Exhibit 99.1
Albany International Reports First-Quarter 2004 Earnings
First-Quarter Highlights
- Net income per share was $0.10, compared to $0.65 for the same period
last year. Net income per share was reduced by restructuring charges
of $0.24 in 2004 and $0.02 in 2003. Net income was further reduced in
the first quarter of 2004 due to an impairment loss amounting to $0.08
per share.
- Net income per share was favorably affected by the resolution of
certain income tax matters amounting to $0.03 per share in 2004 and
$0.16 per share in 2003.
- Net sales were $226.2 million, an increase of 7.5 percent compared to
the same period last year and a decline of 1.3 percent excluding the
effect of changes in currency translation rates.
- Operating income, after restructuring charges of $11.6 million, was
$13.0 million, compared to $27.7 million in the first quarter of 2003
after restructuring charges of $0.8 million.
- The Company purchased 764,300 shares of its Class A Common Stock during
the quarter.
- Net cash provided by operating activities was $24.5 million during the
quarter, compared to $32.3 million for the same period last year.
ALBANY, N.Y., April 26 /PRNewswire-FirstCall/ -- Albany International
Corp. (NYSE/PCX/FWB: AIN) reported first-quarter net income per share of
$0.10, compared to $0.65 for the same period last year. Net income per share
was reduced by restructuring charges of $0.24 in 2004 and $0.02 in 2003. Net
income was further reduced in the first quarter of 2004 due to an impairment
loss amounting to $0.08 per share.
The resolution of certain income tax matters had a favorable effect on
earnings amounting to $0.03 per share in 2004 and $0.16 in 2003.
The following table summarizes effects on net income per share:
First Quarter
2004 2003
Earnings per share before special items: $0.39 $0.51
Restructuring charges (0.24) (0.02)
Income tax matters 0.03 0.16
Impairment loss on investment (0.08) --
Net income per share $0.10 $0.65
Net sales increased $15.8 million, or 7.5 percent compared to the same
period last year. Excluding the effect of changes in currency translation
rates, net sales were down 1.3 percent. The decrease in net sales is due
principally to weak global paper machine clothing (PMC) demand early in the
quarter, which was partly the result of reductions in PMC inventory levels
held by a number of our customers. In addition, competitive pricing pressures
and the previously disclosed decision to decline sales opportunities that do
not meet profit objectives resulted in slight market share decreases in some
regions.
Following is a table of net sales by segment and the effect of changes in
currency translation rates:
(in thousands) Increase in
first-quarter
2004 net sales
Net sales as due to Percent Change
reported changes in Excluding
Three months ended currency Currency
March 31, translation As Rate
2004 2003 rates Reported Effect
Engineered
Fabrics $184,071 $176,541 $13,733 4.3 % -3.5 %
Albany Door
Systems 27,350 22,537 3,268 21.4 % 6.9 %
Applied
Technologies 14,774 11,335 1,430 30.3 % 17.7 %
Total $226,195 $210,413 $18,431 7.5 % -1.3 %
Gross profit was 40.6 percent of net sales in the first quarter of 2004,
compared to 42.9 percent in the first quarter of 2003. The decrease is
principally due to lower net sales, excluding the effect of changes in
currency translation rates, and a shift in product mix to lower-margin
segments.
Selling, technical, general, and research expenses increased 8.7 percent
compared to the same period last year, and 0.5 percent excluding the effect of
changes in currency translation rates.
Operating income was $13.0 million, compared to $27.7 million in 2003.
Operating income was reduced by restructuring charges of $11.6 million in 2004
and $0.8 million in 2003. Restructuring charges in 2004 include $5.3 million
of non-cash items related to scrapping equipment in facilities that are being
closed.
Other expense, net, was $5.8 million for the quarter, compared to
$1.2 million for the first quarter of 2003. The increase is due principally
to an impairment loss of $4.0 million, representing the full value of the
Company's investment in an unaffiliated company. In its 2003 Annual Report,
the Company disclosed the possibility that this asset might become impaired.
Income tax expense includes, in both years, the benefit of resolving
certain income tax matters that increased net income by $0.9 million in 2004
and $5.2 million in 2003.
Net cash provided by operating activities was $24.5 million during the
first quarter of 2004, compared to $32.3 million for the same period of 2003.
