Exhibit 99.1
Albany International Reports Fourth-Quarter and Full-Year Financial Results
Highlights
* Net income per share was $0.38, compared to $0.32 for the fourth quarter
of 2003. Restructuring charges reduced net income per share by $0.20
during the quarter and by $0.12 during the same period in 2003.
Additionally, net income for the fourth quarter of 2004 was favorably
affected by income tax adjustments that had the effect of increasing net
income by $0.08 per share. No comparable adjustments were recorded in the
fourth quarter of 2003.
* Net income per share for the full year was $0.32, compared to $1.64 in
2003. Restructuring charges reduced net income per share by $1.16 in 2004
and $0.46 in 2003.
* Net sales were $238.4 million, an increase of 3.1 percent compared to the
fourth quarter of 2003. Net sales decreased 1.8 percent excluding the
effect of changes in currency translation rates.
* Operating income was $15.5 million in the quarter, compared to $18.1
million during the same period in 2003. Restructuring charges reduced
operating income by $8.8 million during the quarter and $5.8 million
during the same period in 2003.
* Net cash provided by operating activities during the quarter was $25.6
million, after $15.6 million of payments for restructuring expenses.
* The Company purchased 500,000 shares of its Class A Common Stock during
the quarter.
ALBANY, N.Y., Jan. 27 /PRNewswire-FirstCall/ -- Albany International Corp.
(NYSE/PCX/FWB:AIN) reported fourth-quarter net income of $0.38 per share,
compared to net income of $0.32 per share for the same period last year.
Restructuring charges reduced net income by $0.20 per share during the quarter
and by $0.12 per share during the same period in 2003.
Net sales increased $7.1 million, or 3.1 percent, compared to the same
period of 2003. Excluding the effect of changes in currency translation rates,
net sales decreased 1.8 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
Three months fourth-quarter Percent Change
ended 2004 net sales -----------------------
December 31, due to changes Excluding
----------------------- in currency As Currency
(in thousands) 2004 2003 translation rates Reported Rate Effect
- -------------------- ---------- ---------- ------------------ ---------- -----------
Engineered
Fabrics $ 189,598 $ 185,529 $ 8,542 2.2 % -2.4 %
Albany Door
Systems 33,202 30,645 2,400 8.3 % 0.5 %
Applied
Technologies 15,639 15,160 362 3.2 % 0.8 %
Total $ 238,439 $ 231,334 $ 11,304 3.1 % -1.8 %
Gross profit was 39.8 percent of net sales in the fourth quarter of 2004,
compared to 39.3 percent in the fourth quarter of 2003. The improvement is due
principally to benefits resulting from cost reduction initiatives.
Selling, technical, general, and research expenses increased 5.2 percent
compared to the fourth quarter of 2003. These expenses increased 0.5 percent
excluding the effect of changes in currency translation rates.
Fourth-quarter operating income was $15.5 million in 2004, compared to $18.1
million in 2003. Fourth-quarter operating income was reduced by restructuring
charges of $8.8 million in 2004, and $5.8 million in 2003.
Other expense, net, was expense of $3.4 million for the fourth quarter of
2004, compared to income of $0.6 million for the same period of 2003. In
comparison to the fourth quarter of 2003, the difference had the effect of
reducing net income by $0.09 per share. The difference is due principally to
currency hedging activities and the remeasurement of short-term intercompany
balances at operations that held amounts denominated in currencies other than
their local currency.
During the fourth quarter, the Company successfully resolved tax
contingencies in several countries, resulting in an income tax benefit of $0.12
per share. The Company also recorded a tax valuation allowance of $0.04 per
share related to net operating losses generated by restructuring activities. The
net effect of these discrete tax events reduced the Company's tax expense by
$0.08 per share.
Full-year net sales were 3.6 percent higher than 2003. Excluding the effect
of changes in currency translation rates, net sales were down 1.4 percent.
Following is a table of full-year net sales by segment and the effect of changes
in currency translation rates:
Net sales
as reported Increase in Percent Change
Years ended 2004 net sales -----------------------
December 31, due to changes Excluding
----------------------- in currency As Currency
(in thousands) 2004 2003 translation rates reported rate effect
- -------------------- ---------- ---------- ------------------ ---------- -----------
Engineered
Fabrics $ 740,824 $ 733,316 $ 33,149 1.0% -3.5%
Albany Door
Systems 112,773 101,331 8,498 11.3% 2.9%
Applied
Technologies 66,205 53,296 3,022 24.2% 18.6%
Total $ 919,802 $ 887,943 $ 44,669 3.6% -1.4%
For the full year, gross profit as a percentage of net sales was 39.4
percent in 2004, compared to 40.7 percent in 2003. The decrease is due
principally to lower Engineered Fabrics net sales excluding the effect of
changes in currency translation rates.
