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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1994
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
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ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
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 offices) (Zip Code)
Registrant's telephone number, including area code
518-445-2200
Securities registered pursuant to Section 12(b) of the Act:
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)
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 1, 1995 by
non-affiliates of the registrant was $428,933,094.
The registrant had 24,448,868 shares of Class A Common Stock and 5,633,427
shares of Class B Common Stock outstanding as of March 1, 1995.
DOCUMENTS INCORPORATED BY REFERENCE PART
Registrant's Annual Report to Shareholders for the year ended December 31,
1994. II
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be
held on May 18, 1995. III
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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 more than 5,000, 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).
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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 24 countries who work directly with paper mill
operating management. The Registrant's technical service 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, 1994 and 1993 were
approximately $446 million and $407 million, respectively. Orders recorded at
December 31, 1994 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
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into two primary categories, research and development and technical
expenditures. Research and development expenses totaled $18.4 million in 1994,
$17.6 million in 1993 and $18.5 million in 1992. 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 products such as
DUOTEX-Registered Trademark- 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 $22.5 million in
1994, $21.4 million in 1993, and $22.9 million in 1992. 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 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-Registered Trademark-, 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 27% in the United States and
Canadian markets, taken together, 17% in the rest of the world and approximately
21% 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 5,404 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.
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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
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J. Spencer Standish 69 Chairman of the Board and Director
Francis L. McKone 60 President, CEO and Director
Michael C. Nahl 52 Senior Vice President and Chief Financial
Officer
J. Weldon Cole 58 Senior Vice President -- Administration and
Development
Manfred F. Kincaid 57 Senior Vice President -- Technology
Thomas H. Richardson 59 Senior Vice President -- International
Frank R. Schmeler 55 Senior Vice President -- North America
Edward Walther 51 Senior Vice President -- Europe
Charles B. Buchanan 63 Vice President, Secretary and Director
Richard A. Carlstrom 51 Vice President -- Controller
Raymond D. Dufresne 47 Vice President, Treasurer and Assistant
Secretary
William H. Dutt 59 Vice President -- Research, Development and
Engineering
Hugh A. McGlinchey 55 Vice President -- Information Systems
James W. Sherrer 59 Vice President -- Administration
Thomas H. Hagoort 62 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.
J. WELDON COLE joined the Registrant as Senior Vice President on January 1,
1995. From 1988 until December 1994 he held various management positions, most
recently as President and Director of Beloit Corporation, an international
manufacturer of pulp and papermaking equipment. He is a director of Rock
Financial Corporation.
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
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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.
EDWARD WALTHER joined the Registrant in 1994. He has served the Registrant
as Senior Vice President since 1995 and as Vice President and General Manager --
Continental Europe since 1994. Prior to joining the Registrant, he held various
marketing and managerial positions with a company in the paper machine clothing
business.
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.
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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.
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 2,437,000, of which 2,327,000 square feet are owned and 110,000
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 2,715,200 square
feet, of which 2,517,100 square feet are owned and 198,100 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 1995. The
Registrant's capital expenditures are expected to approximate $40 million during
1995 in order to meet anticipated sales growth.
The Registrant believes it has modern, efficient production equipment. In
the last five years, it has spent $238 million on new plants and equipment or
upgrading existing facilities, including the completion of 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 1994 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 23 of the
Annual Report are incorporated herein by reference.
Restrictions on dividends and other distributions are described in Note 6,
on pages 12 and 13 of the Annual Report. Such description is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Eleven Year Summary" on page 24 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 20 to 22 of the Annual Report is
incorporated herein by reference.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries, included on pages 6 to 19 in the Annual Report, are incorporated
herein by reference:
Consolidated Statements of Income and Retained Earnings -- years ended
December 31, 1994, 1993 and 1992
Consolidated Balance Sheets -- December 31, 1994 and 1993
Consolidated Statements of Cash Flows -- years ended December 31, 1994, 1993
and 1992
Notes to Consolidated Financial Statements
Report of Independent Accountants
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 1994 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 STATEMENTS SCHEDULE 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) SCHEDULE. The following consolidated financial statements schedule
for each of the three years in the period ended December 31, 1994 is included
pursuant to Item 14(d):
Report of Independent Accountants on Financial Statements Schedule
Schedule VIII -- Valuation and qualifying accounts
a)(3)(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1994.
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(3) EXHIBITS
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<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>
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<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)
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)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
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)
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)
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
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)
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(n)(i) -- Supplemental Executive Retirement Plan. (15)
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
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, 1994.
21 -- Subsidiaries of Registrant.
23 -- Consent of Coopers & Lybrand L.L.P.
24 -- Powers of Attorney. (12)
27 -- Financial Data Schedule.
</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.
(15) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated June 30, 1994, 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 20, 1995
(J. Spencer Standish)
*
---------------------------------------- President and Director March 20, 1995
(Francis L. McKone) (Chief Executive Officer)
/s/ MICHAEL C. NAHL Senior Vice President and Chief
---------------------------------------- Financial Officer March 20, 1995
(Michael C. Nahl) (Principal Financial Officer)
*
---------------------------------------- Vice President-Controller March 20, 1995
(Richard A. Carlstrom) (Principal Accounting Officer)
*
---------------------------------------- Vice President, Secretary and Director March 20, 1995
(Charles B. Buchanan)
*
---------------------------------------- Director March 20, 1995
(Paul Bancroft III)
*
---------------------------------------- Director March 20, 1995
(Thomas R. Beecher, Jr.,)
*
---------------------------------------- Director March 20, 1995
(Stanley I. Landgraf)
*
---------------------------------------- Director March 20, 1995
(Allan Stenshamn)
*
---------------------------------------- Director March 20, 1995
(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 20th day of
March, 1995.
ALBANY INTERNATIONAL CORP.
by /s/ MICHAEL C. NAHL
--------------------------------------
Michael C. Nahl
Principal Financial Officer
Senior Vice President
and Chief Financial Officer
16
<PAGE>
SCHEDULE
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENTS SCHEDULE
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 6 of the
1994 Annual Report to Shareholders of Albany International Corp. In connection
with our audits of such financial statements, we have also audited the related
financial statements schedule listed in the index on page 8 of this Form 10-K.
In our opinion, the financial statements schedule 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.
/s/ Coopers & Lybrand L.L.P.
Albany, New York
January 26, 1995
<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 BALANCE AT
- ------------------------------------------------------------- BEGINNING CHARGED TO -------------- END OF
DESCRIPTION OF PERIOD EXPENSE DEDUCTIONS (A) PERIOD
- ------------------------------------------------------------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts
Year ended December 31:
1994..................................................... $ 4,579 $ 597 $ 558 $ 4,618
1993..................................................... $ 4,800 $ 1,667 $ 1,888 $ 4,579
1992..................................................... $ 5,289 $ 1,320 $ 1,809 $ 4,800
<FN>
(A) Includes accounts written off as uncollectible, recoveries and the effect
of currency exchange rates.
</TABLE>
<PAGE>
EXHIBIT 11
SCHEDULE OF COMPUTATION OF PRIMARY
AND FULLY DILUTED
NET INCOME PER SHARE
<PAGE>
ALBANY INTERNATIONAL CORP.
