UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K/A
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
April 26, 2007
 
ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
Delaware
0-16214 
14-0462060
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
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
None
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))
 

 
 

 
EXPLANATORY NOTE
 
The Company is filing this amendment to Form 8-K filed with the Securities and Exchange Commission on April 27, 2007, for the purpose of amending Exhibit 99.1 to correct clerical errors on the Account receivable, net and Note receivable lines.
 
Item 2.02. Results of Operations and Financial Condition.
 
On April 26, 2007, Albany International issued a news release reporting first quarter 2007 financial results. A copy of the news release is furnished as Exhibit 99.1 to this report.
 
Item 9.01. Financial Statements and Exhibits.
 
(d)
Exhibits. The following exhibit is being furnished herewith:
    99.1 News release dated April 26, 2007 reporting first quarter 2007 financial results.  
 
 
 
2

 

Signature

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 hereunto duly authorized.



ALBANY INTERNATIONAL CORP.


By: /s/ Michael C. Nahl                                               

Name: Michael C. Nahl
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)


Date: April 27, 2007

 
3

 
EXHIBIT INDEX

Exhibit No.
 
Description
 
 
 
99.1
 
News release dated April 26, 2007 reporting first quarter 2007 financial results.

 
 
4

 

Albany International Reports First-Quarter Earnings

First-Quarter Highlights

 
·
Net income per share was $0.32, after expenses related to previously announced cost reduction and process improvement initiatives reduced net income per share by $0.24. Net income per share was $0.60 in the first quarter of 2006.
     
 
·
Net sales were $257.7 million, an increase of 2.6 percent compared to the same period last year. Excluding the effect of changes in currency translation rates, net sales decreased 0.9 percent.
     
 
·
Net sales in the Paper Machine Clothing (PMC) segment declined 0.9 percent compared to the same period last year, and 3.7 percent excluding the effect of changes in currency translation rates.
     
 
·
Net sales increased 8.2 percent in the Applied Technologies segment compared to the same period last year, and 4.9 percent excluding the effect of changes in currency translation rates.
     
 
·
Net sales in the Door Systems segment increased 17.0 percent compared to the first quarter of 2006, and 8.9 percent excluding the effect of changes in currency translation rates.

ALBANY, N.Y., April 26 /PRNewswire-FirstCall/ -- Albany International Corp. (NYSE: AIN) reported first-quarter net income per share of $0.32, after expenses related to previously announced cost reduction and process improvement initiatives reduced net income by $0.24 per share. Net income per share was $0.60 in the first quarter of 2006.
 
Net sales increased $6.5 million, or 2.6 percent compared to the same period last year. Excluding the effect of changes in currency translation rates, net sales decreased 0.9 percent.
 
The following table presents net sales by segment and the effect of changes in currency translation rates:
 
(in thousands)
 
Net Sales
Three Months ended
March 31,
 
Percent
 
Impact of
Changes in Currency Translation
 
Percent
Change
excluding
Currency Rate
 
   
2007
 
2006
 
Change
 
Rates
 
Effect
 
                       
Paper Machine Clothing
 
$
182,306
 
$
183,893
   
-0.9
%
$
5,271
   
-3.7
%
Applied Technologies
   
40,938
   
37,843
   
8.2
%
 
1,226
   
4.9
%
Albany Door Systems
   
34,494
   
29,487
   
17.0
%
 
2,394
   
8.9
%
Total
 
$
257,738
 
$
251,223
   
2.6
%
$
8,891
   
-0.9
%

Gross profit was 38.2 percent of net sales in the first quarter of 2007, compared to 41.4 percent in the first quarter of 2006 and 35.2 percent in the fourth quarter of 2006. In comparison to the first quarter of 2006, the decrease is principally due to the impact of lower PMC sales. In comparison to the fourth quarter of 2006, the increase in gross profit percentage reflects operating efficiency improvements.
 
