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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, 1998
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, 12204
ALBANY, NEW YORK (Zip Code)
(Address of principal executive offices)
518-445-2200
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
CLASS A COMMON STOCK ($0.001 PAR VALUE) NEW YORK STOCK EXCHANGE AND
PACIFIC STOCK EXCHANGE
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Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
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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 18, 1999 by
non-affiliates of the registrant was $474,279,536.
The registrant had 23,856,160 shares of Class A Common Stock and 5,785,282
shares of Class B Common Stock outstanding as of February 18, 1999.
DOCUMENTS INCORPORATED BY REFERENCE PART
Registrant's Annual Report to Shareholders for the year ended December 31, 1998. II
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 6,
1999. III
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PART I
ITEM 1. BUSINESS
Albany International Corp. ("the Company") 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. 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. 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
fabrics are usually washed, and water is removed. The fabric then is heat set,
treatments may be applied, and it is measured and trimmed.
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. Monofilament screens are woven on a loom. 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 fabrics which include fabrics for the non-woven industry, corrugator
belts, filtration media and high performance industrial doors. The Nomafa Door
Division, a manufacturer of Rapid Roll Doors-Registered Trademark-, is the
operation of the Company which developed high speed, high performance industrial
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. In November 1996, the Registrant acquired
Schieffer Door Systems, a manufacturer of high-speed, high-performance
industrial doors. Also, in 1998, the Registrant acquired Burwell Door Systems in
Australia and M&I Door Systems in Canada. Schieffer's technology and leadership
position in Germany, and the 1998 acquisitions, have significantly enhanced the
Registrant's industrial door operations.
INDUSTRY FACTORS
There are approximately 1,200 paper machines in the United States located in
approximately 600 paper mills. It is estimated that, excluding China, there are
about 7,200 paper machines in the world and approximately 1,500, mostly very
small, paper machines in China. Demand for paper machine clothing is tied to the
volume of paper production, which in turn reflects economic growth. According to
published data, world production volumes have grown at an annual rate in excess
of 3% 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 growth of industry 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, The Netherlands,
Mexico, South Korea, Sweden and the United States. The Registrant has a 50%
interest in two related entities in South Africa and one 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 industrial 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 1,000 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 and its lowest levels in the first
quarter. 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, 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
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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.
The Registrant's order backlogs at December 31, 1998 and 1997 were
approximately $474 million and $468 million, respectively. Orders recorded at
December 31, 1998 are 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 $23.7 million in 1998, $23.1 million in 1997, and $21.9 million
in 1996. 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 DUOTEX-Registered Trademark- and TRIOTEX-TM-forming fabrics,
PRINTEX-TM- forming fabrics, DURAFORM -Registered Trademark- SR, an enhanced
single-layer forming fabric, SEAMTECH-TM-, the patented on-machine-seamed press
fabric, DYNATEX-TM-, a unique multi-layer press fabric, long nip press belts
which are essential to water removal in the press section and Thermonetics-TM-,
BEL-PLANE -Registered Trademark-, AEROLINE-TM- and AEROGRIP-TM- which are dryer
fabrics. Technical expenditures totaled $26.3 million in 1998, $26.9 million in
1997 and $26.8 million in 1996. 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. Through its
major research facility in Mansfield, Massachusetts, the Registrant conducts
research under contract for the U.S. government and major corporations. In
addition to its Mansfield facility, the Registrant has four other research and
development centers located at manufacturing locations in Halmstad, Sweden;
Selestat, France; 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 materials 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 40%
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 more than 50 paper machine clothing suppliers worldwide,
only six major paper machine clothing companies 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 29% in the United States and
Canadian markets, taken together, 20% in the rest of the world and approximately
23% in the world overall.
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Together, the United States and Canada constitute approximately 36% 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 6,011 persons, of whom approximately 75% 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 64 Chairman of the Board, CEO and Director
Frank R. Schmeler 59 President, COO and Director
Edward Walther 55 Executive Vice President
Michael C. Nahl 56 Senior Vice President and Chief Financial Officer
Michel J. Bacon 49 Senior Vice President--Canada, Pacific and Latin America
William M. McCarthy 48 Senior Vice President--Europe
Thomas H. Hagoort 66 General Counsel and Secretary
Richard A. Carlstrom 55 Vice President--Controller
William H. Dutt 63 Vice President--Chief Technical Officer
Edward R. Hahn 54 Vice President--Research and Development
Hugh A. McGlinchey 59 Vice President--Information Systems
Kenneth C. Pulver 55 Vice President--Corporate Communications
John C. Treanor 60 Treasurer
Charles J. Silva, Jr. 39 Assistant General Counsel and Assistant Secretary
FRANCIS L. MCKONE joined the Registrant in 1964. He has served the
Registrant as Chairman of the Board and Chief Executive Officer since 1998,
Chief Executive Officer since 1993, President since 1984, 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 Albank, FSB and Thermo Fibergen, Inc.