EXHIBIT 11
SCHEDULE OF COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRIMARY EARNINGS PER SHARE:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
- ---------------------------- ----------------------------
1994 (1) 1993 (1) 1994 (1) 1993 (1)
- ------------- ------------- ------------- -------------
<C> <C> <S> <C> <C>
30,033,929 29,882,469 Common stock outstanding at end of period............ 30,033,929 29,882,469
Adjustments to ending shares to arrive at weighted
average for the period:
(24,052) (20,622) Shares contributed to E.S.O.P. (2)................... (78,940) (70,461)
-- -- Shares issued under option (2)....................... (1,643) --
-- (256,196) Shares issued in public offering (2)................. -- (3,132,647)
- ------------- ------------- ------------- -------------
30,009,877 29,605,652 Weighted average number of shares.................... 29,953,346 26,679,361
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
$ 8,383 $ 6,396 Net income........................................... $ 23,952 $ 15,524
$ 0.28 $ 0.22 Net income per share (3)............................. $ 0.80 $ 0.58
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
<FN>
- ------------------------
(1) Includes Class A and Class B Common Stock
(2) Calculated as follows:
number of shares outstanding multiplied by the reciprocal of the number of
days outstanding divided by the number of days in the period
</TABLE>
<PAGE>
Shares contributed to E.S.O.P.:
<TABLE>
<S> <C> <C>
For the twelve months:
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
---------
---------
January 31, 1994 10,831 * (30/365) 890
February 28, 1994 11,120 * (58/365) 1,767
March 31, 1994 11,090 * (89/365) 2,704
April 12, 1994 56 * (101/365) 15
April 30, 1994 11,683 * (119/365) 3,809
May 31, 1994 11,882 * (150/365) 4,883
June 30, 1994 12,440 * (180/365) 6,135
July 31, 1994 12,977 * (211/365) 7,502
August 31, 1994 12,679 * (242/365) 8,406
September 30, 1994 13,090 * (272/365) 9,755
October 31, 1994 10,963 * (303/365) 9,101
November 14, 1994 39 * (317/365) 34
November 30, 1994 12,996 * (333/365) 11,857
December 31, 1994 12,114 * (364/365) 12,082
---------
78,940
---------
---------
For the three months:
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
---------
---------
October 31, 1994 10,963 * (30/92) 3,575
November 14, 1994 39 * (44/92) 19
November 30, 1994 12,996 * (60/92) 8,476
December 31, 1994 12,114 * (91/92) 11,982
---------
24,052
---------
---------
</TABLE>
Shares issued under option:
<TABLE>
<S> <C> <C>
For the twelve months:
March 22, 1994 7,500 * (80/365) 1,643
--------------------- ---------
--------------------- ---------
</TABLE>
<PAGE>
Shares offered:
<TABLE>
<S> <C> <C>
For the twelve months:
October 6, 1993 4,000,000 * (278/365) 3,046,575
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
---------
256,196
---------
---------
<FN>
- ------------------------
(3) Dilutive common stock equivalents are not material and therefore are not
included in the calculation of primary earnings per common share.
</TABLE>
Fully diluted earnings per share:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
- ---------------------------- ----------------------------
1994 (1) 1993 (1) 1994 (1) 1993 (1)
- ------------- ------------- ------------- -------------
<C> <C> <S> <C> <C>
30,009,877 29,605,652 Weighted average number of shares.................... 29,953,346 26,679,361
284,046 243,079 Incremental shares of unexercised options (4)........ 284,046 243,079
5,712,450 5,712,450 Convertible shares of subord. debentures (5)......... 5,712,450 --
- ------------- ------------- ------------- -------------
36,006,373 35,561,181 Adjusted weighted average number of shares........... 35,949,842 26,922,440
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
$ 9,505 $ 7,589 Net income (including after-tax interest savings).... $ 28,440 $ 15,524
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
$ 0.26 $ 0.21 Fully diluted net income per share................... $ 0.79 $ 0.58
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
<FN>
- ------------------------
(4) Incremental shares of exercisable options are calculated based on the
higher of the average price of the Company's stock or the ending price for
the respective period. The calculation includes all options whose exercise
price is below the higher of the average or ending stock price.
(5) The subordinated debentures are convertible into 5,712,450 shares of the
Company's Class A common stock. There were no conversions as of December
31, 1994. Upon any conversion, the Company would realize an after-tax
interest expense savings based on 5.25% of the face value less the
corresponding income tax deduction. The full amount of the shares and the
interest savings will be included in the calculation only when they cause
dilution to net income per share.
</TABLE>
<PAGE>
EXHIBIT 13
1994 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 judgements
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, L.L.P.,
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.
/s/ J. Spencer Standish
J. Spencer Standish
CHAIRMAN OF THE BOARD
/s/ Francis L. McKone
Francis L. McKone
PRESIDENT AND CHIEF EXECUTIVE OFFICER
s/ Michael C. Nahl
Michael C. Nahl
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALBANY INTERNATIONAL CORP.
We have audited the accompanying consolidated balance sheets of Albany
International Corp. as of December 31, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1994 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.
/s/ Coopers & Lybrand L.L.P.
Albany, New York
January 26, 1995
6
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
ALBANY INTERNATIONAL CORP.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 1992
<S> <C> <C> <C>
STATEMENTS OF INCOME
Net sales $ 567,583 $ 546,120 $ 561,084
Cost of goods sold 338,868 344,609 367,516
- -------------------------------------------------------------------------------------------------------
Gross profit 228,715 201,511 193,568
Selling and general expenses 124,883 123,496 122,004
Technical and research expenses 40,888 38,968 41,386
Restructuring of operations and termination benefits -- (1,863) 12,045
- -------------------------------------------------------------------------------------------------------
Operating income 62,944 40,910 18,133
Interest income (317) (365) (1,073)
Interest expense 17,137 16,480 19,902
Other expense/(income), net 4,324 (630) (3,218)
- -------------------------------------------------------------------------------------------------------
Income before income taxes 41,800 25,425 2,522
Income taxes 17,974 10,017 958
- -------------------------------------------------------------------------------------------------------
Income before minority interest 23,826 15,408 1,564
Loss applicable to minority interest -- -- 961
Equity in earnings of associated companies 126 116 160
- -------------------------------------------------------------------------------------------------------
Income before extraordinary item and cumulative effect of
accounting changes 23,952 15,524 2,685
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) 23,952 15,524 (3,585)
RETAINED EARNINGS
Retained earnings, beginning of period 126,276 120,113 132,648
Less dividends 10,488 9,361 8,950
- -------------------------------------------------------------------------------------------------------
Retained earnings, end of period $ 139,740 $ 126,276 $ 120,113
- -------------------------------------------------------------------------------------------------------
PER COMMON SHARE:
Income before extraordinary item and cumulative effect
of accounting changes $ 0.80 $ 0.58 $ 0.11
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) $ 0.80 $ 0.58 $ (0.14)
- -------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<PAGE>
CONSOLIDATED BALANCE SHEETS
ALBANY INTERNATIONAL CORP.