Selling, technical, general, and research (STG&R) expenses were $82.3 million in the first quarter of 2007, including $2.9 million related to the effect of changes in currency translation rates and $9.2 million ($0.24 per share) of charges related to cost reduction and process improvement initiatives that have been previously announced. STG&R expenses were $74.6 million for the first quarter of 2006.
 

 
Operating income was $16.1 million in the first quarter of 2007, compared to $29.4 million in the first quarter of 2006, reflecting a lower gross profit percentage and the 2007 charges related to cost reduction and process improvement initiatives.
 
The first-quarter effective income tax rate was 25 percent in 2007, compared to 30 percent in 2006. The lower rate in 2007 is attributable to changes in the amount and mix of geographical income. Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation Number 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB statement No. 109.” The effect of adopting this Interpretation was an increase in liabilities and a decrease in retained earnings of $2.5 million.
 
Net cash provided by operating activities was $17.3 million in comparison with $26.7 million in the first quarter of 2006. Capital spending during the first quarter of 2007 was $23.2 million, and the Company remains on track with its previously announced capital spending plans, which call for $160 to $180 million of spending in 2007. Depreciation and amortization were $14.2 million and $1.1 million, respectively, for the first quarter of 2007, and are expected to be approximately $60 million and $4 million, respectively, for the full year.
 
Paper Machine Clothing

This segment includes Paper Machine Clothing and Process Belts (PMC) used in the manufacture of paper and paperboard products.
 
Compared to Q1 2006, PMC net sales decreased 0.9 percent, and decreased 3.7 percent after excluding the effect of changes in currency translation rates. The decline in net sales compared to Q1 2006 resulted principally from lower sales in Europe. Compared to Q4 2006, net sales to Western Europe increased by 3.9 percent, following an 8.6 percent improvement from Q3 to Q4 of 2006. Orders in the Americas remained firm and were strong in both the European and Pacific Corridors.
 
Applied Technologies

This segment includes the emerging businesses that apply our core competencies in advanced textiles and materials to other industries including insulation for personal outerwear and home furnishings (PrimaLoft®); specialty materials and composite structures for aircraft and other applications (Albany Engineered Composites); specialty filtration products for wet and dry applications (Albany Filtration Technologies); fabrics, wires, and belting products for the nonwovens and pulp industries, and industrial process belts for tannery, textile, and corrugator applications (Albany Engineered Fabrics).
 
First-quarter net sales increased 8.2 percent compared to Q1 2006 and 4.9 percent excluding the effect of changes in currency translation rates. Compared to Q1 2006 and excluding the effect of changes in currency translation rates, net sales in Albany Engineered Composites increased 30.2 percent, Albany Filtration Technologies increased 9.4 percent, and PrimaLoft improved by 7.9 percent. Sales in Albany Engineered Fabrics decreased 3.2 percent compared to Q1 2006, primarily due to lower sales to original equipment manufacturers during the quarter. While the order backlog in Engineered Fabrics was unchanged, backlogs in the other Applied Technologies businesses were strong.
 
Albany Door Systems

This segment includes sales and service of High Performance Doors and after-market sales to a variety of industrial customers.
 
Led by strong new product and after-market sales in Europe and Asia, Door System net sales increased 17.0 percent compared to the same period last year and 8.9 percent excluding the effect of changes in currency translation rates. Compared to Q1 2006, the order backlog is strong and reflects the impact of new product introductions.
 


Comments on Current and Planned Activities

President and CEO Joe Morone commented, “In our Q3 2006 earnings release, I discussed our short-term objective of returning by Q4 this year, to the profitability levels of Q2 2006, excluding the effects of cost reduction and process improvement initiatives. In our most recent earnings release, I told you that the operating results and market conditions that we experienced in Q4 2006 suggested that we were indeed on trend toward meeting that objective. Q1 2007 provides further evidence that we remain on trend.
 
