Exhibit 99.1
Albany International Reports Third-Quarter Financial Results
Third-Quarter Highlights
* Net income per share was $0.33, compared to net income per share
of $0.20 for the same period last year. Restructuring-related
expenses reduced net income per share by $0.09 during the
quarter and by $0.30 during the same period in 2003.
* Net sales were $222.8 million, an increase of 4.4 percent
compared to the same period last year and an increase of 0.6
percent excluding the effect of changes in currency translation
rates.
* Operating income was $21.5 million in the quarter, compared to
$11.3 million during the same period in 2003. Restructuring
charges reduced operating income by $2.6 million during the
quarter and $14.3 million during the same period in 2003.
* Net cash provided by operating activities during the quarter was
$24.9 million, after $8.8 million of severance payments and a
$20 million contribution to the United States pension plan.
* The Company purchased 1,489,943 shares of its Class A Common
Stock during the quarter, representing approximately 4.5 percent
of the outstanding shares at the time of purchase.
ALBANY, N.Y., Oct. 21 /PRNewswire-FirstCall/ -- Albany International Corp.
(NYSE/PCX/FWB: AIN) reported third-quarter net income of $0.33 per share,
compared to net income of $0.20 per share for the same period last year.
Restructuring-related expenses reduced net income by $0.09 per share during
the quarter and by $0.30 during the same period in 2003.
The $0.09 per share earnings reduction includes $0.06 per share for
restructuring expenses and $0.03 per share for tax valuation allowances
related to tax loss carry-forwards generated by restructuring activities.
Net sales increased $9.5 million, or 4.4 percent, compared to the same
period last year. Excluding the effect of changes in currency translation
rates, net sales increased 0.6 percent.
As noted in the second-quarter earnings announcement, the Company changed
its policy of recording outbound freight cost. In financial reports prior to
the second quarter of 2004, the Company reported these costs as a deduction in
the computation of net sales. The Company has revised its policy to include
such freight costs in "cost of goods sold." The amounts included in this
release, including prior-period data, reflect this change.
Following is a table of net sales by segment and the effect of changes in
currency translation rates:
Increase in
Net sales third-quarter
(in thousands) as reported 2004 net sales
Three months due to changes Percent Change
ended Sept 30, in currency Excluding
2004 2003 translation Currency
rates As Reported Rate Effect
Engineered
Fabrics $180,067 $176,909 $6,052 1.8% -1.6%
Albany Door
Systems 26,077 23,486 1,738 11.0% 3.6%
Applied
Technologies 16,704 12,997 419 28.5% 25.3%
Total $222,848 $213,392 $8,209 4.4% 0.6%
Gross profit was 39.2 percent of net sales in the third quarter of 2004,
compared to 40.4 percent in the third quarter of 2003. The decrease in gross
profit as a percentage of net sales is due principally to lower Engineered
Fabrics net sales excluding the effect of changes in currency translation
rates, costs associated with plant-shutdown activities, and higher medical
costs. The reclassification of freight costs reduced gross profit as a
percentage of sales by 0.9 percent in the third quarter of both 2004 and 2003.
Selling, technical, general, and research expenses increased 4.0 percent
compared to the same period last year, but increased only 0.2 percent
excluding the effect of changes in currency translation rates.
Third-quarter operating income was $21.5 million in 2004, compared to
$11.3 million in 2003. Third-quarter operating income was reduced by
restructuring charges of $2.6 million in 2004 and $14.3 million in 2003.
Results for the third quarter of 2004 include a charge of $1.1 million
($0.03 per share), representing the effect of a tax valuation allowance
related to tax-loss carry-forwards generated by restructuring activities. The
Company expects its effective income tax rate for the remainder of 2004 to be
approximately 30 percent before special items.
Year-to-date net sales were 3.8 percent higher than last year. Excluding
the effect of changes in currency translation rates, net sales were down 1.3
percent. Following is a table of year-to-date net sales by segment and the
effect of changes in currency translation rates:
Net sales Increase in
(in thousands) as reported 2004 net sales
Nine months due to changes Percent Change
ended Sept 30, in currency Excluding
2004 2003 translation Currency
rates As Reported Rate Effect
Engineered
Fabrics $551,226 $547,787 $24,607 0.6% -3.9%
Albany Door
Systems 79,571 70,686 6,098 12.6% 3.9%
Applied
Technologies 50,566 38,136 2,660 32.6 % 25.6%
Total $681,363 $656,609 $33,365 3.8% - 1.3%
For the first nine months of 2004, gross profit as a percentage of net
sales was 39.2 percent, compared to 41.2 percent for the first nine months of
last year. The decrease is due principally to lower Engineered Fabrics net
sales excluding the effect of changes in currency translation rates, costs
associated with plant-shutdown activities, and higher medical costs. The
reclassification of freight costs reduced gross profit as a percentage of
sales by 0.9 percent for the first nine months of both 2004 and 2003.
