<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________
COMMISSION FILE NUMBER: 0-16214
---------------------
ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 14-0462060
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1373 BROADWAY, ALBANY, NEW YORK 12204
(Address of principal executive (Zip Code)
offices)
</TABLE>
Registrant's telephone number, including area code
518-445-2200
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
CLASS A COMMON STOCK NEW YORK STOCK EXCHANGE AND
($0.001 PAR VALUE) PACIFIC STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports,) and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of Class A Common Stock held on March 8, 1994 by
non-affiliates of the registrant was $509,232,549.
The registrant had 24,249,169 shares of Class A Common Stock and 5,655,251
shares of Class B Common Stock outstanding as of March 8, 1994.
<TABLE>
<S> <C>
DOCUMENTS INCORPORATED BY REFERENCE PART
Registrant's Annual Report to Shareholders for the year ended December 31, 1993. II
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on
May 12, 1994. III
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
The Registrant designs, manufactures and markets paper machine clothing for
each section of the paper machine. It is the largest producer of paper machine
clothing in the world. Paper machine clothing consists of large continuous belts
of custom designed and custom manufactured, engineered fabrics that are
installed on paper machines and carry the paper stock through each stage of the
paper production process. Paper machine clothing is a consumable product of
technologically sophisticated design that is made with synthetic monofilament
and fiber materials. The Registrant produces a substantial portion of its
monofilament requirements. The design and material composition of paper machine
clothing can have a considerable effect on the quality of paper products
produced and the efficiency of the paper machines on which it is used. In
addition to paper machine clothing, the Registrant manufactures other engineered
fabrics which include fabrics for the non-woven industry, corrugator belts,
filtration media and rapid roll doors.
Practically all press fabrics are woven tubular or endless from monofilament
yarns. After weaving, the base press fabric goes to a needling operation where a
thick fiber layer, called a batt, is laid on the base just before passing
through the needling machine. The needles are equipped with tiny barbs that grab
batt fibers locking them into the body of the fabric. After needling, the
fabrics are usually washed, and water is removed. The fabric then is heat set,
treatments may be applied, and it is measured and trimmed.
The Registrant's manufacturing process is similar for forming fabrics and
drying fabrics. Monofilament screens are woven on a loom. The fabrics are seamed
to produce an endless loop, and heat stabilized by running them around two large
cylinders under heat and drawn out by tension. After heat setting, the fabrics
are seamed and boxed.
INDUSTRY FACTORS
There are approximately 1,250 paper machines in the United States located in
approximately 490 paper mills. It is estimated that, excluding China, there are
8,100 paper machines in the world and approximately 1,000, mostly very small,
paper machines in China. Demand for paper machine clothing is tied to the volume
of paper production, which in turn reflects economic growth. According to
published data, world production volumes have grown in excess of 4% annually
over the last ten years. The Registrant anticipates continued growth for the
long-term in world paper production. The profitability of the paper machine
clothing business has generally been less cyclical than the profitability of the
papermaking industry. Papermaking capacity utilization does not vary
significantly because in periods of declining demand for paper, paper mills
still operate near capacity but at lower profitability.
Because the paper industry has been characterized by an evolving but
essentially stable manufacturing technology based on the wet forming papermaking
process, which requires a very large capital investment, the Registrant does not
believe that a commercially feasible substitute technology that does not employ
paper machine clothing is likely to be developed and incorporated into the paper
production process by paper manufacturers in the foreseeable future.
Accordingly, the prospects for continued stability of industry demand for paper
machine clothing appear excellent.
Over the last few years, paper manufacturers have generally reduced the
number of suppliers of paper machine clothing per machine position. This trend
has increased opportunities for market leaders to expand their market share.
INTERNATIONAL OPERATIONS
The Registrant maintains wholly-owned manufacturing facilities in Australia,
Brazil, Canada, Finland, France, Germany, Great Britain, Holland, Mexico, Sweden
and the United States. The Registrant has a 50% interest in a partnership in
South Africa which is engaged primarily in the paper machine clothing business
(see Note 1 of Notes to Consolidated Financial Statements).
2
<PAGE>
The Registrant's geographically diversified operations allow it to serve the
world's paper markets more efficiently and to provide superior technical service
to its customers. The Registrant benefits from the transfer of research and
development product innovations between geographic regions. The worldwide scope
of the Registrant's manufacturing and marketing efforts also limits the impact
on the Registrant of economic downturns that are limited to a geographic region.
The Registrant's widespread presence subjects it to certain risks, including
controls on foreign exchange and the repatriation of funds. However, the
Registrant has been able to repatriate earnings in excess of working capital
requirements from each of the countries in which it operates without substantial
governmental restrictions and does not foresee any material changes in its
ability to continue to do so in the future. In addition, the Registrant believes
that the risks associated with its operations and locations outside the United
States are those normally associated with doing business in these locations. In
countries in which the Registrant operates that have experienced high inflation
rates, the Registrant frequently reprices its products. This practice has
enabled the Registrant to quickly pass on to its customers most of the increased
costs due to local inflation. Although government imposed price freezes have
occasionally occurred in some of the Registrant's markets, including the United
States, neither controls nor high inflation rates have had a long-term material
adverse impact on the Registrant's operating results.
MARKETING, CUSTOMERS AND BACKLOG
Paper machine clothing is custom designed for each user depending upon the
type, size and speed of the papermaking machine, the machine section, the grade
of paper being produced, and the quality of the pulp stock used. Judgment and
experience are critical in designing the appropriate clothing for each position
on the machine. As a result, the Registrant employs highly skilled sales and
technical service personnel in 21 countries who work directly with paper mill
operating management. The Registrant's technical service van program in the
United States gives its service engineers field access to the measurement and
analysis equipment needed for troubleshooting and application engineering.
Sales, service and technical expenses are major cost components of the
Registrant. The Registrant employs approximately 900 people in the sales and
technical functions combined, many of whom have engineering degrees or paper
mill experience.
The forming and pressing sections of the papermaking process have been
characterized by a greater frequency of technological and design innovations
that improve performance than has the drying section. The Registrant's market
leadership position in forming and pressing fabrics and the 1993 acquisition of
Mount Vernon which produces dryer fabrics, reflects the Registrant's commitment
to technological innovation.
Typically, the Registrant experiences its highest quarterly sales levels in
the fourth quarter of each fiscal year and its lowest levels in the first
quarter. The Registrant believes that this pattern only partially reflects
seasonal shifts in demand for its products but is more directly related to
purchasing policies of the Registrant's customers.
Payment terms granted to customers reflect general competitive practices.
Terms vary with product and competitive conditions, but generally require
payment within 30 to 90 days, depending on the country of operation.
Historically, bad debts have been insignificant. No single customer, or group of
related customers, accounted for more than 5% of the Registrant's sales of paper
machine clothing in any of the past three years. Management does not believe
that the loss of any one customer would have a material adverse effect on the
Registrant's business.
The Registrant's order backlogs at December 31, 1993 and 1992 were
approximately $407 million and $351 million, respectively. Orders recorded at
December 31, 1993 are expected to be invoiced during the next 12 months.
RESEARCH AND DEVELOPMENT
The Registrant invests heavily in research, new product development and
technical analysis to maintain its leadership in the paper machine clothing
industry. The Registrant's expenditures fall
3
<PAGE>
into two primary categories, research and development and technical
expenditures. Research and development expenses totaled $17.6 million in 1993
and $18.5 million in 1992 and 1991. While most research activity supports
existing products, the Registrant engages in research for new products. New
product research has focused primarily on more sophisticated paper machine
clothing and has resulted in a stream of new products such as DUOTEX-R- and
TRIOTEX-TM- forming fabrics, for which the technology has been licensed to
several competitors, the patented, on-machine-seamed press fabric, long nip
press belts which are essential to water removal in the press section and
Thermonetics-TM- a dryer fabric. Technical expenditures, primarily at the plant
level, totaled $21.4 million in 1993, $22.9 million in 1992, and $23.5 million
in 1991. Technical expenditures are focused on design, quality assurance and
customer support.
Although the Registrant has focused most of its research and development
efforts on paper machine clothing products and design, the Registrant also has
made considerable progress in developing non-paper machine clothing products.
Through its major research facility in Mansfield, Massachusetts, the Registrant
conducts research under contract for the U.S. government and major corporations.
In addition to its Mansfield facility, the Registrant has four other research
and development centers located at manufacturing locations in Halmstad, Sweden;
Selestat, France; Albany, New York; and Menasha, Wisconsin.
The Registrant has developed and is developing proprietary processes for
manufacturing structural and insulation products using polyimide and other
fibers, which have potential applications in aircraft, automotive and other
industries. A number of products that include properties such as thermal
stability, non-flammability, non-melting and low generation of smoke and toxic
gasses at high temperatures are currently being tested.
Another innovative engineered fabric development unrelated to paper machine
clothing is Primaloft, a synthetic down which is believed to have properties
superior to goose down. This product continues to gain acceptance in the
marketplace for cold weather clothing and bedding.
The Registrant holds a number of patents, trademarks and licenses, none of
which are material to the continuation of the Registrant's business. Consistent
with industry practice, the Registrant frequently licenses its patents to
competitors primarily to enhance customer acceptance of the new products. The
revenue from such licenses is less than 1 percent of consolidated net sales.
COMPETITION
While there are more than 50 paper machine clothing suppliers worldwide,
only six major paper machine clothing companies compete on a global basis.
Market shares vary depending on the country and the type of paper machine
clothing produced. In the paper machine clothing market, the Registrant believes
that it has a market share of approximately 26% in the United States and
Canadian markets, taken together, 16% in the rest of the world and approximately
20% in the world overall. Together, the United States and Canada constitute
approximately 38% of the total world market for paper machine clothing.
Competition is intense in all areas of the Registrant's business. While
price competition is, of course, a factor, the primary bases for competition are
the performance characteristics of the Registrant's products, which are
principally technology-driven, and the quality of customer service. The
Registrant, like its competitors, provides diverse services to customers through
its sales and technical service personnel including: (1) consulting on
performance of the paper machine; (2) consulting on paper machine
configurations, both new and rebuilt; (3) selection and custom manufacture of
the appropriate paper machine clothing; and (4) storing fabrics for delivery to
the user.
EMPLOYEES
The Registrant employs 5,286 persons, of whom approximately 75% are engaged
in manufacturing the Registrant's products. Wages and benefits are competitive
with those of other manufacturers in the geographic areas in which the
Registrant's facilities are located. The Registrant considers its relations with
its employees in general to be excellent.
4
<PAGE>
EXECUTIVE OFFICERS OF REGISTRANT
The following table sets forth certain information with respect to the
executive officers of the Registrant:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- ----------------------------------------------
<S> <C> <C>
J. Spencer Standish 68 Chairman of the Board and Director
Francis L. McKone 59 President, CEO and Director
Michael C. Nahl 51 Senior Vice President and Chief Financial
Officer
Manfred F. Kincaid 56 Senior Vice President
Thomas H. Richardson 58 Senior Vice President
Frank R. Schmeler 54 Senior Vice President
Charles B. Buchanan 62 Vice President, Secretary and Director
Richard A. Carlstrom 50 Vice President -- Controller
Raymond D. Dufresne 46 Vice President, Treasurer and Assistant
Secretary
William H. Dutt 58 Vice President -- Technical
Hugh A. McGlinchey 54 Vice President -- Information Systems
James W. Sherrer 58 Vice President -- Administration
Thomas H. Hagoort 61 General Counsel
</TABLE>
J. SPENCER STANDISH joined the Registrant in 1952. He has served the
Registrant as Chairman of the Board since 1984, Vice Chairman from 1976 to 1984,
Executive Vice President from 1974 to 1976, and Vice President from 1972 to
1974. He has been a Director of the Registrant since 1958. He is a director of
Berkshire Life Insurance Company.
FRANCIS L. MCKONE joined the Registrant in 1964. He has served the
Registrant as Chief Executive Officer since 1993, President since 1984,
Executive Vice President from 1983 to 1984, Group Vice President -- Papermaking
Products Group from 1979 to 1983, and prior to 1979 as a Vice President of the
Registrant and Division President -- Papermaking Products U.S. He has been a
Director of the Registrant since 1983.
MICHAEL C. NAHL joined the Registrant in 1981. He has served the Registrant
as Senior Vice President and Chief Financial Officer since 1983 and prior to
1983 as Group Vice President.
MANFRED F. KINCAID joined the Registrant in 1960. He has served the
Registrant as Senior Vice President since 1983, Vice President -- Papermaking
Products Europe from 1981 to 1983, and prior to 1981 as Vice President and
General Manager of the Appleton Wire Division.
THOMAS H. RICHARDSON joined the Registrant in 1965. He has served the
Registrant since 1993 as Senior Vice President -- International. Prior to 1993,
he served as Vice President and General Manager of Euroscan from 1986 to 1993,
as Senior Vice President -- Canada and Europe from 1983 to 1986, as Senior Vice
President -- International from 1981 to 1983, and prior to 1981 as General
Manager of Albany International Industria e Comercio Ltda. in Brazil.
FRANK R. SCHMELER joined the Registrant in 1964. He has served the
Registrant as Senior Vice President since 1988, as Vice President and General
Manager of the Felt Division from 1984 to 1988, as Division Vice President and
General Manager, Albany International Canada from 1978 to 1984 and as Vice
President of Marketing, Albany International Canada from 1976 to 1978.
5
<PAGE>
CHARLES B. BUCHANAN joined the Registrant in 1957. He has served the
Registrant as Vice President and Secretary since 1980 and as Vice President and
Assistant to the President from 1976 to 1980. He has been a Director of the
Registrant since 1969. He is a Director of Fox Valley Corporation and of CMP
Industries, Inc.
RICHARD A. CARLSTROM joined the Registrant in 1972. He has served the
Registrant as Vice President -- Controller since 1993, as Controller since 1980,
as Controller of a U.S. division from 1975 to 1980, and prior to 1975 as
Financial Controller of Albany International Pty. in Australia.
