UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
(X) Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934 (No Fee Required)
For the fiscal year ended December 31, 2006
OR
( ) Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No Fee Required)
For the transition period from to
Commission file number 0-16214
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Albany International Corp. Prosperity Plus Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Albany International Corp.
1373 Broadway, Albany, New York 12204
Albany International Corp.
Prosperity Plus Savings Plan
Index
December 31, 2006 and 2005
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Page(s)
Report of Independent Registered Public Accounting Firm ................... 1
Financial Statements
Statements of Net Assets Available for Benefits ........................... 2
Statements of Changes in Net Assets Available for Benefits ................ 3
Notes to Financial Statements ............................................. 4-9
Supplemental Schedule*
Schedule of Assets (Held at End of Year) .................................. 10
*Other supplemental schedules required by 29 CFR 2520.103-800 of the
Department of Labor Rules and Regulations for Reporting and Disclosure
under the Retirement Income Security Act of 1974 (ERISA) have been
omitted because they are not applicable.
Signature.................................................................... 11
Exhibits
23. Consent of Independent Registered Public Accounting Firm............... 12
Report of Independent Registered Public Accounting Firm
To the Participants, Administrator and Compensation Committee of
Albany International Corp. Prosperity Plus Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Albany International Corp. Prosperity Plus Savings Plan (the "Plan") at
December 31, 2006 and 2005, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers
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Albany, New York
June 21, 2007
1
Albany International Corp.
Prosperity Plus Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2006 and 2005
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2006 2005
Assets
Investments, at fair value
Registered investment companies $197,579,735 $167,732,530
Albany International Class A common stock 36,988,917 39,595,904
Participant loans 7,100,335 7,216,682
Common/collective trust 47,818,809 47,387,152
Cash - interest bearing 13,952 13,418
------------ ------------
Total investments 289,501,748 261,945,686
Employer contribution receivable 940,391 2,256,903
Participant contribution receivable 74,953 -
------------ ------------
Net assets available for benefits at fair value 290,517,092 264,202,589
Adjustment from fair value to contract value for interest in collective trust
relating to fully benefit-responsive investment
contracts 460,144 624,924
------------ ------------
Net assets available for benefits $290,977,236 $264,827,513
============ ============
The accompanying notes are an integral part of the financial statements.
2
Albany International Corp.
Prosperity Plus Savings Plan
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2006 and 2005
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2006 2005
Additions
Investment income
Interest and dividend income from investments $ 11,201,137 $ 9,785,820
Interest income, participant loans 515,498 471,813
Net appreciation in fair value of investments 13,833,723 3,344,381
------------ ------------
25,550,358 13,602,014
------------ ------------
Contributions
Employer 5,322,352 6,517,896
Participant 10,404,375 9,855,828
------------ ------------
15,726,727 16,373,724
Other additions 467,785 10,591
------------ ------------
Total additions 41,744,870 29,986,329
------------ ------------
Deductions
Payment of benefits 15,570,774 17,567,476
Other deductions 24,373 14,410
------------ ------------
Total deductions 15,595,147 17,581,886
------------ ------------
Net increase 26,149,723 12,404,443
Net assets available for benefits
Beginning of year 264,827,513 252,423,070
------------ ------------
End of year $290,977,236 $264,827,513
============ ============
The accompanying notes are an integral part of the financial statements.
3
Albany International Corp.
Prosperity Plus Savings Plan
Notes to Financial Statements
December 31, 2006 and 2005
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1. Description of Plan
The following description of the Albany International Corp. (the
"Company") Prosperity Plus Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan and is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan
covers all full time domestic employees of the Company and its
subsidiaries who are 21 years of age or older.
Contributions
Employees may make voluntary contributions to the Plan of 1% to 15% of
eligible compensation, subject to certain limitations, on a before-and/or
after-tax basis as defined in the Plan. Participants may also contribute
amounts representing distributions from other qualified defined benefit or
defined contribution plans. Participants direct the investment of their
contributions into various investment options offered by the Plan. The
Plan currently offers thirteen registered investment companies, a
common/collective trust, a brokerage option and Albany International Class
A common stock. The Company makes a matching contribution to the Plan in
varying percentages up to 5% of the participant's eligible compensation
(which may be in a combination of both shares of Company Class A stock and
cash). Employees may convert any of the Albany International Class A
common stock in their match and profit sharing accounts into the other
available investment fund options.