Other expense, net, was expense of $13.5 million for the full year, compared
to $0.7 million for 2003. In comparison to 2003, the difference had the effect
of reducing net income by $0.28 per share. The difference is due principally to
an impairment loss of $4.0 million recorded in the first quarter of 2004,
currency hedging activities, and the remeasurement of short-term intercompany
balances at operations that held amounts denominated in currencies other than
their local currency.
For the full year, net income per share was $0.32 in 2004, after
restructuring charges of $1.16. In 2003, net income was $1.64 per share, after
restructuring charges of $0.46. Income tax adjustments in 2004 included a charge
of $0.21 per share for valuation allowances related to restructuring activities,
which was partially offset by reductions to income tax expense of $0.14 per
share relating to the favorable resolution of income tax contingencies. The net
effect of these discrete tax events reduced the Company's full-year earnings per
share $0.07 in 2004. In 2003, discrete tax events increased net income per share
$0.16. The fourth-quarter 2004 tax rate includes an adjustment reducing the
full-year tax rate to 19.9 percent. The tax rate for the full year 2003 was 22.5
percent. We anticipate that the tax rate for 2005 before discrete items will not
exceed 30 percent.
Liquidity and Capital Resources
Net cash provided by operating activities was $25.6 million for the fourth
quarter of 2004, compared to $39.5 million for the same period of 2003. Cash
payments related to restructuring expenses were $15.6 million in the fourth
quarter of 2004, compared to $3.0 million in the fourth quarter of 2003. Cash
required in 2005 for restructuring liabilities and equipment relocations is
expected to be approximately $13 million, which includes approximately $4
million that will be recorded as operating expense in 2005.
During the fourth quarter of 2004, inventories decreased $3.4 million and
accounts receivable decreased $6.1 million, excluding the effect of changes in
currency translation rates.
Capital spending during the quarter was $15.8 million and $57.1 million for
the full year. Capital spending in 2005 is expected to be approximately $45
million, compared to estimated full-year depreciation of $52 million and
amortization of $4 million.
During the quarter, the Company purchased 500,000 shares of its Class A
Common Stock at a cost of $15.0 million. For the full year, the Company
purchased 2,819,943 of its shares-which equates to 8.4 percent of the shares
outstanding at December 31, 2003-at a cost of $81.1 million. During the year,
the Company issued 633,763 of its shares for the exercise of stock options and
contributions to the Company's United States 401(k) savings plan. Shares
outstanding at December 31, 2004 were 31,409,196. The Company remains authorized
to purchase an additional 1,053,100 shares without further notice.
Comments on Operations
Chairman and Chief Executive Officer Frank Schmeler commented, "2004 was a
significant year for our Company. We concluded the restructuring program
announced in January 2003, which reduced costs by more than $40 million. In
addition to the closure of manufacturing facilities in Europe and North America
during the year, we made substantial investments in plant and equipment for
efficiency and future growth. Matching our capacity to the changing demand of
the global paper and board industries, while a difficult challenge, has made the
Company stronger and well-positioned to meet the needs of our customers.
"In 2004, global paper and paperboard manufacturers continued to produce
more tons of product with fewer units of paper machine clothing (PMC), a trend
we reported earlier in the year. Several factors contributed to this trend
including enhanced PMC product performance that creates additional value for our
customers, more efficient paper machine operation as a result of industry
consolidation and rationalization, and the practice by some paper manufacturers
to run PMC products longer. Since the rate of paper industry consolidation and
rationalization appears to have slowed, the Company expects the negative impact
of this effect on PMC demand in future periods to decrease."
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.)
Fourth-quarter net sales for the Engineered Fabrics segment increased 2.2
percent compared to the same period of 2003. Excluding the effect of changes in
currency translation rates, net sales decreased 2.4 percent compared to the
fourth quarter of 2003. Full-year net sales increased 1.0 percent and decreased
3.5 percent excluding the effect of changes in currency translation rates. Net
sales in 2004 were affected by weak PMC demand due to extended fabric life,
customer efforts to reduce overall PMC inventory, and the loss of some business
due to price. The impact of completed restructuring initiatives, as well as the
efficiency gains from the substantial investments in plant and equipment,
contributed to improving gross margins in the third and fourth quarters of 2004.
