UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the quarterly period ended: | ||||||||
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: 1-10026
| (Exact name of registrant as specified in its charter) | ||
(State or other jurisdiction of incorporation or organization) | ||
(Address of principal executive offices) | ||
(IRS Employer Identification No.) | ||
(Zip Code) | ||
| (Registrant’s telephone number, including area code) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
The New York Stock Exchange ( | ||||||||
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The registrant had 31.2 million shares of Class A Common Stock as of July 15, 2023.
ALBANY INTERNATIONAL CORP.
TABLE OF CONTENTS
| Page No. | ||||||||
Consolidated statements of comprehensive income/(loss) – three and six months ended June 30, 2023 and 2022 | ||||||||
ITEM 1. FINANCIAL STATEMENTS
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general, and administrative expenses | |||||||||||||||||||||||
| Technical and research expenses | |||||||||||||||||||||||
| Restructuring expenses, net | ( | ||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Interest expense/(income), net | |||||||||||||||||||||||
| Other (income)/expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income attributable to the noncontrolling interest | |||||||||||||||||||||||
| Net income attributable to the Company | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share attributable to Company shareholders - Basic | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share attributable to Company shareholders - Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Shares of the Company used in computing earnings per share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Dividends declared per Class A share | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements
1
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(in thousands)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income/(loss), before tax: | |||||||||||||||||||||||
| Foreign currency translation | ( | ( | ( | ||||||||||||||||||||
| Amortization of pension liability adjustments: | |||||||||||||||||||||||
| Prior service credit | ( | ( | ( | ( | |||||||||||||||||||
| Net actuarial loss | |||||||||||||||||||||||
| Payments and amortization related to interest rate swaps included in earnings | ( | ( | |||||||||||||||||||||
| Derivative valuation adjustment | |||||||||||||||||||||||
| Income taxes related to items of other comprehensive income/(loss): | |||||||||||||||||||||||
| Amortization of prior service credit | |||||||||||||||||||||||
| Amortization of net actuarial loss | ( | ( | ( | ( | |||||||||||||||||||
| Payments and amortization related to interest rate swaps included in earnings | ( | ( | |||||||||||||||||||||
| Derivative valuation adjustment | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive income attributable to the noncontrolling interest | |||||||||||||||||||||||
| Comprehensive income attributable to the Company | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements
2
ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
| June 30, 2023 | December 31, 2022 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Contract assets, net | |||||||||||
| Inventories | |||||||||||
| Income taxes prepaid and receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangibles, net | |||||||||||
| Goodwill | |||||||||||
| Deferred income taxes | |||||||||||
| Noncurrent receivables, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Income taxes payable | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Deferred taxes and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| COMMITMENTS AND CONTINGENCIES (Note 15) | |||||||||||
| SHAREHOLDERS' EQUITY | |||||||||||
Preferred stock, par value $ | |||||||||||
Class A Common Stock, par value $ | |||||||||||
Class B Common Stock, par value $ | |||||||||||
| Additional paid in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated items of other comprehensive income: | |||||||||||
| Translation adjustments | ( | ( | |||||||||
| Pension and postretirement liability adjustments | ( | ( | |||||||||
| Derivative valuation adjustment | |||||||||||
Treasury stock (Class A), at cost; | ( | ( | |||||||||
| Total Company shareholders' equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of the consolidated financial statements
3
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended June 30, | ||||||||||||||
| 2023 | 2022 | |||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | ||||||||||||||
| Amortization | ||||||||||||||
| Change in deferred taxes and other liabilities | ||||||||||||||
| Impairment of property, plant, equipment, and inventory | ||||||||||||||
| Non-cash interest expense | ||||||||||||||