RAYMOND D. DUFRESNE joined the Registrant in 1973. He has served the
Registrant as Vice President -- Treasurer since 1993, as Treasurer since 1985,
as Business Analyst and Assistant Treasurer from 1978 to 1985 and Financial
Manager of Albany International Industria e Comercio Ltda. in Brazil from 1975
to 1977.
WILLIAM H. DUTT joined the Registrant in 1958. He has served the Registrant
since 1983 as Vice President -- Technical, and prior to 1983 he served in
various technical, engineering, and research capacities including Director of
Research and Development and Vice President -- Operations for Albany Felt.
HUGH A. MCGLINCHEY joined the Registrant in 1991. He has served the
Registrant as Vice President -- Information Systems since 1993 and from 1991 to
1993 as Director -- Information Systems. Prior to 1991 he served as Director --
Corporate Information and Communications Systems for Avery Dennison Corporation.
JAMES W. SHERRER, SR. joined the Registrant in 1992. He has served the
Registrant since 1993 as Vice President -- Administration and from 1992 to 1993
as Vice President. Prior to joining the Registrant, he held various technical
and managerial positions with a company in the paper machine clothing business.
THOMAS H. HAGOORT joined the Registrant as General Counsel on January 1,
1991. From 1968 until December 31, 1990 he was a partner in Cleary, Gottlieb,
Steen and Hamilton, an international law firm with headquarters in New York
City, to which he became of counsel on January 1, 1991.
RAW MATERIALS AND INVENTORY
Primary raw materials for the Registrant's products are synthetic fibers,
which are generally available from a number of suppliers. The Registrant,
therefore, is not required to maintain inventories in excess of its current
needs to assure availability. In addition, the Registrant manufactures
monofilament, a basic raw material for all types of paper machine clothing, at
its facility in Homer, New York, which supplies approximately 25% of its
world-wide monofilament requirements. This manufacturing capability assists the
Registrant in its negotiations with monofilament producers for the balance of
its supply requirements, and enhances the ability of the Registrant to develop
proprietary products.
The Registrant believes it is in compliance with all Federal, State and
local provisions which have been enacted or adopted regarding the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, and does not have knowledge of environmental regulations which do
or might have a material effect on future capital expenditures, earnings, or
competitive position.
The Registrant is incorporated under the laws of the State of Delaware and
is the successor to a New York corporation which was originally incorporated in
1895 and which was merged into the Registrant in August 1987 solely for the
purpose of changing the domicile of the corporation. Upon such merger, each
outstanding share of Class B Common Stock of the predecessor New York
corporation was changed into one share of Class B Common Stock of the
Registrant. References to the Registrant that relate to any time prior to the
August 1987 merger should be understood to refer to the predecessor New York
corporation.
6
<PAGE>
ITEM 2. PROPERTIES
The Registrant's principal manufacturing facilities are located in the
United States, Canada, Europe, Brazil, Mexico and Australia. The aggregate
square footage of the Registrant's facilities in the United States and Canada is
approximately 2,407,000, of which 2,298,200 square feet are owned and 108,800
square feet are leased. Most of the leased facilities in the United States are
used for the warehousing of finished goods. The Registrant's facilities located
outside the United States and Canada comprise approximately 2,506,000 square
feet, of which 2,255,000 square feet are owned and 251,000 square feet are
leased. The Registrant considers these facilities to be in good condition and
suitable for their purpose. The capacity associated with these facilities is
adequate to meet production levels required and anticipated through 1994. The
Registrant's capital expenditures are expected to approximate $39 million during
1994 in order to meet anticipated sales growth.
The Registrant believes it has modern, efficient production equipment. In
the last five years, it has spent $280 million on new plants and equipment or
upgrading existing facilities, including the completion of, a dryer fabric plant
in Cowansville, Quebec, Canada, new forming fabric plants in Sweden and Holland
and new press fabric plants in Sweden and Finland.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine
litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of 1993 to a vote
of security holders.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
"Stock and Shareholders" and "Quarterly Financial Data" on page 31 of the
Annual Report are incorporated herein by reference.
Restrictions on dividends and other distributions are described in Note 6,
on pages 20 and 21 of the Annual Report. Such description is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Ten Year Summary" on page 32 of the Annual Report is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Review of Operations" on pages 27 to 30 of the Annual Report is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries, included on pages 15 to 18 in the Annual Report, are incorporated
herein by reference:
Consolidated Statements of Income and Retained Earnings -- years ended
December 31, 1993, 1992 and 1991
Consolidated Balance Sheets -- December 31, 1993 and 1992
Consolidated Statements of Cash Flows -- years ended December 31, 1993, 1992
and 1991
Notes to Consolidated Financial Statements
Report of Independent Accountants
7
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a) DIRECTORS. The information set out in the section captioned "Election
of Directors" of the Proxy Statement is incorporated herein by reference.
b) EXECUTIVE OFFICERS OF REGISTRANT. Information about the officers of the
Registrant is set forth in Item 1 above.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the sections of the Proxy Statement captioned
"Executive Compensation", "Summary Compensation Table", "Option/SAR Grants in
Last Fiscal Year", "Option/SAR Exercises during 1993 and Year-End Value",
"Pension Plan Table", "Compensation and Stock Option Committee Report on
Executive Compensation" and "Stock Performance Graph" is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set out in the section captioned "Share Ownership" of the
Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a)(1) FINANCIAL STATEMENTS. The consolidated financial statements included
in the Annual Report are incorporated by reference in Item 8.
a)(2) SCHEDULES. The following consolidated financial statement schedules
for each of the three years in the period ended December 31, 1993 are included
pursuant to Item 14(d):
Report of Independent Accountants on Financial Statement Schedules
Schedule V -- Property, plant and equipment
Schedule VI -- Accumulated depreciation and amortization of property,
plant and equipment
Schedule VIII -- Valuation and qualifying accounts
Schedule IX -- Short-term borrowings
a)(3)(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1993.
8
<PAGE>
(3) EXHIBITS
<TABLE>
<S> <C> <C>
3(a) -- Certificate of Incorporation of Registrant. (4)
3(b) -- Bylaws of Registrant. (1)
4(a) -- Article IV of Certificate of Incorporation of Registrant (included in Exhibit
3(a)).
4(b) -- Specimen Stock Certificate for Class A Common Stock. (1)
MENASHA I
10(a)(i) -- Bank Loan Agreement, dated as of September 11, 1981, among the Registrant, the
City of Menasha, Wisconsin, and The Chase Manhattan Bank (National
Association). (1)
10(a)(ii) -- Loan Agreement, dated as of September 11, 1981, between the City of Menasha,
Wisconsin, and the Registrant. (1)
10(a)(iii) -- Guarantee, dated as of September 11, 1981, executed and delivered by the
Registrant to The Chase Manhattan Bank (National Association). (1)
10(a)(iv) -- Amendment Agreement, dated as of August 1, 1983, between the City of Menasha,
Wisconsin, and the Registrant, relating to the Loan Agreement referred to as
Exhibit 10(a)(ii). (1)
10(a)(v) -- Amendment, dated as of August 1, 1983, relating to the Guarantee referred to as
Exhibit 10(a)(iii), between the Registrant and The Chase Manhattan Bank
(National Association). (1)
10(a)(vi) -- Letter Agreement, dated January 27, 1986, among the Registrant, the City of
Menasha, Wisconsin, and The Chase Manhattan Bank (National Association),
further amending the Loan Agreement and the Guarantee referred to,
respectively, as Exhibits 10(a)(ii) and 10(a)(iii). (1)
10(a)(vii) -- Letter Agreement, dated June 19, 1987, among the Registrant, the City of
Menasha, Wisconsin, and The Chase Manhattan Bank (National Association),
further amending the Loan Agreement and the Guarantee referred to,
respectively, as Exhibits 10(a)(ii) and 10(a)(iii). (1)
10(a)(viii) -- Letter Agreement, dated July 10, 1987, among the Registrant, the City of
Menasha, Wisconsin, and The Chase Manhattan Bank (National Association),
further amending the Loan Agreement and the Guarantee referred to,
respectively, as Exhibits 10(a)(ii) and 10(a)(iii). (1)
10(a)(ix) -- Letter Agreement, dated December 7, 1987, among the Registrant, the City of
Menasha, Wisconsin, and The Chase Manhattan Bank (National Association),
further amending the Loan Agreement and the Guarantee referred to,
respectively, as Exhibits 10(a)(ii) and 10(a)(iii). (2)
10(a)(x) -- Letter Agreement, dated May 9, 1990, between the Registrant, the City of
Menasha, Wisconsin, and The Chase Manhattan Bank (National Association),
further amending the Loan Agreement and Guarantee referred to, respectively, as
Exhibits 10(a)(ii) and 10(a)(iii). (8)
PORTLAND I
10(b)(i) -- Bank Loan Agreement, dated as of December 16, 1981, among the Registrant, The
Industrial Development Board of the City of Portland, Tennessee, and The Chase
Manhattan Bank (National Association). (1)
10(b)(ii) -- Loan Agreement, dated as of December 16, 1981, between the Registrant and The
Industrial Development Board of the City of Portland, Tennessee. (1)
10(b)(iii) -- Guarantee, dated as of December 16, 1981, delivered by the Registrant to The
Chase Manhattan Bank (National Association). (1)
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
10(b)(iv) -- Amendment Agreement, dated as of August 1, 1983, between the Registrant and The
Industrial Development Board of the City of Portland, Tennessee, relating to
the Loan Agreement referred to as Exhibit 10(b)(ii). (1)
10(b)(v) -- Amendment, dated as of August 1, 1983, between the Registrant and The Chase
Manhattan Bank (National Association), relating to the Guarantee referred to as
Exhibit 10(b)(iii). (1)
10(b)(vi) -- Letter Agreement, dated January 27, 1986, among the Registrant, The Industrial
Development Board of the City of Portland, Tennessee, and The Chase Manhattan
Bank (National Association), further amending the Loan Agreement and the
Guarantee referred to, respectively, as Exhibits 10(b)(ii) and 10(b)(iii). (1)
10(b)(vii) -- Letter Agreement, dated June 19, 1987, among the Registrant, The Industrial
Development Board of the City of Portland, Tennessee, and The Chase Manhattan
Bank (National Association), further amending the Loan Agreement and the
Guarantee referred to, respectively, as Exhibits 10(b)(ii) and 10(b)(iii). (1)
10(b)(viii) -- Letter Agreement, dated July 10, 1987, among the Registrant, The Industrial
Development Board of Portland, Tennessee, and The Chase Manhattan Bank
(National Association), further amending the Loan Agreement and the Guarantee
referred to, respectively, as Exhibits 10(b)(ii) and 10(b)(iii). (1)
10(b)(ix) -- Letter Agreement, dated December 7, 1987, among the Registrant, The Industrial
Development Board of Portland, Tennessee, and The Chase Manhattan Bank
(National Association), further amending the Loan Agreement and the Guarantee
referred to, respectively, as Exhibits 10(b)(ii) and 10(b)(iii). (2)
10(b)(x) -- Letter Agreement, dated May 9, 1990, between the Registrant, The Industrial
Development Board of the City of Portland, Tennessee, and The Chase Manhattan
Bank (National Association), further amending the Loan Agreement and Guarantee
referred to, respectively, as Exhibits 10(b)(ii) and 10(b)(iii). (8)
PORTLAND II
10(c)(i) -- Bank Loan Agreement, dated as of November 21, 1983, among the Registrant, The
Industrial Development Board of the City of Portland, Tennessee, and Morgan
Guaranty Trust Company of New York. (1)
10(c)(ii) -- Loan Agreement, dated as of November 21, 1983, between the Registrant and the
Industrial Development Board of the City of Portland, Tennessee. (1)
10(c)(iii) -- Contingent Purchase Agreement, dated as of November 21, 1983, between the
Registrant and Morgan Guaranty Trust Company of New York. (1)
10(c)(iv) -- Letter Agreement, dated as of January 27, 1986, among the Registrant, The
Industrial Development Board of the City of Portland, Tennessee, and Morgan
Guaranty Trust Company of New York, amending the Contingent Purchase Agreement
referred to as Exhibit 10(c)(iii). (1)
10(c)(v) -- Letter Agreement, dated as of December 12, 1986, among the Registrant, The
Industrial Development Board of the City of Portland, Tennessee, and Morgan
Guaranty Trust Company of New York, further amending the Contingent Purchase
Agreement referred to as Exhibit 10(c)(iii). (1)
10(c)(vi) -- Letter Agreement, dated April 27, 1990, between the Registrant and Morgan
Guaranty Trust Company of New York, further amending the Contingent Purchase
Agreements referred to, respectively, as Exhibits 10(c)(iii) and 10(d)(iii).
(8)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
MENASHA II
10(d)(i) -- Bank Loan Agreement, dated as of November 5, 1984, among the Registrant, the
City of Menasha, Wisconsin, and Morgan Guaranty Trust Company of New York. (1)
10(d)(ii) -- Loan Agreement, dated as of November 5, 1984, between the Registrant and the
City of Menasha, Wisconsin. (1)
10(d)(iii) -- Contingent Purchase Agreement, dated as of November 5, 1984, between the
Registrant and Morgan Guaranty Trust Company of New York. (1)
10(d)(iv) -- Letter Agreement, dated as of January 27, 1986, among the Registrant, the City
of Menasha, Wisconsin, and Morgan Guaranty Trust Company of New York, amending
the Contingent Purchase Agreement referred to as Exhibit 10(d)(iii). (1)
10(d)(v) -- Letter Agreement, dated as of December 12, 1986, among the Registrant, the City
of Menasha, Wisconsin, and Morgan Guaranty Trust Company of New York, further
amending the Contingent Purchase Agreement referred to as Exhibit 10(d)(iii).
