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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 0-16214
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ALBANY INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 14-0462060
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1373 BROADWAY, ALBANY, NEW YORK 12204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 518-445-2200
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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New York Stock Exchange and
Class A Common Stock ($0.001 par value) Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF CLASS
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None
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports,) and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
The aggregate market value of Class A Common Stock held on February 15, 2001
by non-affiliates of the registrant was $431,892,520.
The registrant had 24,954,605 shares of Class A Common Stock and 5,869,457
shares of Class B Common Stock outstanding as of February 15, 2001.
DOCUMENTS INCORPORATED BY REFERENCE PART
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Registrant's Annual Report to Shareholders for the year
ended December 31, 2000................................... II
Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on
May 10, 2001.............................................. III
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PART I
ITEM 1. BUSINESS
Albany International Corp. ("the Registrant") designs, manufactures and
markets paper machine clothing for each section of the paper machine. It
manufactures and sells more paper machine clothing worldwide than any other
company. In 1999, to enhance that position, the Company purchased the paper
machine clothing business of the Geschmay group. Paper machine clothing consists
of large continuous belts of custom designed and custom manufactured, engineered
fabrics that are installed on paper machines and carry the paper stock through
each stage of the paper production process. Paper machine clothing is a
consumable product of technologically sophisticated design that is made with
synthetic monofilament and fiber materials. The design and material composition
of paper machine clothing can have a considerable effect on the quality of paper
products produced and the efficiency of the paper machines on which it is used.
The Registrant produces a substantial portion of its monofilament requirements.
Practically all press fabrics are woven tubular or endless from monofilament
yarns on large, specially designed looms. After weaving, the base press fabric
goes to a needling operation where a thick fiber layer, called a batt, is laid
on the base just before passing through the needling machine. The needles are
equipped with tiny barbs that grab batt fibers locking them into the body of the
fabric. After needling, the composite fabrics are usually washed, and water is
removed. The fabric then is heat set, treatments and coatings may be applied,
and it is measured and trimmed to width.
The Registrant's manufacturing process is similar for forming fabrics and
drying fabrics, except that there is normally no needling operation in the
construction of those fabrics. Most monofilament screens are woven flat on wide
looms. The fabrics are seamed to produce an endless loop, and heat stabilized by
running them around two large cylinders under heat and drawn out by tension.
After heat setting, the fabrics are seamed and boxed.
In addition to paper machine clothing, the Registrant manufactures other
engineered products for the non-woven industry, corrugator belts, filtration
media and high performance doors. The High Performance Door Division, which
includes Rapid Roll Doors-Registered Trademark-, is the operation of the Company
that developed high speed, high performance doors, which grew from the
application of the Company's coated fabric technology to its woven fabrics.
Since the inception of Rapid Roll Doors in the early 1980's, manufacturing
operations in North America and Europe have supplied over 100,000 installations
worldwide. Since 1996, the Registrant has acquired Schieffer Door Systems and
Jansen Tortechnik in Germany, Burwell Door Systems in Australia and M&I Door
Systems in Canada to enhance the high performance door operations.
INDUSTRY FACTORS
There are approximately 1,100 paper machines in the United States located in
approximately 530 paper mills. It is estimated that there are approximately
4,770 paper machines in the world which produce at least 50 tons of paper per
day. Additionally, there are many smaller paper machines. Demand for paper
machine clothing is tied to the volume of paper production, which in turn
reflects economic growth. According to published data, world paper production
volumes have grown at an annual rate of approximately 3.5% over the last ten
years. The Registrant anticipates continued growth for the long-term in world
paper production. The profitability of the paper machine clothing business has
generally been less cyclical than the profitability of the papermaking industry.
Because the paper industry has been characterized by an evolving but
essentially stable manufacturing technology based on the wet forming papermaking
process, which requires a very large capital investment, the Registrant does not
believe that a commercially feasible substitute technology that does not employ
paper machine clothing is likely to be developed and incorporated into the paper
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production process by paper manufacturers in the foreseeable future.
Accordingly, the prospects for continued demand for paper machine clothing
appear excellent.
Over the last few years, paper manufacturers have generally reduced the
number of suppliers of paper machine clothing per machine position. This trend
has increased opportunities for market leaders, including the Registrant, to
expand their market share.
INTERNATIONAL OPERATIONS
The Registrant maintains wholly-owned manufacturing facilities in Australia,
Brazil, Canada, China, Finland, France, Germany, Great Britain, Italy, Mexico,
The Netherlands, South Korea, Sweden and the United States. The Registrant has
50% interests in an entity in South Africa and an entity in Russia which are
engaged primarily in the engineered fabrics business. The Registrant also has a
50% interest in an entity in England which is engaged in the high performance
door business (see Note 1 of Notes to Consolidated Financial Statements).
The Registrant's geographically diversified operations allow it to serve the
world's paper markets more efficiently and to provide superior technical service
to its customers. The Registrant benefits from the transfer of research and
development product innovations between geographic regions. The worldwide scope
of the Registrant's manufacturing and marketing efforts also limits the impact
on the Registrant of economic downturns that are limited to a geographic region.