5
FRANK R. SCHMELER joined the Registrant in 1964. He has served the
Registrant as President and Chief Operating Officer since 1998, Executive Vice
President and Chief Operating Officer since 1997 and as Senior Vice President
from 1988 to 1997, as Vice President and General Manager of the Felt Division
from 1984 to 1988, as 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.
EDWARD WALTHER joined the Registrant in 1994. He has served the Registrant
as Executive Vice President since 1997 and as Senior Vice President from 1995 to
1997 and as Vice President and General Manager--Continental Europe since 1994.
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.
MICHEL J. BACON joined the Registrant in 1978. He has served the Registrant
as Senior Vice President since 1996 and as Vice President and General Manager of
Albany International Canada from 1991 to 1996, as 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 Senior Vice President since 1997 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.
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, to which he became of counsel on January 1, 1991.
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.
WILLIAM H. DUTT joined the Registrant in 1958. He has served the Registrant
since 1983 as Vice President-Chief Technical Officer, and prior to 1983 he
served in various technical, engineering, and research capacities including
Director of Research and Development and Vice President-Operations for Albany
Felt.
EDWARD R. HAHN joined the Registrant in 1971. He has served the Registrant
since 1995 as Vice President-Research and Development and Executive Director of
Albany International Research Company, 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.
HUGH A. MCGLINCHEY joined the Registrant in 1991. He has served the
Registrant as Vice President-Information Systems since 1993 and from 1991 to
1993 as Director-Information Systems. Prior to 1991 he served as
Director-Corporate Information and Communications Systems for Avery Dennison
Corporation.
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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 in 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 facilities in the United States
and Canada is approximately 2,558,000, of which 2,361,000 square feet are owned
and 197,000 square feet are leased. The Registrant's facilities located outside
the United States and Canada comprise approximately 2,725,000 square feet, of
which 2,504,000 square feet are owned and 221,000 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 1999. The Registrant's
expected 1999 capital expenditures, including leases, of about $45 million will
provide sufficient capacity for anticipated growth.
The Registrant believes it has modern, efficient production equipment. In
the last five years, it has spent $221 million on new plants and equipment or
upgrading existing facilities.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is a defendant in two actions in state court in Louisiana,
seeking damages from the Registrant and numerous other defendants for injuries
allegedly suffered by hundreds of employees at two former Crown-Zellerbach paper
mills in Bogalusa and St. Francisville, Louisiana, due to exposure to asbestos.
Liberty Mutual, the underwriter of insurance coverage applicable to these
claims, is defending these matters on the Registrant's behalf.
The Registrant is one of a group of paper machine clothing manufacturers who
at one time produced dryer felts containing asbestos. (Mount Vernon Mills, from
whom the Registrant acquired the Albany Mount Vernon dryer business assets, is
also named as a separate defendant.) There are currently over fifty other
corporate defendants, including primary suppliers of asbestos, asbestos
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abatement and removal companies, paper machine builders, pump manufacturers,
insulation and building materials suppliers, boiler manufacturers and other
suppliers of products used in these mills that are alleged to have contained
asbestos.
In the Bogalusa proceeding, the Registrant was initially served with a
discovery request late in 1996, to which it responded initially in March 1997,
and continued to respond supplementally during 1997 and 1998. Discovery of paper
machine clothing dryer fabrics defendants has not yet begun in the St.
Francisville proceeding.
The information identified during the discovery process suggests that the
Registrant's production of asbestos-containing products was limited to certain
synthetic dryer fabrics produced during the period from 1964/5 to 1974/5. It is
the position of the Registrant and the other paper machine clothing defendants
that there was insufficient exposure to asbestos from paper machine clothing to
cause asbestos-related injury in any plaintiff.
Discovery by both plaintiffs and defendants in the Bogalusa proceeding was
essentially completed in late 1998. The first trial, involving six plaintiffs,
commenced in January 1999 and resulted in a unanimous jury verdict in favor of
the defendants on all claims in early March. All claims against the Registrant
in this first trial had been settled by Liberty Mutual earlier in the
proceeding. Further trials have not yet been scheduled.
The Registrant, in addition to being named as a direct defendant in these
proceedings, was initially also named separately as the "successor-in-interest"
to Mount Vernon Mills. However, the Registrant denied any liability for products
sold by Mount Vernon Mills prior to the acquisition of the Mount Vernon assets,
and the Registrant's motion to be dismissed as a successor to Mount Vernon was
granted in the Bogalusa proceeding before the first trial. A similar motion will
be filed in the St. Francisville proceeding.