Albany Door Systems
(This segment includes sales and service of High Performance Doors and
aftermarket sales to a wide variety of industrial customers.)
Fourth-quarter net sales increased 8.3 percent compared to the fourth
quarter of 2003 and 0.5 percent excluding the effect of changes in currency
translation rates. Full-year net sales increased 11.3 percent and 2.9 percent
excluding the effect of changes in currency translation rates. Results for the
full year were positively affected by efficiency improvements, new product
development, and increases in aftermarket and service revenues, even though
customers' capital spending for high-performance door products did not improve
in major markets.
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).)
Fourth-quarter net sales in this segment increased 3.2 percent compared to
the same period in 2003 and 0.8 percent excluding the effect of changes in
currency translation rates. Full-year net sales increased 24.2 percent and 18.6
percent excluding the effect of changes in currency translation rates.
Filtration products for power generation plants, principally in Australia, and
gains in tannery and textile markets in Asia and Latin America provided a large
portion of the 2004 improvement in this segment. In addition, results at
Techniweave were positively affected by new business in structured components.
Looking Ahead
Mr. Schmeler continued, "We are optimistic about expectations for global
paper and paperboard markets in 2005 and their effect on our financial results
for the year. Current operating rates remain high, especially in paperboard, and
demand for most paperboard grades and selected paper grades is expected to hold
through the first half of 2005. The Albany Door Systems segment should continue
to grow in 2005 due to new products and the expansion of aftermarket sales and
service. The Applied Technologies segment should benefit from new power
generation plants, which will come onstream in 2005, improvements in tannery and
textile markets in Asia and Latin America, and the growth of wet filtration
products.
"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 increase
raw material costs by approximately $12 million in 2005.
"Our restructuring activities are complete, and in 2005 we will focus on
growth. We believe that customers will place their business with suppliers that
offer them the greatest value, and the Albany Value Concept supports this
belief. It directs our efforts in the marketplace in the form of new and
improved products and superior process support for our customers. At the same
time, it focuses our employees on product quality and consistency and the
pursuit of process and efficiency improvements in all areas of our businesses.
The Albany Value Concept should continue to provide substantial benefits for our
customers and improved returns for our shareholders."
The Company plans a live webcast to discuss fourth-quarter and full-year
2004 earnings tomorrow 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 global customers and sales worldwide. 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 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 and sales growth, market share, earnings,
profitability, cash flows, pricing, markets, cost reductions, raw material
costs, 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 OPERATIONS AND RETAINED EARNINGS
(in thousands except per share data)
Three Months Ended Years Ended
December 31, December 31,
------------------------- -----------------------
(unaudited) (unaudited) (unaudited)
2004 2003 2004 2003
----------- ----------- ----------- ---------
$ 238,439 $ 231,334 Net sales $ 919,802 $ 887,943
143,542 140,422 Cost of goods sold 557,742 526,757
94,897 90,912 Gross profit 362,060 361,186
70,552 67,047 Selling, technical, general 267,498 253,821
and research expenses
8,814 5,752 Restructuring, net 54,058 21,751
15,531 18,113 Operating income 40,504 85,614
3,563 3,758 Interest expense, net 14,636 15,074
3,359 (570) Other expense/(income), net 13,539 662
8,609 14,925 Income before income taxes 12,329 69,878
(3,303) 4,477 Income tax (benefit)/expense 2,450 15,720
11,912 10,448 Income before associated 9,879 54,158
companies
131 88 Equity in earnings/(losses) 506 (103)
of associated companies
12,043 10,536 Net income 10,385 54,055
424,525 425,217 Retained earnings, 433,407 387,609
beginning of period
(2,511) (2,346) Dividends declared (9,735) (8,257)
