.5 percent higher than 2002 net
sales. Excluding the effect of changes in currency translation rates, net
sales were down 2.2 percent. Following is a table of net sales by segment and
the effect of changes in currency translation rates:
Net sales as reported Increase in 2003 net sales
year ended December 31, due to changes in
(In thousands) 2003 2002 currency translation rates
Engineered Fabrics $717,104 $682,991 $54,451
Albany Door Systems 99,655 91,185 13,019
Applied Technologies 52,213 41,871 3,159
Total $868,972 $816,047 $70,629
On January 8, 2004, the Company entered into a new, five-year $460 million
revolving credit facility with a group of banks. The new facility, which is
unsecured, replaced a $500 million facility that had been secured by a pledge
of shares of certain subsidiaries. At the closing, the Company borrowed $200
million under the new facility and repaid an equal amount to satisfy the old
facility. Based upon the maximum leverage ratio permitted under the new
facility, the Company is currently permitted to borrow an additional $260
million.
The new credit agreement permits the Company to purchase shares of Common
Stock at any time, as long as the Company's Leverage Ratio (as defined in the
credit agreement) does not exceed 2.25 to 1.00 after the purchase. The
agreement also permits the Company to make acquisitions, provided that the
Leverage Ratio does not exceed 2.50 to 1.00 after giving effect to any such
acquisition. As of December 31, 2003, the Company's Leverage Ratio under the
new agreement would have been 0.97 to 1.00. In accordance with generally
accepted accounting principles, the Company expects to take a charge in the
first quarter of 2004 of $0.9 million for the write-off of remaining deferred
financing costs related to the old credit facility.
Net cash provided by operating activities was $36.0 million during the
fourth quarter of 2003, compared to $49.1 million for the same period of 2002.
For the full year, net cash provided by operating activities was $128.1
million compared to $118.8 million in 2002. Prospects for continued strong
cash flows in 2004 remain good, particularly as the Company realizes
additional savings from the $30 million cost reduction program. The Company is
continuing to evaluate which alternative uses of cash would be most beneficial
to our shareholders.
In January 1998, the Board of Directors authorized the purchase of
3,000,000 shares of Class A Common Stock, in the open market or otherwise, at
such prices as management may from time to time consider to be advantageous,
and 1,616,900 shares were purchased. No purchases have been made under this
authorization since October 1, 1998. Management remains authorized to
purchase up to 1,383,100 shares without further announcement.
Comments on Operations
Chairman and Chief Executive Officer Frank Schmeler commented, "Despite a
very difficult business environment, which adversely affected our sales and
earnings results for the fourth quarter, the Company reported improved
earnings for the full year. Although stronger economic indicators were
reported in some geographic regions during the fourth quarter, our paper and
paperboard customers continued to reduce capacity and limit production. The
resulting impact on demand for our products adversely affected sales of
engineered fabrics. Sales of high-performance doors were similarly affected
as industrial customers continued constraints on capital spending. The
Company continued to focus on new product introductions in our Engineered
Fabrics and High Performance Door segments during the quarter. The new
developments should provide new value opportunities for our customers and
benefits for our businesses. Net sales in our Applied Technologies segment
improved for both the quarter and the full year and also reflected the effect
of new product developments. The Company's strong full-year results reflect
our continuing ability to generate cash and control costs, despite challenging
business conditions and the additional efforts required to successfully
implement the restructuring program.
"On January 22, 2004, we announced a manufacturing consolidation plan
affecting two paper machine clothing facilities in Europe. Under the plan, we
would discontinue the manufacture of dryer fabrics at our facility in Bury,
England, but would continue making process belts in that location. The
production of dryer fabrics would be relocated to our recently expanded and
modernized dryer fabric facility in Finland. In addition, we would
discontinue all manufacturing at our press fabric and forming fabric plants in
Dieren, the Netherlands, and relocate this production to other Albany
International plants. These actions are subject to consultation with works
councils and trade unions in accordance with local law. Subject to compliance
with the local law, we expect these actions to be completed during the third
quarter of 2004.
Engineered Fabrics
(This segment includes Paper Machine Clothing (PMC), used in the
manufacture of paper and paperboard products, and Engineered Products for the
nonwovens and pulp industries.)
"Fourth-quarter net sales for the Engineered Fabrics segment increased 1.8
percent compared to the same period last year. Excluding the effect of
changes in currency translation rates, fourth-quarter net sales decreased 8.3
percent compared to the same period in 2002. Although the operating rates of
the paper and paperboard industries might be expected to rise as a result of
the reductions in capacity produced by their consolidations, reported
operating rates in the United States improved only slightly for paper and
declined for paperboard. In Europe, operating rates remained soft.
Albany Door Systems
(This segment includes sales of High Performance Doors and replacement
door parts to a wide variety of industrial customers and door service.)
"Economic conditions continue to have an adverse affect on sales of our
high-performance doors. Compared to the fourth quarter of 2002, sales in this
segment increased 11.9 percent, but decreased 2.8 percent excluding the effect
of changes in currency translation rates. Door sales remained sluggish as
increases in our customers' capital spending have yet to materialize. The
ongoing cost reduction activities had a positive impact on segment earnings.
