<TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: September 30, 1997
------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-16214
-------
ALBANY INTERNATIONAL CORP.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 14-0462060
--------- ------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1373 Broadway, Albany, New York 12204
- ------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 518-445-2200
------------
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
-
The registrant had 25,351,423 shares of Class A Common Stock and 5,615,563
shares of Class B Common Stock outstanding as of September 30, 1997.
<PAGE>
ALBANY INTERNATIONAL CORP.
INDEX
Page No.
----------
<C> <S>
Part I Financial information
Item 1. Financial Statements
Consolidated statements of income and retained earnings -
three months and nine months ended September 30, 1997 and 1996 1
Consolidated balance sheets - September 30, 1997 and December 31, 1996 2
Consolidated statements of cash flows - nine months ended September 30, 1997 and 1996 3
Notes to consolidated financial statements 4-5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-7
Part II Other information
Item 6. Exhibits and Reports on Form 8-K 8
</TABLE>
<PAGE>
Item 1. Financial Statements
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
<C> <C> <S> <C> <C>
Restated Restated
1997 1996 1997 1996
---- ---- ---- ----
$171,730 $169,821 Net sales $525,454 $509,969
97,815 97,768 Cost of goods sold 301,038 295,150
------ ------ ------- -------
73,915 72,053 Gross profit 224,416 214,819
49,853 47,580 Selling, technical and general expenses 151,839 146,152
------ ------ ------- -------
24,062 24,473 Operating income 72,577 68,667
3,845 3,706 Interest expense, net 11,570 12,221
1,672 602 Other expense, net 2,696 574
----- --- ----- ---
18,545 20,165 Income before income taxes 58,311 55,872
7,232 7,864 Income taxes 22,740 21,792
----- ----- ------ ------
11,313 12,301 Income before associated companies 35,571 34,080
111 225 Equity in earnings of associated companies 207 112
--- --- --- ---
11,424 12,526 Income before extraordinary item 35,778 34,192
Extraordinary loss on early extinguishment of debt,
- - net of tax of $828 - 1,296
------ ------ ------ -----
11,424 12,526 Net income 35,778 32,896
Retained earnings, beginning of period, as
224,233 185,013 previously reported 206,308 171,082
Cumulative effect on prior years of retroactive
3,567 3,011 restatement for accounting change for inventory 3,567 2,645
----- ----- ----- -----
227,800 188,024 Retained earnings, beginning of period, restated 209,875 173,727
3,250 3,041 Less dividends 9,679 9,114
----- ----- ----- -----
$235,974 $197,509 Retained earnings, end of period $235,974 $197,509
======== ======== ======== ========
Income/(loss) per common share:
$0.37 $0.41 Income before extraordinary item $1.17 $1.13
- - Extraordinary loss on early extinguishment of debt - (0.04)
----- ----- ----- -----
$0.37 $0.41 Net income $1.17 $1.09
===== ===== ===== =====
$0.105 $0.10 Dividends per common share $0.315 $0.30
====== ===== ====== =====
30,877,761 30,388,252 Weighted average number of shares 30,697,390 30,340,740
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) Restated
September 30, December 31,
1997 1996
<S> <C> <C>
---------------- ----------------
ASSETS
Cash and cash equivalents $22,471 $8,034
Accounts receivable, net 168,694 179,516
Inventories:
Finished goods 106,851 105,822
Work in process 40,808 40,568
Raw material and supplies 34,494 33,808
---------------- ----------------
182,153 180,198
Deferred taxes and prepaid expenses 17,801 16,879
---------------- ----------------
Total current assets 391,119 384,627
Property, plant and equipment, net 323,471 339,461
Investments in associated companies 2,256 2,060
Intangibles 42,789 44,954
Deferred taxes 28,223 27,756
Other assets 41,950 33,059
---------------- ----------------
Total assets $829,808 $831,917
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable $61,241 $65,165
Accounts payable 28,056 32,813
Accrued liabilities 59,152 59,755
Current maturities of long-term debt 2,126 2,295
Income taxes payable and deferred 11,532 16,718
---------------- ----------------
Total current liabilities 162,107 176,746
Long-term debt 188,621 187,100
Other noncurrent liabilities 96,418 97,579
Deferred taxes and other credits 40,123 38,162
---------------- ----------------
Total liabilities 487,269 499,587
---------------- ----------------
SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00 per share;
authorized 2,000,000 shares; none issued - -
Class A Common Stock, par value $.001 per share;
authorized 100,000,000 shares; issued
25,356,137 in 1997 and 24,865,573 in 1996 25 25
Class B Common Stock, par value $.001 per share;
authorized 25,000,000 shares; issued and