The Registrant's widespread presence subjects it to certain risks, including
controls on foreign exchange and the repatriation of funds. However, the
Registrant has been able to repatriate earnings in excess of working capital
requirements from each of the countries in which it operates without substantial
governmental restrictions and does not foresee any material changes in its
ability to continue to do so in the future. In addition, the Registrant believes
that the risks associated with its operations and locations outside the United
States are those normally associated with doing business in these locations.
MARKETING, CUSTOMERS AND BACKLOG
Paper machine clothing is custom designed for each user depending upon the
type, size and speed of the papermaking machine, the machine section, the grade
of paper being produced, and the quality of the pulp stock used. Technical
expertise, judgment and experience are critical in designing the appropriate
clothing for each position on the machine. As a result, the Registrant employs
highly skilled sales and technical service personnel in 25 countries who work
directly with paper mill operating management. The Registrant's technical
service program in the United States gives its service engineers field access to
the measurement and analysis equipment needed for troubleshooting and
application engineering. Sales, service and technical expenses are major cost
components of the Registrant. The Registrant employs approximately 1,200 people
in the sales and technical functions combined, many of whom have engineering
degrees or paper mill experience. The Registrant's market leadership position
reflects the Company's commitment to technological innovation.
Typically, the Registrant experiences its highest quarterly sales levels in
the fourth quarter of each fiscal year. The Registrant believes that this
pattern only partially reflects seasonal shifts in demand for its products but
is more directly related to purchasing policies of the Registrant's customers.
Payment terms granted to customers reflect general competitive practices.
Terms vary with product and competitive conditions, but generally require
payment within 30 to 90 days, from the date of invoice, depending on the country
of operation. Historically, bad debts have been insignificant. No single
customer, or group of related customers, accounted for more than 5% of the
Registrant's sales of paper machine clothing in any of the past three years.
Management does not believe that the loss of any one customer would have a
material adverse effect on the Registrant's business.
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The Registrant's order backlogs at December 31, 2000 and 1999 were
approximately $604 million and $592 million, respectively. Order backlog at
December 31, 2000 is generally expected to be invoiced during the next
12 months.
RESEARCH AND DEVELOPMENT
The Registrant invests heavily in research, new product development and
technical analysis to maintain its leadership in the paper machine clothing
industry. The Registrant's expenditures fall into two primary categories,
research and development and technical expenditures. Research and development
expenses totaled $23.3 million in 2000, $23.6 million in 1999, and
$23.7 million in 1998. While most research activity supports existing products,
the Registrant engages in research for new products. New product research has
focused primarily on more sophisticated paper machine clothing and has resulted
in a stream of products such as PRINTEX-TM-, KRAFTEX-Registered Trademark- and
MICROTEX-Registered Trademark- forming fabrics,
SEAMTECH-Registered Trademark-PLUS, the latest patented on-machine-seamed press
fabric, DYNATEX-TM-, a unique multiaxial press fabric, SeamDynatex-TM-, our
newest innovation combining the benefits of seamed and multi axial features and
APERTECH-TM-, a new class of porous, polymeric press fabrics, process belts such
as TRANSBELT -Registered Trademark-, VENTABELT -Registered Trademark-( ) and
GLOSSBELT-TM-, as well as THERMONETICS-Registered Trademark-, AERO2000-TM-,
AEROLINE-Registered Trademark- and AEROGRIP-Registered Trademark- which are
dryer fabrics. Technical expenditures totaled $26.2 million in 2000,
$24.5 million in 1999, and $26.3 million in 1998. Technical expenditures are
focused on design, quality assurance and customer support.
Although the Registrant has focused most of its research and development
efforts on paper machine clothing products and design, the Registrant also has
made progress in developing non-paper machine clothing products, such as
Primaloft-Registered Trademark-, a synthetic down alternative.
Primaloft-Registered Trademark- is widely used in technical outdoor apparel as
well as premium comforters and pillows. Through its major research subsidiary,
Albany International Research Co. located in Mansfield, Massachusetts, the
Registrant conducts research under contract for the U.S. government and major
corporations. In addition to Albany International Research Co., the Registrant
has another significant research facility in Halmstad, Sweden and four other
development centers located at manufacturing locations in Selestat, France;
Goppingen, Germany; Albany, New York; and Menasha, Wisconsin.
The Registrant holds a number of patents, trademarks and licenses, none of
which are material to the continuation of the Registrant's business. The
Registrant has licensed some of its patents to one or more competitors, mainly
to enhance customer acceptance of the new products. The revenue from such
licenses is less than 1% of consolidated net sales.