The decrease is due principally to higher-than-normal first-quarter income tax
payments in 2004. Inventories increased $5.3 million and accounts receivable
decreased $4.4 million during the first quarter of 2004, excluding the effect
of changes in currency translation rates. Inventory levels during
restructuring activities will likely remain slightly higher than normal to
ensure customer coverage.
Capital Resources
Capital spending during the quarter was $15.3 million. Second- and third-
quarter capital spending is expected to be somewhat less than the first
quarter, with fourth-quarter spending increasing as a result of equipment
deliveries required to achieve planned efficiency improvements. Full-year
capital spending is expected to be approximately $55 million.
As previously announced, the Company entered into a new $460 million
credit facility early in the quarter. Interest expense continues to be
affected by the floating-to-fixed interest rate swap agreements that fix the
interest rate on $200 million of debt at 7.16 percent. These agreements
mature in June and August of 2005.
During the quarter, the Company purchased 764,300 of its shares at an
average price of $27.68 and remains authorized to purchase an additional
618,800 shares without further notice. Approximately $2.0 million of the
$21.2 million purchase price for these shares was paid in early April of 2004.
Comments on Operations
Chairman and Chief Executive Officer Frank Schmeler commented,
"On March 9, 2004, we announced sales and earnings for the first two months of
the year. As reported at that time, two-month earnings were negatively
affected by lower net sales, and margins were reduced by a shift in product
mix to lower-margin segments. Earnings for the two months, and for the full
quarter, were also reduced by higher-than-anticipated operating costs at
locations in North America that are absorbing production from operations that
are in the process of being closed. These additional costs are considered
necessary to protect certain customer delivery commitments. The Company
expects that these additional transition costs will be eliminated as North
American restructuring activities are completed.
"In the last quarter of 2003, it appeared that many primary global
economies were experiencing improved growth, yet paper and paperboard
manufacturers were just beginning to see improvement, and then only in
selected grades and regions. As a result, demand for paper machine clothing
(PMC) remained weak through year-end.
"Early in 2004, paper and paperboard manufacturers began to validate the
expected demand increases for their products and announced price increases
across several grades. After a slow start, PMC sales and earnings showed
strong improvement in March.
"Restructuring charges during the quarter are related to the activities in
Engineered Products in France, the dryer fabric facility closure in the United
Kingdom, and the closure of the Greenville, South Carolina, press fabric
plant. Required consultation with the works council is ongoing for the plant
shutdown in Holland. The new plant in France for the global Engineered
Products business and the expanded dryer fabric facility in Finland are on
track for second-quarter start-up. While we complete the restructuring
activities, we will continue to ensure consistent quality and reliable
delivery to our customers."
Engineered Fabrics
(This segment includes Paper Machine Clothing (PMC) and Process Belts used
in the manufacture of paper and paperboard products, and Engineered Products
for the nonwovens and pulp industries.)
First-quarter 2004 net sales for the Engineered Fabrics segment increased
4.3 percent compared to the same period last year. Excluding the effect of
changes in currency translation rates, net sales decreased 3.5 percent
compared to the first quarter of 2003. PMC demand, which was weak early in
the quarter, improved in March in each of our business regions. In addition
to the weak demand early in the quarter, we lost some business based on price.
As our customers continue to reduce costs, we have encountered some additional
pricing pressure on PMC products. In response, we continue to focus on
delivering value through our products and services. A number of customers
have learned that buying "lower price" PMC can result in both higher
production costs and reduced quality of paper produced, leading to
substantially reduced profitability for their operations. We are a strategic
supplier to the paper industry, and we will continue to focus on supplying our
customers with superior technology and services that will increase their
profitability.
North America
In the United States, Canada, and Mexico, paper and paperboard operating
rates improved as compared to the first quarter of last year. PMC sales
demand early in the quarter was lower than expected and improved later in the
quarter. For the quarter, net sales in North America were 1.3 percent behind
last year. Excluding the effect of changes in currency translation rates,
sales decreased 3.4 percent compared to 2003.