outstanding 5,615,563 in 1997 and 1996 6 6
Additional paid in capital 187,373 177,412
Retained earnings 235,974 209,875
Translation adjustments (68,265) (42,340)
Pension liability adjustment (12,483) (12,483)
---------------- ----------------
342,630 332,495
Less treasury stock (Class A), at cost (4,714 shares
in 1997; 16,511 shares in 1996) 91 165
---------------- ----------------
Total shareholders' equity 342,539 332,330
---------------- ----------------
Total liabilities and shareholders' equity $829,808 $831,917
================ ================
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
September 30,
Restated
1997 1996
<S> <C> <C>
----------------- -----------------
OPERATING ACTIVITIES
Net income $35,778 $32,896
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of associated companies (207) (112)
Depreciation and amortization 33,149 34,488
Accretion of convertible subordinated debentures - 353
Provision for deferred income taxes, other credits and long-term liabilities (6,744) (3,375)
Increase in cash surrender value of life insurance, net of premiums paid (358) (265)
Unrealized currency transaction losses 3,385 263
Loss on disposition of assets 2 430
Shares contributed to ESOP 3,513 4,450
Loss on early extinguishment of debt - 1,296
Changes in operating assets and liabilities:
Accounts receivable 7,387 (675)
Inventories (2,258) (12,044)
Prepaid expenses (736) (1,588)
Accounts payable (4,756) (9,283)
Accrued liabilities 1,479 (1,107)
Income taxes payable (1,818) 9,841
Other, net (3,300) (3,144)
----------------- -----------------
Net cash provided by operating activities 64,516 52,424
----------------- -----------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (39,410) (34,342)
Purchased software (954) (1,566)
Proceeds from sale of assets 240 2,095
Premiums paid for life insurance (1,190) (1,193)
----------------- -----------------
Net cash used in investing activities (41,314) (35,006)
----------------- -----------------
FINANCING ACTIVITIES
Proceeds from borrowings 41,477 215,878
Principal payments on debt (40,798) (217,107)
Proceeds from options exercised 6,864 101
Tax benefit of options exercised 1,079 -
Purchases of treasury shares (1,421) (2,552)
Dividends paid (9,475) (9,104)
----------------- -----------------
Net cash used in financing activities (2,274) (12,784)
----------------- -----------------
Effect of exchange rate changes on cash (6,491) (3,077)
----------------- -----------------
Increase in cash and cash equivalents 14,437 1,557
Cash and cash equivalents at beginning of year 8,034 7,609
----------------- -----------------
Cash and cash equivalents at end of period $22,471 $9,166
================= =================
The accompanying notes are an integral part of the financial statements.
</TABLE>
3
<PAGE>
ALBANY INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Management Opinion
In the opinion of management the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of only normal,
recurring adjustments, necessary for a fair presentation of results for such
periods. The results for any interim period are not necessarily indicative of
results for the full year. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These consolidated financial statements
should be read in conjunction with financial statements and notes thereto for
the year ended December 31, 1996.
2. Other Expense, Net
Included in other expense, net for the nine months ended September 30
are: currency transactions, $1.7 million income in 1997 and 1996, amortization
of debt issuance costs and loan origination fees, $.7 million in 1997 and $.8
million in 1996, interest rate protection agreements, $.7 million income in 1997
and $.8 million income in 1996, strategic planning costs, $1.3 million in 1997
and other miscellaneous items, none of which are significant, in 1997 and 1996.
Included in other expense, net for the three months ended September 30
are: currency transactions, $1.0 million income in 1997 and $.2 million expense
in 1996, amortization of debt issuance costs and loan origination fees, $.3
million in 1997 and 1996, interest rate protection agreements, $.5 million
income in 1996, strategic planning costs, $1.3 million in 1997 and other
miscellaneous items, none of which are significant, in 1997 and 1996.
3. Earnings Per Share
Earnings per share on common stock are computed using the weighted
average number of shares of Class A and Class B Common Stock outstanding during
each year. Options granted under the Company's stock option plans were not
dilutive to earnings per share at September 30, 1997 and 1996.
Effective December 15, 1997, the Company is required to adopt Financial
Accounting Standard No. 128, "Earnings per Share". This Standard requires both
basic and diluted earnings per share to be reported for all periods presented.