$ 434,057 $ 433,407 Retained earnings, end of $ 434,057 $ 433,407
period
Earnings per share - basic:
$ 0.38 $ 0.32 Net income $ 0.32 $ 1.64
Earnings per share - diluted:
$ 0.38 $ 0.31 Net income $ 0.31 $ 1.61
31,467 33,437 Average number of shares 32,575 32,889
used in basic earnings
per share computations
32,066 34,168 Average number of shares 33,174 33,511
used in diluted earnings
per share computations
$ 0.08 $ 0.07 Dividends per share $ 0.30 $ 0.25
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
December 31, December 31,
2004 2003
------------ ------------
ASSETS
Cash and cash equivalents $ 58,982 $ 78,822
Accounts receivable, net 144,950 151,157
Note receivable 18,955 21,814
Inventories:
Finished goods 96,061 93,787
Work in process 57,470 53,936
Raw material and supplies 31,999 29,805
185,530 177,528
Deferred taxes 26,526 33,314
Prepaid expenses 8,867 8,067
Total current assets 443,810 470,702
Property, plant and equipment, net 378,170 370,280
Investments in associated companies 6,456 5,278
Intangibles 14,207 15,790
Goodwill 171,622 159,543
Deferred taxes 87,848 63,657
Cash surrender value of life
insurance policies 34,583 32,399
Other assets 19,064 21,274
Total assets $ 1,155,760 $ 1,138,923
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $ 14,617 $ 5,250
Accounts payable 43,378 35,080
Accrued liabilities 120,263 122,550
Current maturities of long-term
debt 1,340 1,949
Income taxes payable and deferred 29,620 13,682
Total current liabilities 209,218 178,511
Long-term debt 213,615 214,894
Other noncurrent liabilities 147,268 153,811
Deferred taxes and other credits 34,882 37,052
Total liabilities 604,983 584,268
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
33,176,872 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 296,045 280,734
Retained earnings 434,057 433,407
Accumulated items of other
comprehensive income:
Translation adjustments (11,711) (65,613)
Derivative valuation adjustment (2,785) (8,840)
Pension liability adjustment (38,369) (39,579)
677,273 600,145
Less treasury stock (Class A), at
cost (5,004,152 shares
in 2004 and 2,190,038 shares in
2003) 126,496 45,490
Total shareholders' equity 550,777 554,655
Total liabilities and
shareholders' equity $ 1,155,760 $ 1,138,923
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended
December 31,
---------------------------
2004 2003
------------ ------------
(unaudited)
OPERATING ACTIVITIES
Net income $ 10,385 $ 54,055
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in (earnings)/losses of
associated companies (506) 103
Depreciation 51,843 51,003
Amortization 3,372 5,091
Provision for deferred income
taxes, other credits and long-
term liabilities (16,652) (6,908)
Provision for write-off of
equipment 17,099 14,671
Provision for impairment of
investment 4,000 -
Increase in cash surrender value
of life insurance (1,958) (1,998)
Change in unrealized currency
transaction gains and losses 8,004 (8,286)
Gain on disposition of assets (285) (513)
Shares contributed to ESOP 5,505 5,398
Tax benefit of options exercised 1,473 2,289
Changes in operating assets and liabilities:
Accounts receivable 9,747 15,685
Note receivable 2,859 (1,739)
Inventories 642 3,171
Prepaid expenses (300) (894)
Accounts payable 3,029 (4,544)
Accrued liabilities (5,518) 12,457
Income taxes payable 9,638 (9,294)
Other, net (552) 1,777
Net cash provided by operating
activities 101,825 131,524
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (57,129) (51,849)
Purchased software (879) (1,072)
Proceeds from sale of assets 5,416 2,653
Cash received from life insurance
policy terminations 863 -
Premiums paid for life insurance
policies (1,089) (1,118)
Net cash used in investing
activities (52,818) (51,386)
FINANCING ACTIVITIES
Proceeds from borrowings 68,005 45,833
Principal payments on debt (60,724) (59,709)
Purchase of treasury shares (81,135) -
Proceeds from options exercised 8,284 17,559
Debt issuance costs (1,555) -
Dividends paid (9,570) (7,692)
Net cash used in financing
activities (76,695) (4,009)
Effect of exchange rate changes on
cash flows 7,848 (16,106)
(Decrease)/increase in cash and cash
equivalents (19,840) 60,023
Cash and cash equivalents at
beginning of year 78,822 18,799
Cash and cash equivalents at end of
period $ 58,982 $ 78,822
SOURCE Albany International Corp.
-0- 01/27/2005
/CONTACT: Kenneth C. Pulver, Vice President-Corporate Communications,
+1-518-445-2214/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.albint.com /