RAW MATERIALS AND INVENTORY
Primary raw materials for the Registrant's products are synthetic fibers,
which are generally available from a number of suppliers. The Registrant,
therefore, is not required to maintain raw material inventories in excess of its
current needs to assure availability. In addition, the Registrant manufactures
monofilament, a basic raw material for all types of paper machine clothing, at
its facility in Homer, New York, which supplies approximately 35% of its
world-wide monofilament requirements. This manufacturing capability assists the
Registrant in its negotiations with monofilament producers for the balance of
its supply requirements, and enhances the ability of the Registrant to develop
proprietary products.
COMPETITION
While there are a number of small regional paper machine clothing suppliers
worldwide, only four compete on a global basis. Market shares vary depending on
the country and the type of paper machine clothing produced. In the paper
machine clothing market, the Registrant believes that it has a market share of
approximately 36% in the United States and Canadian markets, taken together, 27%
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in the rest of the world and approximately 30% in the world overall. Together,
the United States and Canada constitute approximately 38% of the total world
market for paper machine clothing.
Competition is intense in all areas of the Registrant's business. While
price competition is, of course, a factor, the primary bases for competition are
the performance characteristics of the Registrant's products, which are
principally technology-driven, and the quality of customer service. The
Registrant, like its competitors, provides diverse services to customers through
its sales and technical service personnel including: (1) consulting on
performance of the paper machine; (2) consulting on paper machine
configurations, both new and rebuilt; (3) selection and custom manufacture of
the appropriate paper machine clothing; and (4) storing fabrics for delivery to
the user.
EMPLOYEES
The Registrant employs 6,929 persons, of whom approximately 74% are engaged
in manufacturing the Registrant's products. Wages and benefits are competitive
with those of other manufacturers in the geographic areas in which the
Registrant's facilities are located. The Registrant considers its relations with
its employees in general to be excellent.
EXECUTIVE OFFICERS OF REGISTRANT
The following table sets forth certain information with respect to the
executive officers of the Registrant:
NAME AGE POSITION
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Francis L. McKone......................... 66 Chairman of the Board and Director
Frank R. Schmeler......................... 62 President, Chief Executive Officer and
Director
Michel J. Bacon........................... 51 Group Vice President--Europe
William M. McCarthy....................... 50 Group Vice President--Canada, Pacific and
Latin America
Edward Walther............................ 57 Group Vice President--United States
Michael C. Nahl........................... 58 Senior Vice President and Chief Financial
Officer
Edward R. Hahn............................ 56 Senior Vice President--Chief Technical
Officer
Frank Kolf................................ 55 Senior Vice President--Administration and
Development
Thomas H. Hagoort......................... 68 General Counsel and Secretary
Richard A. Carlstrom...................... 57 Vice President--Controller
Thomas H. Curry........................... 52 Vice President--Sales and Marketing United
States
David C. Michaels......................... 45 Vice President--Treasury and Tax
Kenneth C. Pulver......................... 57 Vice President--Corporate Communications
John C. Treanor........................... 62 Treasurer
Charles J. Silva, Jr...................... 41 Assistant General Counsel and Assistant
Secretary
FRANCIS L. MCKONE joined the Registrant in 1964. He has served the
Registrant as Chairman of the Board since 1998, Chief Executive Officer from
1993 to 2000, President from 1984 to 1998, Executive Vice President from 1983 to
1984, Group Vice President-Papermaking Products Group from 1979 to 1983, and
prior to 1979 as a Vice President of the Registrant and Division
President-Papermaking Products U.S. He has been a Director of the Registrant
since 1983. He is a Director of Thermo Fibergen, Inc., Thermo Fibertek, Inc. and
a member of the Advisory Board of Albank, a division of Charter One Bank.
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FRANK R. SCHMELER joined the Registrant in 1964. He has served the
Registrant as Chief Executive Officer since 2000, as President since 1998, Chief
Operating Officer from 1997 to 2000, Executive Vice President from 1997 to 1998,
Senior Vice President from 1988 to 1997, Vice President and General Manager of
the Felt Division from 1984 to 1988, Division Vice President and General
Manager, Albany International Canada from 1978 to 1984 and as Vice President of
Marketing, Albany International Canada from 1976 to 1978. He has been a Director
of the Registrant since 1997.
MICHEL J. BACON joined the Registrant in 1978. He has served the Registrant
as Group Vice President since 2001, Senior Vice President from 1996 to 2001,
Vice President and General Manager of Albany International Canada from 1991 to
1996, Vice President of Operations, Albany International Canada Press Division
from 1989 to 1991 and as Vice President of Marketing, Albany International
Canada from 1987 to 1989.
WILLIAM M. MCCARTHY joined the Registrant in 1977. He has served the
Registrant as Group Vice President since 2001, Senior Vice President from 1997
to 2001, and since 1991 has held various positions for Press Fabrics U.S.
including Vice President and General Manager, Vice President-Marketing and
Technical Director. From 1988 to 1991 he was Technical Director for Continental
Europe-Press Fabrics.