| Compensation and benefits paid or payable in Class A Common Stock | ||||||||||||||
| Provision for credit losses from uncollected receivables and contract assets | ||||||||||||||
| Foreign currency remeasurement (gain) on intercompany loans | ( | ( | ||||||||||||
| Fair value adjustment on foreign currency options | ( | ( | ||||||||||||
| Changes in operating assets and liabilities that provided/(used) cash: | ||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||
| Contract assets | ( | |||||||||||||
| Inventories | ( | ( | ||||||||||||
| Prepaid expenses and other current assets | ( | ( | ||||||||||||
| Income taxes prepaid and receivable | ( | ( | ||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued liabilities | ( | ( | ||||||||||||
| Income taxes payable | ( | ( | ||||||||||||
| Noncurrent receivables | ||||||||||||||
| Other noncurrent liabilities | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||
| Purchases of property, plant and equipment | ( | ( | ||||||||||||
| Purchased software | ( | ( | ||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||
| Proceeds from borrowings | ||||||||||||||
| Principal payments on debt | ( | |||||||||||||
| Principal payments on finance lease liabilities | ( | |||||||||||||
| Purchase of Treasury shares | ( | |||||||||||||
| Taxes paid in lieu of share issuance | ( | ( | ||||||||||||
| Proceeds from options exercised | ||||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Net cash provided by financing activities | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | |||||||||||||
| Increase in cash and cash equivalents | ||||||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
The accompanying notes are an integral part of the consolidated financial statements
4
ALBANY INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Significant Accounting Policies
Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of results for such periods. Albany International Corp. ("Albany", the "Registrant", the "Company", "we", "us", or "our") consolidates the financial results of its subsidiaries for all periods presented. The results for any interim period are not necessarily indicative of results for the full year.
The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the Company's Consolidated Financial Statements and accompanying Notes. Actual results could differ materially from those estimates.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Albany International Corp.’s Annual Report on Form 10-K for the year ended December 31, 2022.
Acquisition
On June 14, 2023, the Company entered into an agreement to acquire Heimbach GmbH ("Heimbach"), a privately-held manufacturer of paper machine clothing and technical textiles located in Düren, Germany. The Company will acquire Heimbach for a purchase price of approximately €153 million, including net debt of approximately €21 million. Albany expects to fund the acquisition using cash on hand. The transaction is subject to regulatory approvals and other customary closing conditions.
2. Reportable Segments and Revenue Recognition
In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments.
Machine Clothing:
The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate.
We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
Albany Engineered Composites:
The Albany Engineered Composites (“AEC”) segment provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. The segment includes Albany Safran Composites, LLC (“ASC”), in which our customer, the SAFRAN Group (“SAFRAN”) owns a 10 percent noncontrolling interest. AEC, through ASC, is the exclusive supplier of the LEAP program of advanced composite fan blades and fan cases under a long-term supply contract, where revenue is determined by a cost-plus-fee agreement. The LEAP engine is used on the Airbus A320neo, Boeing 737 MAX, and COMAC 919 aircraft. AEC's largest aerospace customer is the SAFRAN Group and sales to SAFRAN (consisting primarily of fan blades and cases for CFM International's LEAP engine) accounted for approximately 16 percent of the Company's consolidated Net revenues in 2022. AEC net sales to SAFRAN were $93.5 million and $83.1 million in the first six months of 2023 and 2022, respectively. The total of Accounts receivable, Contract assets and Noncurrent receivables due from SAFRAN amounted to $88.9 million and $80.8 million as of June 30, 2023 and December 31, 2022, respectively.
Other significant programs by AEC include the Sikorsky CH-53K, F-35, JASSM, and Boeing 787 programs. AEC also supplies vacuum waste tanks for the Boeing 7-Series programs, and specialty components for the Rolls Royce
5
lift fan on the F-35, as well as the fan case for the GE9X engine. For the year ended December 31, 2022, approximately 46 percent of AEC revenues were related to U.S. government contracts or programs.