<TABLE>
<CAPTION>
AT DECEMBER 31,
(IN THOUSANDS) 1994 1993
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 228 $ 1,381
Accounts receivable, less allowance for doubtful accounts ($4,618, 1994; $4,579,
1993) 154,140 120,416
Inventories
Finished goods 78,501 72,763
Work in process 37,665 32,991
Raw material and supplies 26,364 18,539
Deferred taxes and prepaid expenses 17,278 18,050
- -----------------------------------------------------------------------------------------------------------
Total current assets 314,176 264,140
- -----------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost, net 320,719 302,829
Investments in associated companies 992 10,951
Intangibles 20,495 25,558
Deferred taxes 40,251 33,640
Other assets 24,753 18,302
- -----------------------------------------------------------------------------------------------------------
Total assets $ 721,386 $ 655,420
- -----------------------------------------------------------------------------------------------------------
LIABILITIES
Current liabilities:
Notes and loans payable $ 16,676 $ 8,560
Accounts payable 30,236 23,284
Accrued liabilities 53,750 55,288
Current maturities of long-term debt 1,044 2,917
Income taxes payable and deferred 11,071 7,881
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 112,777 97,930
- -----------------------------------------------------------------------------------------------------------
Long-term debt 232,767 208,620
Other noncurrent liabilities 81,176 82,423
Deferred taxes and other credits 22,719 21,979
- -----------------------------------------------------------------------------------------------------------
Total liabilities 449,439 410,952
- -----------------------------------------------------------------------------------------------------------
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;
24,564,033 issued in 1994 and 24,531,445 in 1993 25 25
Class B common stock, par value $.001 per share; authorized 25,000,000 shares;
issued and outstanding 5,633,427 in 1994 and 5,658,515 in 1993 6 6
Additional paid in capital 170,539 170,112
Retained earnings 139,740 126,276
Translation adjustments (36,408) (45,758)
Pension adjustment -- (1,856)
- -----------------------------------------------------------------------------------------------------------
273,902 248,805
Less treasury stock, at cost 1,955 4,337
- -----------------------------------------------------------------------------------------------------------
Total shareholders' equity 271,947 244,468
- -----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 721,386 $ 655,420
- -----------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
ALBANY INTERNATIONAL CORP.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income/(loss) $ 23,952 $ 15,524 ($ 3,585)
Adjustments to reconcile net cash provided by operating
activities:
Equity in earnings of associated companies (126) (116) (160)
Distributions received from associated companies 42 407 517
Loss applicable to minority interest -- -- (961)
Depreciation and amortization 38,649 41,969 45,523
Accretion of convertible subordinated debentures 1,519 1,419 959
Provision for deferred income taxes, other credits and
long-term liabilities (2,395) (8,455) (5,733)
Increase in cash surrender value of life insurance, net of
premiums paid (468) (452) (1,027)
Unrealized currency transaction gains (1,271) (998) (6,534)
Loss/(gain) on disposition of assets 1,280 (6,967) 124
Tax benefit of options exercised 12 -- --
Treasury shares contributed to ESOP 2,671 2,344 2,563
FAS No. 109 asset revaluation -- -- (8,498)
Gain on early extinguishment of debt -- -- (1,019)
Cumulative effect of accounting changes -- -- 7,289
Debt issuance costs -- -- (2,955)
Changes in operating assets and liabilities:
Accounts receivable (30,021) 3,272 3,785
Inventories (15,046) (815) 14,963
Prepaid expenses 586 470 (677)
Accounts payable 6,527 212 (7,995)
Accrued liabilities (5,054) (6,715) 2,459
Income taxes payable 2,124 4,587 1,897
Other, net 140 (507) 2,870
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 23,121 45,179 43,805
- --------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (36,322) (30,940) (20,219)
Purchased software (2,053) -- --
Proceeds from sale of assets 1,855 27,750 1,456
Acquisitions, net of cash acquired 526 (55,356) (2,428)
Premiums paid for life insurance (1,196) (1,198) (1,206)
- --------------------------------------------------------------------------------------------------------
Net cash used in investing activities (37,190) (59,744) (22,397)
- --------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from borrowings 51,484 65,205 48,618
Principal payments on debt (23,490) (107,090) (177,044)
Proceeds from options exercised 126 -- --
Proceeds from issuance of convertible subordinated debentures -- -- 131,385
Proceeds from sale of common stock -- 68,690 --
Minority investment in limited partnership -- -- 900
Dividends paid (10,474) (8,990) (8,937)
Interest rate protection agreements -- -- 109
- --------------------------------------------------------------------------------------------------------
Net cash provided/(used) by financing activities 17,646 17,815 (4,969)
- --------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (4,730) (5,874) (17,502)
- --------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (1,153) (2,624) (1,063)
Cash and cash equivalents at beginning of year 1,381 4,005 5,068
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 228 $ 1,381 $ 4,005
- --------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<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 a 50% interest in a partnership in South
Africa. The consolidated financial statements include the Company's
original investment in the South African company, plus its share of
undistributed earnings, in the account "Investments in associated
companies." The Company had 40% equity interests in companies in Mexico,
Brazil and Argentina until the first quarter of 1994 when it exchanged its
40% equity interests in Brazil and Argentina for the remaining 60% equity
interest in Mexico.
REVENUE RECOGNITION
The Company records sales when products are shipped to customers pursuant
to orders or contracts. 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
$18,388,000 in 1994, $17,605,000 in 1993, and $18,474,000 in 1992.
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 AND OTHER ASSETS
The excess purchase price over fair values assigned to assets acquired is
amortized on a straight-line basis over either 25 or 40 years.
Patents, at cost, are amortized on a straight-line basis over 8 years.
Computer software, at cost, is amortized on a straight-line basis over 5
years and is included in "Other assets."
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
10
<PAGE>
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.
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 1994, 1993 and
1992 was 29,953,346, 26,679,361 and 25,558,541, respectively.
2. INVENTORIES
The cost of inventories valued under the LIFO method is $67,251,000 at
December 31, 1994 and $64,042,000 at December 31, 1993. Had the Company's
inventory been valued at average cost (which approximates replacement
cost), inventories would have been $5,771,000 higher in 1994 and $5,894,000
higher in 1993.
3. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are summarized below:
<TABLE>
<CAPTION>
- ---------------------------------------------------
(IN THOUSANDS) 1994 1993
<S> <C> <C>
- ---------------------------------------------------
Land $ 22,467 $ 18,149
Buildings 147,439 132,380
Machinery and equipment 386,034 340,656
- ---------------------------------------------------
555,940 491,185
- ---------------------------------------------------
Accumulated
depreciation 235,221 188,356
- ---------------------------------------------------
$ 320,719 $ 302,829
- ---------------------------------------------------
</TABLE>
Construction in progress approximated $3,339,000 in 1994 and $6,465,000 in
1993.
Depreciation expense was $37,554,000 in 1994, $41,286,000 in 1993, and
$44,837,000 in 1992.
Expenditures for maintenance and repairs are charged to income as incurred
and amounted to $14,400,000 in 1994, $15,138,000 in 1993, and $14,535,000
in 1992.
Capital expenditures were $36,322,000 in 1994, $30,940,000 in 1993, and
$20,219,000 in 1992. At the end of 1994, the Company was committed to
$20,635,000 of future expenditures for new equipment.
4. INTANGIBLES
The components of intangibles are summarized below:
<TABLE>
<CAPTION>
- -----------------------------------------------------
(IN THOUSANDS) 1994 1993
<S> <C> <C>
- -----------------------------------------------------
Excess purchase price
over fair value $ 29,049 $ 28,054
Patents 10,329 10,105
Accumulated amortization (18,883) (18,200)
Deferred unrecognized
pension cost (see Note
12) -- 5,599
- -----------------------------------------------------
$ 20,495 $ 25,558
- -----------------------------------------------------
</TABLE>
Amortization expense was $683,000 in 1994 and 1993, and $686,000 in 1992.
5. ACCRUED LIABILITIES
Accrued liabilities consist of:
<TABLE>
<CAPTION>
- -----------------------------------------------------
(IN THOUSANDS) 1994 1993
<S> <C> <C>
- -----------------------------------------------------
Salaries and wages $ 14,853 $ 12,831
Employee benefits 13,895 13,671
Pre-receivable sale -- 6,559
Returns and allowances 2,744 2,094
Interest 3,325 2,896
Restructuring costs 2,852 3,915
Other 16,081 13,322
- -----------------------------------------------------
$ 53,750 $ 55,288
- -----------------------------------------------------
</TABLE>
11
<PAGE>
6. FINANCIAL INSTRUMENTS
Notes and loans payable at December 31, 1994 and 1993 were short-term debt
instruments with banks, denominated in local currencies with a weighted
average interest rate of 6.7% in 1994 and 5.7% in 1993.