EDWARD WALTHER joined the Registrant in 1994. He has served the Registrant
as Group Vice President since 2001, as Executive Vice President from 1997 to
2001, Senior Vice President from 1995 to 1997 and as Vice President and General
Manager--Continental Europe from 1994 to 1995. Prior to joining the Registrant,
he held various marketing and managerial positions with a company in the paper
machine clothing business.
MICHAEL C. NAHL joined the Registrant in 1981. He has served the Registrant
as Senior Vice President and Chief Financial Officer since 1983 and prior to
1983 as Group Vice President. From 1965 to 1979 he served in marketing,
financial, logistical, analytical and management positions for the Exxon
Corporation and from 1979 to 1981 he was with General Refractories Corporation
as Director of Strategic Planning, Vice President and Chief Financial Officer.
He is a Director of UCAR International Inc. and First Integrated Capital Corp.
EDWARD R. HAHN joined the Registrant in 1971. He has served the Registrant
as Senior Vice President since 2000 and as Vice President-Research and
Development and Executive Director of Albany International Research Company from
1995 to 2000, as Vice President and General Manager of Press Fabrics U.S. from
1990 to 1995, as Vice President of Euroscan Press and Dryer Divisions from 1987
to 1990 and as Vice President of Operations for Nordiskafilt from 1986 to 1987.
FRANK KOLF joined the Registrant in 2001 as Senior Vice President. Prior to
joining the Registrant, he served as Executive Vice President for the Wangner
Group and as Director of Strategic Corporate Controlling with Carl Schenck AG.
THOMAS H. HAGOORT joined the Registrant in 1991. He has served the
Registrant as General Counsel and Secretary since 1997 and as General Counsel
from 1991 to 1997. From 1968 until December 31, 1990 he was a partner in Cleary,
Gottlieb, Steen and Hamilton, an international law firm with headquarters in New
York City.
RICHARD A. CARLSTROM joined the Registrant in 1972. He has served the
Registrant as Vice President-Controller since 1993, as Controller since 1980, as
Controller of a U.S. division from 1975 to 1980, and prior to 1975 as Financial
Controller of Albany International Pty. in Australia.
THOMAS H. CURRY joined the Registrant in 1992. He has served the Registrant
as Vice President-Sales and Marketing U.S. since 1999 and from 1995 to 1999 held
various positions for Press Fabrics U.S. including Vice President-General
Manager and Vice President-Marketing and from 1992 to 1995 held various sales
and marketing positions for the U.S. Dryer Division.
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DAVID C. MICHAELS joined the registrant in 1987. He has served the
Registrant as Vice President-Treasury and Tax since 2000 and previously served
as Director of Tax. Prior to 1987, he held various financial and tax positions
at Veeco Instruments, Inc.
KENNETH C. PULVER joined the Registrant in 1968. He has served the
Registrant as Vice President-Corporate Communications since 1997 and as Vice
President of Operations for Primaloft from 1992 to 1997. From 1984 to 1992 he
served in various marketing positions with Albany Engineered Systems.
JOHN C. TREANOR joined the Registrant in 1970. He has served the Registrant
as Treasurer since 1997, as Controller of Albany International Europe from 1992
to 1997 and as Controller of Albany International Canada from 1985 to 1992.
CHARLES J. SILVA, JR. joined the Registrant in 1994. He has served the
Registrant as Assistant General Counsel and Assistant Secretary since 1996 and
as Assistant General Counsel from 1994 to 1996. Prior to 1994, he was an
associate with Cleary, Gottlieb, Steen and Hamilton, an international law firm
with headquarters in New York City.
The Registrant believes it is in compliance with all Federal, State and
local provisions which have been enacted or adopted regarding the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, and does not have knowledge of environmental regulations which do
or might have a material effect on future capital expenditures, earnings, or
competitive position.
The Registrant is incorporated under the laws of the State of Delaware and
is the successor to a New York corporation which was originally incorporated in
1895 and which was merged into the Registrant in August 1987 solely for the
purpose of changing the domicile of the corporation. Upon such merger, each
outstanding share of Class B Common Stock of the predecessor New York
corporation was changed into one share of Class B Common Stock of the
Registrant. References to the Registrant that relate to any time prior to the
August 1987 merger should be understood to refer to the predecessor New York
corporation.
ITEM 2. PROPERTIES
The Registrant's principal manufacturing facilities are located in the
United States, Canada, Europe, Brazil, Mexico, Australia, South Korea and China.
The aggregate square footage of the Registrant's operating facilities in the
United States and Canada is approximately 2,866,000 square feet, of which
2,640,000 square feet are owned and 226,000 square feet are leased. The
Registrant's facilities located outside the United States and Canada comprise
approximately 4,037,000 square feet, of which 3,171,000 square feet are owned
and 866,000 square feet are leased. The Registrant considers these facilities to
be in good condition and suitable for their purpose. The capacity associated
with these facilities is adequate to meet production levels required and
anticipated through 2000. The Registrant's expected 2001 capital expenditures,
including leases, of about $40 million will provide sufficient capacity for
anticipated growth.