The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Net revenues | ||||||||||||||
Machine Clothing | $ | $ | $ | $ | ||||||||||
| Albany Engineered Composites | ||||||||||||||
| Consolidated revenues | $ | $ | $ | $ | ||||||||||
| Operating income/(loss) | ||||||||||||||
Machine Clothing | $ | $ | $ | $ | ||||||||||
| Albany Engineered Composites | ||||||||||||||
| Corporate expenses | ( | ( | ( | ( | ||||||||||
| Consolidated Operating income | $ | $ | $ | $ | ||||||||||
Reconciling items: | ||||||||||||||
| Interest income | ( | ( | ( | ( | ||||||||||
Interest expense | ||||||||||||||
| Other (income)/expense, net | ( | ( | ( | ( | ||||||||||
| Income before income taxes | $ | $ | $ | $ | ||||||||||
Revenue Recognition:
Products and services provided under long-term contracts represent a significant portion of revenues in the Albany Engineered Composites segment and we account for these contracts over time, primarily using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors. Changes in the estimated profitability of long-term contracts decreased operating income by $1.9 million for the second quarter of 2023 and decreased operating income $4.0 million for the first half of 2023. Adjustments in the estimated profitability of long-term contracts increased operating income by $1.2 million and decreased operating income $0.6 for the second quarter and first half of 2022, respectively.
6
We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.
The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2023:
| Three months ended June 30, 2023 | |||||||||||
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total | ||||||||
| Machine Clothing | $ | $ | $ | ||||||||
| Albany Engineered Composites: | |||||||||||
| ASC | |||||||||||
| Other AEC | |||||||||||
Total Albany Engineered Composites | |||||||||||
| Total revenues | $ | $ | $ | ||||||||
The following table disaggregates revenue for each product group by timing of revenue recognition for the three months ended June 30, 2022:
| Three months ended June 30, 2022 | |||||||||||
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total | ||||||||
| Machine Clothing | $ | $ | $ | ||||||||
| Albany Engineered Composites: | |||||||||||
| ASC | |||||||||||
| Other AEC | |||||||||||
Total Albany Engineered Composites | |||||||||||
| Total revenues | $ | $ | $ | ||||||||
The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2023:
| Six months ended June 30, 2023 | |||||||||||
(in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total | ||||||||
| Machine Clothing | $ | $ | $ | ||||||||
| Albany Engineered Composites: | |||||||||||
| ASC | |||||||||||
| Other AEC | |||||||||||
| Total Albany Engineered Composites | |||||||||||
| Total revenues | $ | $ | $ | ||||||||
7
The following table disaggregates revenue for each product group by timing of revenue recognition for the six months ended June 30, 2022:
| Six months ended June 30, 2022 | |||||||||||
| (in thousands) | Point in Time Revenue Recognition | Over Time Revenue Recognition | Total | ||||||||
| Machine Clothing | $ | $ | $ | ||||||||
| Albany Engineered Composites: | |||||||||||
| ASC | |||||||||||
| Other AEC | |||||||||||
| Total Albany Engineered Composites | |||||||||||
| Total revenues | $ | $ | $ | ||||||||
The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing ("PMC") and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Americas PMC | $ | $ | $ | $ | ||||||||||
Eurasia PMC | ||||||||||||||
| Engineered Fabrics | ||||||||||||||
| Total Machine Clothing net revenues | $ | $ | $ | $ | ||||||||||
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year and certain contracts in the AEC segment are relatively short duration firm-fixed-price orders. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $792 million and $579 million as of June 30, 2023 and 2022, respectively, and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of June 30, 2023, we expect to recognize as revenue approximately $78 million during 2023, $131 million during 2024, $148 million during 2025, and the remainder thereafter.
8
3. Pensions and Other Postretirement Benefit Plans
The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The Company also provides certain postretirement benefits to retired employees in the U.S. and Canada. The Company accrues the cost of providing these benefits during the active service period of the employees.
The composition of the net periodic benefit cost/ (income) for the six months ended June 30, 2023 and 2022, was as follows:
Pension plans | Other postretirement benefits | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Components of net periodic benefit cost/(income): | ||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||
| Interest cost | ||||||||||||||
Expected return on assets | ( | ( | ||||||||||||
| Amortization of prior service cost/(income) | ( | ( | ( | ( | ||||||||||
Amortization of net actuarial loss | ||||||||||||||
| Net periodic benefit cost/(income) | $ | $ | $ | ( | $ | ( | ||||||||
The amount of net benefit cost/(income) is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement. There were no such events in the first six months of 2023 or 2022.
Service cost for defined benefit pension and postretirement plans are reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net periodic benefit cost are included in the line item Other (income)/expense, net in the Consolidated Statements of Income.