Long-term debt at December 31, 1994 and 1993, principally to banks and
bondholders, exclusive of amounts due within one year, consists of:
<TABLE>
<CAPTION>
- ----------------------------------------------------
(IN THOUSANDS) 1994 1993
<S> <C> <C>
- ----------------------------------------------------
$150 million 5.25%
convertible
subordinated debentures
due 2002, yielding
7.0%. $ 135,338 $ 133,819
$125 million credit
agreement which
terminates in 1997 with
LIBOR borrowings
outstanding at an
average interest of
4.85% in 1994 and 3.96%
in 1993. 50,000 19,000
Various notes, mortgages
and debentures relative
to operations
principally outside the
United States, at an
average interest of
6.11% in 1994 and 6.62%
in 1993, due in varying
amounts through 2003. 30,287 38,016
Industrial revenue
financings at an
average interest of
5.43% in 1994 and 5.06%
in 1993, due in varying
amounts through 2015. 17,142 17,785
- ----------------------------------------------------
$ 232,767 $ 208,620
- ----------------------------------------------------
</TABLE>
Principal payments due on long-term debt are: 1995, $1,044,000; 1996,
$6,651,000; 1997, $52,740,000; 1998, $10,368,000, 1999, $11,577,000.
Interest paid was $16,708,000 in 1994, $16,634,000 in 1993, and $18,943,000
in 1992.
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 Certificates of Deposit
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, 1994, $20,941,000 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
$161,000,000 at December 31, 1994.
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 an
index of yields of high-grade, tax-exempt bond issues published by Kenny
Information Systems. The counterparty is obligated to make payments to the
Company calculated at an average of 70% of LIBOR. As of December 31, 1994
and 1993, the average blended rates payable on the long-term swap
agreements were 4.14% and 2.49%, respectively, and the blended rates
receivable were 4.21% and 2.48%, respectively. 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 $586,000) by estimating the cost
of entering into one or more inverse swap transactions on such date that
would neutralize the original transactions. The cost is estimated by
obtaining the market swap rate for fixed-rate contracts of similar
duration. The change in the valuation is reflected in "Other
expense/(income), net" and was not significant in 1994, 1993, and 1992.
At December 31, 1994, the Company had various forward exchange contracts,
maturing during 1995. For each closed position, a sale contract of a
particular currency was matched with a purchase contract for the same
currency
12
<PAGE>
at the same amount, counterparty and settlement date. Open positions were
valued at fair value using the estimated forward exchange rate of a
matching contract as of December 31, 1994. The foreign currency positions,
both open and closed, as of December 31, 1994, by major currency, are:
<TABLE>
<CAPTION>
- ------------------------------------------------
Buy Sell
Contracts Contracts
or Fair or Fair
Currency Value Value
<S> <C> <C>
- ------------------------------------------------
(IN THOUSANDS)
Australian
Dollar $25,101 $25,000
Brazilian Real 24,663 22,000
Dutch Guilder 66,376 65,679
French Franc 25,869 25,660
German Mark 29,210 29,000
Swedish Krona 73,845 73,270
- ------------------------------------------------
Total $245,064 $240,609
- ------------------------------------------------
</TABLE>
The primary purpose of these contracts was to provide an economic hedge
against currency fluctuation effects on future revenue streams. Forward
exchange contracts that are designated hedges are typically entered into at
currency amounts that approximate the net assets of the related foreign
operation and any intercompany loan balance in that foreign currency.
Periodically, the Company also enters into futures contracts primarily to
hedge in the short-term against interest rate fluctuations. At December 31,
1994 and 1993, the Company was not a party to any such contracts. The
"Interest rate protection agreements" component of "Other expense/(income),
net" includes losses on futures contracts, based on fair value, of
$917,000, $222,000 and $128,000 in 1994, 1993 and 1992, respectively (see
Note 9).
All financial instruments are held for purposes other than trading. For all
positions there is risk from the possible inability of the counterparties
(major financial institutions) to meet the terms of the contracts and the
risk of unfavorable changes in interest and currency rates which may reduce
the benefit of the contracts. However, for most closed forward exchange
contracts, both the purchase and sale sides of the Company's exposures are
with the same financial institution. The Company seeks to control off
balance sheet risk by evaluating the credit worthiness of counterparties
and by monitoring the currency exchange and interest rate markets, hedging
risks in compliance with internal guidelines and reviewing all principal
economic hedging contracts with designated directors of the Company.
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, 1994, there
were no amounts sold under this agreement as compared to $11,965,000 in
1993. At December 31, 1993 this transaction had the effect of reducing
accounts receivable $5,406,000, reducing long-term debt $11,965,000 and
increasing accrued liabilities $6,559,000.
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, 1994 the estimated fair value of the Company's long-term
debt excluding current maturities approximates $226,399,000. 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 $15,527,000, $21,488,000, and $19,675,000
for 1994, 1993, and 1992, 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, 1994 are: 1995, $12,578,000; 1996, $9,860,000; 1997, $7,692,000; 1998,
$4,921,000; 1999 $4,162,000; and thereafter, $1,672,000.
13
<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, 1994, 15,338,377 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 1994, 1993, and 1992.
Changes in shareholders' equity for 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Class A Class B Treasury Stock
Common Stock Common Stock Additional (Class A)
-------------------- -------------------- Paid in --------------------
(IN THOUSANDS) Shares Amount Shares Amount Capital Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Balance: January 1, 1992 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
Shares contributed to ESOP -- -- -- -- 289 (143) (2,382)
Conversion of Class B shares to Class
A shares 26 -- (26) -- -- -- --
Options exercised 7 -- -- -- 138 -- --
- ------------------------------------------------------------------------------------------------------------------------
Balance: December 31, 1994 24,564 $25 5,633 $6 $170,539 164 $1,955
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
9. OTHER EXPENSE/(INCOME), NET
The components of other expense/(income), net, as further described in Note
6, are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- ---------------------------------------------------------
Currency
transactions $ 2,590 $ (5,515) $ (7,782)
Interest rate
protection
agreements 63 442 373
Pre-receivable
sales (214) 2,348 2,674
Amortization of
debt
issuance costs
and
loan origination
fees 804 804 721
Other 1,081 1,291 796
- ---------------------------------------------------------
$ 4,324 $ (630) $ (3,218)
- ---------------------------------------------------------
</TABLE>
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.
Income taxes currently payable are provided on taxable income at the
statutory rate applicable to such income.
The components of income taxes are:
<TABLE>
<CAPTION>
- -------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- -------------------------------------------------------
Current:
U.S. $ 15,868 $ 11,437 $ 5,707
Non-U.S. 5,835 8,699 8,909
- -------------------------------------------------------
21,703 20,136 14,616
- -------------------------------------------------------
Deferred:
U.S. (6,432) (5,230) (2,134)
Non-U.S. 2,703 (4,889) (11,524)
- -------------------------------------------------------
(3,729) (10,119) (13,658)
- -------------------------------------------------------
$ 17,974 $ 10,017 $ 958
- -------------------------------------------------------
</TABLE>
U.S. income before income taxes was $18,097,000 in 1994, $31,405,000 in
1993, and $15,042,000 in 1992.
14
<PAGE>
Taxes paid, net of refunds, were $19,639,000 in 1994, $3,657,000 in 1993,
and $6,900,000 in 1992.
A comparison of the federal statutory rate to the Company's effective rate
is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
- ----------------------------------------------------
U.S. statutory rate 35.0% 35.0% 34.0%
State taxes 2.4 6.8 12.2
Non-U.S. tax rates,
repatriation of
earnings, and other
net charges associated
with prior years 5.9 (1.4) (22.6)
Minority interest -- -- 10.8
Other (.3) (1.0) 3.6
- ----------------------------------------------------
Effective tax rate 43.0% 39.4% 38.0%
- ----------------------------------------------------
</TABLE>
The significant components of deferred income tax benefit attributed to
income from operations for the years ended December 31, 1994, 1993, and
1992 are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- -------------------------------------------------------
Deferred tax
benefit $ (6,603) $ (10,518) $ (18,766)
Adjustments to
deferred tax
assets and
liabilities for
enacted changes
in tax laws and
rates (1,584) (1,983) 1,880
Utilization of
operating loss
carryforwards 4,458 2,382 3,228
- -------------------------------------------------------
$ (3,729) $ (10,119) $ (13,658)
- -------------------------------------------------------
</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
$70,257,000 at December 31, 1994. 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, 1994
and 1993 are presented below:
-----------------------------------------------
<TABLE>
<CAPTION>
U.S. Non-U.S.