The Registrant believes that any judgment or settlement relating to these
proceedings will be well within existing insurance coverage limits.
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 1998 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 34 of the
Annual Report are incorporated herein by reference.
Restrictions on dividends and other distributions are described in Note 6,
on pages 17 to 19 of the Annual Report. Such description is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Eleven Year Summary" on pages 32 and 33 of the Annual Report is
incorporated herein by reference.
8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Review of Operations" on pages 28 to 31 of the Annual Report is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries, included on pages 10 to 27 in the Annual Report, are incorporated
herein by reference:
Consolidated Statements of Income and Retained Earnings--years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Comprehensive Income--years ended December 31,
1998, 1997 and 1996
Consolidated Balance Sheets--December 31, 1998 and 1997
Consolidated Statements of Cash Flows--years ended December 31, 1998, 1997
and 1996
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 1998 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.
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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, 1998 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 quarter ended
December 31, 1998.
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(3) EXHIBITS
3(a) - Certificate of Incorporation of Registrant. (3)
3(b) - Bylaws of Registrant. (1)
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)
MORGAN CREDIT AGREEMENT
10(i)(i) - Amended and restated Credit Agreement, dated as of February 29, 1996, among the
Registrant, certain banks listed therein, and Morgan Guaranty Trust Company of
New York, as Agent. (6)
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 AGREEMENTS
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, 1998.
11
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.
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(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.
12
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
- ------------------------------ (Chief Executive March 19, 1999
(Francis L. McKone) Officer)
Senior Vice President and
/s/ MICHAEL C. NAHL Chief Financial Officer
- ------------------------------ (Principal Financial March 19, 1999
(Michael C. Nahl) Officer)
* Vice President-Controller
- ------------------------------ (Principal Accounting March 19, 1999
(Richard A. Carlstrom) Officer)
*
- ------------------------------ Director March 19, 1999
(Thomas R. Beecher, Jr.)
*
- ------------------------------ Director March 19, 1999
(Charles B. Buchanan)
*
- ------------------------------ Director March 19, 1999
(Erland E. Kailbourne)
*
- ------------------------------ Director March 19, 1999
(Dr. Joseph G. Morone)
* President and Director
- ------------------------------ (Chief Operating March 19, 1999
(Frank R. Schmeler) Officer)
*
- ------------------------------ Director March 19, 1999
(Christine L. Standish)
*
- ------------------------------ Director March 19, 1999
(Allan Stenshamn)
*
- ------------------------------ Director March 19, 1999
(Barbara P. Wright)
*By: /s/ MICHAEL C. NAHL
-------------------------
Michael C. Nahl
ATTORNEY-IN-FACT
13
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 19th day of
March, 1999.
ALBANY INTERNATIONAL CORP.
By: /S/ MICHAEL C. NAHL
-----------------------------------------
Michael C. Nahl
PRINCIPAL FINANCIAL OFFICER
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
14
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENTS SCHEDULE
To The Shareholders and Board of Directors
Albany International Corp.
Our audits of the consolidated financial statements referred to in our
report dated January 28, 1999 appearing in the 1998 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 28, 1999
SCHEDULE II
ALBANY INTERNATIONAL CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
COLUMN B COLUMN C
----------- ----------- COLUMN E
COLUMN A BALANCE AT ADDITIONS COLUMN D -------------
- --------------------------------------- BEGINNING CHARGED TO ------------- BALANCE AT
DESCRIPTION OF PERIOD EXPENSE DEDUCTIONS(A) END OF PERIOD
- --------------------------------------- ----------- ----------- ------------- -------------
Allowance for doubtful accounts
Year ended December 31:
1998 $ 5,224 $ 1,312 $ 1,032 $ 5,504
1997 $ 4,962 $ 1,298 $ 1,036 $ 5,224
1996 $ 5,010 $ 1,036 $ 1,084 $ 4,962
(A) Includes accounts written off as uncollectible, recoveries and the effect
of currency exchange rates.
INDEX TO EXHIBITS
EXHIBITS
- -----------
3(a) -- Certificate of Incorporation of Registrant. (3)
3(b) -- Bylaws of Registrant. (1)
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)
MORGAN CREDIT AGREEMENT
10(i)(i) -- Amended and restated Credit Agreement, dated as of February 29, 1996, among the Registrant,
certain banks listed therein, and Morgan Guaranty Trust Company of New York, as Agent. (6)
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 AGREEMENTS
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, 1998.
21 -- Subsidiaries of Registrant.
23 -- Consent of PricewaterhouseCoopers LLP.
24 -- Powers of Attorney.
27 -- Financial Data Schedule.
- ------------------------
(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.