When income/(loss) per common share is calculated in accordance with this
Standard, for the three and nine months ended September 30, 1997 and 1996, basic
and diluted income/(loss) per common share do not significantly differ from
reported amounts.
4. Income Taxes
The Company's effective tax rate for the nine months ended September
30, 1997 and 1996 was 39% and approximates the anticipated effective tax rate
for the full year 1997.
4
<PAGE>
5. Supplementary Cash Flow Information
Interest paid for the nine months ended September 30, 1997 and 1996 was
$11.4 million and $14.7 million, respectively.
Taxes paid for the nine months ended September 30, 1997 and 1996 was
$16.7 million and $13.2 million, respectively.
6. Accounting for Derivatives
Gains or losses on forward exchange contracts that function as an
economic hedge against currency fluctuation effects on future revenue streams
are recorded in "Other expense, net".
Gains or losses on forward exchange contracts that are designated a
hedge of a foreign operation's net assets and/or long-term intercompany loans
are recorded in "Translation adjustments", a separate component of shareholders'
equity. These contracts reduce the risk of currency exposure on foreign currency
net assets and do not exceed the foreign currency amount being hedged. To the
extent the above criteria are not met, or the related assets are sold,
extinguished, or terminated, activity associated with such hedges is recorded in
"Other expense, net".
All open positions on forward exchange contracts are valued at fair
value using the estimated forward rate of a matching contract.
Gains or losses on futures contracts are recorded in "Other expense,
net". Open positions are valued at fair value using quoted market rates.
7. Inventories
During the third quarter of 1997, the Company changed its method of
determining the cost of United States inventories from the last-in, first-out
(LIFO) method to the average cost method. The Company believes that the average
cost method results in a closer matching of revenues and expenses during periods
of increased productivity and changes in product mix. This change in accounting
method has been applied retroactively and financial information for all periods
presented has been restated to apply the average cost method. Income before
extraordinary item and net income were increased by $.2 million, less than 1
cent per share, and $.5 million, 2 cents per share, for the three and nine
months ended September 30, 1996, respectively, as a result of this change. There
was no effect on 1997 income. Retained earnings has been adjusted for the effect
of retroactive application of the new method.
5
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
For the Three and Nine Months Ended September 30, 1997
The following discussion should be read in conjunction with the accompanying
Consolidated Financial Statements and Notes thereto.
RESULTS OF OPERATIONS:
Net sales increased to $171.7 million for the three months ended September 30,
1997 as compared to $169.8 million for the three months ended September 30,
1996. The effect of the stronger U.S. dollar as compared to the third quarter of
1996 was to decrease net sales by $9.8 million. Excluding this effect and the
1996 acquisition of Schieffer Door Systems ("Schieffer"), 1997 net sales
increased 2.8% as compared to 1996.
Net sales increased 3% to $525.5 million for the nine months ended September 30,
1997 compared with the same period in 1996. The effect of the stronger U.S.
dollar as compared to the first nine months of 1996 was to decrease net sales by
$21.7 million while the effect of Schieffer was to increase 1997 net sales by
$22.0 million.
Geographically, net sales for the nine months ended September 30, 1997, as
compared to the same period in 1996, increased in the U.S. and decreased in
Canada. Net sales in Canada increased in the third quarter. Net sales in Europe,
while up in local currency, decreased in U.S. dollars due to the effect of the
stronger U.S. dollar.
Gross profit was 43.0% of net sales for the three months ended September 30,
1997 as compared to 42.4% for the same period in 1996 bringing the nine month
result to 42.7% for 1997 as compared to 42.1% for 1996. Excluding the effect of
Schieffer, gross profit was 43.4% and 43.1% of net sales for the three and nine
months ended September 30, 1997, respectively. Year to date variable costs as a
percent of net sales increased from 32.9% in 1996 to 33.7% for the same period
in 1997. Excluding the effect of Schieffer, variable costs as a percent of net
sales would have declined to 32.6% in 1997.
Selling, technical, general and research expenses, excluding Schieffer, were
flat for the nine months ended September 30, 1997 as compared to the same period
in 1996. Excluding the additional effect of translation of non-U.S. currencies
into fewer U.S. dollars, these expenses increased 4.1%.
Operating income as a percentage of net sales increased to 13.8% for the nine
months ended September 30, 1997 from 13.5% for the comparable period in 1996.
Even though third quarter 1997 fixed costs were right on forecast, the fact that
net sales were below expectations caused operating income as a percentage of net
sales to decrease to 14.0% for the three months ended September 30, 1997 from
14.4% for the comparable period in 1996.