(1)
PORTLAND III
10(e)(i) -- Bank Loan Agreement, dated as of November 14, 1985, among the Registrant, The
Industrial Development Board of the City of Portland, Tennessee, and Norstar
Bank of Upstate NY. (1)
10(e)(ii) -- Loan Agreement, dated as of November 14, 1985, between the Registrant and The
Industrial Development Board of the City of Portland, Tennessee. (1)
10(e)(iii) -- Contingent Purchase Agreement, dated as of November 14, 1985, between the
Registrant and Norstar Bank of Upstate NY. (1)
10(e)(iv) -- Letter Agreement, dated January 27, 1986, among the Registrant, The Industrial
Development Board of the City of Portland, Tennessee, and Norstar Bank of
Upstate NY, amending the Contingent Purchase Agreement referred to as Exhibit
10(e)(iii). (1)
10(e)(v) -- Letter Agreement, dated December 12, 1986, among the Registrant, The Industrial
Development Board of the City of Portland, Tennessee, and Norstar Bank of
Upstate NY, further amending the Contingent Purchase Agreement referred to as
Exhibit 10(e)(iii). (1)
10(e)(vi) -- Letter Agreement, dated May 10, 1990, between the Registrant and Norstar Bank
of Upstate NY, further amending the Contingent Purchase Agreement referred to
as Exhibit 10(e)(iii). (8)
EAST GREENBUSH
10(f)(i) -- Installment Sale Agreement, dated as of July 1, 1987, between the Registrant
and Rensselaer County Industrial Development Authority. (1)
10(f)(ii) -- Letter of Credit Agreement, dated as of July 1, 1987, between the Registrant
and Norstar Bank of Upstate NY. (1)
10(f)(iii) -- Letter Agreement, undated, between the Registrant and Norstar Bank of Upstate
NY, amending the Letter of Credit Agreement referred to as Exhibit 10(f)(ii).
(2)
10(f)(iv) -- Letter Agreement, dated May 10, 1990, between the Registrant and Norstar Bank
of Upstate NY, further amending the Letter of Credit Agreement referred to as
Exhibit 10(f)(ii). (8)
10(g)(i) -- Loan Agreement, dated April 27, 1989, between the Registrant and New York State
Urban Development Corporation. (6)
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
D.I.A.L. LOAN
10(h)(i) -- Loan Agreement, dated August 31, 1988, between the Registrant and The Chase
Manhattan Bank (National Association). (5)
10(h)(ii) -- Letter Agreement, dated as of February 1, 1991, between the Registrant and
Harris Trust and Savings Bank, amending the Loan Agreement referred to as
Exhibit 10(h)(i). (9)
MORGAN CREDIT AGREEMENT
10(i)(i) -- Credit Agreement, dated as of July 16, 1992, among the Registrant, certain
banks listed therein, and Morgan Guaranty Trust Company of New York, as Agent.
(13)
INTEREST RATE CAP/SWAP AGREEMENTS
10(j)(i) -- Interest Rate Swap agreements, dated August 29, 1990, between the Registrant
and Security Pacific National Bank. (9)
EQUIPMENT LEASES
10(k)(i) -- Equipment Lease Agreement, dated December 29, 1988, between Registrant and
Fleet Credit Corporation. (6)
10(k)(ii) -- Master Lease Agreement, dated August 17, 1987, between Registrant and
BancBoston Leasing. (6)
10(k)(iii) -- Master Lease of Personal Property, dated November 19, 1987, between Registrant
and Security Pacific Equipment Leasing, Inc. (6)
10(k)(iv) -- Master Lease of Personal Property No. 20910, dated August 31, 1989, between the
Registrant and Security Pacific Equipment Leasing, Inc. (7)
PARENT GUARANTEES
10(l)(i) -- Guarantee, dated June 15, 1989, delivered by Registrant to Bank of Montreal
related to Albany International Canada, Inc. (6)
10(l)(ii) -- Guarantee, dated August 10, 1989, delivered by Registrant to National Australia
Bank Limited related to Albany International Pty Ltd. (6)
10(l)(iii) -- Limited Guaranty, dated as of December 5, 1989, delivered by the Registrant to
The First National Bank of Boston, guarantying certain repayment obligations of
six subsidiaries of the Company. (9)
10(l)(iv) -- Corporate Continuing Guaranty, dated August 8, 1990, delivered by the
Registrant to Citicorp and/or Citibank, N.A., guarantying certain repayment
obligations of seven subsidiaries of the Company. (9)
10(l)(v) -- Corporate Continuing Guaranty, dated September 20, 1990, delivered by the
Registrant to Citicorp and/or Citibank, N.A., guarantying certain repayment
obligations of Albany International S.A. De C.V. (9)
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
STOCK OPTIONS
10(m)(i) -- Form of Stock Option Agreement, dated as of August 1, 1983, between the
Registrant and each of five employees, together with schedule showing the names
of such employees and the material differences among the Stock Option
Agreements with such employees. (1)
10(m)(ii) -- Form of Amendment of Stock Option Agreement, dated as of July 1, 1987, between
the Registrant and each of the five employees identified in the schedule
referred to as Exhibit 10(m)(i). (1)
10(m)(iii) -- 1988 Stock Option Plan. (3)
10(m)(iv) -- 1992 Stock Option Plan. (13)
EXECUTIVE COMPENSATION
10(n) -- Pension Equalization Plan adopted April 16, 1986, naming two current executive
officers and one former executive officer of Registrant as "Participants"
thereunder. (1)
10(o)(i) -- Form of Executive Deferred Compensation Plan adopted September 1, 1985, and
Forms of Election Agreement. (1)
10(o)(ii) -- Form of Directors' Deferred Compensation Plan adopted September 1, 1985, and
Form of Election Agreement. (1)
10(o)(iii) -- Executive Deferred Compensation Plan. (3)
10(o)(iv) -- Directors' Deferred Compensation Plan. (3)
OTHER AGREEMENTS
10(p) -- Joint venture agreement, dated as of June 29, 1990, between the Registrant and
Lenzing A.G. (8)
10(q) -- Merchandise Orders Purchase and Sale Agreement, dated as of January 28, 1991,
among the Registrant, CXC Incorporated and Citicorp North America, Inc., as
Agent. (10)
10(q)(i) -- Amendment No. 1 to Merchandise Orders Purchase and Sale Agreement, dated as of
April 26, 1991, among the Registrant, CXC Incorporated and Citicorp North
America, Inc., as Agent, amending the Merchandise Orders Purchase and Sale
Agreement referred to as Exhibit 10(q). (11)
10(r) -- Assets Purchase Agreement, dated as of December 15, 1992, between the
Registrant and Mount Vernon Mills, Inc. (13)
10(s) -- Asset Purchase Agreement, dated as of June 30, 1993, by and among the
Registrant, Albany International Canada Inc. and Albany International Ltd. and
Thermo Fibertek Inc., Thermo Electron (Canada) Inc. and Winterburn Limited.
(14)
10(t) -- Stock Purchase Agreement, dated as of June 30, 1993 between the Registrant and
Thermo Fibertek Inc. (14)
11 -- Statement re Computation of Per-Share Earnings.
13 -- Annual Report to Security Holders for the year ended December 31, 1993.
22 -- Subsidiaries of Registrant.
24 -- Consent of Coopers & Lybrand.
25 -- Powers of Attorney. (12)
</TABLE>
13
<PAGE>
All other schedules and exhibits are not required or are inapplicable and,
therefore, have been omitted.
(1) Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1, No. 33-16254, as amended, declared effective by the Securities and
Exchange Commission on September 30, 1987, which previously-filed Exhibit is
incorporated by reference herein.
(2) Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1, No. 33-20650, declared effective by the Securities and Exchange
Commission on March 29, 1988, which previously-filed Exhibit is incorporated
by reference herein.
(3) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated August 8, 1988, which previously-filed Exhibit is incorporated by
reference herein.
(4) Previously filed as an Exhibit to the Registrant's Registration Statement on
Form 8-A, File No. 1-10026, declared effective by the Securities and
Exchange Commission on August 26, 1988 (as to The Pacific Stock Exchange,
Inc.), and on September 7, 1988 (as to The New York Stock Exchange, Inc.),
which previously-filed Exhibit is incorporated by reference herein.
(5) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated January 6, 1989, which previously-filed Exhibit is incorporated by
reference herein.
(6) Previously filed as an Exhibit to the Registrant's Registration Statement on
Form S-1, No. 33-30581, declared effective by the Securities and Exchange
Commission on September 26, 1989, which previously-filed Exhibit is
incorporated by reference herein.
(7) Previously filed as an Exhibit to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1989, which previously-filed
Exhibit is incorporated by reference herein.
(8) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated June 29, 1990, which previously-filed Exhibit is incorporated by
reference herein.
(9) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated February 28, 1991, which previously-filed Exhibit is incorporated
by reference herein.
(10) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated April 8, 1991, which previously-filed Exhibit is incorporated by
reference herein.
(11) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated May 28, 1991, which previously-filed Exhibit is incorporated by
reference herein.
(12) Previously filed as an Exhibit to the Registrant's Quarterly Report on Form
10Q dated November 8, 1991, which previously-filed Exhibit is incorporated
by reference herein.
(13) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated January 18, 1993, which previously-filed Exhibit is incorporated
by reference herein.
(14) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated July 21, 1993, which previously-filed Exhibit is incorporated by
reference herein.
14
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------------- ---------------------------------------- ------------------
<C> <S> <C>
*
---------------------------------------- Chairman of the Board and Director March 22, 1994
(J. Spencer Standish)
*
---------------------------------------- President and Director (Chief Executive March 22, 1994
(Francis L. McKone) Officer)
/s/ MICHAEL C. NAHL Senior Vice President and Chief
---------------------------------------- Financial Officer (Principal Financial March 22, 1994
(Michael C. Nahl) Officer)
*
---------------------------------------- Vice President -- Controller (Principal March 22, 1994
(Richard A. Carlstrom) Accounting Officer)
*
---------------------------------------- Vice President, Secretary and Director March 22, 1994
(Charles B. Buchanan)
*
---------------------------------------- Director March 22, 1994
(Paul Bancroft III)
*
---------------------------------------- Director March 22, 1994
(Thomas R. Beecher, Jr.,)
*
---------------------------------------- Director March 22, 1994
(Stanley I. Landgraf)
*
---------------------------------------- Director March 22, 1994
(Allan Stenshamn)
*
---------------------------------------- Director March 22, 1994
(Barbara P. Wright)
*By /s/ MICHAEL C. NAHL
----------------------------------
Michael C. Nahl
Attorney-in-fact
</TABLE>
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 22nd day of
March, 1994.
ALBANY INTERNATIONAL CORP.
by ______/s/ MICHAEL C. NAHL_____
Michael C. Nahl
Principal Financial Officer
Senior Vice President
and Chief Financial Officer
16
<PAGE>
SCHEDULES
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To The Shareholders and Board of Directors
Albany International Corp.
Our report on the consolidated financial statements of Albany International
Corp. has been incorporated by reference in this form 10-K from page 14 of the
1993 Annual Report to Shareholders of Albany International Corp. In connection
with our audits of such financial statements, we have also audited the related
financial statement schedules listed in the index on page 8 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Albany, New York
January 27, 1994
<PAGE>
SCHEDULE V
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN B COLUMN F
----------- COLUMN C COLUMN D COLUMN E -----------
COLUMN A BALANCE AT ------------- ----------- --------------- BALANCE AT
- ----------------------------------------- BEGINNING ADDITIONS RETIREMENTS OTHER END OF
DESCRIPTION OF PERIOD AT COST OR SALES CHANGES(A) PERIOD
- ----------------------------------------- ----------- ------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land & Improvements...................... $ 19,304 $ 820 $ 1,168 $ (807) $ 18,149
Buildings................................ 133,168 12,702 6,431 (7,059) 132,380
Machinery & equipment.................... 334,537 52,832 22,317 (24,396) 340,656
----------- ------------- ----------- --------------- -----------
$ 487,009 $ 66,354(B) $ 29,916 $ (32,262) $ 491,185
----------- ------------- ----------- --------------- -----------
----------- ------------- ----------- --------------- -----------
Year ended December 31, 1992:
Land & Improvements...................... $ 19,958 $ 478 $ 118 $ (1,014) $ 19,304
Buildings................................ 140,331 1,487 532 (8,118) 133,168
Machinery & equipment.................... 361,054 19,467 5,499 (40,485) 334,537
----------- ------------- ----------- --------------- -----------
$ 521,343 $ 21,432(C) $ 6,149 $ (49,617)(D) $ 487,009
----------- ------------- ----------- --------------- -----------
----------- ------------- ----------- --------------- -----------
Year ended December 31, 1991:
Land & Improvements...................... $ 16,385 $ 3,527 $ 18 $ 64 $ 19,958
Buildings................................ 149,247 10,725 168 (19,473)(F) 140,331
Machinery & equipment.................... 329,137 27,415 10,725 15,227(F) 361,054
----------- ------------- ----------- --------------- -----------
$ 494,769 $ 41,667(E) $ 10,911 $ (4,182) $ 521,343
----------- ------------- ----------- --------------- -----------
----------- ------------- ----------- --------------- -----------
<FN>
(A) Other changes represent translation adjustments unless otherwise noted.
(B) Includes assets acquired of $35,413.
(C) Includes assets acquired of $1,212.
(D) Includes assets revalued in accordance with FAS No. 109 of $8,498.
(E) Includes capitalized interest of $1,600.
(F) Includes a reclassification of $19,150 from buildings to machinery &
equipment.