-------------------- --------------------
(IN THOUSANDS) 1994 1993 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accounts receivable,
principally due to
allowance for doubtful
accounts $ 273 $ 176 $ (521) $ 97
Inventories, principally
due to additional costs
inventoried for tax
purposes,
pursuant to the Tax
Reform
Act of 1986 4,491 3,278 2 485
Tax loss carryforwards -- -- 3,851 5,054
Other 3,491 2,146 975 1,543
- -----------------------------------------------------------------------------
Total current deferred tax
assets 8,255 5,600 4,307 7,179
- -----------------------------------------------------------------------------
Sale lease back
transaction 1,537 1,867 -- --
Deferred compensation 4,707 4,221 -- --
Tax loss carryforwards -- -- 21,645 18,737
Plant, equipment and
depreciation (3,814) (8,024) (150) (162)
Postretirement benefits
other than pensions 19,927 19,086 -- --
Other (2,951) (1,520) (650) (565)
- -----------------------------------------------------------------------------
Total noncurrent deferred
tax assets 19,406 15,630 20,845 18,010
- -----------------------------------------------------------------------------
Total deferred tax assets $ 27,661 $ 21,230 $ 25,152 $ 25,189
- -----------------------------------------------------------------------------
Total current deferred tax
liabilities -- -- $ 1,685 $ 693
- -----------------------------------------------------------------------------
Plant, equipment and
depreciation -- -- 19,425 17,203
Other -- -- (811) (209)
- -----------------------------------------------------------------------------
Total noncurrent deferred
tax liabilities -- -- 18,614 16,994
- -----------------------------------------------------------------------------
Total deferred tax
liabilities -- -- $ 20,299 $ 17,687
- -----------------------------------------------------------------------------
</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 15% is expected to
be used in 1995 and the remainder of the noncurrent loss carryforward has
no expiration. 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.
15
<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 and includes
restructuring of operations and termination benefits in 1993 and 1992 and
the gain related to the sale of the Engineered Systems Division in 1993:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- ---------------------------------------------------------
UNITED STATES
Net sales $ 239,755 $ 240,853 $ 220,792
Operating income 31,400 38,668 15,251
Assets 255,198 231,892 183,567
- ---------------------------------------------------------
CANADA
Net sales $ 57,459 $ 58,015 $ 64,766
Operating income 7,333 5,506 8,021
Assets 59,280 55,714 59,650
- ---------------------------------------------------------
EUROPE
Net sales $ 191,883 $ 177,688 $ 210,137
Operating
income/ (loss) 15,233 (7,881) (10,767)
Assets 283,499 251,722 286,791
- ---------------------------------------------------------
REST OF WORLD
Net sales $ 78,486 $ 69,564 $ 65,389
Operating income 8,978 4,617 5,628
Assets 107,472 85,715 81,368
- ---------------------------------------------------------
</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 a noncontributory pension plan 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 Assets Plans in Which
Exceed Accumulated Accumulated Benefits
Benefits Exceed Assets
--------------------- --------------------
(IN THOUSANDS) 1994 1993 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present
value of benefit
obligations:
Vested $ (88,180) $ (18,933) $ (9,419) $ (79,602)
Accumulated (93,576) (20,675) (10,973) (85,972)
Projected (112,125) (27,390) (14,487) (102,241)
Plan assets at fair
value, primarily
listed stocks and
bonds 100,369 27,301 -- 64,854
- -------------------------------------------------------------------------
Projected benefit
obligation in excess
of plan assets (11,756) (89) (14,487) (37,387)
Unrecognized net loss 17,377 1,348 2,472 25,950
Prior service cost
not yet recognized
in net periodic
pension cost 7,585 931 -- 5,599
Remaining unrecog-
nized net (asset)
obligation (7,626) (680) 315 (8,063)
Recognized unaccrued
pension expense -- -- -- (8,213)
- -------------------------------------------------------------------------
Accrued pension asset
(liability) $ 5,580 $ 1,510 $ (11,700) $ (22,114)
- -------------------------------------------------------------------------
</TABLE>
The expected long-term rate of return for U.S. plans was 10% for 1994,
1993, and 1992. The weighted average discount rate was 9.5% for 1994, 7.8%
for 1993, and 8.65% for 1992. The rate of increase in future compensation
levels for salaried and hourly employees was 5.9% and 6.0%, respectively in
1994, 4.4% and 4.5%, respectively in 1993, and 5.8% and 6.0%, respectively
in 1992.
The weighted average expected long-term rate of return for non-U.S. plans
was 7.4% for 1994, 8.0% for 1993, and 8.2% for 1992. The weighted average
discount rate was 8.5% for 1994, 7.3% for 1993, and 8.7% for 1992. The
weighted average rate increase in future compensation levels was 5.7% for
1994, 4.8% for 1993 and 5.8% for 1992.
The Company was required to accrue an additional minimum liability in 1993
for those plans for which accumulated plan benefits exceeded plan assets.
The liability at December 31, 1993 of $7,455,000 was offset by an asset
amounting to $5,599,000 (included in intangibles) and a direct charge to
equity of $1,856,000. No additional minimum liability was required to be
accrued for 1994.
The vested benefit obligation has been determined based upon the actuarial
present value of
16
<PAGE>
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) 1994 1993 1992
<S> <C> <C> <C>
- --------------------------------------------------------
Service cost $ 4,276 $ 4,311 $ 4,007
Interest cost on
projected
benefit
obligation 9,709 9,780 9,717
Actual return on
assets (7,197) (9,341) (7,905)
Net amortization
and deferral (1,837) 1,158 (54)
- --------------------------------------------------------
Net periodic
pension cost $ 4,951 $ 5,908 $ 5,765
- --------------------------------------------------------
</TABLE>
Annual pension cost charged to operating expense for all Company plans was
$8,529,000 for 1994, $7,840,000 for 1993, and $7,690,000 for 1992.
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. The Company's non-U.S. operations do not offer such
benefits to retirees.
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. 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) 1994 1993
<S> <C> <C>
- -----------------------------------------------------
Accumulated
postretirement benefit
obligation:
Retirees $ 22,890 $ 29,632
Fully eligible active
plan
participants 3,131 3,531
Other active
participants 9,740 14,835
- -----------------------------------------------------
35,761 47,998
Unrecognized gain 15,586 1,192
- -----------------------------------------------------
Accrued postretirement
cost $ 51,347 $ 49,190
- -----------------------------------------------------
</TABLE>
Net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- ----------------------------------------------------------
Service cost of
benefits earned $ 935 $ 804 $ 969
Interest cost on
accumulated
postretirement
benefit obligation 3,163 3,475 3,749
Amortization of
unrecognized net
gain (141) (96) --
- ----------------------------------------------------------
Net periodic
postretirement
benefit cost $ 3,957 $ 4,183 $ 4,718
- ----------------------------------------------------------
</TABLE>
For measuring the expected postretirement benefit obligation, an annual
rate of increase in the per capita claims cost of 8% is assumed for 1994.
This rate is assumed to decrease gradually to 5.5% by 1999 and remain at
that level thereafter.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 9.5% for 1994 and 7.8% for 1993.
A one percentage point increase in the health care cost trend rate would
result in a $4,653,000 increase in the accumulated postretirement benefit
obligation as of December 31, 1994 and an increase of $559,000 in the
aggregate service and interest cost components of the net periodic
postretirement benefit cost for 1994.