The Registrant believes it has modern, efficient production equipment. In
the last five years, excluding acquisitions, it has spent $215 million on new
plants and equipment or upgrading existing facilities.
7
ITEM 3. LEGAL PROCEEDINGS
The Registrant was initially named as a defendant in two actions in state
court in Louisiana, seeking damages from the Registrant and approximately fifty
other defendants (including primary suppliers of asbestos, asbestos abatement
and removal companies, paper machine builders, pump manufacturers, insulation
and building materials suppliers, boiler manufacturers and other suppliers of
products alleged to have contained asbestos) for injuries allegedly suffered by
approximately 2,000 employees at two paper mills in Bogalusa and St.
Francisville, Louisiana, due to exposure to asbestos. Liberty Mutual, the
underwriter of insurance coverage applicable to these claims, defended these
matters on the Registrant's behalf, subject to the standard reservation of any
rights under the applicable policies. (Mount Vernon Mills, from which the
Registrant acquired the Albany Mount Vernon dryer business assets, and Brandon
Drying Fabrics, Inc., a subsidiary of Geschmay Corp. (formerly Wangner Systems
Corporation) acquired in 1999, are also named as separate defendants.)
The information identified during the discovery process suggests that the
Registrant's production of asbestos-containing paper machine clothing products
was limited to certain synthetic dryer fabrics marketed during the period from
1967 to 1976. It is the position of the Registrant and the other paper machine
clothing defendants that there was insufficient exposure to asbestos from any
paper machine clothing products to cause asbestos-related injury in any
plaintiff. Furthermore, asbestos contained in the Company's synthetic products
was encapsulated in a resin-coated yarn woven into the interior of the fabric,
further reducing the likelihood of fiber release.
Discovery by both plaintiffs and defendants in the Bogalusa proceeding was
essentially completed in late 1998. The first trial commenced in January 1999.
(All claims relating to this first trial against the Registrant were settled
prior to that time.) A unanimous jury verdict in favor of the remaining
defendants (including two dryer fabric producers) was returned in early
March 1999.
All remaining claims against Albany International Corp. pending in each of
the Bogalusa and St. Francisville proceedings (approximately 2,000 plaintiffs in
the aggregate) were settled during 2000. All settlement amounts were funded by
Liberty Mutual. (Brandon Drying Fabrics, Inc. remains a defendant in these
proceedings.)
The Company currently remains a defendant in a number of asbestos
proceedings involving an aggregate of approximately 2,200 claimants. Brandon
Drying Fabrics, Inc. is named as a separate defendant in most of these same
proceedings.
One proceeding, in Jefferson County, Mississippi, accounts for 1,400
claimants. Based upon preliminary work histories provided by counsel, it appears
that as many as half of these plaintiffs were never employed in paper mills. Of
the approximately 800 remaining cases, a large number do not provide sufficient
employment histories to determine whether the claimants would have ever had any
contact with any asbestos-containing paper machine clothing sold by the Company.
The Registrant, in addition to being named as a direct defendant in the
above proceedings, has also been named separately as the "successor-in-interest"
to Mount Vernon Mills in many of these proceedings. The Registrant denies any
liability for products sold by Mount Vernon Mills prior to the acquisition of
the Mount Vernon assets, and has successfully moved for dismissal in several
proceedings before the first trial. Similar motions will be filed in other
proceedings.
The Registrant believes all asbestos-related claims to be without merit.
While there can be no assurance as to their outcome, the Registrant believes
that any material liability relating to the aforementioned proceedings in excess
of existing insurance coverage limits is unlikely.
Brandon Drying Fabrics, Inc. is also a party to the above asbestos
proceedings in the United States.
8
Brandon Drying Fabrics, Inc. was created in 1978 in connection with the
purchase of certain assets from Abney Mills, a South Carolina textile
manufacturing entity. Brandon Sales, Inc. was a wholly-owned subsidiary of Abney
and its assets were among those purchased from Abney Mills. After the purchase,
Brandon Drying Fabrics, Inc. manufactured drying fabrics under its own name,
none of which contained asbestos. It is believed that Abney Mills ceased
production of asbestos-containing products prior to the 1978 purchase.
Affidavits obtained from former Abney Mills employees confirm that belief.
Under the terms of the Assets Purchase Agreement between Brandon Drying
Fabrics, Inc. and Abney Mills, Abney Mills agreed to indemnify, defend and hold
harmless from any actions or claims on account of products manufactured by Abney
Mills and its related corporations prior to the date of the sale whether or not
the product was sold subsequent to the date of the sale. It appears that Abney
Mills has since been dissolved. Nevertheless, a representative of this dissolved
entity has been notified of the pendency of these actions and demand has been
made that it assume the defense of these actions.
Brandon Drying Fabric, Inc.'s insurance carriers have agreed to
indemnification and defense costs related to these proceedings of 88.2% of the
total, subject to the standard reservation of rights. The remaining 11.8% is
being sought from an insurance company that denies that it issued a policy.