“As I also discussed in our last two earnings releases, this trend toward gradually improving profitability is shaped by three distinct components: recovery in Paper Machine Clothing (PMC) revenue from the Q3 2006 bottom, company-wide cost reduction and process improvement initiatives, and continued growth of the emerging businesses. In Q1 2007 we made good progress on each of these three fronts.
 
“Turning first to PMC revenue, excluding the effect of currency, Q1 net sales were down 3.7 percent compared to a year ago. However, PMC revenue is on trend toward our 2007 Q4 objective. In Western Europe, with volume increases more than offsetting lower average prices, revenue rose 3.9 percent over Q4 2006, which in turn had been 8.6 percent higher than the Q3 2006 low point. Orders in Western Europe are also strong. Revenue in the Americas grew compared to Q4 2006, and orders remained firm. Pacific Corridor sales were soft in Q1, but orders are strong and we continue to make good progress toward the completion of our plant expansion in Korea and our new plant in China.
 
“We remain cautious in our outlook for PMC revenue. On the positive side, orders are strong, especially in Europe and Asia, and several new products are beginning to have an impact in the market. But our view of these positive indicators is tempered by the knowledge that our customer base in PMC continues to consolidate in both the Americas and Europe, and as we saw in 2006, the PMC industry remains highly competitive.
 
“It is precisely this sense of caution that provides motivation for the second contributor to the trend toward gradual improvement: the company-wide cost reduction and process improvement initiatives. As we discussed in the Q3 2006 earnings release, we have been undertaking three sets of cost reduction initiatives: reduction of administrative costs, consolidation of manufacturing capacity, and restructuring of our global procurement practices. In Q1, our earnings were reduced $0.24 per share by costs associated with these and other performance improvement initiatives. We have incurred a cumulative total of $0.40 per share for costs associated with these initiatives over the last three quarters. Consistent with our earlier estimates, we still expect total annualized savings from these initiatives to reach $0.45 per share by year’s end. We also expect to take additional charges in Q2 and Q3 that should lead to additional savings in 2008 and beyond.
 
“The third contributing factor to the gradual improvement in earnings is the growth in the emerging businesses. Compared to Q1 2006 and excluding currency translation effects, Composites sales grew 30.2 percent, Filtration by 9.4 percent, Door Systems by 8.9 percent, and PrimaLoft by 7.9 percent. Orders in each of these businesses were strong. The one drag on growth in the emerging businesses this quarter was Engineered Fabrics, which accounts for roughly half of the revenue in the Applied Technologies segment. Compared to Q1 2006, and once again excluding the effect of changes in currency translation rates, Engineered Fabrics revenue declined by 3.2 percent. Orders in Q1 were also slow. We do not believe this slowdown in Engineered Fabrics is due to any structural or competitive factors, and we do expect a rebound later in the year.
 
“More generally, we continue to be especially encouraged by developments in the Composites business, and are making steady progress in our efforts to build the manufacturing and engineering base required to sustain rapid and profitable growth. We are also encouraged by our exploration of ways to accelerate growth of the Door Systems business, and by the sales and orders growth in our Filtration business, which is being driven by the requirement for environmental control in the power generation market in China.
 

 
“So in sum, we think we are still on track toward our short-term target of returning, by year’s end, to the operating income levels of Q2 2006. We remain bullish in the long term about the Albany cash and grow business model and cautiously optimistic about the short term. Our optimism stems from growing competitive strength in PMC, progress in cost-cutting and process improvement initiatives, and continued growth in the emerging businesses; while our caution stems from the recognition that those underlying conditions that hit the top line in PMC in Q3 are still in place.”
 
The Company plans a live web cast to discuss first-quarter 2007 financial results on Friday, April 27, 2007, at 9:00 a.m. Eastern Time. For access, go to www.albint.com
 
Albany International is the world’s largest producer of custom-designed paper machine fabrics and process belts that are essential to the manufacture of paper and paperboard. In its family of businesses, Albany applies its core competencies in advanced textiles and materials to other industries. Founded in 1895, the Company is headquartered in Albany, New York, and employs approximately 6,150 people worldwide. Our plants are strategically located to serve our global customers. Additional information about the Company and its businesses and products is available at www.albint.com.
 