6
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
Accounts receivable decreased $10.8 million from December 31, 1996. Excluding
the effect of the stronger U.S. dollar, accounts receivable decreased $4.1
million. Inventories increased $2.0 million, during the nine months ended
September 30, 1997, after restatement for a change in accounting for inventory
as discussed below. Excluding the effect of the stronger U.S. dollar,
inventories increased $8.6 million.
During the third quarter of 1997, the Company changed its method of determining
the cost of United States inventories from the last-in, first-out (LIFO) method
to the average cost method. The Company believes that the average cost method
results in a closer matching of revenues and expenses during periods of
increased productivity and changes in product mix. This change in accounting
method has been applied retroactively and financial information for all periods
presented has been restated to apply the average cost method. Income before
extraordinary item and net income were increased by $.2 million, less than 1
cent per share, and $.5 million, 2 cents per share, for the three and nine
months ended September 30, 1996, respectively, as a result of this change. There
was no effect on 1997 income. Retained earnings has been adjusted for the effect
of retroactive application of the new method.
On March 15, 1996, the Company redeemed the $150 million, 5.25% convertible
subordinated debentures at a redemption price of 91.545%. This redemption
resulted in an extraordinary loss of approximately $1.3 million, net of tax. The
debentures were redeemed by utilizing the revolving credit agreement and
short-term debt. The Company's current debt structure has resulted in lower
interest expense and currently provides approximately $230 million in committed
and available unused long-term debt capacity with financial institutions.
Management believes that this debt capacity, in combination with expected free
cash flows, should be sufficient to meet operating requirements and for business
opportunities and most acquisitions which support corporate strategies.
Capital expenditures for the nine months ended September 30, 1997 were $39.4
million as compared to $34.3 million for the same period last year. The Company
anticipates that capital expenditures, excluding the capital equivalent of
leases, will be approximately $55 million for the full year. The largest single
capital expenditure will be approximately $15 million to construct a new
manufacturing facility in South Korea which should be complete in November 1997.
The Company will continue to finance these expenditures with cash from
operations and existing credit facilities.
A cash dividend of $.10 per share, which was declared for the fourth quarter of
1996, was paid in the first quarter of 1997. The Company also declared cash
dividends of $.105 per share for each of the first three quarters of 1997, which
were paid in the second and third quarters and will be paid in the fourth
quarter of this year.
Effective December 15, 1997, the Company is required to adopt Financial
Accounting Standard No. 128, "Earnings per Share". This Standard requires both
basic and diluted earnings per share to be reported for all periods presented.
When income/(loss) per common share is calculated in accordance with this
Standard, for the three and nine months ended September 30, 1997 and 1996, basic
and diluted income/(loss) per common share do not significantly differ from
reported amounts.
7
<PAGE>
Part II - Other Information
<TABLE>
<C> <S>
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
No reports on Form 8-K were filed during the quarter ended September
30, 1997.
Exhibit No. Description
----------- -----------
11. Schedule of computation of primary and fully diluted net income per share
18. Letter re change in accounting principle
27. Financial data schedule
</TABLE>
8
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
ALBANY INTERNATIONAL CORP.
--------------------------
(Registrant)
Date: November 4, 1997
by /s/Michael C. Nahl
------------------
Michael C. Nahl
Sr. Vice President and
Chief Financial Officer
<PAGE>
<TABLE>
<CAPTION>
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:
For the three months For the nine months
ended September 30, ended September 30,
Restated Restated
1997 (1) 1996 (1) 1997 (1) 1996 (1)
<C> <C> <S> <C> <C>
- ---------------- -------------- -------------- --------------
30,966,986 30,411,824 Common stock outstanding at end of period 30,966,986 30,411,824
Adjustments to ending shares to arrive at
weighted average for the period:
(19,630) (23,572) Shares contributed to E.S.O.P. (2) (63,787) (85,275)