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION ESTIMATED
METHOD USEFUL LIVES
--------------- -------------
<S> <C> <C>
Land and Improvements..................... S/L 10
Buildings................................. S/L 25
Machinery and equipment................... S/L 3-10
</TABLE>
<PAGE>
SCHEDULE VI
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN B COLUMN C COLUMN F
----------- ----------- COLUMN D COLUMN E -----------
COLUMN A BALANCE AT CHARGED TO ----------- ----------- BALANCE AT
- ------------------------------------------------ BEGINNING COSTS AND RETIREMENTS OTHER END OF
DESCRIPTION OF PERIOD AT COST OR SALES CHANGES(A) PERIOD
- ------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land & Improvements............................. $ 1,215 $ 666 $ 329 $ (62) $ 1,490
Buildings....................................... 20,131 5,276 2,261 (1,313) 21,833
Machinery & equipment........................... 157,045 35,344 15,877 (11,479) 165,033
----------- ----------- ----------- ----------- -----------
$ 178,391 $ 41,286 $ 18,467 $ (12,854) $ 188,356
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Year ended December 31, 1992:
Land & Improvements............................. $ 890 $ 442 $ 8 $ (109) $ 1,215
Buildings....................................... 17,249 5,352 376 (2,094) 20,131
Machinery & equipment........................... 140,748 39,043 4,185 (18,561) 157,045
----------- ----------- ----------- ----------- -----------
$ 158,887 $ 44,837 $ 4,569 $ (20,764) $ 178,391
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Year ended December 31, 1991:
Land & Improvements............................. $ 510 $ 367 $ 7 $ 20 $ 890
Buildings....................................... 12,392 4,261 131 727 17,249
Machinery & equipment........................... 116,309 35,956 9,552 (1,965) 140,748
----------- ----------- ----------- ----------- -----------
$ 129,211 $ 40,584 $ 9,690 $ (1,218) $ 158,887
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
(A) Other changes represent translation adjustments unless otherwise noted.
</TABLE>
<PAGE>
SCHEDULE VIII
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN B COLUMN C
----------- ----------- COLUMN E
COLUMN A BALANCE AT ADDITIONS COLUMN D -------------
- ----------------------------------------------------------- BEGINNING CHARGED TO ------------- BALANCE AT
DESCRIPTION OF PERIOD EXPENSE DEDUCTIONS(A) END OF PERIOD
- ----------------------------------------------------------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts
Year ended December 31:
1993................................................... $ 4,800 $ 1,667 $ 1,888 $ 4,579
1992................................................... $ 5,289 $ 1,320 $ 1,809 $ 4,800
1991................................................... $ 5,342 $ 792 $ 845 $ 5,289
<FN>
(A) Includes accounts written off as uncollectible, recoveries and the effect
of currency exchange rates.
</TABLE>
<PAGE>
SCHEDULE IX
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
SHORT TERM BORROWINGS
YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN D COLUMN E COLUMN F
----------- ----------- -------------
COLUMN B COLUMN C MAXIMUM AVERAGE WEIGHTED
----------- --------------- AMOUNT AMOUNT AVERAGE
COLUMN A BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
- ---------------------------------------------- END OF AVERAGE DURING DURING DURING
CATEGORY OF AGGREGATE BORROWINGS YEAR INTEREST RATE THE YEAR THE YEAR(2) THE YEAR(2)
- ---------------------------------------------- ----------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Notes and loans principally to banks: (1)
1993........................................ $ 8,560 5.85% $ 23,222 $ 14,025 5.71 %
1992........................................ $ 19,003 5.67% $ 19,003 $ 10,728 7.99 %
1991........................................ $ 12,471 9.74% $ 25,107 $ 18,644 9.27 %
<FN>
(1) Short-term borrowings are generally available in accordance with informal
banking arrangements.
(2) Calculated on the month end balances for each year.
</TABLE>
<PAGE>
EXHIBIT 11
<PAGE>
ALBANY INTERNATIONAL CORP.
EXHIBIT 11
SCHEDULE OF COMPUTATION OF PRIMARY NET INCOME/(LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
- ---------------------------- ----------------------------
1993 (1) 1992 (1) 1993 (1) 1992 (1)
- ------------- ------------- ------------- -------------
<C> <C> <S> <C> <C>
29,882,469 25,642,124 Common stock outstanding at end of period............ 29,882,469 25,642,124
Adjustments to ending shares to arrive at weighted
average for the period:
(20,622) (26,060) Shares contributed to E.S.O.P. (2)................... (70,461) (83,583)
(256,195) -- Shares issued in public offering (3)................. (3,132,647) --
- ------------- ------------- ------------- -------------
29,605,652 25,616,064 Weighted average number of shares.................... 26,679,361 25,558,541
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
Income before extraordinary item and accounting
$ 6,396 $ 919 changes............................................. $ 15,524 $ 2,685
Extraordinary gain on early extinguishment of debt,
-- 1,019 net of tax of $624.................................. -- 1,019
Cumulative effect of accounting changes:
-- -- Income taxes......................................... -- 20,142
Post retirement benefits, net of tax of
-- -- $16,813........................................... -- (27,431)
- ------------- ------------- ------------- -------------
$ 6,396 $ 1,938 Net income/(loss).................................... $ 15,524 $ (3,585)
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
Income per share before extraordinary item and
$ 0.22 $ 0.04 accounting changes.................................. $ 0.58 $ 0.11
-- 0.04 Extraordinary gain on early extinguishment of debt... -- 0.04
Cumulative effect of accounting changes:
-- -- Income taxes......................................... -- 0.79
Post retirement benefits, net of tax of
-- -- $16,813........................................... -- (1.08)
- ------------- ------------- ------------- -------------
$ 0.22 $ 0.08 Net income/(loss) per share.......................... $ 0.58 $ (0.14)
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
<FN>
- ------------------------
(1) Includes Class A and Class B Common Stock
(2) Calculated as follows:
number of shares outstanding multiplied by reciprocal of the number of days
outstanding divided by the number of days in the period
</TABLE>
<PAGE>
Shares contributed:
<TABLE>
<S> <C> <C>
For the twelve months:
January 3, 1992 11,502 * (2/366) 63
February 3, 1992 10,660 * (33/366) 961
March 4, 1992 9,454 * (63/366) 1,627
April 2, 1992 9,784 * (92/366) 2,459
May 5, 1992 10,441 * (125/366) 3,566
June 1, 1992 10,112 * (152/366) 4,200
July 2, 1992 12,954 * (183/366) 6,477
August 4, 1992 13,439 * (216/366) 7,931
August 31, 1992 12,836 * (243/366) 8,522
September 30, 1992 14,090 * (273/366) 10,510
October 31, 1992 15,297 * (304/366) 12,706
November 30, 1992 13,002 * (334/366) 11,865
December 31, 1992 12,731 * (365/366) 12,696
---------
83,583
---------
---------
January 31, 1993 13,626 * (30/365) 1,120
February 28, 1993 13,572 * (58/365) 2,157
March 31, 1993 12,074 * (89/365) 2,944
April 30, 1993 12,736 * (119/365) 4,152
May 31, 1993 11,770 * (150/365) 4,837
June 30, 1993 12,285 * (180/365) 6,058
July 31, 1993 10,209 * (211/365) 5,902
August 31, 1993 9,706 * (242/365) 6,435
September 30, 1993 10,993 * (272/365) 8,192
October 31, 1993 10,444 * (303/365) 8,670
November 30, 1993 10,347 * (333/365) 9,440
December 31, 1993 10,583 * (364/365) 10,554
---------
70,461
---------
---------
For the three months:
October 31, 1992 15,297 * (30/92) 4,988
November 30, 1992 13,002 * (60/92) 8,479
December 31, 1992 12,731 * (91/92) 12,593
---------
26,060
---------
---------
October 31, 1993 10,444 * (30/92) 3,406
November 30, 1993 10,347 * (60/92) 6,748
December 31, 1993 10,583 * (91/92) 10,468
---------
20,622
---------
---------
</TABLE>
- ------------------------
(3) Calculated as follows:
number of shares outstanding multiplied by reciprocal of the number of days
outstanding divided by the number of days in the period
<PAGE>
Shares offered:
<TABLE>
<S> <C> <C>
For the twelve months:
October 6, 1993 4,000,000 * (278/365) 3,046,576
November 5, 1993 102,000 * (308/365) 86,071
---------
3,132,647
---------
---------
For the three months:
October 6, 1993 4,000,000 * (5/92) 217,391
November 5, 1993 102,000 * (35/92) 38,804
---------
256,195
---------
---------
</TABLE>
<PAGE>
EXHIBIT 13
1993 ANNUAL REPORT
<PAGE>
REPORT OF MANAGEMENT
MANAGEMENT OF ALBANY INTERNATIONAL CORP. IS RESPONSIBLE FOR THE INTEGRITY AND
OBJECTIVITY OF THE ACCOMPANYING FINANCIAL STATEMENTS AND RELATED INFORMATION.
THESE STATEMENTS HAVE BEEN PREPARED IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, AND INCLUDE AMOUNTS THAT ARE BASED ON OUR BEST
JUDGMENTS WITH DUE CONSIDERATION GIVEN TO MATERIALITY.
MANAGEMENT MAINTAINS A SYSTEM OF INTERNAL ACCOUNTING CONTROLS DESIGNED TO
PROVIDE REASONABLE ASSURANCE, AT REASONABLE COST, THAT ASSETS ARE SAFEGUARDED
AND THAT TRANSACTIONS AND EVENTS ARE RECORDED PROPERLY. A PROGRAM OF INTERNAL
AUDITS AND MANAGEMENT REVIEWS PROVIDES A MONITORING PROCESS THAT ALLOWS THE
COMPANY TO BE REASONABLY SURE THE SYSTEM OF INTERNAL ACCOUNTING CONTROLS
OPERATES EFFECTIVELY.
THE FINANCIAL STATEMENTS HAVE BEEN AUDITED BY COOPERS & LYBRAND, INDEPENDENT
ACCOUNTANTS. THEIR ROLE IS TO EXPRESS AN OPINION AS TO WHETHER MANAGEMENT'S
FINANCIAL STATEMENTS PRESENT FAIRLY, IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, THE COMPANY'S FINANCIAL CONDITION AND OPERATING
RESULTS. THEIR OPINION IS BASED ON PROCEDURES WHICH INCLUDE REVIEWING AND
EVALUATING CERTAIN ASPECTS OF SELECTED SYSTEMS, PROCEDURES AND INTERNAL
ACCOUNTING CONTROLS, AND CONDUCTING SUCH TESTS AS THEY DEEM NECESSARY.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS, COMPOSED SOLELY OF OUTSIDE
DIRECTORS, MEETS PERIODICALLY WITH THE INDEPENDENT ACCOUNTANTS, MANAGEMENT
AND INTERNAL AUDIT TO REVIEW THEIR WORK AND CONFIRM THAT THEY ARE PROPERLY
DISCHARGING THEIR RESPONSIBILITIES. IN ADDITION, THE INDEPENDENT ACCOUNTANTS
ARE FREE TO MEET WITH THE AUDIT COMMITTEE WITHOUT THE PRESENCE OF MANAGEMENT
TO DISCUSS RESULTS OF THEIR WORK AND OBSERVATIONS ON THE ADEQUACY OF INTERNAL
FINANCIAL CONTROLS, THE QUALITY OF FINANCIAL REPORTING AND OTHER RELEVANT
MATTERS.
J. Spencer Standish
CHAIRMAN OF THE BOARD
Francis L. McKone
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Michael C. Nahl
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS ALBANY INTERNATIONAL CORP.
WE HAVE AUDITED THE ACCOMPANYING CONSOLIDATED BALANCE SHEETS OF ALBANY
INTERNATIONAL CORP. AS OF DECEMBER 31, 1993 AND 1992, AND THE RELATED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS, AND CASH FLOWS FOR
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993. THESE
FINANCIAL STATEMENTS ARE THE RESPONSIBILITY OF THE COMPANY'S MANAGEMENT. OUR
RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE FINANCIAL STATEMENTS BASED
ON OUR AUDITS.
WE CONDUCTED OUR AUDITS IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS. THOSE STANDARDS REQUIRE THAT WE PLAN AND PERFORM THE AUDIT TO
OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS ARE FREE
OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS,
EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS.
AN AUDIT ALSO INCLUDES ASSESSING THE ACCOUNTING PRINCIPLES USED AND
SIGNIFICANT ESTIMATES MADE BY MANAGEMENT, AS WELL AS EVALUATING THE OVERALL
FINANCIAL STATEMENT PRESENTATION. WE BELIEVE THAT OUR AUDITS PROVIDE A
REASONABLE BASIS FOR OUR OPINION.
IN OUR OPINION, THE FINANCIAL STATEMENTS REFERRED TO ABOVE PRESENT FAIRLY, IN
ALL MATERIAL RESPECTS, THE CONSOLIDATED FINANCIAL POSITION OF ALBANY
INTERNATIONAL CORP. AS OF DECEMBER 31, 1993 AND 1992, AND THE CONSOLIDATED
RESULTS OF ITS OPERATIONS AND ITS CASH FLOWS FOR EACH OF THE THREE YEARS IN
THE PERIOD ENDED DECEMBER 31, 1993 IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.
AS DESCRIBED IN NOTES 1 AND 13 TO THE FINANCIAL STATEMENTS, IN 1992, THE
COMPANY CHANGED ITS METHOD OF ACCOUNTING FOR INCOME TAXES IN ACCORDANCE WITH
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109 AND POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS IN ACCORDANCE WITH STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 106.