Europe
In Europe, paper and paperboard production grew at approximately
2.0 percent from 2001 through 2003, and we expect similar growth for the
foreseeable future. Late in the first quarter, we saw evidence of modest
increases in PMC demand. First-quarter net sales in Europe increased
11.3 percent over the same quarter in 2003, but decreased 3.7 percent
excluding the effects of currency translation rates.
Pacific
First-quarter net sales in the Pacific region increased 4.8 percent over
the same quarter last year and decreased 0.6 percent excluding the effect of
currency translation rates. Robust economic growth in China was accompanied
by continuing new machine announcements, which should provide improved PMC
demand as start-ups begin.
Albany Door Systems
(This segment includes sales and service of High Performance Doors and
aftermarket sales to a wide variety of industrial customers.)
Compared to the first quarter of 2003, net sales increased 21.4 percent
and 6.9 percent excluding the effect of changes in currency translation rates.
This sales gain is the result of growth in new products and improved
aftermarket sales. New products, coupled with continuing cost reduction
activities, should improve results for the remainder of the year.
Applied Technologies
(This segment includes 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); and industrial insulation
products (High Performance Materials).)
Net sales in this segment increased 30.3 percent compared to the same
period in 2003 and 17.7 percent excluding the effect of changes in currency
translation rates. New products, efficiency gains, and the improving global
economy are driving increased revenue and earnings in this segment. Net sales
in Techniweave and High Performance Materials improved significantly as a
result of new products, which include advanced materials and unique woven
composites. Industrial Process Technologies sales and earnings increased
sharply during the quarter due to regained market share resulting from new
products and lower costs.
Looking Ahead
Mr. Schmeler continued, "The improvement in global paper and paperboard
finally resulted in increased demand for Engineered Fabrics products late in
the first quarter, and we remain cautiously optimistic about a sustained
recovery in this segment. Our Albany Door Systems segment continues to be
adversely affected by the slow economic improvement in Germany, an important
market. In spite of this continued weakness, we are optimistic that sales and
earnings in this segment will gradually improve through the year. Results in
the Applied Technologies segment are encouraging, and we expect to see
continued improvements over last year, driven by new products and efficiency
gains.
"Our strategy to focus on value-added products and services for our
customers is resulting in the accelerated development of new products in each
of our business segments. Our objective is to continue to create solutions
for our customers that significantly improve their operations and increase
their profitability.
"We continue to use the Albany Value Concept to demonstrate added value to
customers through our products and services. Our employees are using the
Albany Value Concept internally to continue to create best-practice
opportunities and a common business culture focused on delivering value to
customers and, ultimately, shareholders.
"The impact of several simultaneous plant closures in a complex global
market may result in poor visibility of earnings over the next two quarters.
However, we expect to see the continuing benefits of our cost reduction
efforts in subsequent quarters and expect the full earnings benefit to be
effective during the fourth quarter of 2004.
"Through this difficult period, our employees have remained focused on the
task of serving our customers, completing our restructuring activities, and
ensuring our success."
The Company plans a live webcast to discuss first-quarter 2004 earnings on
Monday, April 26, 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. Earnings per share
before special items is calculated by adding back to net income per share
certain individually significant items that affect the comparability of
reporting periods. 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 2003 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
March 31,
2004 2003
Net sales $226,195 $210,413
Cost of goods sold 134,417 120,088
Gross profit 91,778 90,325
Selling, technical, general and
research expenses 67,152 61,788
Restructuring, net 11,593 831
Operating income 13,033 27,706
Interest expense, net 3,654 3,871
Other expense, net 5,787 1,209