4. Other (Income)/Expense, net
The components of Other (income)/expense, net are:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Currency transaction (gains)/losses | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Bank fees and amortization of debt issuance costs | ||||||||||||||
| Components of net periodic pension and postretirement cost other than service cost | ( | ( | ( | ( | ||||||||||
Other | ( | ( | ||||||||||||
| Total other (income)/expense, net | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Other (income)/expense, net, included foreign currency related transactions which resulted in gains of $4.2 million and $4.1 million in the three and six months ended June 30, 2023, respectively, as compared to gains of $7.3 million and $11.0 million in the same period last year. The stronger Euro and Mexican Peso during the three and six months ended June 30, 2023 led to a lesser gain on foreign currency related transactions.
9
5. Income Taxes
The following table presents components of income tax expense for the three and six months ended June 30, 2023 and 2022:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| (in thousands, except percentages) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Income tax based on income from operations (1) | $ | $ | $ | $ | ||||||||||
| Provision for change in estimated tax rate | ||||||||||||||
| Income tax before discrete items | ||||||||||||||
| Discrete tax expense: | ||||||||||||||
| Exercise of U.S. stock options | ( | |||||||||||||
| Impact of amended tax returns | ( | ( | ||||||||||||
| True-up of prior year estimated taxes | ( | ( | ||||||||||||
| Enacted tax legislation and rate change | ||||||||||||||
| Provision for/resolution of tax audits and contingencies, net | ( | ( | ||||||||||||
| Impact of long range tax planning | ( | |||||||||||||
| Withholding tax related to internal restructuring | ||||||||||||||
| Other | ||||||||||||||
| Total income tax expense/(benefit) | $ | $ | $ | $ | ||||||||||
(1) Income tax is calculated at estimated annualized effective tax rate of | ||||||||||||||
Income tax expense for the quarter was computed in accordance with ASC 740-270, Income Taxes – Interim Reporting. Under this method, loss jurisdictions, which cannot recognize a tax benefit with regard to their generated losses, are excluded from the annual effective tax rate calculation and their taxes will be recorded discretely in each quarter.
6. Earnings Per Share
The amounts used in computing earnings per share and the weighted average number of shares of potentially dilutive securities are as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
(in thousands, except market price and earnings per share) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Net income attributable to the Company | $ | $ | $ | $ | ||||||||||
| Weighted average number of shares: | ||||||||||||||
Weighted average number of shares used in calculating basic net income per share | ||||||||||||||
| Effect of dilutive stock-based compensation plans: | ||||||||||||||
| RSU and MPP shares | ||||||||||||||
| Weighted average number of shares used in calculating diluted net income per share | ||||||||||||||
| Net income attributable to the Company per share: | ||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||
10
7. Accumulated Other Comprehensive Income ("AOCI")
The table below presents changes in the components of AOCI for the period from December 31, 2022 to June 30, 2023:
(in thousands) | Translation adjustments | Pension and postretirement liability adjustments | Derivative valuation adjustment | Total Other Comprehensive Income | ||||||||||
| December 31, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||
Other comprehensive income/(loss) before reclassifications, net of tax | ( | |||||||||||||
| Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax | ( | ( | ||||||||||||
Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax | ( | ( | ||||||||||||
| Net current period other comprehensive income | ( | ( | ||||||||||||
| June 30, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||
The table below presents changes in the components of AOCI for the period from December 31, 2021 to June 30, 2022:
| (in thousands) | Translation adjustments | Pension and postretirement liability adjustments | Derivative valuation adjustment | Total Other Comprehensive Income | ||||||||||
| December 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
| Other comprehensive income/(loss) before reclassifications, net of tax | ( | ( | ||||||||||||
| Interest (expense)/income related to swaps reclassified to the Consolidated Statements of Income, net of tax | ||||||||||||||
| Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax | ( | ( | ||||||||||||
| Net current period other comprehensive income | ( | ( | ||||||||||||
| June 30, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||
The components of AOCI that are reclassified to the Consolidated Statements of Income relate to our pension and postretirement plans and interest rate swaps.