This release contains certain items that may be considered to be non-GAAP financial measures. Such items are provided because management believes that, when presented together with the GAAP items to which they relate, they can provide additional useful information to investors regarding the registrant’s financial condition, results of operations, and cash flows.
 
The effect of changes in currency translation rates is calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. That amount is then compared to the U.S. dollar amount reported in the current period.
 
Forward-looking statements in this release or in the webcast, including statements about future economic conditions, materials costs, growth in PMC sales and operating income during the next several quarters, growth expectations for the Company’s emerging businesses, the amount and timing of anticipated costs and savings associated with cost reduction and process improvement initiatives, pension contributions, pricing conditions in the PMC industry, paper industry outlook, the amount and timing of capital expenditures, tax rates, and depreciation and amortization are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations and are subject to various risks and uncertainties, including, but not limited to, economic conditions affecting the paper industry and other risks and uncertainties set forth in the Company’s 2006 Annual Report to Shareholders and subsequent filings with the U.S. Securities and Exchange Commission. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period.
 


ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)

 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2007
 
2006
 
           
Net sales
 
$
257,738
 
$
251,223
 
Cost of goods sold
   
159,352
   
147,247
 
               
Gross profit
   
98,386
   
103,976
 
Selling, technical, general and research expenses
   
82,327
   
74,562
 
               
Operating income
   
16,059
   
29,414
 
Interest expense, net
   
3,302
   
1,879
 
Other (income)/expense, net
   
(30
)
 
909
 
               
Income before income taxes
   
12,787
   
26,626
 
Income tax expense
   
3,197
   
7,988
 
               
Income before associated companies
   
9,590
   
18,638
 
Equity in (losses)/earnings of associated companies
   
(285
)
 
177
 
               
Net income
   
9,305
   
18,815
 
               
Earnings per share:
             
Basic
 
$
0.32
 
$
0.60
 
Diluted
 
$
0.31
 
$
0.59
 
               
Shares used in computing earnings per share:
             
Basic
   
29,265
   
31,419
 
Diluted
   
29,672
   
31,919
 
               
Dividends per share
 
$
0.10
 
$
0.09
 
 


ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 
 
(unaudited)
     
 
 
March 31,
 
December 31,
 
 
 
2007
 
2006
 
ASSETS
         
Cash and cash equivalents
 
$
56,426
 
$
68,237
 
Accounts receivable, net
   
205,616
    209,907  
Inventories
   
238,894
   
224,210
 
Deferred taxes
   
16,488
   
16,290
 
Prepaid expenses
   
13,122
   
10,552
 
Total current assets
   
530,546
   
529,196
 
               
Property, plant and equipment, net
   
407,588
   
397,521
 
Investments in associated companies
   
6,321
   
6,634
 
Intangibles
   
8,937
   
9,343
 
Goodwill
   
174,797
   
172,890
 
Deferred taxes
   
112,286
   
112,280
 
Cash surrender value of life
             
insurance policies
   
42,099
   
41,197
 
Other assets
   
41,105
   
37,486
 
Total assets
 
$
1,323,679
 
$
1,306,547
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
             
Notes and loans payable
 
$
21,488
 
$
12,510
 
Accounts payable
   
44,414
   
50,214
 
Accrued liabilities
   
114,329
   
101,995
 
Current maturities of long-term debt
   
11,171
   
11,167
 
Income taxes payable and deferred
   
1,686
   
20,099
 
Total current liabilities
   
193,088
   
195,985
 
               
Long-term debt
   
345,859
   
354,587
 
Other noncurrent liabilities
   
219,273
   
219,774
 
Deferred taxes and other credits
   
54,089
   
37,076
 
Total liabilities
   
812,309
   
807,422
 
               
Commitments and Contingencies
    -     -  
               
SHAREHOLDERS' EQUITY
             
Preferred stock, par value $5.00 per share; authorized
2,000,000 shares; none issued
   
-
   
-
 
Class A Common Stock, par value $.001 per share; authorized
100,000,000 shares; issued 34,633,542 in 2007
and 34,518,870 in 2006.
   