Liquidity and Capital Resources
Net cash provided by operating activities was $24.9 million during the
third quarter of 2004, compared to $27.8 million for the same period of 2003.
Severance payments related to restructuring activities were $8.8 million in
the third quarter of 2004 and are expected to be approximately $15.0 million
in the fourth quarter. The Company does not expect any significant payments
for restructuring in 2005. In the third quarter of 2004 and in the third
quarter of 2003, the Company made a $20 million contribution to its United
States pension plan.
During the third quarter of 2004, inventories decreased $3.6 million and
accounts receivable decreased $8.0 million, excluding the effect of changes in
currency translation rates.
Capital spending during the quarter was $14.9 million and is expected to
be approximately $17 million in the fourth quarter. Full-year capital
spending is expected to be approximately $58 million, compared to full-year
depreciation and amortization of $56 million.
During the quarter, the Company purchased 1,489,943 shares of its Class A
Common Stock at a purchase price of $43.0 million. Since the beginning of
2004, the Company has purchased 2,319,943 of its shares - which equates to 6.9
percent of the shares outstanding at December 31, 2003 - at a cost of $66.1
million. The Company remains authorized to purchase an additional 553,100
shares without further notice.
Comments on Operations:
Chairman and Chief Executive Officer Frank Schmeler commented, "Customers
in our major Engineered Fabrics markets generally saw improved demand for
their products and services during the quarter. After adjusting to exclude
the effect of changes in currency translation rates, higher sales in our
Albany Door Systems and Applied Technologies segments offset a slight decline
in Engineered Fabrics sales, resulting in a slight increase in the Company's
consolidated sales compared to the same quarter last year.
"In addition to the restructuring-related expenses of $0.09 per share
discussed above, results for the quarter were further reduced by $0.03 per
share of costs related to equipment relocation and plant closings, which
cannot be categorized as restructuring costs for accounting purposes.
"We anticipate that future expenses related to equipment relocation and
plant cleanups will approximate $1.5 million in the fourth quarter of 2004 and
$1.0 million in the first quarter of 2005. In addition, non-cash
restructuring charges of up to $4.0 million may be required during the fourth
quarter as we finalize our equipment requirements and related valuations."
Engineered Fabrics
(This segment includes paper machine clothing and process belts (PMC) used
in the manufacture of paper and paperboard products, and engineered products
for the nonwovens and pulp industries.)
Third-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, net sales decreased 1.6 percent
compared to the third quarter of 2003. Net sales were affected by technology
gains that provide longer fabric life, customer efforts to reduce overall PMC
inventory, and the Company's decision to decline certain sales opportunities
that do not meet profit objectives. Despite these factors, share of market in
the quarter reflects normal gains and losses by market segment, and overall
share of market was stable.
North America
In the United States, Canada, and Mexico, paper and paperboard operating
rates improved over the third quarter of last year, and overall paper and
paperboard production increased. In spite of these improvements for our
customers, industry data suggest that year-to-date industry sales of PMC
declined compared to the same period last year. For the Company, North
American net sales for the quarter were 1.5 percent lower than last year.
Excluding the effect of changes in currency translation rates, third-quarter
net sales decreased 2.1 percent compared to the same period in 2003. Year-to-
date net sales decreased 2.2 percent and decreased 3.1 percent excluding the
effect of changes in currency translation rates. During the quarter, our
focus on delivering value through new products provided economic benefits to
our customers. At the same time, our internal value activities improved
efficiency in our operations and provided process gains in several areas.
Value-focused activities are improving our results and will have a positive
impact on our business in future quarters.
Europe
In Europe, paper and paperboard production increased, as most customer
operations performed at over 90 percent capacity. In spite of the production
increases, industry data indicate that year-to-date shipments of PMC in Europe
declined. Our third-quarter net sales increased 8.9 percent over the same
quarter in 2003, but remained flat excluding the effects of changes in
currency translation rates, an improvement over the second quarter of 2004.
Year-to-date net sales increased 6.8 percent and decreased 3.1 percent
excluding the effect of changes in currency translation rates. The transition
of production in connection with restructuring activities was carried out
during the third quarter without disruption of supply to our customers. The
expanded dryer fabric facility in Finland and the new engineered fabrics
facility in France were officially dedicated during the quarter and are now
fully operational. With the European organization focused on delivering value
to our customers, we expect future quarters will benefit from the completion
of the restructuring activities and performance improvements that new products
provide for our customers.