11
The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Consolidated Statements of Income that were affected for the three and six months ended June 30, 2023 and 2022:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income: | ||||||||||||||
| Other (income)/expense, net related to interest rate swaps included in Income before taxes | $ | ( | $ | $ | ( | $ | ||||||||
| Income tax effect | ( | ( | ||||||||||||
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income | $ | ( | $ | $ | ( | $ | ||||||||
Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income: | ||||||||||||||
| Amortization of prior service credit | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Amortization of net actuarial loss | ||||||||||||||
| Total pretax amount reclassified (a) | ( | ( | ( | ( | ||||||||||
| Income tax effect | ||||||||||||||
| Effect on net income due to items reclassified from Accumulated Other Comprehensive Income | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 3. Pensions and Other Postretirement Benefit Plans).
8. Noncontrolling Interest
Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in a new Albany subsidiary, Albany Safran Composites, LLC ("ASC"). The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiary, Albany Safran Composites, LLC:
| Six months ended June 30, | ||||||||
| (in thousands, except percentages) | 2023 | 2022 | ||||||
| Net income of Albany Safran Composites (ASC) | $ | $ | ||||||
| Less: Return attributable to the Company's preferred holding | ||||||||
| Net income of ASC available for common ownership | $ | $ | ||||||
| Ownership percentage of noncontrolling shareholder | % | % | ||||||
| Net income attributable to the noncontrolling interest | $ | $ | ||||||
| Noncontrolling interest, beginning of year | $ | $ | ||||||
| Net income attributable to noncontrolling interest | ||||||||
| Changes in other comprehensive income attributable to the noncontrolling interest | ( | |||||||
| Noncontrolling interest, end of interim period | $ | $ | ||||||
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9. Accounts Receivable
Accounts receivable, net includes Trade and other accounts receivable and Bank promissory notes, net of Allowance for expected credit losses. In connection with certain revenues in Asia, the Company accepts a bank promissory note as customer payment. The notes may be presented for payment at maturity, which is less than one year. As of June 30, 2023 and December 31, 2022, Accounts receivable consisted of the following:
| (in thousands) | June 30, 2023 | December 31, 2022 | ||||||
| Trade and other accounts receivable | $ | $ | ||||||
| Bank promissory notes | ||||||||
| Allowance for expected credit losses | ( | ( | ||||||
| Accounts receivable, net | $ | $ | ||||||
The Company has Noncurrent receivables in the AEC segment that represent revenue earned, which has extended payment terms. The Noncurrent receivables will be invoiced to the customer over a 10-year period, which began in 2020. As of June 30, 2023 and December 31, 2022, Noncurrent receivables consisted of the following:
| (in thousands) | June 30, 2023 | December 31, 2022 | ||||||
| Noncurrent receivables | $ | $ | ||||||
Allowance for expected credit losses | ( | ( | ||||||
| Noncurrent receivables, net | $ | $ | ||||||
10. Contract Assets and Liabilities
Contract assets include unbilled amounts typically resulting from revenues under contracts when the cost-to-cost method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional and the customer is invoiced. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheets.
Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period.
As of June 30, 2023 and December 31, 2022, Contract assets and Contract liabilities consisted of the following:
| (in thousands) | June 30, 2023 | December 31, 2022 | ||||||
| Contract assets | $ | $ | ||||||
Allowance for expected credit losses | ( | ( | ||||||
| Contract assets, net | $ | $ | ||||||
| Contract liabilities | $ | $ | ||||||
Contract assets, net decreased $3.4 million during the six months ended June 30, 2023. The decrease was primarily due to invoicing to customers for satisfied performance obligations for contracts that were in a contract asset position. There were no
Contract liabilities decreased $8.4 million during the six months ended June 30, 2023, primarily due to revenue recognized from satisfied performance obligations exceeding amounts invoiced to customers that were in a contract liability position. Revenue recognized for the six months ended June 30, 2023 and 2022 that was included in the Contract liability balance at the beginning of the year was $11.7 million and $5.5 million, respectively.