Brandon's internal records demonstrate otherwise, and Brandon has filed suit
against this company as well as its other carriers. Based on advice of counsel,
Brandon is confident that it will prevail in establishing 100% indemnification
and defense cost coverage.
The Registrant is unable to predict the outcome of these matters, but does
not believe, based upon currently available information, that the ultimate
resolution of such matters will have a material adverse effect on the financial
position, results of operations, or cash flows of the Registrant. There are no
other material pending legal proceedings, other than ordinary routine litigation
incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of 2000 to a vote
of security holders.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
"Stock and Shareholders" and "Quarterly Financial Data" on page 38 of the
Annual Report are incorporated herein by reference.
Restrictions on dividends and other distributions are described in Note 6,
on pages 22 and 23 of the Annual Report. Such description is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Eleven Year Summary" on pages 36 and 37 of the Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Review of Operations" on pages 32 to 35 of the Annual Report is
incorporated herein by reference.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries, included on pages 14 to 31 in the Annual Report, are incorporated
herein by reference:
Consolidated Statements of Income and Retained Earnings--years ended
December 31, 2000, 1999, and 1998
Consolidated Statements of Comprehensive Income--years ended December 31,
2000, 1999 and 1998
Consolidated Balance Sheets--December 31, 2000 and 1999
Consolidated Statements of Cash Flows--years ended December 31, 2000, 1999
and 1998
Notes to Consolidated Financial Statements
Report of Independent Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) DIRECTORS. The information set out in the section captioned "Election
of Directors" of the Proxy Statement is incorporated herein by reference.
(b) EXECUTIVE OFFICERS OF REGISTRANT. Information about the officers of the
Registrant is set forth in Item 1 above.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the sections of the Proxy Statement captioned
"Executive Compensation", "Summary Compensation Table", "Option/SAR Grants in
Last Fiscal Year", "Option/ SAR Exercises During 2000 and Year-End Values",
"Pension Plan Table", "Compensation and Stock Option Committee Report on
Executive Compensation", "Compensation and Stock Option Committee Interlocks and
Insider Participation", "Stock Performance Graph", and "Directors' Fees" is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set out in the section captioned "Share Ownership" of the
Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULE AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS. The consolidated financial
statements included in the Annual Report are incorporated by
reference in Item 8.
(a)(2) SCHEDULE. The following consolidated financial statements
schedule for each of the three years in the period ended
December 31, 2000 is included pursuant to Item 14(d):
Report of Independent Accountants on Financial Statements
Schedule Schedule II--Valuation and Qualifying Accounts
(a)(3)(b) No reports on Form 8-K were filed during the fourth quarter
of 2000.
(3) EXHIBITS
3(a) Certificate of Incorporation of Registrant. (3)
3(b) Bylaws of Registrant. (10)
4(a) Article IV of Certificate of Incorporation of Registrant
(included in Exhibit 3(a)).
4(b) Specimen Stock Certificate for Class A Common Stock. (1)
CREDIT AGREEMENT
10(i)(i) Credit Agreement, dated as of August 11, 1999 (the "Credit
Agreement") among the Registrant, certain banks listed
therein, The Chase Manhattan Bank, as Administrative Agent,
Chase Manhattan International Limited, as London Agent,
Citibank N.A., as Syndication Agent and Banc One Capital
Markets, Inc., as Documentation Agent. (9)
10(i)(ii) Amendment No. 1, dated as of December 22, 1999, to the
Credit Agreement. (11)
STOCK OPTIONS
10(m)(i) Form of Stock Option Agreement, dated as of August 1, 1983,
between the Registrant and each of five employees, together
with schedule showing the names of such employees and the
material differences among the Stock Option Agreements with
such employees. (1)
10(m)(ii) Form of Amendment of Stock Option Agreement, dated as of
July 1, 1987, between the Registrant and each of the five
employees identified in the schedule referred to as Exhibit
10(m)(i). (1)
10(m)(iii) 1988 Stock Option Plan. (2)
10(m)(iv) 1992 Stock Option Plan. (4)
10(m)(v) 1997 Executive Stock Option Agreement. (7)
10(m)(vi) 1998 Stock Option Plan. (8)
EXECUTIVE COMPENSATION
10(n) Pension Equalization Plan adopted April 16, 1986, naming two
current executive officers and one former executive officer
of Registrant as "Participants" thereunder. (1)
10(n)(i) Supplemental Executive Retirement Plan. (5)
10(o)(i) Form of Executive Deferred Compensation Plan adopted
September 1, 1985, and Forms of Election Agreement. (1)
11
10(o)(ii) Form of Directors' Deferred Compensation Plan adopted
September 1, 1985, and Forms of Election Agreement. (1)
10(o)(iii) Executive Deferred Compensation Plan. (2)
10(o)(iv) Directors' Deferred Compensation Plan. (2)
10(o)(v) Deferred Compensation Plan of Albany International Corp. (6)
10(o)(vi) Centennial Deferred Compensation Plan. (6)
OTHER EXHIBITS
11 Schedule of Computation of Net Income Per Share and Diluted
Net Income Per Share.