17
<PAGE>
14. TRANSLATION ADJUSTMENTS
The Consolidated Statements of Cash Flows were affected by translation as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- ------------------------------------------------------
Change in
cumulative
translation
adjustments $ (9,350) $ 21,860 $ 43,578
Other
noncurrent
liabilities (2,117) 2,531 4,442
Deferred taxes (51) (101) 4,095
Long-term debt (459) 1,038 1,540
Investment in
associated
companies (278) (198) 457
Net fixed
assets 17,046 (19,408) (37,351)
Other assets (61) 152 741
- ------------------------------------------------------
Effect of
exchange rate
changes $ 4,730 $ 5,874 $ 17,502
- ------------------------------------------------------
</TABLE>
Shareholders' equity was affected by translation as follows:
(increase)/decrease from translation of non-U.S. financial statements of
$(1,853,000), $9,577,000, and $14,382,000; from remeasurement of loans of
$(11,023,000), $9,518,000, and $23,205,000 in 1994, 1993, and 1992,
respectively; and by losses on designated economic hedges, net of tax, of
$3,526,000, $2,765,000 and $5,991,000 in 1994, 1993 and 1992, respectively.
In 1994 and 1993, net translation (gains)/losses included in operations in
Brazil and Mexico were $(532,000) and $1,316,000, respectively, and were
included in cost of goods sold. Net translation losses related to
operations in Brazil and Mexico in 1992 were $10,455,000 with amounts
included in net sales of $8,489,000 and in cost of goods sold of
$1,966,000.
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, 1994 range from $15.00 to
$18.75. In 1994, options were exercised at a price of $16.75. Activity with
respect to these plans is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
- --------------------------------------------------------
Shares under
option at
January 1 2,417,850 2,087,500 1,977,500
Options granted 244,500 380,250 110,000
Options cancelled 24,450 49,900 --
Options exercised 7,500 -- --
- --------------------------------------------------------
Shares under
option at
December 31 2,630,400 2,417,850 2,087,500
Options
exercisable
at December 31 1,837,700 1,601,400 1,129,500
Shares available 1,362,100 1,582,150 1,912,500
- --------------------------------------------------------
</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 $1,211,000 in 1994,
$1,002,000 in 1993, and $432,000 in 1992. The increase in cash value net of
premiums was $468,000 in 1994, $452,000 in 1993, and $1,027,000 in 1992.
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% of 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 $2,771,000 in 1994, $2,400,000 in 1993, and $2,371,000 in 1992.
In 1994, the Company adopted a profit-sharing plan covering substantially
all employees in the United States. At the beginning of each year, the
Board of Directors will approve a formula, based on forecast financial
results, that will determine the amount of the profit-sharing contribution
for that year. The profit-sharing contributions will only be made to
current active participants in Prosperity Plus in the form of cash or the
Company's Class A Common Stock. The expense recorded for this plan in 1994
was $1,161,000.
18
<PAGE>
16. ACQUISITION, DIVESTITURES, RESTRUCTURING AND RECLASSIFICATIONS
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 of 1993, 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.
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 the second quarter of 1993, the Company recorded certain accruals
related to Worker's Compensation (approximately $1,800,000) and past
service costs of unfunded supplemental pensions (approximately $500,000).
In the Consolidated Statements of Income and Retained Earnings, these
amounts were reclassified from "Restructuring of operations and termination
benefits" to "Selling and general expenses."
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 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. At the same time, the
Company recorded restructuring charges which included $2,200,000 for asset
write offs, $2,500,000 for lease obligations related to an unoccupied
facility and $2,300,000 for termination costs related to downsizing certain
operations. The asset write offs will be finalized in 1995, termination
costs will continue until 1996 and lease obligation payments will continue
until 1999.
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. Substantially all of the
1992 provision was utilized at December 31, 1994.
The components of accrued restructuring costs consist of:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
- -------------------------------------------------------------
Termination costs $ 1,490 $ 2,329 $ 3,776
Asset write offs 1,087 1,358 2,093
Equipment relocation
costs -- -- 2,606
Lease obligations 1,873 2,500 --
Other -- 12 105
- -------------------------------------------------------------
$ 4,450 $ 6,199 $ 8,580
- -------------------------------------------------------------
</TABLE>
The decrease in accrued balances are the result of actual payments for
terminations or incurred expenses and the disposal of written down
equipment.
19
<PAGE>
FINANCIAL REVIEW
REVIEW OF OPERATIONS
- --1994 VS. 1993
Net sales increased $21.5 million or 3.9% as compared with 1993. Net sales were
increased by $4.2 million from the effect of a weaker U.S. dollar as compared to
1993 and were decreased by $20.5 million resulting from the divestiture of the
Company's equipment division (AES) in mid-1993. Excluding these factors, 1994
net sales increased 7.2% over 1993.
Net sales in the United States were comparable to the prior year's sales.
Selective price concessions for customers entering into Continuous Supply
agreements for the Company's products tended to reduce selling prices and had a
slight negative impact on sales. Management believes that Continuous Supply
agreements are part of an effort by paper manufacturers to reduce the number of
suppliers of paper machine clothing and that this will be beneficial to the
Company in the long term. Canadian sales approximated prior year's sales and
increased significantly during the last six months of 1994 reflecting improved
economic and paper industry operating conditions.
European sales increased 8.0% in 1994 as compared to 1993 reversing a three year
decline which began in 1991. Sales growth rates in the Nordic region and
Continental Europe were strongest in the second half of 1994 and with strong
order backlogs gradual improvement can be expected well into 1995. Sales in the
Rest of World segment increased 12.8% as compared to 1993.
The Company continues to gain market share in Forming Fabrics and Dryer Fabrics
and retain its Press Fabrics market share. There were no significant price
increases in 1994, except for new products and upgrades. In December 1994, price
increases of 5% for the United States and 6% for Canada were announced
commencing in January 1995. In addition, price increases were announced in
selective European markets and Mexico.
Gross profit continued to improve and was 43.7% of net sales for the three
months ended December 31, 1994 as compared to 39.2% for the same period in 1993
increasing the full year result to 40.3% for 1994 as compared to 36.9% for 1993.
Variable costs as a percent of net sales decreased to 32.4% in 1994 from 34.0%
in 1993 due mainly to plant closings and workforce reductions, principally in
Europe, and the divestiture of AES in June 1993. In addition, the Company's
Total Quality Assurance program has resulted in improved product quality and
efficiencies, both of which have contributed to lower costs.
Selling, technical, general and research expenses increased 2.0% in 1994 as
compared to 1993. Excluding the effect of translation of non-U.S. currencies
into U.S. dollars and the sale of AES, these expenses would have increased 6.2%.
The Company has not reduced its sales and service efforts as there is increasing
customer demand for service. Management anticipates that this demand will
continue to increase as customers reduce the number of suppliers.
Operating income as a percent of net sales increased to 11.1% as compared to
7.5% in 1993. Management is continuing to review capacity requirements with the
intention of further reducing costs and streamlining operations and anticipates
that operating income as a percent of net sales should continue to improve
during 1995. Furthermore, since the Company is operating below capacity,
increased sales should result in higher margins. The capacity expansion and
upgrades over the last several years, along with the restructuring program,
should position the Company to capitalize on future opportunities for sales and
earnings growth as world economies and markets continue to improve.
The decrease in other expense/(income), net, as compared to 1993, was due to
currency transactions which resulted in $8.1 million less income in 1994 and no
pre-receivable sales in 1994 which resulted in $2.6 million less expense in
1994. Currency transaction income results from economic hedges which can have
either a positive or negative effect on other expense/(income), 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 Notes 6 and 9 of Notes to Consolidated Financial Statements).
The Company's 1994 effective tax rate was 43.0% as compared to 39.4% for the
comparable period in 1993. The rate increase is due principally to the accrual
of net charges associated with prior years resulting from both U.S. and non-U.S.
examinations. Management anticipates that the 1995 effective tax rate will be
approximately 40%.