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11. Inventories
Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead. Raw material inventories are valued on an average cost basis. Other inventory cost elements are valued at cost, using the first-in, first-out method. The Company writes down the inventories for estimated obsolescence, and to lower of cost or net realizable value based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories.
As of June 30, 2023 and December 31, 2022, Inventories consisted of the following:
| (in thousands) | June 30, 2023 | December 31, 2022 | ||||||
| Raw materials | $ | $ | ||||||
Work in process | ||||||||
| Finished goods | ||||||||
Total inventories | $ | $ | ||||||
12. Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually.
In the second quarter of 2023, management applied the qualitative assessment approach in performing its annual evaluation of goodwill for the Company's Machine Clothing reporting unit and two AEC reporting units and concluded that each reporting unit’s fair value continued to exceed its carrying value. In addition, there were no amounts at risk due to the estimated excess between the fair and carrying values. Accordingly, no impairment charges were recorded.
When a quantitative assessment is performed, determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates, and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment whenever events, such as significant changes in the business climate, plant closures, changes in product offerings, or other circumstances indicate that the carrying amount may not be recoverable.
To determine fair value, we utilize two market-based approaches and an income approach. Under the market-based approaches, we utilize information regarding the Company, as well as publicly available industry information, to determine earnings multiples and revenues multiples. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.
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13. Financial Instruments
Long-term debt, principally to banks and noteholders, consists of:
| (in thousands, except interest rates) | June 30, 2023 | December 31, 2022 | ||||||
Revolving credit agreement with borrowings outstanding at an end of period interest rate of | $ | $ | ||||||
We had no
On October 27, 2020, we entered into a $700 million Amended and Restated unsecured Four-Year Revolving Credit Agreement (the “Credit Agreement”), which amended and restated the prior $685 million Five-Year Revolving Credit Facility Agreement, entered into on November 7, 2017. On June 23, 2023, we entered into the first Amendment to the Credit Agreement (the Credit Agreement and the First Amendment, collectively, the "Amended Credit Agreement") to replace the LIBOR-based reference interest rate option with a reference interest rate option based on the Term Secured Overnight Financing Rate ("Term SOFR") plus an applicable credit spread adjustment (subject to a minimum floor of 0.00 %). The Amendment did not make any other material changes to the terms and conditions of the Credit Agreement, including the representations and warranties, events of default, affirmative and negative covenants.
The applicable interest rate for borrowings is based on Term SOFR plus a spread, which is based on our leverage ratio (as defined in the Amended Credit Agreement) at the time of a borrowing as follows:
| Leverage Ratio | Commitment Fee | ABR Spread | Total Spread | ||||||||
< | |||||||||||
≥ | |||||||||||
≥ | |||||||||||
≥ | |||||||||||
As of June 30, 2023, however, the applicable interest rate for borrowings was based on LIBOR plus the spread, which was 1.625 %.
As of June 30, 2023, there was $487 million of borrowings outstanding under the Amended Credit Agreement. As of June 30, 2023, we had borrowings available of $213 million, based on our maximum leverage ratio and our Consolidated EBITDA (as defined in the Amended Credit Agreement).
The Amended Credit Agreement contains customary terms, as well as affirmative covenants, negative covenants and events of default. As of June 30, 2023, we were in compliance with all applicable covenants. We anticipate continued compliance in each of the next four quarters while continuing to monitor its future compliance based on current and future economic conditions.
The borrowings are guaranteed by certain of the Company’s subsidiaries as defined in the Amended Credit Agreement. Our ability to borrow additional amounts under the Amended Credit Agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change (as defined in the Amended Credit Agreement).