Albany, New York
January 27, 1994
14
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
For the years ended December 31
- -----------------------------------------------------------------------------------------------
(in thousands except per share data) 1993 1992 1991
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STATEMENTS OF INCOME
Net sales $546,120 $561,084 $557,218
Cost of goods sold 344,609 367,516 360,251
- -----------------------------------------------------------------------------------------------
Gross profit 201,511 193,568 196,967
Selling and general expenses 121,214 122,004 109,891
Technical and research expenses 38,968 41,386 41,961
Restructuring charges and termination benefits 419 12,045 1,694
- -----------------------------------------------------------------------------------------------
Operating income 40,910 18,133 43,421
Interest income (365) (1,073) (474)
Interest expense 16,480 19,902 20,564
Other (income)/expense, net (630) (3,218) 4,646
- -----------------------------------------------------------------------------------------------
Income before income taxes 25,425 2,522 18,685
Income taxes 10,017 958 10,219
- -----------------------------------------------------------------------------------------------
Income before minority interest 15,408 1,564 8,466
Loss applicable to minority interest -- 961 1,137
Equity in earnings of associated companies 116 160 708
- -----------------------------------------------------------------------------------------------
Income before extraordinary item and cumulative
effect of accounting changes 15,524 2,685 10,311
Extraordinary gain on early extinguishment of debt,
net of tax of $624 -- 1,019 --
Cumulative effect of accounting changes:
Income taxes -- 20,142 --
Postretirement benefits, net of tax of $16,813 -- (27,431) --
- -----------------------------------------------------------------------------------------------
Net income/(loss) 15,524 (3,585) 10,311
RETAINED EARNINGS
Retained earnings, beginning of period 120,113 132,648 131,240
Less dividends 9,361 8,950 8,903
- -----------------------------------------------------------------------------------------------
Retained earnings, end of period $126,276 $120,113 $132,648
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
PER COMMON SHARE:
Income before extraordinary item and cumulative
effect of accounting changes $0.58 $0.11 $0.41
Extraordinary gain on early extinguishment of debt -- 0.04 --
Cumulative effect of accounting changes:
Income taxes -- 0.79 --
Postretirement benefits -- (1.08) --
- -----------------------------------------------------------------------------------------------
Net income/(loss) $0.58 $(0.14) $0.41
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
At December 31
- -----------------------------------------------------------------------------------------------
(in thousands) 1993 1992
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,381 $ 4,005
Accounts receivable, less allowance for doubtful accounts
($4,579, 1993; $4,800, 1992) 120,416 122,689
Inventories
Finished goods 72,763 53,777
Work in process 32,991 33,728
Raw material and supplies 18,539 22,366
Deferred taxes and prepaid expenses 18,050 13,104
- -----------------------------------------------------------------------------------------------
Total current assets 264,140 249,669
- -----------------------------------------------------------------------------------------------
Property, plant and equipment, at cost, net 302,829 308,618
Investments in associated companies 10,951 11,483
Intangibles 25,558 27,798
Deferred taxes 33,640 30,661
Other assets 18,302 17,763
- -----------------------------------------------------------------------------------------------
Total assets $655,420 $645,992
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(in thousands) 1993 1992
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES
Current liabilities:
Notes and loans payable $ 8,560 $ 19,003
Accounts payable 23,284 23,073
Accrued liabilities 55,288 59,005
Current maturities of long-term debt 2,917 4,063
Income taxes payable and deferred 7,881 4,333
- -----------------------------------------------------------------------------------------------
Total current liabilities 97,930 109,477
- -----------------------------------------------------------------------------------------------
Long-term debt 208,620 239,732
Other noncurrent liabilities 82,423 80,253
Deferred taxes and other credits 21,979 25,564
Minority interest -- 266
- -----------------------------------------------------------------------------------------------
Total liabilities 410,952 455,292
- -----------------------------------------------------------------------------------------------
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; 24,531,445 issued
in 1993 and 20,429,445 in 1992 25 20
Class B common stock, par value $.001 per share;
authorized 25,000,000 shares; issued and
outstanding 5,658,515 in 1993 and 1992 6 6
Additional paid in capital 170,112 101,395
Retained earnings 126,276 120,113
Translation adjustments (45,758) (23,898)
Pension adjustment (1,856) (287)
- -----------------------------------------------------------------------------------------------
248,805 197,349
Less treasury stock, at cost 4,337 6,649
- -----------------------------------------------------------------------------------------------
Total shareholders' equity 244,468 190,700
- -----------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $655,420 $645,992
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31,
- ---------------------------------------------------------------------------------------------------------------
(in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income/(loss) $15,524 $(3,585) $10,311
Adjustments to reconcile net cash provided by
operating activities:
Equity in earnings of associated companies (116) (160) (708)
Distributions received from associated companies 407 517 565
Loss applicable to minority interest -- (961) (1,137)
Depreciation and amortization 41,969 45,523 42,032
Provision for deferred income taxes, other credits
and long term liabilities (8,455) (5,733) (19,627)
Valuation of interest rate protection agreements -- -- 4,179
Increase in cash surrender value of life insurance,
net of premium paid (452) (1,027) (252)
Unrealized currency transaction gains (998) (6,534) (566)
(Gain)/Loss on sale of assets (6,967) 124 241
Treasury shares contributed to ESOP 2,344 2,563 2,185
FAS No. 109 asset revaluation -- (8,498) --
Gain on early extinguishment of debt -- (1,019) --
Cumulative effect of accounting changes -- 7,289 --
Changes in operating assets and liabilities:
Accounts receivable 3,272 3,785 4,192
Inventories (815) 14,963 16,548
Prepaid expenses 470 (677) (499)
Accounts payable 212 (7,995) (7,164)
Accrued liabilities (6,715) 2,459 14,229
Income taxes payable 4,587 1,897 (3,660)
Other, net (507) 2,870 6,370
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 43,760 45,801 67,239
- ---------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (30,940) (20,219) (40,067)
Interest capitalized -- -- (1,600)
Proceeds from sale of assets 27,750 1,456 979
Acquisition, net of cash acquired (55,356) (2,428) --
Premiums paid for life insurance (1,198) (1,206) (1,232)
- ---------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (59,744) (22,397) (41,920)
- ---------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from borrowings 66,624 49,577 44,217
Principal payments on debt (107,090) (177,044) (60,784)
Proceeds from issuance of convertible subordinated debentures -- 131,385 --
Debt issuance costs -- (2,955) --
Proceeds from sale of common stock 68,690 -- --
Minority investment in limited partnership -- 900 300
Dividends paid (8,990) (8,937) (8,891)
Interest rate protection agreements -- 109 (70)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided/(used) by financing activities 19,234 (6,965) (25,228)
- ---------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (5,874) (17,502) 813
- ---------------------------------------------------------------------------------------------------------------
(Decrease)/Increase in cash and cash equivalents (2,624) (1,063) 904
Cash and cash equivalents at beginning of year 4,005 5,068 4,164
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $1,381 $4,005 $5,068
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Albany
International Corp. and its subsidiaries after elimination of intercompany
transactions. The Company has 40% equity interests in companies in Mexico,
Brazil and Argentina and a 50% interest in a partnership in South Africa. The
Company had a 49% equity interest in a company in Mexico until the second
quarter of 1992, when it purchased the remaining 51%. This operation was
consolidated beginning in May 1992. The consolidated financial statements
include the Company's original investment in such companies, plus its share of
undistributed earnings, in the account "Investments in associated companies." In
February 1994, the Company exchanged its 40% equity interests in Brazil and
Argentina for a 60% equity interest in Mexico. The transaction will be reported
in the first quarter of 1994.
REVENUE RECOGNITION
The Company records sales when products are shipped to customers. Sales terms
are in accordance with industry practice in markets served. The Company limits
the concentration of credit risk in receivables from the paper manufacturing
industry by closely monitoring credit and collection policies. The allowance for
doubtful accounts is adequate to absorb estimated losses.
TRANSLATION OF FINANCIAL STATEMENTS
Assets and liabilities of non-U.S. operations are translated at year-end rates
of exchange, and the income statements are translated at the average rates of
exchange for the year. Gains or losses resulting from translating non-U.S.
currency financial statements are accumulated in a separate component of
shareholders' equity.
For operations in countries that are considered to have highly inflationary
economies, gains and losses from translation and transactions are determined
using a combination of current and historical rates and are included in net
income.
Gains or losses resulting from currency transactions denominated in a currency
other than the entity's local currency, forward exchange contracts which are not
designated as hedges for accounting purposes and futures contracts are generally
included in income. Changes in value of forward exchange contracts which are
effective as hedges for accounting purposes are generally reported in
shareholders' equity in the caption "Translation adjustments."
RESEARCH EXPENSE
Research expense, which is charged to operations as incurred, was $17,605,000 in
1993, $18,474,000 in 1992, and $18,472,000 in 1991.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid short-term
investments with original maturities of three months or less.
INVENTORIES
Inventories are stated at the lower of cost or market. The cost of United States
inventories is based on the last-in, first-out (LIFO) method; all other
inventories are valued at average cost.
PROPERTY, PLANT AND EQUIPMENT
Depreciation is recorded using the straight-line method over the estimated
useful lives of the assets for financial reporting purposes; accelerated methods
are used for income tax purposes.
Significant additions or improvements extending assets' useful lives are
capitalized; normal maintenance and repair costs are expensed as incurred.
The cost of fully depreciated assets remaining in use are included in the
respective asset and accumulated depreciation accounts. When items are sold or
retired, related gains or losses are included in net income.
INTANGIBLES
The excess purchase price over fair values assigned to assets acquired is
amortized on a straight-line basis over 40 years.
Patents, at cost, are amortized on a straight-line basis over 8 years.
INCOME TAXES
The Company implemented Financial Accounting Standard No. 109, "Accounting for
Income Taxes," in 1992. The Standard requires the use of the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable for
future years to differences between financial statement and tax bases of
existing assets and liabilities. Under FAS No. 109, the effect of tax rate
changes on deferred taxes is recognized in the income tax provision in the
period that includes the enactment date. Under the previous method deferred
taxes were recognized using the tax rate applicable to the year of the
calculation and were not adjusted for subsequent changes in tax rates.
In 1991, provisions for deferred income taxes were recorded for timing
differences between the recognition of income or expense for tax and financial
statement reporting.
19
<PAGE>
It is the Company's policy to accrue appropriate U.S. and non-U.S. income taxes
on earnings of subsidiary companies which are intended to be remitted to the
parent company in the near future.
The provision for taxes is reduced by investment and other tax credits in the
years such credits become available.
PENSION PLANS
Substantially all employees are covered under either Company or government
sponsored pension plans. For principal Company sponsored plans, pension plan
costs are based on actuarial determinations. The plans are generally trusteed or
insured and accrued amounts are funded as required in accordance with governing
laws and regulations.
EARNINGS PER SHARE
Earnings per share of common stock are computed based on the weighted average
number of shares of common stock outstanding during each year. Dilutive common
stock equivalents are not material and therefore are not included in the
computation of primary earnings per common share. The convertible subordinated
debentures, issued in March 1992, are not common stock equivalents and will not
affect primary earnings per share. The weighted average number of common shares
outstanding during 1993, 1992 and 1991 was 26,679,361, 25,558,541, and
25,415,097, respectively (see Note 8).
2. INVENTORIES
The cost of inventories valued under the LIFO method is $42,899,000 at December
31, 1993 and $43,418,000 at December 31, 1992. Had the Company's inventory been
valued at average cost (which approximates replacement cost), inventories would
have been $5,894,000 higher in 1993 and $6,753,000 higher in 1992.
3. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are summarized below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
(in thousands) 1993 1992
- ------------------------------------------------------------
<S> <C> <C>
Land $ 18,149 $ 19,304
Buildings 132,380 133,168
Machinery and equipment 340,656 334,537
- ------------------------------------------------------------
491,185 487,009
- ------------------------------------------------------------
Accumulated depreciation 188,356 178,391
- ------------------------------------------------------------
$302,829 $308,618
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
Construction in progress approximated $6,465,000 in 1993 and $604,000 in 1992.
Depreciation expense was $41,286,000 in 1993, $44,837,000 in 1992, and
$40,584,000 in 1991.
Expenditures for maintenance and repairs are charged to income as incurred and
amounted to $15,138,000 in 1993, $14,535,000 in 1992, and $15,821,000 in 1991.
Capital expenditures were $30,940,000 in 1993, $20,219,000 in 1992, and
$40,067,000 in 1991. At the end of 1993, the Company was committed to
$19,514,000 of future expenditures for new equipment.
4. INTANGIBLES
The components of intangibles are summarized below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(in thousands) 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C>
Excess purchase price over fair value $28,054 $29,139
Patents 10,105 10,105
Accumulated amortization (18,200) (17,517)
Deferred unrecognized pension cost
(see Note 12) 5,599 6,071
- ----------------------------------------------------------------------------
$25,558 $27,798
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
Amortization expense was $683,000 in 1993, $686,000 in 1992, and $1,448,000 in
1991.
5. ACCRUED LIABILITIES
Accrued liabilities consist of:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(in thousands) 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C>
Salaries and wages $12,597 $13,656
Employee benefits 12,989 9,398
Pre-receivable sale 6,559 6,458
Interest 2,896 3,050
Restructuring cost 6,841 6,946
Other 13,406 19,497
- ---------------------------------------------------------------------------
$55,288 $59,005
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
6. DEBT
Notes and loans payable at December 31, 1993 and 1992 were short-term debt
instruments with banks, denominated in local currencies with a weighted average
interest rate of 5.7% in 1993 and 8.0% in 1992.
Long-term debt at December 31, 1993 and 1992, principally to banks and
bondholders, exclusive of amounts due within one year, consists of:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(in thousands) 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C>
$150 million 5.25% convertible
subordinated debentures due 2002,
yielding 7.0%. $133,819 $132,400
$125 million credit agreement which
terminates in 1997 with LIBOR
borrowings outstanding at an average
interest of 3.96% in 1993 and 5.63%
in 1992. 19,000 61,000
Various notes, mortgages and
debentures relative to operations
principally outside the United States,
at an average interest of 6.62% in 1993
and 8.59% in 1992, due in varying
amounts through 2002. 38,016 26,029
Industrial revenue financings at an
average interest of 5.06% in 1993 and
4.77% in 1992, due in varying amounts
through 2008. 17,785 20,303
- ---------------------------------------------------------------------------
$208,620 $239,732
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
20
<PAGE>
Principal payments due on long-term debt are: 1994, $2,917,000; 1995,
$3,218,000; 1996, $6,427,000; 1997, $36,745,000; 1998, $14,298,000.
Interest paid was $16,634,000 in 1993, $18,943,000 in 1992, and $19,150,000 in
1991. During 1991, the Company capitalized $1,600,000 of interest costs
related to the construction of buildings.