Pacific
Third-quarter net sales in the Pacific region decreased 3.3 percent
compared to the same period last year and 4.5 percent excluding the effect of
changes in currency translation rates. Year-to-date net sales decreased 3.3
percent and 6.2 percent excluding the effect of changes in currency
translation rates. Within the region, year-to-date results vary, as success
in China and Korea has been offset by sales declines due to inventory and
pricing practices in other countries. We are addressing these issues and
expect the next several quarters to benefit from programs in place and the
value derived from new technologies.
Albany Door Systems
(This segment includes sales and service of High Performance Doors and
aftermarket sales to a wide variety of industrial customers.)
Net sales increased 11.0 percent compared to the third quarter of 2003 and
3.6 percent excluding the effect of changes in currency translation rates.
Year-to-date net sales increased 12.6 percent and 3.9 percent excluding the
effect of changes in currency translation rates. In spite of the negative
impact of economic weakness in Germany, a major door market, year-on-year
sales and earnings improved. We expect further sales and earnings benefits in
future quarters resulting from the development of new products and markets and
the completed efficiency improvements.
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 28.5 percent compared to the same
period in 2003 and 25.3 percent excluding the effect of changes in currency
translation rates. Year-to-date net sales increased 32.6 percent and 25.6
percent excluding the effect of changes in currency translation rates. The
increased sales in this segment reflect successful growth in a number of
businesses, including industrial filtration, PrimaLoft(R) synthetic
insulation, and Techniweave. Our industrial filtration business serves
several wet and dry applications, including dry filtration products for power
generation. Expansion of power generation capacity in Asia is creating new
demand for these products, for which our regional production capability
provides a strategic advantage. PrimaLoft's synthetic insulation outerwear and
home furnishings markets in both North America and Europe continue to grow.
As PrimaLoft expands to additional applications, satisfied users are
increasing the value of the brand. Techniweave has been successful with
applications in aerospace and other industrial uses employing advanced
materials, pre-formed shapes, and composite structures.
Looking Ahead
Mr. Schmeler continued, "In the third quarter, our paper and paperboard
customers increased production in response to improved demand for their
products. We are pleased with the much-needed relief for our customers and
are optimistic for the coming quarters. While changes affecting the paper and
paperboard industry and its suppliers over the last few years appear to be
stabilizing, and should be beneficial in the long term, they have been
difficult to manage and have resulted in unusual swings in our business.
Although fully anticipating all of the effects of these changes has not been
easy, we believe the Company is well positioned today as a result of our
efforts. The opportunities presented by new PMC technologies are very
positive as our focus on technological improvement continues.
"In our Applied Technologies segment, the success in filtration for power
generation and the growth in PrimaLoft and Techniweave is encouraging.
Technology for this segment contributes to our other businesses with respect
to materials and processes.
"The Albany Door Systems segment results improved in the third quarter.
New product introductions, after-market sales and service increases, and
efficiency improvements have been implemented globally, and we expect to see
continued improvement in coming quarters.
"Increased operating expenses resulting from higher energy prices will
have an impact on our operations in 2005. Our primary raw material for PMC is
petroleum-based, and we anticipate that higher petroleum prices will result in
increases in raw material, energy, and other costs in 2005. In addition, we
will incur incremental audit fees of approximately $1.4 million in the fourth
quarter of 2004, resulting from compliance with requirements of the Sarbanes-
Oxley Act.
"We continue to believe that our customers will place their business with
suppliers that offer them the greatest value. The Albany Value Concept
directs our efforts externally in the form of new and improved products and
process support and internally through a focus on quality, consistency, and
efficiency. These actions are aimed at producing continuing substantial
benefits for our customers and improved returns to our shareholders."
The Company plans a live webcast to discuss third-quarter 2004 financial
results on Friday, October 22, 2004, at 9:00 a.m. Eastern time. For access go
to http://www.albint.com.