(69,595) - Shares issued under option (2) (213,219) (4,262)
- - Treasury shares purchased (2) 7,410 18,453
- ---------------- -------------- -------------- --------------
30,877,761 30,388,252 Weighted average number of shares 30,697,390 30,340,740
================ ============== ============== ==============
$11,424 $12,526 Income before extraordinary item $35,778 $34,192
Extraordinary loss on early extinguishment of debt,
- - net of tax of $828 - $1,296
- ---------------- -------------- -------------- --------------
$11,424 $12,526 Net income $35,778 $32,896
================ ============== ============== ==============
$0.37 $0.41 Income per share before extraordinary item (3) $1.17 $1.13
- - Extraordinary loss on early extinguishment of debt (3) - ($0.04)
- ---------------- -------------- -------------- --------------
$0.37 $0.41 Net income per share (3) $1.17 $1.09
================ ============== ============== ==============
(1) Includes Class A and Class B Common Stock
(2) Calculated as follows:
number of shares multiplied by the reciprocal of the number of days
outstanding (or the reciprocal of the number of days held in
treasury for treasury stock purchases) divided by the number of
days in the period
ADJUSTMENTS TO ENDING SHARES: Number of days in period
-------------------------------
Three months Nine months
-------------- --------------
1996 92 274
1997 92 273
============== ==============
Reciprocal days Shares adjustment
- --------------------------------- --------------------------------------------
<C> <C> <S> <C> <C> <C>
Three months Nine months Shares Three months Nine months
- ---------------- -------------- --------------------------- --------------
1996
Shares Contributed to ESOP:
- 30 31-Jan-96 12,969 - 1,420
- 59 29-Feb-96 136,670 - 29,429
- 90 31-Mar-96 11,616 - 3,815
- 120 30-Apr-96 10,790 - 4,726
- 151 31-May-96 12,658 - 6,976
- 181 30-Jun-96 10,383 - 6,859
30 212 31-Jul-96 12,253 3,996 9,480
61 243 31-Aug-96 13,016 8,630 11,543
91 273 30-Sep-96 11,067 10,946 11,027
-------------- --------------
Totals 23,572 85,275
============== ==============
<PAGE>
Shares Issued Under Option or to Directors:
- 140 20-May-96 2,255 - 1,152
- 142 22-May-96 6,000 - 3,110
-------------- --------------
Totals - 4,262
============== ==============
Treasury Shares Purchased:
- 16 17-Jan-96 91,000 - 5,314
- 72 13-Mar-96 50,000 - 13,139
-------------- --------------
Totals - 18,453
============== ==============
1997
Shares Contributed to ESOP:
- 30 31-Jan-97 12,002 - 1,319
- 58 28-Feb-97 58,773 - 12,487
- 89 31-Mar-97 12,126 - 3,953
- 119 30-Apr-97 12,380 - 5,396
- 150 31-May-97 12,193 - 6,699
- 180 30-Jun-97 11,243 - 7,413
30 211 31-Jul-97 10,555 3,442 8,158
61 242 31-Aug-97 9,406 6,236 8,338
91 272 30-Sep-97 10,061 9,952 10,024
-------------- --------------
Totals 19,630 63,787
============== ==============
Shares Issued Under Option or to Directors:
- 1 02-Jan-97 200 - 1
- 2 03-Jan-97 3,600 - 26
- 5 06-Jan-97 10,000 - 183
- 6 07-Jan-97 900 - 20
- 7 08-Jan-97 5,000 - 128
- 29 30-Jan-97 37,300 - 3,962
- 33 03-Feb-97 20,000 - 2,418
- 37 07-Feb-97 5,000 - 678
- 42 12-Feb-97 27,000 - 4,154
- 43 13-Feb-97 1,400 - 221
- 44 14-Feb-97 28,600 - 4,610
- 48 18-Feb-97 10,000 - 1,758
- 91 02-Apr-97 1,800 - 600
- 110 21-Apr-97 2,922 - 1,177
- 159 09-Jun-97 2,500 - 1,456
- 162 12-Jun-97 17,900 - 10,622
- 163 13-Jun-97 10,200 - 6,090
- 168 18-Jun-97 8,700 - 5,354
- 169 19-Jun-97 19,200 - 11,886
- 175 25-Jun-97 5,000 - 3,205
- 176 26-Jun-97 14,000 - 9,026
21 202 22-Jul-97 5,100 1,164 3,774
23 204 24-Jul-97 22,000 5,500 16,440
24 205 25-Jul-97 60,000 15,652 45,055
30 211 31-Jul-97 26,800 8,739 20,713
31 212 01-Aug-97 600 202 466
35 216 05-Aug-97 16,800 6,391 13,292
36 217 06-Aug-97 1,000 391 795
<PAGE>
37 218 07-Aug-97 1,000 402 799
38 219 08-Aug-97 12,500 5,163 10,027
42 223 12-Aug-97 2,500 1,141 2,042
44 225 14-Aug-97 500 239 412
48 229 18-Aug-97 1,800 939 1,510
49 230 19-Aug-97 800 426 674
50 231 20-Aug-97 3,400 1,848 2,877
52 233 22-Aug-97 1,800 1,018 1,536
55 236 25-Aug-97 4,300 2,571 3,717
56 237 26-Aug-97 1,800 1,096 1,563
63 244 02-Sep-97 1,000 685 894
64 245 03-Sep-97 600 417 538
65 246 04-Sep-97 1,000 707 901
66 247 05-Sep-97 4,400 3,157 3,981
72 253 11-Sep-97 1,000 783 927
73 254 12-Sep-97 8,300 6,586 7,722
76 257 15-Sep-97 5,300 4,378 4,989
-------------- --------------
Totals 69,595 213,219
============== ==============
Treasury Shares Purchased:
- 26 27-Jan-97 57,500 - 5,476
- 120 01-May-97 4,400 - 1,934
-------------- --------------
- 7,410
============== ==============
(3) Dilutive common stock equivalents are not material and therefore are
not included in the calculation of primary earnings per common share.