The Company's credit agreement provides that the Company may borrow up to
$125,000,000 until July 16, 1997 at which time the banks' commitment to lend
is terminated. The terms of the credit agreement include a facility fee. The
maximum interest rate margin over LIBOR or CDs is determined by the Company's
cash flow to debt ratio. New borrowings under the revolving credit facility are
conditional on the absence of material adverse changes in the business,
financial position, results of operations and prospects of the Company and its
consolidated subsidiaries taken as a whole. In the event of nonperformance by
any bank on its commitment to extend credit, the Company could not borrow the
full amount of the facility. However, the Company does not anticipate
nonperformance by any bank.
The credit agreement contains various covenants which include limits on: the
disposition of assets, minimum consolidated tangible net worth, interest
coverage and cash flow to debt ratios, cash dividends, or certain restricted
investments unless the required consolidated tangible net worth, as defined, is
maintained. At December 31, 1993, $20,645,000 was available for the payment of
cash dividends.
Under the credit agreement and formal and informal agreements with other
financial institutions, the Company could have borrowed an additional
$195,000,000 at December 31, 1993.
During March 1992, the Company sold original issue discount 5.25% convertible
subordinated debentures due 2002 which, if held to maturity, will yield 7.0% to
the original purchaser. The proceeds to the Company, net of original issue
discount and expenses, were $128,430,000. The original issue discount will be
amortized over the term of the debentures. The debentures are convertible into
5,712,450 shares of Class A common stock. After March 15, 1996, the Company may
call the debentures, in whole or in part, at a redemption price of 91.545% in
1996; 92.723% in 1997; 93.985% in 1998; 95.338% in 1999; 96.786% in 2000 and
98.338% in 2001.
The Company has swap agreements wherein on a notional amount of $250,000,000 the
Company will pay a periodic floating rate based upon selected Federal tax exempt
bonds, and the Company will receive a fixed percentage of LIBOR. The swap
agreements expire during 2000. The practical effect of these swaps is to
partially hedge the potential effect of higher tax rates after August 1990. The
Company values these contracts at market (approximately $883,000, based on a
pricing model). The change in the valuation is reflected in "Other
(income)/expense, net" and was not significant in 1993 and 1992, and $1,025,000
in 1991.
The Company bears the risk of the possible inability of the counterparties to
meet the terms of the swap agreements and the risk of unfavorable changes in
interest rates which may reduce the benefit of the contracts.
During the fourth quarter of 1991, the Company entered into interest rate
protection agreements which, when valued at December 31, 1991, resulted in a
loss included in "Other (income)/expense, net" of $3,154,000. The Company
subsequently exited the agreements during the second quarter of 1992.
The Company has an agreement under which it may sell to a financial institution
up to $40,000,000 of the Company's right to receive certain payments for goods
ordered from the Company. At December 31, the amount sold under this agreement
was $11,965,000 in 1993 and $12,485,000 in 1992. This transaction had the effect
of reducing accounts receivable $5,406,000 in 1993 and $6,027,000 in 1992,
reducing long-term debt $11,965,000 in 1993 and $12,485,000 in 1992 and
increasing accrued liabilities $6,559,000 in 1993 and $6,458,000 in 1992.
During the fourth quarter of 1992, the Company elected an early payment of a
$3,000,000 tax exempt financing for $1,357,000 which resulted in a pretax
extraordinary gain of $1,643,000.
At December 31, 1993, the estimated fair value of the Company's long-term debt
excluding current maturities approximates $220,273,000. The estimate is based
on the quoted market price for the 5.25% convertible subordinated debentures,
the present value of future cash flows of fixed rate debt based upon changes in
the general level of interest rates, and on the assumption that carrying value
approximates fair value for variable rate debt.
7. LEASES
Total rental expense amounted to $21,488,000, $19,675,000, and $17,865,000 for
1993, 1992 and 1991, respectively. Principal leases are for machinery and
equipment, vehicles and real property. Certain leases contain renewal and
purchase option provisions at fair market values. There were no significant
capital leases.
Future rental payments required under operating leases that have initial or
remaining noncancelable lease terms in excess of one year as of December 31,
1993 are: 1994, $12,949,000; 1995, $9,859,000; 1996, $7,263,000;
1997, $5,693,000; 1998, $4,309,000; and thereafter, $4,413,000.
21
<PAGE>
8. SHAREHOLDERS' EQUITY
The Company has two classes of Common Stock, Class A Common Stock, par value
$.001 and Class B Common Stock, par value $.001 which have equal liquidation
rights. Each share of the Company's Class A Common Stock is entitled to one vote
on all matters submitted to shareholders and each share of Class B Common Stock
is entitled to ten votes. Class A and Class B Common Stock will receive equal
dividends as the Board of Directors may determine from time to time. The Class B
Common Stock is convertible into an equal number of shares of Class A Common
Stock at any time. At December 31, 1993, 15,370,965 shares of Class A Common
Stock were reserved for the conversion of Class B Common Stock, the exercise of
stock options and the conversion of 5.25% convertible subordinated debentures.
The Board of Directors authorized the purchase of up to an aggregate of
2,000,000 shares of the Company's Class A Common Stock in the open market. The
Company has purchased 703,200 shares of its Class A Common Stock since 1990 and
may purchase up to 1,296,800 more shares without further advance public
announcement.
The Board authorized the payment of dividends totalling $.35 per common share
per year during 1993, 1992, and 1991.
Changes in shareholders' equity for 1993, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Class A Class B Additional Treasury Stock
Common Stock Common Stock Paid in (Class A)
(in thousands) Shares Amount Shares Amount Capital Shares Amount
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance: January 1, 1991 20,318 $20 5,770 $6 $101,601 742 $11,604
Conversion of Class B shares to Class A shares 111 -- (111) -- -- -- --
Shares contributed to ESOP -- -- -- -- (183) (140) (2,369)
- -------------------------------------------------------------------------------------------------------------------------
Balance: December 31, 1991 20,429 $20 5,659 $6 $101,418 602 $ 9,235
Shares contributed to ESOP -- -- -- -- (23) (157) (2,586)
- -------------------------------------------------------------------------------------------------------------------------
Balance: December 31, 1992 20,429 $20 5,659 $6 $101,395 445 $ 6,649
Shares contributed to ESOP -- -- -- -- 32 (138) (2,312)
Public offering 4,102 4 -- -- 68,685 -- --
Other -- 1 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Balance: December 31, 1993 24,531 $25 5,659 $6 $170,112 307 $ 4,337
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
9. OTHER (INCOME)/EXPENSE, NET
The components of other (income)/expense, net are:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(in thousands) 1993 1992 1991
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Currency transactions $(5,515) $(7,782) $(4,324)
Interest rate protection
agreements 442 373 4,514
Pre-receivable sales 2,348 2,674 3,712
Amortization of debt issuance
costs and loan origination fees 804 721 192
Other 1,291 796 552
- ----------------------------------------------------------------------------
$ (630) $(3,218) $4,646
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
At December 31, 1993, the Company had various forward exchange contracts,
recorded at fair market value, maturing during 1994 to purchase $140,967,000 and
sell $140,899,000 of various currencies at specified prices. The primary purpose
of these contracts was to provide an economic hedge against currency fluctuation
effects on future revenue streams. A risk exists from the possible inability of
the counterparties (major financial institutions) to meet the terms of the
contracts and from the movements in currency values.
The Company seeks to control off balance sheet risk by evaluating the credit
worthiness of counterparties and by monitoring the currency exchange markets,
hedging risks in compliance with internal guidelines and reviewing all principal
economic hedging contracts with designated directors of the Company.
10. INCOME TAXES
The Company elected to adopt FAS No. 109, "Accounting for Income Taxes," as of
January 1, 1992. In accordance with the provisions of the Standard, prior years'
financial statements have not been restated, and accordingly, the Company has
reported a cumulative effect of change in accounting principle. This cumulative
effect increased 1992 income by $20,142,000 or $.79 per share. In addition to
the cumulative effect, the adoption of FAS No. 109 reduced 1992 pretax income by
$1,638,000, which was offset by a corresponding tax benefit.
In 1993 and 1992, income taxes currently payable are provided on taxable income
at the statutory rate applicable to such income.
22
<PAGE>
The components of income taxes are:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(in thousands) 1993 1992 1991
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
U.S. $11,437 $ 5,707 $13,694
Non-U.S. 8,699 8,909 2,854
- ----------------------------------------------------------------------------
20,136 14,616 16,548
- ----------------------------------------------------------------------------
Deferred:
U.S. (5,230) (2,134) (1,770)
Non-U.S. (4,889) (11,524) (4,559)
- ----------------------------------------------------------------------------
(10,119) (13,658) (6,329)
- ----------------------------------------------------------------------------
$10,017 $ 958 $10,219
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
U.S. income before income taxes was $31,405,000 in 1993, $15,042,000 in 1992,
and $20,192,000 in 1991.
Taxes paid, net of refunds, were $3,657,000 in 1993, $6,900,000 in 1992, and
$18,114,000 in 1991.
A comparison of the federal statutory rate to the Company's effective rate is as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory rate 35.0% 34.0% 34.0%
State taxes 6.8 12.2 3.2
Purchase accounting
adjustments -- -- 11.4
Non-U.S. tax rates,
repatriation of earnings,
and other income effects (1.4) (22.6) 4.0
Minority interest -- 10.8 2.0
Other (1.0) 3.6 .1
- ---------------------------------------------------------------------------
Effective tax rate 39.4% 38.0% 54.7%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
In 1991, amortization of purchase accounting adjustments was not tax effected
which caused the higher effective tax rate.
The significant components of deferred income tax benefit attributed to income
from operations for the years ended December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(in thousands) 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C>
Deferred tax benefit $ (5,754) $(12,310)
Adjustments to deferred tax assets
and liabilities for enacted changes
in tax laws and rates (1,983) 1,880
Benefits of operating loss carryforwards (2,382) (3,228)
- -----------------------------------------------------------------------------
$(10,119) $(13,658)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
For 1991 the sources of timing differences and the related deferred tax effect
of each are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(in thousands) 1991
- -----------------------------------------------------------------------------
<S> <C>
Depreciation $(3,577)
Inventory related transactions (2,890)
Interest rate protection agreement (277)
Pension 290
Non-U.S. tax provisions 429
Currency exchange losses 501
Deferred compensation (33)
Net deferred gains (1,261)
Other 489
- -----------------------------------------------------------------------------
$(6,329)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
Investment tax credits and other credits utilized for financial reporting
purposes were not material.
Undistributed earnings of subsidiaries outside the United States for which no
provision for U.S. taxes has been made amounted to approximately $57,600,000 at
December 31, 1993. In the event earnings of foreign subsidiaries are remitted,
foreign tax credits may be available to offset U.S. taxes.
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities at December 31, 1993 and 1992 are
presented below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
U.S. Non-U.S.
(in thousands) 1993 1992 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accounts receivable, principally due
to allowance for doubtful accounts $176 $140 $97 $77
Inventories, principally due to
additional costs inventoried
for tax purposes, pursuant to
the Tax Reform Act of 1986 3,278 3,850 485 --
Tax loss carryforwards -- -- 5,054 4,509
Other 2,146 (2,968) 1,543 1,754
- -------------------------------------------------------------------------------
Total current deferred tax assets 5,600 1,022 7,179 6,340
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Sale lease back transaction 1,867 2,140 -- --
Deferred compensation 4,221 4,106 -- 279
Tax loss carryforwards -- -- 18,737 16,005
Plant, equipment and
depreciation (8,024) (10,262) (162) (2,524)
Postretirement benefits
other than pensions 19,086 17,876 -- --
Other (1,520) 2,890 (565) 151
- -------------------------------------------------------------------------------
Total noncurrent
deferred tax assets 15,630 16,750 18,010 13,911
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total deferred tax asset $21,230 $17,772 $25,189 $20,251
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total current deferred tax liability -- -- $693 $1,731
- -------------------------------------------------------------------------------
Plant, equipment and depreciation -- -- 17,203 17,343
Other -- -- (209) 235
- -------------------------------------------------------------------------------
Total noncurrent deferred tax liabilities -- -- 16,994 17,578
- -------------------------------------------------------------------------------
Total deferred tax liability -- -- $17,687 $19,309
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
In the U.S., the Company has had a substantial tax liability for each of the
past three years and expects to pay taxes in the future at this or greater
levels. Substantially all of the non-U.S. net deferred tax asset relates to tax
loss carryforwards of which approximately 22% is expected to be used in 1994.
Noncurrent loss carryforwards expire over periods as follows: five to ten years
77% and indefinitely 23%. The Company has restructured its operations to reduce
or eliminate losses and has reorganized in certain countries to ensure that
losses will be offset against the profits of companies with long-term earnings
histories. Accordingly, the Company expects to realize the benefit of its U.S.
and non-U.S. deferred tax assets in the future.
23
<PAGE>
11. BUSINESS SEGMENT AND GEOGRAPHIC DATA
The Company operates primarily in one industry segment which includes
developing, manufacturing, marketing and servicing custom designed engineered
fabrics and related products used in the manufacture of paper and paperboard.
The following table shows data by geographic area:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES
Net sales $240,853 $220,792 $214,772
Operating income 38,668 15,251 26,416
Assets 231,892 183,567 165,699
- ---------------------------------------------------------------------------
CANADA
Net sales $58,015 $64,766 $63,628
Operating income 5,506 8,021 8,381
Assets 55,714 59,650 64,355
- ---------------------------------------------------------------------------
REST OF WORLD
Net sales $247,252 $275,526 $278,818
Operating (loss)/income (3,264) (5,139) 8,624
Assets 337,437 368,159 410,920
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
Sales among geographic areas and export sales are not significant. Operating
income includes an allocation of corporate expenses because such costs are
incurred principally for the benefit of operating companies. Assets exclude
intercompany accounts, assets related to corporate activities, and investments
in associated companies. The associated companies are primarily engaged in the
same industry segment as the Company.