On June 14, 2021, we entered into interest rate swap agreements for the period October 17, 2022 through October 27, 2024. These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $350 million of indebtedness, drawn under the Amended Credit Agreement at the rate of 0.838 % during the period. Under the terms of these transactions, we paid the fixed rate of 0.838 % and the counterparties paid a floating rate based on the one-month LIBOR rate at each monthly calculation date. The Amended Credit Agreement monthly calculation date is the 16th of each month, and on June 16, 2023, one-month LIBOR was 5.16 %. As of June 16, 2023, the all-in-rate on the $350 million of debt was 2.463 %. On June 29, 2023, the Company amended each Swap agreement, in accordance with the practical expedients included in Accounting Standards Codification (“ASC”) 848, Reference Rate Reform, to replace the LIBOR Benchmark with a Term SOFR Benchmark. As a result of the amendments, we will pay a fixed blended rate of 0.7683 % (plus a credit spread adjustment as defined in the Amended Credit Agreement) through October 27, 2024 on $350 million of borrowings under the Amended Credit Agreement. The effective date of the amended Swap agreements is July 17, 2023.
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On October 17, 2022, our interest rate swap agreements that were in effect from December 18, 2017 terminated. These transactions had the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $350 million of indebtedness drawn under the Credit Agreement at the rate of 2.11 % during the period. Under the terms of those transactions, we paid the fixed rate of 2.11 % and the counterparties paid a floating rate based on the one-month LIBOR rate at each monthly calculation date. The all-in-rate on the $350 million of debt was 3.735 % at the time the swap agreements terminated.
These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14. Fair-Value Measurements. No cash collateral was received or pledged in relation to the swap agreements.
Under the Amended Credit Agreement, we are required to maintain leverage and minimum interest coverage ratios (as defined in the Credit Agreement) of not greater than 3.50 to 1.00 and greater than 3.00 to 1.00, respectively.
As of June 30, 2023, our leverage ratio was 1.49 to 1.00 and our interest coverage ratio was 14.36 to 1.00. We may purchase our Common Stock or pay dividends to the extent our leverage ratio remains at or below 3.50 to 1.00, and may make acquisitions with cash, provided our leverage ratio does not exceed the limits noted above.
14. Fair-Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•Level 1 - Quoted prices in active markets for identical assets or liabilities.
•Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
•Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
We had no Level 3 financial assets or liabilities at June 30, 2023 or at December 31, 2022.
The following table presents the fair-value hierarchy for our Level 1 and Level 2 financial and non-financial assets and liabilities, which are measured at fair value on a recurring basis:
| June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
Quoted prices in active markets | Significant other observable inputs | Quoted prices in active markets | Significant other observable inputs | ||||||||||||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 1) | (Level 2) | |||||||||||||||||||
| Fair Value | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Other Assets: | |||||||||||||||||||||||
| Common stock of unaffiliated foreign public company (a) | |||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
(a)Original cost basis $0.5
Cash equivalents include short-term securities that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities.
The interest rate swaps are accounted for as hedges of future cash flows. The fair value of our interest rate swaps are derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is
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included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets. Amounts determined to be due within one year are reclassified to Other current assets and/or Accrued liabilities in the Consolidated Balance Sheets. Unrealized gains and losses on the interest rate swaps flow through the caption Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets. On June 29, 2023, the Company amended each Swap agreement, in accordance with the practical expedients included in ASC 848, Reference Rate Reform, to replace the LIBOR Benchmark with a Term SOFR Benchmark (See Note 13. Financial Instruments for additional information). As of June 30, 2023, these interest rate swaps were determined to be highly effective hedges of interest rate cash flow risk. Amounts accumulated in Other comprehensive income are reclassified as interest expense/(income), net when the related interest payments (that is, the hedged forecasted transactions), affect earnings. Interest expense/(income) related to payments under the active swap agreements totaled $(6.9 ) million for the six months ended June 30, 2023, and $2.9 million for the six months ended June 30, 2022.
We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results. Foreign currency instruments are entered into periodically, and consist of foreign currency option contracts and forward contracts that are valued using quoted prices in active markets obtained from independent pricing sources. These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accounts payable, as applicable. Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expense, net.
When exercised, the foreign currency instruments are net settled with the same financial institution that bought or sold them. For all positions, whether options or forward contracts, there is risk from the possible inability of the financial institution to meet the terms of the contracts and the risk of unfavorable changes in interest and currency rates, which may reduce the value of the instruments. We seek to mitigate risk by evaluating the creditworthiness of counterparties and by monitoring the currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies.