Applied Technologies
(This segment includes a diverse collection of materials and structural-
component businesses including insulation for personal outerwear and home
furnishings (PrimaLoft); specialty materials and composite structures for
aircraft and other applications (Techniweave); specialty filtration products
for wet and dry applications (Industrial Process Technologies); industrial
insulation products (High Performance Materials); and products for high-
temperature personal protection and aerospace applications (Advanced Thermal
Protection).)
"Fourth-quarter 2003 net sales in the Applied Technologies segment
increased 45.6 percent compared to the same period last year and increased
32.4 percent excluding the effect of changes in currency translation rates.
New products and market opportunities are driving growth in this segment. For
example, the expansion of PrimaLoft(R) premium synthetic insulation into the
European and Japanese markets is providing continued growth for this product.
Fourth-quarter results for the segment benefited from the effects of
implemented cost reductions.
Looking Ahead
"Although the reported improvements in the general economy have not yet
resulted in significant improvements in our customers' markets, we maintain a
cautiously optimistic view of 2004. Further improvements in efficiency, and
opportunities for new product and process development, should result from our
restructuring activities. Their successful completion will require the
continued best efforts and full support of all of our people. As previously
reported, we expect significant charges associated with these restructuring
steps to occur in the first and second quarters of 2004.
"Our paper and paperboard customers are asking us to assist them in
improving their operations through paper machine clothing improvements. They
understand the significant impact that improved PMC products can have on the
quality of paper and paperboard and on the cost and efficiency of the paper
and paperboard manufacturing processes. Among the strategic objectives for
all of our businesses is the continued search for solutions that will benefit
both our customers and our shareholders.
"The Company expects capital expenditures to total approximately $55
million in 2004. Investments in new equipment are intended principally to
maximize the benefits of the relocation of production to centralized
locations. Depreciation for 2004, after giving effect to proposed plant
closures, is projected to be approximately $50 million, and amortization is
projected to be approximately $5 million.
"Our focus on delivering value contributed to improved returns for our
shareholders and benefits to our customers in 2003. Some customers have
identified millions of dollars in savings through the application of our
value-driven products and services. We intend to maintain and sharpen this
focus during 2004."
The Company plans a live webcast to discuss fourth-quarter and full-year
2003 earnings on Tuesday, January 27, 2004, at 9:00 a.m. Eastern Time. For
access, go to www.albint.com .
Albany International is the world's largest producer of paper machine
clothing and high-performance doors with manufacturing plants in 15 countries
and sales worldwide. Additional information about the Company and its
businesses and products is available at www.albint.com.
This release contains certain items that may be considered to be non-GAAP
financial measures. Such items are provided because management believes that,
when presented together with the GAAP items to which they relate, they can
provide additional useful information to investors regarding the registrant's
financial condition, results of operations, and cash flows. The effect of
changes in currency translation rates is calculated by converting amounts
reported in local currencies into U.S. dollars at the exchange rate of a prior
period. That amount is then compared to the U.S. dollar amount reported in
the current period.
Forward-looking statements in this release or in the webcast, including
statements about future sales, earnings, cash flows, possible uses for cash,
pricing, markets, cost reductions, new products and process improvements,
paper industry consolidation and outlook, capital expenditures, tax rates, and
depreciation and amortization are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Such statements are
based on current expectations and are subject to various risks and
uncertainties, including, but not limited to, economic conditions affecting
the paper industry and other risks and uncertainties set forth in the
Company's 2002 Annual Report to Shareholders and subsequent filings with the
Securities and Exchange Commission.