During 2006 and 2005, the Company's matching contributions of $4,381,961
and $4,260,993 included $4,100,583 (114,206 shares) and $3,985,319
(116,711 shares) of Albany International Class A common stock,
respectively.
Profit-Sharing Contribution
The Plan provides for a profit-sharing contribution. Profit-sharing
contributions are based upon a minimum 1% employee participation in the
Plan and are in addition to, and separate from, Company matching
contributions. In order to receive a profit-sharing contribution, an
employee must be an active contributing participant in the Plan during the
final quarter of the year for which the profit-sharing contribution is
made, unless the employee has been suspended from participation because of
a hardship withdrawal. If an employee is eligible, yet chooses to
participate for less than a full year, the profit-sharing contribution
will be pro-rated. An employee who retires during the year is also
eligible to receive a profit sharing contribution on a pro-rata basis. The
amount of the profit sharing contribution is based on a formula stated at
the beginning of the year. The Company's contribution for profit-sharing
may be made in either cash or Albany International Class A common stock
(or both) following the end of the year.
The profit sharing contributions were $940,391 and $2,256,903 for the
years ended December 31, 2006 and 2005, respectively. Profit sharing
contributions paid during the years ended December 31, 2006 and 2005
included $2,114,301 (61,641 shares) and $1,371,376 (40,087 shares),
respectively, of Albany International Class A common stock.
4
Albany International Corp.
Prosperity Plus Savings Plan
Notes to Financial Statements
December 31, 2006 and 2005
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Participant Accounts
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contributions and (b) Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
Vesting
Participants are vested immediately in their and the Company's
contributions plus actual earnings thereon.
Pension Purchase
The Plan allows retiring plan participants to purchase additional pension
benefits by transferring existing Plan account balances to the Company's
Pension Plus Plan. The decision to make a pension purchase must be made 60
days prior to retirement. Once the pension purchase option is elected, the
election is irrevocable after retirement.
Payment of Benefits
Upon termination of service, total disability, death or retirement,
participants have the option to receive an amount equal to the value of
their accounts in a lump sum payment or, in the case of total disability
or retirement, monthly installments over a period not to exceed 15 years.
Participants may also elect prior to retirement to withdraw up to 100% of
their after-tax contributions and up to 100% of before-tax contributions
if the Internal Revenue Service's criteria for "financial hardship" are
met.
Plan Termination
The Company intends to continue the Plan indefinitely but reserves the
right to modify, amend, suspend or terminate the Plan. In the event of
plan termination, distributions would be allocated based on the value of
the participant accounts.
Administrative Costs
The Plan stipulates that all costs incurred in administering the Plan
shall be borne by the Company or, if the Compensation Committee so
determines, by the Plan. The Company paid Plan administrative expenses of
$75,466 and $69,288 during 2006 and 2005, respectively.
2. Summary of Significant Accounting Policies
Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
Plan management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of changes in net assets during the reporting period. Actual
results could differ from those estimates.
As described in Financial Accounting Standards Board Staff Position, FSP
AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment
Contracts Held by Certain Investment Companies Subject to the AICPA
Investment Company Guide and Defined-Contribution Health and Welfare and
Pension Plans (the FSP), investment contracts held by a
defined-contribution plan are required to be reported at fair value.
However, contract value is the relevant measurement attribute
5
Albany International Corp.
Prosperity Plus Savings Plan
Notes to Financial Statements
December 31, 2006 and 2005
- --------------------------------------------------------------------------------
for that portion of the net assets available for benefits of a
defined-contribution plan attributable to fully benefit-responsive
investment contracts because contract value is the amount participants
would receive if they were to initiate permitted transactions under the
terms of the plan. The Plan invests in investment contracts through a
collective trust. As required by the FSP, the statements of net assets
available for benefits presents the fair value of the investment in the
collective trust as well as the adjustment of the investment in the
collective trust from fair value to contract value relating to the
investment contracts. The statement of changes in net assets available for
benefits is prepared on a contract value basis. The FSP has been applied
retroactively and accordingly, the statement of net assets available for
benefits at December 31, 2005 has been updated to reflect the requirements
of the FSP.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, mutual funds and other investment securities. Investment
securities are exposed to various risks, such as interest rate, market and
credit. Due to the level of risk associated with certain investment
securities and the level of uncertainty related to changes in the value of
investment securities, it is at least reasonably possible that changes in
risks in the near term would materially affect participants' account
balances and the amounts reported in the statements of net assets
available for benefits and the statement of changes in net assets
available for benefits.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value.