Albany International is the world's largest producer of paper machine
clothing and high-performance doors with manufacturing plants strategically
located to serve its customers throughout the world. Additional information
about the Company and its businesses and products is available at
http://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 Company'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,
energy and material costs, 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 OPERATIONS AND RETAINED EARNINGS
(unaudited)
(in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
$222,848 $213,392 Net sales $681,363 $656,609
135,603 127,109 Cost of goods sold 414,200 386,335
87,245 86,283 Gross profit 267,163 270,274
63,134 60,716 Selling, technical, 196,946 186,774
general and research
expenses
2,576 14,317 Restructuring, net 45,244 15,999
21,535 11,250 Operating income 24,973 67,501
3,533 3,910 Interest expense, net 11,073 11,316
2,053 (2,115) Other expense/ 10,180 1,232
(income), net
15,949 9,455 Income before income taxes 3,720 54,953
5,640 2,809 Income tax expense 5,753 11,243
10,309 6,646 Income/(loss) before (2,033) 43,710
associated companies
158 (96) Equity in earnings/(losses) 375 (191)
of associated companies
10,467 6,550 Net income/(loss) (1,658) 43,519
416,594 420,995 Retained earnings, 433,407 387,609
beginning of period
(2,536) (2,328) Dividends declared (7,224) (5,911)
$424,525 $425,217 Retained earnings, $424,525 $425,217
end of period
Earnings per share - basic:
$0.33 $0.20 Net income/(loss) ($0.05) $1.33
Earnings per share - diluted:
$0.32 $0.19 Net income/(loss) ($0.05) $1.31
32,160 33,064 Average number of shares 32,947 32,705
used in basic earnings per
share computations
32,732 33,766 Average number of shares 32,947 33,273
used in diluted earnings
per share computations
$0.08 $0.07 Dividends per share $0.22 $0.18
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
September 30, December 31,
2004 2003
ASSETS
Cash and cash equivalents $81,216 $78,822
Accounts receivable, net 139,177 151,157
Note receivable 18,261 21,814
Inventories:
Finished goods 90,441 93,787
Work in process 57,654 53,936
Raw material and supplies 31,902 29,805
179,997 177,528
Deferred taxes 29,707 33,314
Prepaid expenses 8,322 8,067
Total current assets 456,680 470,702
Property, plant and equipment, net 354,963 370,280
Investments in associated companies 6,108 5,278
Intangibles 14,945 15,790
Goodwill 158,037 159,543
Deferred taxes 63,777 63,657
Cash surrender value of life
insurance policies 33,766 32,399
Other assets 17,098 21,274
Total assets $1,105,374 $1,138,923
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $6,179 $5,250
Accounts payable 30,827 35,080
Accrued liabilities 141,552 122,550
Current maturities of long-term debt 1,324 1,949
Income taxes payable and deferred 20,211 13,682
Total current liabilities 200,093 178,511
Long-term debt 246,680 214,894
Other noncurrent liabilities 134,192 153,811
Deferred taxes and other credits 28,516 37,052
Total liabilities 609,481 584,268
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 32,989,305 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 291,955 280,734
Retained earnings 424,525 433,407
Accumulated items of other
comprehensive income:
Translation adjustments (65,481) (65,613)
Derivative valuation adjustment (4,067) (8,840)
Pension liability adjustment (39,579) (39,579)
607,389 600,145
Less treasury stock (Class A), at
cost (4,504,152 shares in 2004 and
2,190,038 shares in 2003) 111,496 45,490
Total shareholders' equity 495,893 554,655
Total liabilities and
shareholders' equity $1,105,374 $1,138,923
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
September 30,
2004 2003
OPERATING ACTIVITIES
Net (loss)/income ($1,658) $43,519
Adjustments to reconcile net
(loss)/income to net cash provided
by operating activities:
Equity in (earnings)/losses of
associated companies (376) 191
Depreciation 39,691 38,742
Amortization 2,710 3,687
Provision for deferred income
taxes, other credits and long-
term liabilities (19,488) (6,731)
Provision for write-off of equipment 11,931 12,143
Provision for impairment of investment 4,000 -
Increase in cash surrender value
of life insurance (1,141) (1,082)
Change in unrealized currency
transaction gains and losses 8,150 (4,255)
Loss/(gain) on disposition of assets 842 (486)
Shares contributed to ESOP 4,546 4,451
Tax benefit of options exercised 1,322 1,291
Changes in operating assets and liabilities:
Accounts receivable 3,542 6,008
Note receivable 3,553 (1,130)
Inventories (2,800) (1,444)
Prepaid expenses (283) (2,717)
Accounts payable (4,126) (5,831)
Accrued liabilities 19,131 11,859
Income taxes payable 6,626 (4,751)
Other, net 60 (1,392)
Net cash provided by operating activities 76,232 92,072
INVESTING ACTIVITIES
Purchases of property, plant and equipment (41,296) (29,951)
Purchased software (489) (613)
Proceeds from sale of assets 3,944 4,336
Cash received from life insurance
policy terminations 863 -
Premiums paid for life insurance policies (1,089) (1,118)
Net cash used in investing activities (38,067) (27,346)
FINANCING ACTIVITIES
Proceeds from borrowings 53,388 40,582
Principal payments on debt (21,295) (54,304)
Purchase of treasury shares (66,135) -
Proceeds from options exercised 5,303 12,683
Debt issuance costs (1,555) -
Dividends paid (7,034) (5,367)
Net cash used in financing activities (37,328) (6,406)
Effect of exchange rate changes on cash flows 1,557 (13,614)
Increase in cash and cash equivalents 2,394 44,706
Cash and cash equivalents at
beginning of year 78,822 18,799
Cash and cash equivalents at end of period $81,216 $63,505
SOURCE Albany International Corp.
-0- 10/21/2004
/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: FIN
SU: ERN CCA