During February 1994, the Company exchanged its 40% equity interests in Brazil
and Argentina for the remaining 60% interest in Mexico. The transaction was
accounted for as a purchase, and accordingly, the Company has included the
results of operations in its financial statements as of January 1, 1994.
Reported results of Mexico were not significant. The Company's only remaining
equity interest is a 50% partnership in South Africa. (See Note 1 of Notes to
Consolidated Financial Statements).
20
<PAGE>
- --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 the Engineered
Systems Division (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. Lower European sales reflected 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. Sales in the rest of world segment increased
approximately 6%.
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.
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%.
As part of the Company's program to restructure operations in order to focus on
the core paper machine clothing industry, the Company completed the sale of AES
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. At the same time, restructuring charges, which included
a $2.2 million write down of assets, a $2.5 million lease obligation for
unoccupied facilities and a $2.3 million accrual for termination costs related
to downsizing operations, were recorded.
During the second quarter of 1993, the Company recorded certain accruals related
to worker's compensation ($1.8 million) and past service costs of unfunded
supplemental pensions ($.5 million). Previously, the Company accounted for these
costs on a cash basis. Adverse experience in worker's compensation claims led
the Company to conclude that the method was no longer appropriate and
accordingly an accrual was made. The accrual for unfunded pensions was based on
the Company's reassessment of the life expectancy of participants.
Operating income as a percentage of net sales increased to 7.5% in 1993 as
compared to 3.2% in 1992.
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.
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.
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 as it was 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.
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
21
<PAGE>
exposure (see Notes 6, 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. 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 1994 as compared to
1993 increased in Canada, Europe and Rest of World and decreased in the United
States (see Note 11 of Notes to Consolidated Financial Statements). Total
operating income increased 53.9% as compared to 1993. Operating income/(loss) as
a percent of net sales, after excluding restructuring of operations and
termination benefits, for the United States was 13.1% in 1994, 10.8% in 1993 and
7.8 % in 1992; for Canada was 12.8% in 1994, 10.5% in 1993 and 13.2% in 1992;
for Europe was 7.9% in 1994, (.1%) in 1993 and (.7%) in 1992 and for Rest of
World was 12.0% in 1994, 10.1% in 1993 and 9.0% in 1992. The increase in all
geographic regions in 1994, after excluding restructuring, were due to higher
sales and lower costs.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994 the Company's order backlog was $446.0 million, an increase
of $39.0 million from the prior year-end.
The weakening U.S. dollar during 1994 and the purchase of the remaining Mexican
equity interest (discussed above) increased accounts receivable by $8.3 million
and increased inventories by $6.4 million. In addition, no accounts receivable
were sold at December 31, 1994 as compared to $5.4 million in 1993. Increased
sales and longer collection periods accounted for the balance of the increase in
accounts receivable.
During 1994, the Company implemented Continuous Supply programs with a number of
paper manufacturers. These relationships require the Company to carry inventory
rather than the customer and provide just in time sourcing to the customers
mill. This has resulted in increased inventories and may result in additional
increases in the near term but should result in more predictable requirements
and lower inventory levels and increased sales in the longer term.
Cash flow provided from operating activities was $23.1 million in 1994 compared
with $45.2 million in 1993 and $43.8 million in 1992. Capital expenditures were
$36.3 million for 1994, $30.9 million for 1993 and $20.2 million for 1992.
Capital expenditures in 1995 are expected to be about $40.0 million, excluding
acquisitions and new ventures. The Company will continue to finance these
expenditures with cash from operations and existing credit facilities.
Total debt increased $30.4 million during 1994 due principally to the increases
in inventories and accounts receivable. Management does not anticipate any
significant reductions in working capital requirements until the second quarter
of 1995.
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, 1994, there were no amounts sold under
this agreement as compared to $12.0 million at December 31, 1993. At December
31, 1993, this transaction reduced long-term debt by $12.0 million, reduced
accounts receivable by $5.4 million and increased accrued liabilities by $6.6
million.
Cash dividends of $.0875 per share were paid in each of the four quarters of
1994.
In 1992, the Company reported a charge of $12.0 million for restructuring of
certain operations, including plant closings in Norway and Germany and other
workforce reductions. During the second quarter of 1993 the Company recorded
certain costs related to restructuring of operations which totaled $7.0 million.
(See Note 16 of Notes to Consolidated Financial Statements). Actual
restructuring costs have approximated management's original estimates.
Substantially all of the 1992 provision has been utilized. The 1993 provision
for asset write offs will be utilized in 1995, termination payments will
continue until 1996 and lease obligation payments will continue until 1999.
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.
22
<PAGE>
QUARTERLY FINANCIAL DATA (unaudited)
--------------------------------------------
<TABLE>
<CAPTION>
(IN MILLIONS
EXCEPT PER SHARE DATA) 1ST 2ND 3RD 4TH
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
1994
- ---------------------------------------------------------------------
Net sales $ 131.4 $ 139.6 $ 145.2 $ 151.4
Gross profit 50.2 54.5 57.8 66.2
Net income 3.7 5.9 6.0 8.4
Net income per share(1) .12 .20 .20 .28
Dividends per share .0875 .0875 .0875 .0875
Class A Common Stock
Prices:
High 21.25 20.375 19.50 20.00
Low 18.00 17.75 16.125 16.25
- ---------------------------------------------------------------------
1993
- ---------------------------------------------------------------------
Net sales $ 137.1 $ 149.6 $ 125.6 $ 133.8
Gross profit 47.5 54.8 46.8 52.4
Net income .1 4.6 4.4 6.4
Net income per share .01 .17 .18 .22
Dividends per share .0875 .0875 .0875 .0875
Class A Common Stock
prices:
High 16.625 17.875 19.00 19.25
Low 14.25 15.50 16.50 17.50
- ---------------------------------------------------------------------
1992
- ---------------------------------------------------------------------
Net sales $ 138.0 $ 139.5 $ 142.6 $ 141.0
Gross profit 44.8 46.4 48.2 54.2
Net (loss)/income (7.3) (.5) 2.3 1.9
Net (loss)/income per
share (.29) (.02) .09 .08
Dividends per share .0875 .0875 .0875 .0875
Class A Common Stock
prices:
High 21.25 19.00 15.25 15.63
Low 15.75 14.50 13.75 11.25
- ---------------------------------------------------------------------
<FN>
(1) In the fourth quarter, fully diluted earnings per share were $.26.
</TABLE>
STOCK AND SHAREHOLDERS
The Company's Class A Common Stock is traded principally on the New York Stock
Exchange. At December 31, 1994 there were approximately 5,200 shareholders.
INVESTOR INFORMATION
TRANSFER AGENT, DIVIDEND DISTRIBUTION AGENT AND REGISTRAR
Harris Trust and Savings Bank
Post Office Box 755
111 West Monroe Street
Chicago, Illinois 60690
NOTICE OF ANNUAL MEETING
The Annual Meeting of the Company's shareholders will be held on Thursday, May
18, 1995 at the Company's Headquarters, 1373 Broadway, Albany, New York at 4:00
p.m.
STOCK LISTING
Albany International is listed on the New York Stock Exchange and the Pacific
Stock Exchange (Symbol AIN). Stock tables in newspapers and financial
publications list Albany International as "AlbanyInt."
FORM 10-K AND OTHER INFORMATION
The Company's Annual Report to the Securities and Exchange Commission on Form
10-K will be available in April. You may obtain a copy of the 10-K without
charge. This report and other information concerning the Company is available by
contacting the Investor Relations Department.
DIVIDEND REINVESTMENT PLAN
Stockholders have a convenient opportunity for automatic reinvestment of cash
dividends and voluntary cash investments in the Company's stock through the
Dividend Reinvestment Plan. Participating shareholders pay no service charges or
brokerage commissions; all fees and commissions on shares purchased under the
Plan will be paid by the Company.