Investments in registered investment companies are valued at the latest
quoted sales price on the last business day of the year, which represents
the net asset value of shares held by the Plan at year end.
The investment in the common/collective trust is recorded at fair value
(prior to adjustment to contract value) based on the Plan's share of the
fund's net asset value.
The common stock of Albany International Corp. is valued at the latest
quoted price on the last business day of the year.
Participant loans are valued at cost which approximates fair value.
Security transactions are recorded on a trade-date basis. Gains or losses
on sales of securities are based on average cost.
Dividend income is recorded on the ex-dividend date. Dividends declared by
the Board of Directors of the Company on Albany International Corp. Class
A common stock may be reinvested in the Plan or received as a cash
distribution as elected by the participant. Total cash dividends received
by participants included in payment of benefits are $348,418 and $311,145
for the years ended December 31, 2006 and 2005, respectively. Interest
income is recorded as earned.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation in the fair value of its investments, which
consists of realized gains and losses and unrealized
appreciation/depreciation on those investments.
Payment of Benefits
Benefit payments are recorded when paid.
6
Albany International Corp.
Prosperity Plus Savings Plan
Notes to Financial Statements
December 31, 2006 and 2005
- --------------------------------------------------------------------------------
Reclassifications
Certain amounts in the December 31, 2005 financial statements have been
reclassified to conform to the 2006 presentation.
New Accounting Pronouncement
In September 2006, the FASB issued FAS No. 157, "Fair Value Measurements"
(FAS No. 157). FAS No. 157 clarifies the principle that fair value should
be based on the assumptions market participants would use when pricing an
asset or liability and establishes a fair value hierarchy that prioritizes
the information used to develop those assumptions. Under the Standard,
fair value measurements would be separately disclosed by level within the
fair value hierarchy. FAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15 2007, and interim
periods within those fiscal years, with early adoption permitted.
Management does not expect the adoption of FAS No. 157 to have a material
effect on the financial statements.
3. Investments
Plan investments as of December 31 are as follows:
2006 2005
Investments at fair value as determined
by quoted market price
Registered investment companies $197,579,735 $167,732,530
Albany International Class A common stock 36,988,917 39,595,904
Cash - interest bearing 13,952 13,418
------------ ------------
234,582,604 207,341,852
------------ ------------
Investments at estimated value
Common/collective trust 47,818,809 47,387,152
Participant loans 7,100,335 7,216,682
------------ ------------
54,919,144 54,603,834
------------ ------------
Total investments $289,501,748 $261,945,686
============ ============
The following investments represent 5% or more of net assets available for
benefits at December 31:
2006 2005
Vanguard Institutional Index Fund $50,147,892 $46,176,648
Vanguard International Growth Fund 16,280,234 11,557,121
Vanguard Mid-Cap Index Fund 14,934,051 13,578,572
Vanguard Target Retirement 2015 Fund 20,051,240 15,370,080
Vanguard Target Retirement 2025 Fund 17,790,860 16,630,838
Vanguard Windsor Fund 49,149,626 41,982,704
Vanguard Retirement Savings Trust 47,818,809 47,387,152
Albany International Class A common stock 36,988,917 39,595,904
7
Albany International Corp.
Prosperity Plus Savings Plan
Notes to Financial Statements
December 31, 2006 and 2005
- --------------------------------------------------------------------------------
During 2006 and 2005, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated/(depreciation) in value as follows:
2006 2005
Albany International Class A common stock $ (3,597,525) $ 1,361,459
Registered investment companies 17,431,248 1,982,922
------------ ------------
$ 13,833,723 $ 3,344,381
============ ============
4. Albany International Class A Common Stock Fund
Information about the net assets and the significant components of the
changes in net assets relating to Albany International Class A common
stock fund is as follows:
December 31,
-----------------------------------
2006 2005
Net assets
Albany International Class A common stock $ 36,988,917 $ 39,595,904
Cash - interest bearing 13,952 13,418
Employer profit sharing contribution receivable 940,370 2,114,301
------------ ------------
$ 37,943,239 $ 41,723,623
============ ============
Changes in net assets
Investment income/(expenses) $ (3,597,525) $ 1,361,459
Dividend income 427,113 386,282
Employer matching contribution 4,100,583 3,985,319
Employer profit sharing contribution 940,370 2,114,301
Employee contributions 90,228 47,080
Payment of benefits (1,647,080) (1,606,613)
Other deductions (4,872) (4,935)
Net transfers to/from participant directed
investments (4,089,201) (6,346,147)
------------ ------------
$ (3,870,384) $ (63,254)
============ ============
5. Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 and
additional amounts in multiples of $500 up to a maximum equal to the
lesser of $50,000 or 50% of their account balance. Interest rates on loans
are determined by the Compensation Committee from time to time with the
rate remaining constant throughout the life of the loan (rates range
between 4.94% and 10.25% at December 31, 2006). Loans are to be repaid
through payroll deductions, although they may be repaid in a lump sum
amount, generally over a period from 1 to 5 years except for loans for the
purchase of a primary residence. Home purchase loan repayments range from
5 to 20 years.