13 Annual Report to Security Holders for the year ended
December 31, 2000.
21 Subsidiaries of Registrant.
23 Consent of PricewaterhouseCoopers LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
All other schedules and exhibits are not required or are inapplicable and,
therefore, have been omitted.
(1) Previously filed as an Exhibit to the Company's Registration
Statement on Form S-1, No. 33-16254, as amended, declared
effective by the Securities and Exchange Commission on
September 30, 1987, which previously-filed Exhibit is
incorporated by reference herein.
(2) Previously filed as an Exhibit to the Registrant's Current
Report on Form 8-K dated August 8, 1988, which
previously-filed Exhibit is incorporated by reference
herein.
(3) Previously filed as an Exhibit to the Registrant's
Registration Statement on Form 8-A, File No. 1-10026,
declared effective by the Securities and Exchange Commission
on August 26, 1988 (as to The Pacific Stock Exchange, Inc.),
and on September 7, 1988 (as to The New York Stock Exchange,
Inc.), which previously-filed Exhibit is incorporated by
reference herein.
(4) Previously filed as an Exhibit to the Registrant's Current
Report on Form 8-K dated January 18, 1993, which
previously-filed Exhibit is incorporated by reference
herein.
(5) Previously filed as an Exhibit to the Registrant's Current
Report on Form 8-K dated June 30, 1994, which
previously-filed Exhibit is incorporated by reference
herein.
(6) Previously filed as an Exhibit to the Registrant's Current
Report on Form 8-K dated March 15, 1996, which
previously-filed Exhibit is incorporated by reference
herein.
(7) Previously filed as an Exhibit to the Registrant's Current
Report on Form 10-K dated March 16, 1998, which
previously-filed Exhibit is incorporated by reference
herein.
(8) Previously filed as an Exhibit to the Registrant's Current
Report on Form 10-Q dated August 10, 1998, which
previously-filed Exhibit is incorporated by reference
herein.
(9) Previously filed as an Exhibit to the Registrant's Current
Report on form 8-K dated September 21, 1999, which
previously-filed Exhibit is incorporated by reference
herein.
(10) Previously filed as an Exhibit to the Registrant's Current
Report on Form 10-Q dated November 10, 1999, which
previously-filed Exhibit is incorporated by reference
herein.
(11) Filed herewith.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 26nd day of
March, 2001.
ALBANY INTERNATIONAL CORP.
By: /s/ MICHAEL C. NAHL
------------------------------------------------
Michael C. Nahl
PRINCIPAL FINANCIAL OFFICER, SENIOR VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board and Director March 26, 2001
------------------------------------
(Francis L. McKone)
/s/ MICHAEL C. NAHL Senior Vice President and Chief March 26, 2001
------------------------------------ Financial Officer (Principal
(Michael C. Nahl) Accounting Officer)
* Vice President-Controller March 26, 2001
------------------------------------ (Principal Accounting Officer)
(Richard A. Carlstrom)
* Director March 26, 2001
------------------------------------
(Thomas R. Beecher Jr.)
* Director March 26, 2001
------------------------------------
(Charles B. Buchanan)
* Director March 26, 2001
------------------------------------
(Erland E. Kailbourne)
* Director March 26, 2001
------------------------------------
(Dr. Joseph G. Morone)
13
SIGNATURE TITLE DATE
--------- ----- ----
* President and Director (Chief March 26, 2001
------------------------------------ Executive Officer)
(Frank R. Schmeler)
* Director March 26, 2001
------------------------------------
(Christine L. Standish)
* Director March 26, 2001
------------------------------------
(Allan Stenshamn)
* Director March 26, 2001
------------------------------------
(Barbara P. Wright)
* Director March 26, 2001
------------------------------------
(John C. Standish)
* Director March 26, 2001
------------------------------------
(James L. Ferris Ph.D.)
/s/ MICHAEL C. NAHL
-------------------------------
Michael C. Nahl
*By Attorney-in-fact
14
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENTS SCHEDULE
To The Board of Directors and
Shareholders of Albany International Corp.
Our audits of the consolidated financial statements referred to in our
report dated January 25, 2001 appearing in the 2000 Annual Report to
Shareholders of Albany International Corp. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the financial statement schedule listed in
Item 14(a)(2) of this Form 10-K. In our opinion, the financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
/s/ PRICEWATERHOUSECOOPERS LLP
Albany, New York
January 25, 2001
SCHEDULE II
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- --------------------------- ------------- -------------
ADDITIONS
BALANCE AT ---------------------------
BEGINNING CHARGED TO CHARGED TO BALANCE AT
DESCRIPTION OF PERIOD EXPENSE INTANGIBLES(A) DEDUCTIONS(B) END OF PERIOD
----------- ---------- ---------- -------------- ------------- -------------
Allowance for doubtful accounts
Year ended December 31:
2000........................... $8,768 $1,008 $ -- $2,088 $7,688
1999........................... $5,504 $2,071 $2,838 $1,645 $8,768
1998........................... $5,224 $1,312 $ -- $1,032 $5,504
- ------------------------
(A) Represents the allowance for doubful accounts opening balance sheet amount
for the Geschmay group, which was acquired in 1999.