Shareholders interested in participating in the Plan should contact:
Harris Trust and Savings Bank
Dividend Reinvestment
Post Office Box A-3309
Chicago, Illinois 60690-9939
or
Investor Relations Dept.
Albany International Corp.
P.O. Box 1907
Albany, New York 12201-1907
23
<PAGE>
ELEVEN YEAR SUMMARY
ALBANY INTERNATIONAL CORP.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT AMOUNTS PER SHARE)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $567,583 $546,120 $561,084 $557,218 $556,104
Cost of goods sold 338,868 344,609 367,516 360,251 359,997
Operating income (1),(2) 62,944 40,910 18,133 43,421 30,361
Interest expense, net 16,820 16,115 18,829 20,090 18,450
Income before income taxes 41,800 25,425 2,522 18,685 13,121
Income taxes 17,974 10,017 958 10,219 6,858
Income before minority interest 23,826 15,408 1,564 8,466 6,263
Net income/(loss) (3),(4) 23,952 15,524 (3,585) 10,311 7,649
Per share (5) 0.80 0.58 (0.14) 0.41 0.30
Average number of shares outstanding 29,953 26,679 25,559 25,415 25,312
Capital expenditures 36,322 30,940 20,219 40,067 110,729
Dividends declared 10,488 9,361 8,950 8,903 7,518
Per Class A common share 0.3500 0.3500 0.3500 0.3500 0.3500
Per Class B common share 0.3500 0.3500 0.3500 0.3500 0.1313
FINANCIAL POSITION
Current assets $314,176 $264,140 $249,669 $253,924 $272,696
Current liabilities 112,777 97,930 109,477 103,031 104,299
Current ratio 2.8 2.7 2.3 2.5 2.6
Property, plant and equipment, net 320,719 302,829 308,618 362,456 365,558
Total assets 721,386 655,420 645,992 674,713 703,286
Long-term debt 232,767 208,620 239,732 250,423 262,042
Shareholders' equity (6) 271,947 244,468 190,700 244,427 242,683
Per share 9.05 8.18 7.44 9.59 9.57
Total capital (7) 522,434 464,565 453,498 548,436 572,656
Total debt to total capital 47.9% 47.4% 57.9% 48.4% 49.5%
Return on shareholders' equity 8.8% 6.4% (1.9)% 4.2% 3.2%
NUMBER OF EMPLOYEES 5,404 5,286 5,678 5,726 6,144
- ------------------------------
<CAPTION>
1989 1988 1987 1986 1985 1984
- ----------------------------------------
(IN THOUSANDS, EXCEPT AMOUNTS PER SHARE)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $505,474 $461,246 $402,203 $336,393 $301,830 $266,597
Cost of goods sold 300,007 267,782 237,708 198,569 174,972 152,591
Operating income (1),(2) 66,907 73,347 62,920 53,060 55,041 41,799
Interest expense, net 19,857 16,637 14,908 16,625 20,705 23,692
Income before income taxes 75,552 52,925 46,495 32,575 25,764 19,746
Income taxes 33,171 18,809 21,875 19,427 16,352 13,396
Income before minority interest 42,381 34,116 24,620 13,148 9,412 6,350
Net income/(loss) (3),(4) 44,492 36,258 25,245 14,717 11,365 8,316
Per share (5) 1.75 1.46 1.15 0.59 0.45 0.33
Average number of shares outstanding 25,408 24,779 21,992 24,947 25,094 25,094
Capital expenditures 82,252 58,601 40,216 23,712 24,213 18,718
Dividends declared 5,775 4,674 1,082 -- -- --
Per Class A common share 0.3125 0.2625 0.0625 -- -- --
Per Class B common share -- -- -- -- -- --
FINANCIAL POSITION
Current assets $242,518 $206,729 $177,421 $150,264 $130,734 $117,045
Current liabilities 98,885 84,880 86,691 69,529 54,374 45,658
Current ratio 2.4 2.4 2.0 2.2 2.4 2.6
Property, plant and equipment, net 260,907 214,807 182,232 152,669 140,866 124,636
Total assets 566,342 477,237 417,722 359,727 325,999 296,174
Long-term debt 145,493 157,833 130,745 173,041 159,809 174,182
Shareholders' equity (6) 238,584 178,248 146,036 67,135 65,662 50,393
Per share 9.26 7.10 6.01 3.06 2.62 2.01
Total capital (7) 450,866 391,410 319,027 271,426 251,571 230,830
Total debt to total capital 38.9% 48.3% 47.7% 70.4% 70.0% 76.5%
Return on shareholders' equity 21.3% 22.4% 23.7% 22.2% 19.6% 16.9%
NUMBER OF EMPLOYEES 6,090 5,659 5,244 5,122 5,017 4,318
- ------------------------------
<FN>
(1) The Company adopted Financial Accounting Standard No. 87 "Employers'
Accounting for Pensions", with respect to its U.S. retirement plans in
December 1986 retroactive to January 1, 1986. The adoption of FAS 87
reduced pension cost for 1986 by $2,541,000. In 1989 the Company adopted
the Standard for non-U.S. plans which reduced pension cost by $1,077,000.
(2) Included in 1990 is a charge to income of $8,500,000 for an early
retirement window and terminations which were part of a world wide cost
containment program.
(3) Included in 1987 is a charge to income for the difference between the
amount accrued under Incentive Stock Unit (ISU) agreements and the
appraised value of the 1,534,256 Class B Common shares which were issued to
the holders of the ISU's. The amount of this charge was $2,195,000.
(4) In January 1989, the Company sold its property and facilities in Halmstad,
Sweden for approximately $51,000,000 in cash and notes with a resulting net
gain of approximately $23,000,000.
(5) In 1987, fully diluted earnings per share were $1.11.
(6) During 1987 the shareholders approved two new classes of common stock,
Class A and Class B and the conversion of each outstanding share of Common
Stock into 16 shares of the new Class B Common Stock. The above financial
data has been restated as if the recapitalization had occurred January 1,
1984. All references to net income per share and numbers of shares
outstanding have been adjusted to give retroactive effect to the
recapitalization.
(7) 1991 and prior includes all debt, deferred taxes and other credits and
shareholders' equity. Following the adoption of Financial Accounting
Standard No. 109 in 1992, Total capital includes all debt and shareholders'
equity.
</TABLE>
24
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
<PAGE>
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
PERCENT PERCENT
DIRECT INDIRECT
OWNERSHIP 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 Aktiebolag..................................... 100 Sweden
Nordiskafilt Aktiebolag............................................ 100 Sweden
Dewa Consulting AB................................................. 100 Sweden
Nomafa Aktiebolag.................................................. 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 23
CONSENT OF INDEPENDENT ACCOUNTANTS
<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) of our report dated January 26, 1995, on our audits of the
consolidated financial statements and financial statements schedule of Albany
International Corp. as of December 31, 1994 and 1993, and for the years ended
December 31, 1994, 1993, and 1992, which report is incorporated in this Annual
Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Albany, New York
March 20, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALBANY
INTERNATIONAL'S CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 228
<SECURITIES> 0
<RECEIVABLES> 158,758
<ALLOWANCES> 4,618
<INVENTORY> 142,530
<CURRENT-ASSETS> 314,176
<PP&E> 555,940
<DEPRECIATION> 235,221
<TOTAL-ASSETS> 721,386
<CURRENT-LIABILITIES> 112,777
<BONDS> 232,767
<COMMON> 31
0
0
<OTHER-SE> 271,916
<TOTAL-LIABILITY-AND-EQUITY> 721,386
<SALES> 567,583
<TOTAL-REVENUES> 567,583
<CGS> 338,868
<TOTAL-COSTS> 504,042
<OTHER-EXPENSES> 4,324
<LOSS-PROVISION> 597
<INTEREST-EXPENSE> 16,820
<INCOME-PRETAX> 41,800
<INCOME-TAX> 17,974
<INCOME-CONTINUING> 23,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,952
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