Income before income taxes 3,592 22,626
Income tax expense 217 1,545
Income before associated companies 3,375 21,081
Equity in losses of associated companies (82) (88)
Net Income 3,293 20,993
Retained earnings, beginning of period 433,407 387,609
Dividends declared (2,370) (1,783)
Retained earnings, end of period $434,330 $406,819
Earnings per share - basic:
Net income $0.10 $0.65
Earnings per share - diluted:
Net income $0.10 $0.64
Average number of shares used in basic
earnings per share computations 33,596 32,438
Average number of shares used in diluted
earnings per share computations 34,240 32,857
Dividends per share $0.07 $0.055
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
March 31 December 31,
2004 2003
ASSETS
Cash and cash equivalents $68,846 $78,822
Accounts receivable, net 144,876 151,157
Note receivable 20,981 21,814
Inventories:
Finished goods 92,765 93,787
Work in process 58,040 53,936
Raw material and supplies 30,798 29,805
181,603 177,528
Deferred taxes 29,485 33,314
Prepaid expenses 7,127 8,067
Total current assets 452,918 470,702
Property, plant and equipment, net 359,367 370,280
Investments in associated companies 5,275 5,278
Intangibles 15,392 15,790
Goodwill 156,158 159,543
Deferred taxes 66,088 70,450
Cash surrender value of life
insurance policies 33,066 32,399
Other assets 14,203 21,274
Total assets $1,102,467 $1,145,716
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $8,298 $5,250
Accounts payable 35,497 35,080
Accrued liabilities 117,451 122,550
Current maturities of long-term debt 1,379 1,949
Income taxes payable and deferred 8,438 20,475
Total current liabilities 171,063 185,304
Long-term debt 214,601 214,894
Other noncurrent liabilities 153,730 153,811
Deferred taxes and other credits 31,902 37,052
Total liabilities 571,296 591,061
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 32,824,095 in 2004 and
32,548,938 in 2003 33 33
Class B Common Stock, par value $.001 per
share; authorized 25,000,000 shares;
issued and outstanding 3,236,476 in 2004
and 3,236,476 in 2003 3 3
Additional paid in capital 287,651 280,734
Retained earnings 434,330 433,407
Accumulated items of other
comprehensive income:
Translation adjustments (76,030) (65,613)
Derivative valuation adjustment (8,590) (8,840)
Pension liability adjustment (39,579) (39,579)
597,818 600,145
Less treasury stock (Class A), at
cost (2,954,338 shares in 2004 and
2,190,038 shares in 2003) 66,647 45,490
Total shareholders' equity 531,171 554,655
Total liabilities and
shareholders' equity $1,102,467 $1,145,716
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended
March 31,
2004 2003
OPERATING ACTIVITIES
Net income $3,293 $20,993
Adjustments to reconcile net cash
provided by operating activities:
Equity in losses of associated
companies 82 88
Depreciation 13,825 12,517
Amortization 928 1,267
Provision for deferred income
taxes, other credits and long-
term liabilities 5,392 7,358
Provision for write-off of
equipment 5,269 -
Provision for impairment of
investment 4,000 -
Increase in cash surrender value
of life insurance (667) (600)
Change in unrealized currency
transaction gains and losses 6,268 (1,117)
Loss/(gain) on disposition of
assets 736 (831)
Shares contributed to ESOP 2,588 2,589
Tax benefit of options exercised 913 8
Changes in operating assets and
liabilities:
Accounts receivable 787 5,924
Sale of accounts receivable (2,649) (350)
Note receivable 833 (2,635)
Inventories (5,319) (2,308)
Prepaid expenses 891 (2,180)
Accounts payable 930 (6,904)
Accrued liabilities (3,357) (3,375)
Income taxes payable (12,044) 808
Other, net 1,814 1,003
Net cash provided by operating
activities 24,513 32,255
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (15,275) (9,410)
Purchased software (140) (175)
Proceeds from sale of assets 1,246 1,156
Net cash used in investing
activities (14,169) (8,429)
FINANCING ACTIVITIES
Proceeds from borrowings 8,299 17,424
Principal payments on debt (6,100) (18,424)
Purchase of treasury shares (19,127) -
Proceeds from options exercised 3,416 42
Debt issuance costs (1,555) -
Dividends paid (2,346) (1,783)
Net cash used in financing
activities (17,413) (2,741)
Effect of exchange rate changes on
cash flows (2,907) (1,490)
(Decrease)/Increase in cash and
cash equivalents (9,976) 19,595
Cash and cash equivalents at
beginning of year 78,822 18,799
Cash and cash equivalents at end of
period $68,846 $38,394
SOURCE Albany International Corp.
-0- 04/26/2004
/CONTACT: Kenneth C. Pulver, Vice President-Corporate Communications of
Albany International Corp., +1-518-445-2214/
/Web site: http://www.albint.com /
(AIN)
CO: Albany International Corp.
ST: New York
IN: MAC PAP
SU: ERN CCA