(B) Includes accounts written off as uncollectible, recoveries and the effect of
currency exchange rates.
Index to Exhibits
- -----------------
3(a) - Certificate of Incorporation of Registrant. (3)
3(b) - Bylaws of Registrant. (10)
4(a) - Article IV of Certificate of Incorporation of Registrant
(included in Exhibit 3(a)).
4(b) - Specimen Stock Certificate for Class A Common Stock. (1)
CREDIT AGREEMENT
10(i)(i) - Credit Agreement, dated as of August 11, 1999 (the "Credit
Agreement") among the Registrant, certain banks listed
therein, The Chase Manhattan Bank, as Administrative Agent,
Chase Manhattan International Limited, as London Agent,
Citibank N.A., as Syndication Agent and Banc One Capital
Markets, Inc., as Documentation Agent. (9)
10(i)(ii) - Amendment No. 1, dated as of December 22, 1999, to the Credit
Agreement. (11)
STOCK OPTIONS
10(m)(i) - Form of Stock Option Agreement, dated as of August 1, 1983,
between the Registrant and each of five employees, together
with schedule showing the names of such employees and the
material differences among the Stock Option Agreements with
such employees. (1)
10(m)(ii) - Form of Amendment of Stock Option Agreement, dated as of
July 1, 1987, between the Registrant and each of the five
employees identified in the schedule referred to as Exhibit
10(m)(i). (1)
10(m)(iii) - 1988 Stock Option Plan. (2)
10(m)(iv) - 1992 Stock Option Plan. (4)
10(m)(v) - 1997 Executive Stock Option Agreement. (7)
10(m)(vi) - 1998 Stock Option Plan. (8)
EXECUTIVE COMPENSATION
10(n) - Pension Equalization Plan adopted April 16, 1986, naming two
current executive officers and one former executive officer of
Registrant as "Participants" thereunder. (1)
10(n)(i) - Supplemental Executive Retirement Plan. (5)
10(o)(i) - Form of Executive Deferred Compensation Plan adopted
September 1, 1985, and Forms of Election Agreement. (1)
10(o)(ii) - Form of Directors' Deferred Compensation Plan adopted
September 1, 1985, and Form of Election Agreement. (1)
10(o)(iii) - Executive Deferred Compensation Plan. (2)
10(o)(iv) - Directors' Deferred Compensation Plan. (2)
10(o)(v) - Deferred Compensation Plan of Albany International Corp. (6)
10(o)(vi) - Centennial Deferred Compensation Plan. (6)
OTHER EXHIBITS
11 - Schedule of Computation of Net Income Per Share and Diluted
Net Income Per Share.
13 - Annual Report to Security Holders for the year ended
December 31, 2000.
21 - Subsidiaries of Registrant.
23 - Consent of PricewaterhouseCoopers LLP.
24 - Powers of Attorney.
27 - Financial Data Schedule.
All other schedules and exhibits are not required or are inapplicable and,
therefore, have been omitted.
(1) Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1, No. 33-16254, as amended, declared effective by the Securities
and Exchange Commission on September 30, 1987, which previously-filed
Exhibit is incorporated by reference herein.
(2) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated August 8, 1988, which previously-filed Exhibit is incorporated
by reference herein.
(3) Previously filed as an Exhibit to the Registrant's Registration Statement
on Form 8-A, File No. 1-10026, declared effective by the Securities and
Exchange Commission on August 26, 1988 (as to The Pacific Stock Exchange,
Inc.), and on September 7, 1988 (as to The New York Stock Exchange, Inc.),
which previously-filed Exhibit is incorporated by reference herein.
(4) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated January 18, 1993, which previously-filed Exhibit is incorporated
by reference herein.
(5) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated June 30, 1994, which previously-filed Exhibit is incorporated by
reference herein.
(6) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated March 15, 1996, which previously-filed Exhibit is incorporated
by reference herein.
(7) Previously filed as an Exhibit to the Registrant's Current Report on Form
10-K dated March 16, 1998, which previously-filed Exhibit is incorporated
by reference herein.
(8) Previously filed as an Exhibit to the Registrant's Current Report on Form
10-Q dated August 10, 1998, which previously-filed Exhibit is incorporated
by reference herein.
(9) Previously filed as an Exhibit to the Registrant's Current Report on form
8-K dated September 21, 1999, which previously-filed Exhibit is
incorporated by reference herein.
(10) Previously filed as an Exhibit to the Registrant's Current Report on Form
10-Q dated November 10, 1999, which previously-filed Exhibit is
incorporated by reference herein.
(11) Filed herewith.