FULLY DILUTED EARNINGS PER SHARE:
For the three months For the nine months
ended September 30, ended September 30,
Restated Restated
1997 1996 1997 1996
<C> <C> <S> <C> <C>
- ---------------- -------------- -------------- --------------
30,877,761 30,388,252 Weighted average number of shares 30,697,390 30,340,740
529,032 333,876 Incremental shares of unexercised options (4) 501,737 333,876
- ---------------- -------------- -------------- --------------
31,406,793 30,722,128 Adjusted weighted average number of shares 31,199,127 30,674,616
================ ============== ============== ==============
$11,424 $12,526 Income before extraordinary item $35,778 $34,192
Extraordinary loss on early extinguishment of debt,
- - net of tax of $828 - $1,296
- ---------------- -------------- -------------- --------------
$11,424 $12,526 Net income $35,778 $32,896
================ ============== ============== ==============
$0.36 $0.41 Income per share before extraordinary item $1.15 $1.11
- - Extraordinary loss on early extinguishment of debt - ($0.04)
- ---------------- -------------- -------------- --------------
$0.36 $0.41 Fully diluted net income per share $1.15 $1.07
================ ============== ============== ==============
</TABLE>
(4) Incremental shares of unexercised 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.
<PAGE>
EXHIBIT 18
LETTER RE CHANGE IN ACCOUNTING PRINCIPLE
<PAGE>
August 27, 1997
Albany International Corp.
1373 Broadway
Albany, New York 12201
We are providing this letter to you for inclusion as an exhibit to your Form
10-Q filing pursuant to Item 601 of Regulation S-K.
We have read management's justification for the change in accounting from the
last-in, first-out method (LIFO) of accounting for inventory to the average cost
method contained in the Company's Form 10-Q for the quarter ended September 30,
1997. Based on our reading of the data and discussions with Company officials of
the business judgment and business planning factors relating to the change, we
believe management's justification to be reasonable. Accordingly, in reliance on
management's determination as regards elements of business judgment and business
planning, we concur that the newly adopted accounting principle described above
is preferable in the Company's circumstances to the method previously applied.
We have not audited any financial statements of Albany International Corp. as of
any date or for any period subsequent to December 31, 1996, nor have we audited
the application of the change in accounting principle disclosed in Form 10-Q of
Albany International Corp. for the three and nine months ended September 30,
1997; accordingly, our comments are subject to revision on completion of an
audit of the financial statements that include the accounting change.
/s/Coopers & Lybrand, L.L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALBANY INTERNATIONAL CORP'S CONSOLIDATED FINANCIAL STATEMENTS AS OF AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 22,471
<SECURITIES> 0
<RECEIVABLES> 173,471
<ALLOWANCES> 4,777
<INVENTORY> 182,153
<CURRENT-ASSETS> 391,119
<PP&E> 629,243
<DEPRECIATION> 305,772
<TOTAL-ASSETS> 829,808
<CURRENT-LIABILITIES> 162,107
<BONDS> 188,621
0
0
<COMMON> 31
<OTHER-SE> 342,508
<TOTAL-LIABILITY-AND-EQUITY> 829,808
<SALES> 525,454
<TOTAL-REVENUES> 525,454
<CGS> 301,038
<TOTAL-COSTS> 453,062
<OTHER-EXPENSES> 2,696
<LOSS-PROVISION> (185)
<INTEREST-EXPENSE> 11,570
<INCOME-PRETAX> 58,311
<INCOME-TAX> 22,740
<INCOME-CONTINUING> 35,778
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,778
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