8
Albany International Corp.
Prosperity Plus Savings Plan
Notes to Financial Statements
December 31, 2006 and 2005
- --------------------------------------------------------------------------------
6. Related Party Transactions
The Plan invests in shares of mutual funds managed by an affiliate of
Vanguard Fiduciary Trust Company ("VFTC"). VFTC acts as trustee for the
investments held by the Plan. The Plan also invests in shares of the Plan
Sponsor's Albany International Class A common stock. The Plan purchased
$8,485,240 and $7,837,853 and sold $7,485,296 and $10,005,497 of Albany
International Class A common stock during the years ended December 31,
2006 and 2005, respectively. Transactions in such investments qualify as
party-in-interest transactions which are exempt from the prohibited
transaction rules.
7. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated January 31, 2004, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections
of the Code. The Plan has been amended since receiving the determination
letter. However, the Plan administrator believes that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Code. Therefore, the Plan administrator believes that
the Plan was qualified and the related trust was tax-exempt as of the
financial statement date.
9
Albany International Corp.
Prosperity Plus Savings Plan
Schedule of Assets (Held at End of Year)
December 31, 2006
- --------------------------------------------------------------------------------
EIN 14-0462060 Attachment to Form 5500, Schedule H, Line 4(i) - "Schedule of
Assets (Held at End of Year)"
Current
Identity of Issue/Borrower, Description of investments including Cost Value
Lessor or Similar Party maturity date, rate of interest,
collateral, par, or maturity value
PIMCO Total Return Registered Investment Company $ 6,545,041 $ 6,479,140
Royce Premier Fund Registered Investment Company 4,786,764 4,991,351
* Vanguard Inst Index Fund Registered Investment Company 43,121,860 50,147,892
* Vanguard Int'l Growth Fund Registered Investment Company 13,379,195 16,280,234
* Vanguard Mid-Cap Index Fund Registered Investment Company 12,924,990 14,934,051
* Vanguard Morgan Growth Inv Registered Investment Company 1,650,116 1,770,504
* Vanguard Tgt Retirement 2005 Registered Investment Company 3,836,288 3,937,841
* Vanguard Tgt Retirement 2015 Registered Investment Company 18,554,346 20,051,240
* Vanguard Tgt Retirement 2025 Registered Investment Company 16,045,419 17,790,860
* Vanguard Tgt Retirement 2035 Registered Investment Company 7,080,521 8,002,011
* Vanguard Tgt Retirement 2045 Registered Investment Company 1,901,862 2,100,092
* Vanguard Target Retirement Inc. Registered Investment Company 879,791 901,443
* Vanguard Windsor Fund Registered Investment Company 44,162,061 49,149,626
* VGI Brokerage Option Vanguard Brokerage Option 1,042,320 1,043,450
* Vanguard Retire Savings Trust Common/Collective Trust 48,278,953 48,278,953
* AI Stock Fund Company Stock Fund 28,195,902 36,988,917
* Vanguard cash account - interest bearing Cash 13,952 13,952
* Loan Fund Participant loans (for a term 7,100,335 7,100,335
------------ ------------
not exceeding 20 years at
interest rates ranging
from 4.94% to 10.25%)
Total assets held for investment purposes $259,499,716 $289,961,892
============ ============
* Party in interest
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Albany International Prosperity Plus
Savings Plan
(Name of Plan)
Date: June 28, 2007 /s/ Christopher J. Connally
---------------------------
Christopher J. Connally
Corporate Treasurer
11
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-76078) of Albany International Corp. of our
report dated June 21, 2007 relating to the financial statements of Albany
International Corp. Prosperity Plus Savings Plan, which appears in this Form
11-K.
/s/ PricewaterhouseCoopers
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Albany, New York
June 28, 2007