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(unaudited)
(in thousands except per share data)
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
$226,258 $215,171 Net sales $868,972 $816,047
135,346 126,473 Cost of goods sold 507,786 475,765
90,912 88,698 Gross profit 361,186 340,282
Selling, technical,
general and research
67,047 60,907 expenses 253,821 238,194
5,752 - Restructuring 21,751 -
18,113 27,791 Operating income 85,614 102,088
3,758 4,363 Interest expense, net 15,074 17,536
Other (income)/expense,
(570) 496 net 662 5,003
Income before income
14,925 22,932 taxes 69,878 79,549
4,478 5,225 Income taxes 15,720 25,041
Income before associated
10,448 17,707 companies 54,158 54,508
Equity in earnings of
88 62 associated companies (103) 270
Income before cumulative
effect of change in
10,536 17,769 accounting principle 54,055 54,778
Cumulative effect of
change in accounting
- - principle, net of taxes - (5,837)
10,536 17,769 Net income 54,055 48,941
Retained earnings,
425,217 371,621 beginning of period 387,609 345,273
(2,346) (1,781) Dividends declared (8,257) (6,605)
Retained earnings,
$433,407 $387,609 end of period $433,407 $387,609
Earnings per share - basic:
Income before cumulative
effect of change in
$0.32 $0.55 accounting principle $1.64 $1.70
Cumulative effect of change
0.00 0.00 in accounting principle 0.00 (0.18)
$0.32 $0.55 Net income $1.64 $1.52
Earnings per share - diluted:
Income before cumulative
effect of change in
$0.31 $0.54 accounting principle $1.61 $1.68
Cumulative effect of change
0.00 0.00 in accounting principle 0.00 (0.18)
$0.31 $0.54 Net income $1.61 $1.50
Average number of shares
used in basic earnings
33,437 32,366 per share computations 32,889 32,126
Average number of shares
used in diluted earnings
34,168 32,707 per share computations 33,514 32,635
$0.07 $0.055 Dividend per share $0.25 $0.205
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
December 31, December 31,
2003 2002
ASSETS
Cash and cash equivalents $78,822 $18,799
Accounts receivable, net 151,157 135,339
Note receivable 21,814 20,075
Inventories:
Finished goods 93,787 90,766
Work in process 53,936 44,763
Raw material and supplies 29,805 28,534
177,528 164,063
Deferred taxes 33,314 43,439
Prepaid expenses 8,067 7,173
Total current assets 470,702 388,888
Property, plant and equipment, net 370,280 346,073
Investments in associated companies 5,278 4,849
Intangibles 15,790 16,274
Goodwill 159,543 137,146
Deferred taxes 70,450 65,574
Cash surrender value of life
insurance policies 32,399 29,282
Other assets 21,274 23,435
Total assets $1,145,716 $1,011,521
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $5,250 $12,224
Accounts payable 35,080 39,624
Accrued liabilities 122,550 101,510
Current maturities of long-term
debt 1,949 1,914
Income taxes payable and deferred 20,475 31,222
Total current liabilities 185,304 186,494
Long-term debt 214,894 221,703
Other noncurrent liabilities 153,811 168,765
Deferred taxes and other credits 37,052 33,961
Total liabilities 591,061 610,923
Commitments and Contingencies - -
SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00
per share; authorized 2,000,000
shares; none issued - -
Class A Common Stock, par value
$.001 per share; authorized
100,000,000 shares; issued 32,548,938
in 2003 and 28,983,057 in 2002 33 29
Class B Common Stock, par value
$.001 per share; authorized
25,000,000 shares; issued and
outstanding 3,236,476 in 2003
and 5,607,576 in 2002 3 6
Additional paid in capital 280,734 255,484
Retained earnings 433,407 387,609
Accumulated items of other
comprehensive income:
Translation adjustments (65,613) (147,400)
Derivative valuation adjustment (8,840) (13,592)
Pension liability adjustment (39,579) (35,962)
600,145 446,174
Less treasury stock (Class A), at
cost (2,190,038 shares in 2003
and 2,193,793 shares in 2002) 45,490 45,576
Total shareholders' equity 554,655 400,598
Total liabilities and
shareholders' equity $1,145,716 $1,011,521
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Year Ended
December 31,
2003 2002
OPERATING ACTIVITIES
Net income $54,055 $48,941
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in earnings of associated
companies 103 (270)
Depreciation 51,003 47,478
Amortization 5,091 5,385
Provision for deferred income
taxes, other credits and long-
term liabilities (6,908) (21,094)
Provision for impairment of
buildings and equipment 11,390 -
Provision for impairment of
goodwill - 5,837
Increase in cash surrender value
of life insurance (1,998) (569)
Unrealized currency transaction
gains (8,286) (1,933)
Gain on disposition of assets (678) (2,688)
Shares contributed to ESOP 5,398 4,635
Tax benefit of options exercised 2,289 1,672
Changes in operating assets and
liabilities:
Accounts receivable 17,819 14,737
Sale of accounts receivable (2,134) 7,237
Note receivable (1,739) 1,028
Inventories 3,171 17,687
Prepaid expenses (894) (1,885)
Accounts payable (4,544) (10,653)
Accrued liabilities 12,457 (5,671)
Income taxes payable (9,294) 8,346
Other, net 1,777 605
Net cash provided by operating
activities 128,078 118,825
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (52,564) (31,678)
Purchased software (1,072) (1,465)
Proceeds from sale of assets 6,814 6,373
Repayments of loans from life
insurance policies - (25,934)
Premiums paid for life insurance
policies (1,118) (1,159)
Net cash used in investing
activities (47,940) (53,863)
FINANCING ACTIVITIES
Proceeds from borrowings 45,833 60,208
Principal payments on debt (59,709) (106,446)
Dividends paid (7,692) (6,391)
Proceeds from options exercised 17,559 14,950
Net cash used in financing
activities (4,009) (37,679)
Effect of exchange rate changes on
cash flows (16,106) (14,637)
Increase in cash and cash
equivalents 60,023 12,646
Cash and cash equivalents at
beginning of year 18,799 6,153
Cash and cash equivalents at end of
period $78,822 $18,799
SOURCE Albany International
-0- 01/26/2004
/CONTACT: Kenneth C. Pulver, Vice President-Corporate Communications of
Albany International, +1-518-445-2214/
/Web site: http://www.albint.com /
(AIN)
CO: Albany International
ST: New York
IN: PAP FAS HOU
SU: ERN CCA