12. PENSION PLANS AND OTHER RETIREMENT BENEFITS
The Company has two noncontributory pension plans covering U.S. employees and
both contributory and noncontributory pension plans covering non-U.S. employees.
Employees are covered primarily by plans which provide pension benefits that are
based on the employee's service and average compensation during the three to
five years before retirement or termination of employment.
The following table sets forth the Plans' funded status and amounts recognized
in the Company's balance sheet. Amounts are shown at September 30, for U.S.
pension plans. Amounts for non-U.S. plans are projected to December 31 from the
most recent valuation.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Plans in Which Plans in Which
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
- -------------------------------------------------------------------------------
(in thousands) 1993 1992 1993 1992
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present
value of benefit
obligations:
Vested $(18,933) $(16,482) $(79,602) $(75,795)
Accumulated (20,675) (18,274) (85,972) (79,333)
Projected (27,390) (26,772) (102,241) (94,307)
Plan assets at fair
value, primarily
listed stocks
and bonds 27,301 27,671 64,854 55,812
- -------------------------------------------------------------------------------
Projected benefit
obligation (in
excess of)/less
than plan assets (89) 899 (37,387) (38,495)
Unrecognized
net loss 1,348 188 25,950 23,126
Prior service cost
not yet recognized
in net periodic
pension cost 931 1,077 5,599 6,542
Remaining
unrecognized
net asset (680) (845) (8,063) (9,147)
Recognized
unaccrued
pension expense -- -- (8,213) (7,026)
- -------------------------------------------------------------------------------
Accrued pension
liability $1,510 $ 1,319 $(22,114) $(25,000)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The expected long-term rate of return for U.S. plans was 10% for 1993, 1992, and
1991. The weighted average discount rate was 7.8% for 1993, 8.65% for 1992, and
8.75% for 1991. The rate of increase in future compensation levels for salaried
and hourly employees was 4.4% and 4.5%, respectively in 1993, 5.8% and 6.0%,
respectively in 1992, and 5.7% and 6.0%, respectively in 1991.
The weighted average expected long-term rate of return for non-U.S. plans was
8.0% for 1993, 8.2% for 1992, and 8.3% for 1991. The weighted average discount
rate was 7.3% for 1993, 8.7% for 1992 and 1991. The weighted average rate
increase in future compensation levels was 4.8% for 1993, 5.8% for 1992 and 6.0%
for 1991.
The Company was required to accrue a liability for those plans for which
accumulated plan benefits exceed plan assets. The liability at December 31, 1993
and 1992 respectively, of $7,455,000 and $6,358,000 is offset by an asset
amounting to $5,599,000 and $6,071,000 (included in intangibles) and a direct
charge to equity of $1,856,000 and $287,000.
24
<PAGE>
The vested benefit obligation has been determined based upon the actuarial
present value of the vested benefits to which an employee is currently entitled,
based on the employee's expected date of separation or retirement.
Net pension cost included the following components:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(in thousands) 1993 1992 1991
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $4,311 $4,007 $3,470
Interest cost on projected
benefit obligation 9,780 9,717 8,974
Actual return on assets (9,341) (7,905) (6,801)
Net amortization
and deferral 1,158 (54) (935)
Special early retirement
supplement - - 238
- ----------------------------------------------------------------------------
Net periodic pension cost $5,908 $5,765 $4,946
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
Annual pension cost charged to operating expense for all Company plans was
$7,840,000 for 1993, $7,690,000 for 1992, and $7,389,000 for 1991.
13. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company provides certain medical,
dental and life insurance benefits for its retired United States employees.
Substantially all of the Company's U.S. employees may become eligible for these
benefits, which are subject to change, if they reach normal retirement age while
working for the Company. Retirees share in the cost of these benefits.
In accordance with Financial Accounting Standard No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," the Company accrues the cost
of providing postretirement benefits during the active service period of the
employees. During the fourth quarter of 1992, the Company elected to adopt this
standard effective January 1, 1992 and recognize the accumulated liability,
measured as of January 1, 1992. This resulted in a charge of $27,431,000, net of
tax of $16,813,000 and a reduction of 1992 operating income by $2,798,000. In
1991, the costs of retiree health care and life insurance benefits were expensed
as claims were paid and approximated $2,278,000. The Company currently funds the
plan as claims are paid.
The following table reflects the status of the postretirement benefit plan:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(in thousands) 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $29,632 $28,920
Fully eligible active plan participants 3,531 5,362
Other active participants 14,835 12,760
- ---------------------------------------------------------------------------
47,998 47,042
Unrecognized gain 1,192 --
- ---------------------------------------------------------------------------
Accrued postretirement cost $49,190 $47,042
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
Net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(in thousands) 1993 1992
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<S> <C> <C>
Service cost of benefits earned $ 804 $ 969
Interest cost on accumulated
postretirement benefit obligation 3,475 3,749
Amortization of unrecognized net gain (96) --
- ---------------------------------------------------------------------------
Net periodic postretirement benefit cost $4,183 $4,718
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
For measuring the expected postretirement benefit obligation, an annual rate of
increase in the per capita claims cost of 11% is assumed for 1993. This rate is
assumed to decrease gradually to 5.5% by 2003 and remain at that level
thereafter.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.8% at December 31, 1993 and 8.75% at
January 1, 1993.
A one percentage point increase in the health care cost trend rate would result
in a $6,244,000 increase in the accumulated postretirement benefit obligation as
of December 31, 1993 and an increase of $584,000 in the aggregate service and
interest cost components of the net periodic postretirement benefit cost for
1993.
The Company's non-U.S. operations do not offer such benefits to retirees.
14. TRANSLATION ADJUSTMENTS
The Consolidated Statements of Cash Flows were affected by translation as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(in thousands) 1993 1992 1991
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Change in cumulative
translation adjustments $21,860 $43,578 $1,766
Other noncurrent liabilities 2,531 4,442 (454)
Deferred taxes (101) 4,095 296
Long-term debt 1,038 1,540 1,037
Investment in associated
companies (198) 457 (146)
Net fixed assets (19,408) (37,351) (2,964)
Other assets 152 741 (348)
- -----------------------------------------------------------------------------
Effect of exchange rate changes $ 5,874 $17,502 $ (813)
- -----------------------------------------------------------------------------
</TABLE>
Shareholders' equity was affected by translation as follows: decrease from
translation of non-U.S. financial statements of $9,577,000, $14,382,000 and
$1,425,000; from remeasurement of loans of $9,518,000, $23,205,000 and $341,000
in 1993, 1992 and 1991, respectively; and by losses on designated economic
hedges, net of tax, of $2,765,000 and $5,991,000 in 1993 and 1992, respectively.
25
<PAGE>
Net translation losses related to operations in Brazil and Mexico were
$10,283,000, $10,455,000, and $7,570,000 in 1993, 1992, and 1991, respectively.
Amounts included in net sales were $8,967,000, $8,489,000 and $2,477,000 and in
cost of goods sold were $1,316,000, $1,966,000 and $5,093,000 in 1993, 1992, and
1991, respectively.
15. STOCK OPTIONS AND INCENTIVE PLANS
During 1988 and during 1992, the shareholders approved stock option plans which
each provide for granting of up to 2,000,000 shares of Class A Common Stock to
key employees. Options are generally exercisable in five cumulative annual
amounts beginning 12 months after date of grant. Option exercise prices are not
less than the market value of the shares on the date of grant. Unexercised
options terminate ten years after date of grant for the 1988 Plan and up to
twenty years for the 1992 Plan. Prices per share for shares under option at
December 31, 1993 range from $15.00 to $18.75. Activity with respect to these
plans is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Shares under option
at January 1 2,087,500 1,977,500 1,896,500
Options granted 380,250 110,000 112,500
Options cancelled 49,900 -- 31,500
- ---------------------------------------------------------------------------
Shares under option
at December 31 2,417,850 2,087,500 1,977,500
- ---------------------------------------------------------------------------
Options exercisable
at December 31 1,601,400 1,129,500 748,500
Shares available 1,582,150 1,912,500 22,500
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
The Company's deferred compensation plan provides that a portion of certain
employees' salaries are deferred in exchange for aggregate annual payments for
fifteen years certain upon their retirement, disability or death. These
commitments have been funded with life insurance contracts on the plan
participants. These contracts have a face value equal to the aggregate payments
due upon retirement, disability or death. The Company's expense, net of the
increase in cash surrender value, was $1,002,000 in 1993, $432,000 in 1992,and
$791,000 in 1991. The increase in cash value net of premiums was $452,000 in
1993, $1,027,000 in 1992, and $252,000 in 1991.
The Company maintains a voluntary savings plan covering substantially all
employees in the United States. The Plan, known as "Prosperity Plus," is a
401(k) plan under the U.S. Internal Revenue Code. Employees may contribute from
3% to 15% of their regular wages which under Section 401(k) are tax deferred.
The Company matches 50% for each dollar contributed by employees up to 10% of
their wages in the form of Class A Common Stock which is contributed to an
Employee Stock Ownership Plan. The investment of employee contributions to the
plan is self directed. The cost of the plan amounted to $2,400,000 in 1993,
$2,371,000 in 1992, and $2,233,000 in 1991.
16. ACQUISITION, DIVESTITURES AND RESTRUCTURING
In January 1993, the Company completed an acquisition for cash of approximately
$51,000,000 and a lease obligation with a capital equivalent value of $4,500,000
for inventory, land, buildings and machinery and equipment of the Mount Vernon
Group. In the second quarter the Company exercised its option to purchase the
leased facility for $4,500,000. The purchase was financed with the Company's
existing credit agreement. Mount Vernon is engaged in the same industry as the
Company. The acquisition has been accounted for as a purchase and, accordingly,
the Company has included Mount Vernon's results of operations in its financial
statements as of January 1, 1993. Mount Vernon's 1992 net sales and pretax
income approximated $30,000,000 and $3,000,000, respectively.
As part of the Company's previously announced program to restructure operations
in order to focus on the core paper machine clothing industry, the Company
completed on June 30, 1993 the sale of its Albany Engineered Systems Division
(AES) for $27,400,000. AES had net sales of $37,900,000 and a pre-tax operating
loss of $1,100,000 for the year ended December 31, 1992. The Company realized
an $8,900,000 gain on the sale which was offset by a $7,000,000 write down of
assets and a $2,300,000 accrual for termination costs.
Effective January 1993, the Company's joint venture with an Austrian company, in
which the Company was the general partner, was terminated at no cost to the
partners. Albany International will continue to develop, manufacture and market
current product lines which include properties such as thermal stability,
non-flammability, non-melting and low generation of smoke and toxic gasses at
high temperatures which have potential applications in aircraft, automotive and
other industries.
During 1992, the Company charged earnings $12,045,000 related to restructurings,
primarily in Europe, which included plant closings in Norway and Germany and
other workforce reductions. In 1991, a charge of $1,694,000 was reported related
principally to workforce reductions in Europe, the United States and Canada.
26
<PAGE>
FINANCIAL REVIEW
REVIEW OF OPERATIONS
1993 VS. 1992
Net sales decreased $15.0 million or 2.7% as compared with 1992. Factors
affecting sales levels included the acquisition of the Mount Vernon Group in
January 1993, market share gains and product upgrades which increased sales.
These increases were more than offset by the divestiture of Albany Engineered
Systems (AES) in June 1993 and the effect of the stronger U.S. dollar which
decreased 1993 net sales by $34.3 million as compared to 1992. Excluding the
dollar effect, 1993 net sales increased 3.5% over 1992. There were no
significant price increases during 1993.
Net sales in the United States increased 9.1% due to the acquisition of Mount
Vernon and to the continuing economic recovery which began in the latter part of
1992. Canadian sales decreased 10.4% reflecting the condition of the Canadian
paper industry and the divestiture of AES. There are indications that the
Canadian economy is beginning to recover but not at the same pace as the United
States. Sales in the Rest of World segment continued to decline. Lower European
sales reflect the recessionary environment in most of Continental Europe. Nordic
region sales comparisons were adversely affected by major devaluations in Sweden
and Finland during the fourth quarter of 1992. Economic improvements in the
Nordic countries were beginning to be reflected in sales in the fourth quarter
of 1993 for this region while Continental Europe continued depressed.
Gross profit continued to improve and was 39.2% of net sales for the three
months ended December 31, 1993 bringing the full year result to 36.9% for 1993
as compared to 34.5% for 1992. Variable costs as a percent of net sales
decreased to 34.0% in 1993 from 34.7% in 1992. The improvement reflects a
reduction of the hourly workforce of 371 people (10.0%) since December 1992,
principally in Europe. Reported 1993 results include a benefit, of approximately
$5.0 million, from the previously announced plant closings in Norway and Germany
which took place during the second quarter of 1993. Management anticipates
additional savings of about $3.0 million in 1994.
Selling, technical, general and research expenses decreased 2.0% in 1993 as
compared to 1992. Excluding the effect of translation of non-U.S. currencies
into U.S. dollars due to the stronger U.S. dollar, the acquisition of Mount
Vernon and the sale of AES, these expenses would have increased 3.1%.
Management expects these costs to continue at about the same level in 1994.
As part of the Company's previously announced program to restructure operations
in order to focus on the core paper machine clothing industry, the Company
completed the sale of its AES division to Thermo Fibertek Inc. and a Thermo
Fibertek licensee on June 30, 1993 (see Note 16 of Notes to Consolidated
Financial Statements). AES had net sales of $37.9 million and a pre-tax
operating loss of $1.1 million for the year ended December 31,1992. The proceeds
of the transactions, $27.4 million, were used to repay floating rate long term
indebtedness. The Company realized an $8.9 million gain on the sale of AES which
was offset by a $7.0 million write down of assets and a $2.3 million accrual for
termination costs. Subsequent to the sale of AES, the Company entered into a
strategic alliance with Thermo Fibertek Inc. This alliance will provide the
paper industry with the advantages of coordinated development and marketing of
the two companies' products.