35
   
35
 
Class B Common Stock, par value $.001 per share;
authorized 25,000,000 shares; issued
and outstanding 3,236,098 in 2007 and 2006
   
3
   
3
 
Additional paid in capital
   
320,010
   
316,164
 
Retained earnings
   
545,484
   
541,602
 
Accumulated items of other comprehensive income:
             
Translation adjustments
   
(13,831
)
 
(18,348
)
Pension liability adjustment
   
(81,071
)
 
(81,071
)
 
   
770,630
   
758,385
 
Less treasury stock (Class A), at cost
             
(8,540,882 shares in 2007 and 2006)
   
259,260
   
259,260
 
Total shareholders' equity
   
511,370
   
499,125
 
Total liabilities and  shareholders' equity
 
$
1,323,679
 
$
1,306,547
 
 


ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2007
 
2006
 
OPERATING ACTIVITIES
         
Net income
 
$
9,305
 
$
18,815
 
Adjustments to reconcile net income to net
             
cash provided by operating activities:
             
Equity in earnings of associated companies
   
285
   
(177
)
Depreciation
   
14,187
   
13,174
 
Amortization
   
1,131
   
778
 
Provision for deferred income taxes, other credits
and long-term liabilities
   
915
   
893
 
Provision for write-off of equipment
   
66
   
95
 
Increase in cash surrender value of life insurance
   
(902
)
 
(854
)
Unrealized currency transaction
             
gains and losses
   
169
   
1,721
 
Shares contributed to ESOP
   
1,961
   
3,145
 
Stock option expense
   
200
   
386
 
Tax benefit of options exercised
   
(145
)
 
(226
)
Issuance of shares under long-term
             
incentive plan
   
937
   
-
 
               
Changes in operating assets and
             
liabilities, net of business acquisition:
             
Accounts receivable
   
5,185
   
(3,312
)
Note receivable
   
-
   
(336
)
Inventories
   
(13,641
)
 
(14,711
)
Prepaid expenses
   
(2,446
)
 
(1,786
)
Accounts payable
   
(6,041
)
 
4,895
 
Accrued liabilities
   
11,809
   
5,331
 
Income taxes payable
   
(4,727
)
 
(290
)
Other, net
   
(899
)
 
(849
)
Net cash provided by operating activities
   
17,349
   
26,692
 
               
INVESTING ACTIVITIES
             
Purchases of property, plant and equipment
   
(23,206
)
 
(19,764
)
Purchased software
   
(2,683
)
 
(85
)
Acquisitions, net of cash acquired
   
-
   
(6,232
)
Net cash (used in) investing activities
   
(25,889
)
 
(26,081
)
               
FINANCING ACTIVITIES
             
Proceeds from borrowings
   
10,532
   
186,875
 
Principal payments on debt
   
(10,437
)
 
(9,105
)
Purchase of treasury shares
   
-
   
(101,104
)
Purchase of call options on common stock
   
-
   
(47,688
)
Sale of common stock warrants
   
-
   
32,961
 
Proceeds from options exercised
   
603
   
869
 
Tax benefit of options exercised
   
145
   
226
 
Debt issuance costs
   
-
   
(4,704
)
Dividends paid
   
(2,919
)
 
(2,910
)
Net cash (used in)/provided by financing activities
   
(2,076
)
 
55,420
 
               
Effect of exchange rate changes on cash flows
   
(1,195
)
 
962
 
               
(Decrease)/increase in cash and cash equivalents
   
(11,811
)
 
56,993
 
Cash and cash equivalents at beginning of year
   
68,237
   
72,771
 
Cash and cash equivalents at end of period
 
$
56,426
 
$
129,764