(Gains)/losses related to changes in fair value of derivative instruments that were recognized in Other (income)/expense, net in the Consolidated Statements of Income were as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||
| Foreign currency options (gains)/losses | $ | ( | $ | $ | ( | $ | ( | |||||||
15. Commitments and Contingencies
Asbestos Litigation
Albany International Corp. is a defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. We were defending 3,601 claims as of June 30, 2023.
The following table sets forth the number of claims filed, the number of claims settled, dismissed or otherwise resolved, and the aggregate settlement amount during the periods presented:
| (in thousands, except number of claims) | Opening Number of Claims | Claims Dismissed, Settled, or Resolved | New Claims | Closing Number of Claims | Amounts Paid to Settle or Resolve | ||||||||||||
| As of December 31, 2022 | $ | ||||||||||||||||
| As of June 30, 2023 | $ | ||||||||||||||||
We anticipate that additional claims will be filed against the Company and related companies in the future but are unable to predict the number and timing of such future claims. Due to the fact that information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to pending or future claims and therefore are unable to estimate a range of reasonably possible loss in excess of amounts already accrued for pending or future claims.
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While we believe we have meritorious defenses to these claims, we have settled certain claims for amounts we consider reasonable given the facts and circumstances of each case. Our insurance carrier has defended each case and funded settlements under a standard reservation of rights. As of June 30, 2023, we had resolved, by means of settlement or dismissal, 38,032 claims at a total cost of $10.6 million. Of this amount, almost 100 % was paid by our insurance carrier, who has confirmed that we have approximately $140 million of remaining coverage under primary and excess policies that should be available with respect to current and future asbestos claims.
The Company’s subsidiary, Brandon Drying Fabrics, Inc. (“Brandon”), is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant, despite never having manufactured any fabrics containing asbestos. While Brandon was defending against 7,702 claims as of June 30, 2023, only twelve claims have been filed against Brandon since January 1, 2012, and only $15,000 in settlement costs have been incurred since 2001. Brandon was acquired by the Company in 1999 and has its own insurance policies covering periods prior to 1999. Since 2004, Brandon’s insurance carriers have covered 100 % of indemnification and defense costs, subject to policy limits and a standard reservation of rights.
In some of these asbestos cases, the Company is named both as a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). We acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. We deny any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, we have successfully moved for dismissal in a number of actions.
We currently do not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of operations, or cash flows of the Company. Although we cannot predict the number and timing of future claims, based on the foregoing factors, the trends in claims filed against us, and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows.
16. Changes in Shareholders’ Equity
The following table summarizes changes in Shareholders’ Equity for the period December 31, 2022 to June 30, 2023:
Class A Common Stock | Additional paid-in capital | Retained earnings | Accumulated items of other comprehensive income | Class A Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||
(in thousands) | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||
| Compensation and benefits paid or payable in shares | — | — | — | — | — | — | |||||||||||||||||||||||
Dividends declared on Class A Common Stock, $ | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||
| Cumulative translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||
| Pension and postretirement liability adjustments | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||
| Derivative valuation adjustment | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||
| March 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||
| Compensation and benefits paid or payable in shares | — | — | — | — | — | — | — | ||||||||||||||||||||||
| Shares issued to Directors' | — | — | — | — | ( | — | |||||||||||||||||||||||
Dividends declared on Class A Common Stock, $ | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||
| Cumulative translation adjustments | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||
| Pension and postretirement liability adjustments | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||
| Derivative valuation adjustment | — | — | — | — | — | — | — | ||||||||||||||||||||||
| June 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
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The following table summarizes changes in Shareholders’ Equity for the period December 31, 2021 to June 30, 2022:
Class A Common Stock | Additional paid-in capital | Retained earnings | Accumulated items of other comprehensive income | Class A Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||
(in thousands) | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| December 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||
| Compensation and benefits paid or payable in shares | — | — | — | — | — | — | |||||||||||||||||||||||
| Options exercised | — | — | — | — | — | — | — | ||||||||||||||||||||||
| Purchase of Treasury shares (a) | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||
Dividends declared on Class A Common Stock, $ | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||
| Cumulative translation adjustments | — | — | — | — | ( | — | — | ||||||||||||||||||||||