Operating income as a percentage of net sales increased to 7.5% in 1993 as
compared to 3.2% in 1992. The Company anticipates that operating income as a
percent of net sales will continue to improve during 1994 as additional savings
from the 1993 plant closings in Europe, the reduction of losses due to the sale
of AES and savings from restructuring are realized. Furthermore, since the
Company is operating below capacity, increased sales will result in higher
margins. While it is difficult to predict how long the current business and
economic environment will last, the capacity expansion and upgrades over the
past several years, along with the restructuring program, should position the
Company to capitalize on future opportunities for sales and earnings growth once
the economies and marketplace improve.
Interest expense, net decreased in 1993 as compared to 1992 as the average
interest rate on all bank debt was approximately 57 basis points lower in 1993.
27
<PAGE>
The decrease in other (income)/expense, net was due primarily to currency
transactions which resulted in income of $5.5 million in 1993 as compared to
$7.8 million in 1992. Currency transaction income results from economic hedges
which can have either a positive or negative effect on other (income)/expense,
net in any particular quarter. The specific hedges in place are changed from
time to time depending on market conditions and cash flow forecasts of various
non-U.S. operations and are intended to offset the effects of translation on
operating income (see Note 9 of Notes to Consolidated Financial Statements).
Effective January 1993, the Company's joint venture with an Austrian company, in
which the Company was the general partner, was terminated at no cost to the
partners. Albany International will continue to develop, manufacture and market
current product lines which include properties such as thermal stability, non-
flammability, non-melting and low generation of smoke and toxic gasses at high
temperatures which have potential applications in aircraft, automotive and other
industries. Losses related to this venture were reduced in 1993 as the operation
was downsized.
The decrease in equity earnings of associated companies is due to reduced
earnings from the Company's interests in Argentina. At June 30, 1993, the
Company wrote off the remaining equity in its 40% owned joint venture in
Argentina which is experiencing financial difficulties due to economic
conditions in Argentina and the impact of imports on the Argentine paper
industry. The charge, included in "Equity in earnings of associated companies,"
was $.4 million. In February 1994, the Company exchanged its 40% equity
interests in Brazil and Argentina for the remaining 60% interest in Mexico. The
transaction will be reported in the first quarter of 1994 (see Note 1 of Notes
to Consolidated Financial Statements).
1992 VS. 1991
Net sales increased $3.9 million, less than 1.0% as compared with 1991. Net
sales in the United States and Canada improved over 1991 levels. Sales in the
United States increased 2.8%, an indication that the U.S. economy is beginning
to recover. Canadian sales increased 1.8% despite the troubled conditions in the
Canadian paper industry. Sales in the Rest of World segment continued the
decline which began in 1991 reflecting the recessionary environment in all key
markets in the Nordic region and Continental Europe and the unstable economic
conditions in Brazil. There was very little change in net prices for the second
consecutive year. Product upgrades and product mix changes increased sales but
were offset by small market share declines in Continental Europe and the United
States due mainly to a highly competitive marketplace.
Gross profit as a percent of net sales decreased to 34.5% for 1992 as compared
to 35.3% for 1991. The effect of adopting two new accounting standards, FAS No.
106 and FAS No. 109, reduced gross profit by $4.4 million because the cost of
retiree benefits increased as did the effect of purchase accounting (see Notes
10 and 13 of Notes to Consolidated Financial Statements). Excluding this effect,
gross profit would have been 35.3% of net sales, the same level as in 1991.
Variable costs as a percent of net sales decreased to 34.7% in 1992 from 35.2%
in 1991 due mainly to reductions in the hourly workforce, principally in Europe,
during the latter part of 1991 and in 1992. The improvements in variable costs
were offset by increases in fixed manufacturing costs, principally wages,
benefits and depreciation. In addition, the continuing economic instability in
Brazil had a negative impact on gross profit as devaluation in Brazil was higher
during 1992 as compared to 1991.
Selling, technical, general and research expenses increased $11.5 million (7.6%)
in 1992 as compared to 1991. The increase was due mainly to wages, benefits,
travel and the addition of sales and service personnel in the United States to
better serve our customers. Excluding the effect of translation of non-U.S.
currencies into U.S. dollars, which increased these expenses by $1.2 million
due to the weaker U.S. dollar, the increase would have been 6.8% as compared
to 1991.
28
<PAGE>
During the fourth quarter of 1992 the Company reported a charge of $12 million
for restructuring of certain operations, including plant closings in Norway and
Germany and other workforce reductions. In 1991, the Company reported a similar
charge of $1.7 million, principally for terminations in Scandinavia due to poor
economic conditions in that region of the world. Actual restructuring costs have
approximated management's original estimate. Less than 10% of the original
provision has been carried forward to 1994 to complete termination payments.
Operating income as a percentage of net sales excluding the "Restructuring
charge and termination benefits" decreased to 5.3% as compared to 8.0% for 1991.
Interest expense, net decreased $1.3 million in 1992 as compared to 1991. The
Company capitalized $1.6 million of interest related to debt for facilities
under construction in 1991 while no interest was capitalized in 1992 (see Note 6
of Notes to Consolidated Financial Statements). Including capitalized amounts,
interest expense decreased $2.9 million during 1992 as compared to 1991.
During the fourth quarter of 1991, the Company entered into interest rate
protection agreements which concurrently exchanged fixed and variable rate
obligations on a notional amount of $200.0 million. During the second quarter of
1992, the Company determined that these contracts were no longer necessary due
to the change in debt structure and terminated them resulting in a profit of $.9
million (see Notes 6 and 9 of Notes to Consolidated Financial Statements).
The change in other (income)/expense, net of $7.9 million was due primarily to
currency transactions which resulted in income of $7.8 million in 1992 as
compared to $4.3 million in 1991 and interest rate protection agreements which
resulted in an expense of $.4 million in 1992 as compared to an expense of $4.5
million in 1991.
The Company elected to adopt, retroactive to January 1, 1992, Financial
Accounting Standard No. 109, "Accounting for Income Taxes," which requires a
change from the deferred method to the asset and liability method of accounting
for income taxes. The cumulative effect of adopting this Standard increased net
income by $20.1 million. In addition to the cumulative effect, the adoption of
FAS No. 109 reduced operating income by $1.6 million, which was offset by a
corresponding tax benefit.
The Company's 1992 effective tax rate was 38.0% as compared to 54.7% for the
same period in 1991. The effective rate decreased primarily due to the fact that
in prior years amortization of purchase accounting adjustments were not tax
effected and resulted in a higher effective tax rate while under FAS No. 109,
these adjustments are tax effected (see Note 10 of Notes to Consolidated
Financial Statements).
The decrease in equity earnings of associated companies is due to reduced
earnings from the Company's interests in Mexico, Brazil and South Africa. During
the second quarter of 1992, the Company purchased the remaining 51% of its
equity interest in Mexico. This operation was consolidated beginning in May.
Sales, costs and income were not significant to consolidated results.
During the fourth quarter of 1992, the Company elected early extinguishment of a
$3.0 million tax exempt I.R.B. financing for $1.4 million which resulted in an
extraordinary gain of $1.6 million.
The Company elected to adopt, retroactive to January 1992, Financial Accounting
Standard No. 106, "Postretirement Benefits Other Than Pensions," which requires
the accrual of the cost of providing postretirement benefits other than pensions
(principally health insurance) during the active service period of employees.
The Company immediately recognized the accumulated liability measured as of
January 1 which resulted in a one-time charge of $27.4 million, net of tax of
$16.8 million (see Note 13 of Notes to Consolidated Financial Statements). This
change also reduced operating income by $2.8 million, the increase of accrual
basis costs over the cash basis which is the amount funded currently.
INTERNATIONAL ACTIVITIES
The Company conducts more than half of its business in countries outside of the
United States. As a result, the Company experiences transaction and translation
gains and losses because of currency fluctuations. The Company periodically
enters into foreign currency contracts to hedge this exposure (see Notes 9 and
14 of Notes to Consolidated Financial Statements). The Company believes that the
risks associated with its operations and locations outside the United States are
not other than those normally associated with operations in such locations. In
countries in which the Company operates that have experienced high inflation
rates, the Company frequently reprices its products.
29
<PAGE>
This practice has enabled the Company to quickly pass on to its customers most
of the increased costs due to local inflation. Although government imposed price
freezes have occasionally occurred in some of the Company's markets, including
the United States, neither controls nor high inflation rates have had a
long-term material adverse impact on the Company's operating results.
The profitability in the Company's geographic regions in 1993 as compared to
1992 increased in the United States and Rest of World and decreased in Canada
(see Note 11 of Notes to Consolidated Financial Statements). Operating income
was reduced by $.4 million in 1993, by $12 million in 1992, and by $1.7 million
in 1991 for restructuring charges and termination costs. Operating income as a
percent of net sales, after excluding the above mentioned charges, was 11.7% in
1993, 7.8% in 1992, and 12.3% in 1991 for the United States; 10.5% in 1993,
13.1% in 1992, and 13.2% in 1991 for Canada; and 2.8% in 1993, 1.6% in 1992 and
3.7% in 1991 for Rest of World. The increase in the United States was due to the
acquisition of the Mount Vernon Group in January 1993, increased sales and lower
costs. The decrease in Canada was due to lower sales. The Rest of World increase
was due primarily to the closing of three plants in Europe and improved results
in Brazil.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1993 the Company's order backlog was $407.0 million, an increase
of $56.0 million from the prior year-end, a significant portion of which relates
to the Mount Vernon Group.
During 1993 inventories increased $14.4 million due principally to the
acquisition of Mount Vernon. This increase was partially offset by the sale of
AES inventories and the strengthening of the U.S. dollar.
Cash flow provided from operating activities was $43.8 million in 1993 compared
with $45.8 million in 1992 and $67.2 million in 1991. Capital expenditures were
$30.9 million for 1993 compared with $20.2 million for 1992 and $40.0 million
for 1991.Capital expenditures in 1994 are expected to be about $35.0 million,
excluding acquisitions and new ventures, with additional lease equivalents of
approximately $10.0 million. The Company will continue to finance these
expenditures with cash from operations and existing credit facilities.
Total debt decreased $42.7 million during 1993 due principally to net proceeds
of $68.7 million from the Company's fourth quarter offering of 4,102,000 shares
of its Class A Common Stock. The proceeds were used to repay floating rate long
term indebtedness and for general corporate purposes. Amounts paid may be
reborrowed from time to time for general corporate purposes which may include
acquisitions. The acquisition of the Mount Vernon Group in January 1993 and the
exercise of a lease option during the second quarter of 1993 for a combined
total of approximately $55.0 million cash was financed with the Company's
existing credit agreement. This was offset in part by the proceeds of the sale
of AES which approximated $27.0 million.
The Company has an agreement under which it may sell to a financial institution
up to $40.0 million of the Company's right to receive certain payments for goods
ordered from the Company. At December 31, 1993 and 1992, amounts sold under this
agreement were $12.0 and $12.5 million, respectively. This transaction reduced
long-term debt by $12.0 and $12.5 million, decreased accounts receivable by $5.4
million and $6.0 million and increased accrued liabilities by $6.6 million and
$6.5 million at December 31, 1993 and 1992, respectively.
Cash dividends of $.0875 per share were paid in each of the four quarters of
1993.
Management will continue restructuring operations, where possible, to further
increase efficiencies and to improve service to customers. The Company intends
to focus on its core paper machine clothing business and will consider acquiring
other paper machine clothing companies where such acquisitions support corporate
strategies to enhance value to customers and shareholders.
30
<PAGE>
EXHIBIT 22
<PAGE>
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
PERCENT DI- PERCENT IN-
RECT OWN- DIRECT
ERSHIP OWNERSHIP JURISDICTION
------------- ------------- --------------------
<S> <C> <C> <C>
Albany International Pty.,Ltd...................................... 100 Australia
Albany International Feltros e Telas Industriais Ltda.............. 100 Brazil
Albany International Canada Inc.................................... 100 Canada
Albany Fennofelt Oy AB............................................. 100 Finland
Albany International Holding S.A................................... 100 France
Albany International S.A........................................... 100 France
Martel Catala S.A.................................................. 100 France
Toiles Franck S.A.................................................. 100 France
Nomafa S.A.R.L..................................................... 100 France
Nomafa Betriebsschutzeinrichtungen GmbH............................ 100 Germany
Nordiskafilt GmbH.................................................. 100 Germany
Albany International GmbH Ahlen.................................... 100 Germany
Albany International GmbH Goppingen................................ 100 Germany
Albany International Nederland B.V................................. 100 Netherlands
Nomafa B.V......................................................... 100 Netherlands
Albany International B.V........................................... 100 Netherlands
Nordiskafilt Kabushiki Kaisha...................................... 100 Japan
Albany International S.A. de C.V................................... 100 Mexico
Wangner De Mexico, S.A. de C.V..................................... 100 Mexico
Albany Nordiskafilt AS............................................. 100 Norway
Albany Nordiskafilt AB............................................. 100 Sweden
Nordiska Maskinfilt Aktiebolaget................................... 100 Sweden
Nordiskafilt Aktiegolaget.......................................... 100 Sweden
Dewa Consulting AB................................................. 100 Sweden
Nomafa Aktiebolaget................................................ 100 Sweden
Albany Wallbergs AB................................................ 100 Sweden
Nordiska Industrie Produkte AG..................................... 100 Switzerland
Albany International AG............................................ 100 Switzerland
Albany International Ltd........................................... 100 United Kingdom
Albany International Research Co................................... 100 United States
</TABLE>
<PAGE>
EXHIBIT 24
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Albany International Corp. on Form S-8 (File Nos. 33-23163, 33-28028 and
33-33048) and on Form S-3 (File Nos. 33-37727 and 33-68568) of our reports dated
January 27, 1994, on our audits of the consolidated financial statements and
financial statement schedules of Albany International Corp. as of December 31,
1993 and 1992, and for the years ended December 31, 1993, 1992, and 1991, which
report is included in this Annual Report on Form 10-K. Albany, New York March
22, 1994
