1997 to March 1, 2005, and Technical Director
— Dryer Fabrics from 1993 to 1997. He held various technical and management positions in St. Stephen, South Carolina and Selestat, France from
1987 to 1993.
Hartmut Peters joined the Registrant upon the
acquisition by the Registrant of Wurttembergische Filztuchfabrik D. Geschmay GmbH (“WFG”) in 1999. He has served the Registrant as Group Vice
President — PMC Asia & Pacific since March 1, 2005, Vice President — Asian Operations from 2003 to March 1, 2005 and Managing Director of
WFG from 1999 to 2003.
Dieter Polt joined the Registrant in 2001. He
has served the Registrant as Group Vice President — Albany Door Systems and Applied Technologies since March 1, 2005, and Senior Vice President
— Industrial Products from 2001 to March 1, 2005. Prior to joining the Registrant, he served as President and Chief Executive Officer of the
Wangner Group and held senior management positions in the instrumentation industry.
Thomas H. Hagoort joined the Registrant in
1991. He has served the Registrant as Secretary since 1997, Senior Vice President — Legal Affairs from 2002 to January 1, 2005 and General Counsel
from 1991 to 2002. 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.
Frank Kolf joined the Registrant in 2001. He
has served the Registrant as Senior Vice President —Administration and Development since 2001. Prior to joining the Registrant, he served as
Executive Vice President and Chief Financial Officer for the Wangner Group.
John C. Standish joined the Registrant in
1986. He has served the Registrant as Senior Vice President — Manufacturing since March 1, 2005, Director, North American Dryer Manufacturing from
2003 to March 1, 2005, Director, PAC Pressing and Process Technology from 2000 to 2003, Manager of the Registrant’s forming and engineered fabrics
manufacturing facility in Portland, Tennessee from 1998 to 2000, Production Manager of Albany International B.V. in Europe from 1994 to 1998,
Department Manager — Press Fabrics Division from 1991 to 1994 and Design Engineer for Albany International Canada from 1986 to 1991. He has been a
Director of the Registrant since 2001.
Richard A. Carlstrom joined the Registrant in
1972. He has served the Registrant as Vice President — Controller since 1993, Controller since 1980, and Controller of a U.S. division from 1975
to 1980.
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.
Charles J. Silva, Jr. joined the Registrant
in 1994. He has served the Registrant as Vice President — General Counsel since 2002 and as Assistant Secretary since 1996. He served as Assistant
General Counsel from 1994 until 2002. 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 material compliance
with federal, state, and local provisions that 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 that 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 originally incorporated in 1895, 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.
The Registrant’s Corporate Governance
Guidelines, Business Ethics Policy and Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Controller, and the charters of the
Audit, Compensation and
19
Governance Committees of the Board of Directors
are available at the Corporate Governance section of the Registrant’s website (www.albint.com). Stockholders may obtain a copy of any of these
documents, without charge, from the Registrant’s Investor Relations Department. The Registrant’s Investor Relations Department may be
contacted at:
|
|
Investor Relations Department
Albany International
Corp.
Post Office Box 1907
Albany, New York 12201-1907
Telephone: (518) 445-2284
Fax: (518) 447-6343
E-mail:
investor_relations@albint.com |
The Registrant’s current reports on Form 8-K,
quarterly reports on Form 10-Q, and annual reports on Form 10-K are electronically filed with the Securities and Exchange Commission (SEC), and all
such reports and amendments to such reports filed subsequent to November 15, 2002, have been and will be made available, free of charge, through the
Registrant’s website (www.albint.com) as soon as reasonably practicable after such filing. The public may read and copy any materials filed by the
Registrant with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, D.C. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website (www.sec.gov) that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC.
The Registrant submitted to the New York Stock
Exchange the certification required pursuant to Section 303A.12(a) of the Exchange’s Corporate Governance Rules in May 2004. The Registrant also
filed the certifications required by SEC Rule 13a-14(a) as exhibits to its Annual Report on Form 10-K for the year ended December 31,
2003.
The Registrant’s principal manufacturing
facilities are located in the Australia, Brazil, Canada, China, Finland, France, Germany, Great Britain, Italy, Mexico, South Korea, Sweden, and the
United States. The aggregate square footage of the Registrant’s operating facilities in the United States and Canada is approximately 2,198,000
square feet, of which 2,069,000 square feet are owned and 129,000 square feet are leased. The Registrant’s facilities located outside the United
States and Canada comprise approximately 2,651,000 square feet, of which 2,423,000 square feet are owned and 228,000 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 2005. The Registrant’s expected 2005 capital expenditures 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, excluding acquisitions, it has spent approximately $203.4 million on new plants and equipment or
upgrading existing facilities.
Item 3. LEGAL PROCEEDINGS
Albany International Corp. (“Albany”) is a
defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of
exposure to asbestos-containing products previously manufactured by Albany. Albany’s production of asbestos-containing paper machine clothing
products was limited to certain synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. Such fabrics
generally had a useful life of three to twelve months.
Albany was defending against 29,138 claims as of
February 11, 2005. This compares with 29,411 such claims as of December 31, 2004, 30,463 claims as of October 22, 2004, 28,838 claims as of December
31, 2003, 22,593 claims as of December 31, 2002, 7,347 claims as of December 31, 2001, 1,997 claims as of December 31, 2000, and 2,276 claims as of
December 31, 1999. These suits allege a variety of lung and other diseases based on alleged exposure to products previously manufactured by
Albany.
Albany anticipates that additional claims will be
filed against it and the related companies in the future but is unable to predict the number and timing of such future claims. These suits typically
involve claims against from
20
twenty to over two hundred defendants, and the
complaints usually fail to identify the plaintiffs’ work history or the nature of the plaintiffs’ alleged exposure to Albany’s products.
In cases in which work histories have been provided, approximately one-third of the claimants have alleged time spent in a paper mill, and only a
portion of those claimants have alleged time spent in a paper mill to which Albany is believed to have supplied asbestos-containing
products.
Approximately 24,314 of the claims pending against
Albany are filed in various counties in Mississippi. 20,072 such claims are included in only 14 proceedings. Recent changes in the application of
procedural rules regarding the mass joinder of numerous asbestos claims in a single proceeding against numerous defendants could at some point result
in a significant reduction of the claims pending against Albany in that State, as well as a better understanding of the remaining claims. As the result
of a recent ruling of the Mississippi Supreme Court, courts in counties throughout the State have begun issuing orders severing the individual claims
of plaintiffs in mass joinder asbestos cases. Once severed, the courts are requiring the plaintiffs to file amended complaints which include more
detailed information regarding their allegations of asbestos exposure, and have indicated that the dismissal or transfer of improperly filed cases may
follow. As a consequence, the Company expects that many plaintiffs who cannot satisfy the amended pleading requirements will voluntarily dismiss their
claims. As to plaintiffs who do file amended complaints, the Company expects some claims to be transferred from Mississippi, and that the only
claimants remaining in Mississippi will be those who are residents of, or who allege exposure to asbestos in, that State, and whose amended complaints
satisfy the requirement for specific information regarding their exposure claims.
The Company expects that only a portion of these
remaining claimants will be able to demonstrate time spent in a paper mill to which Albany supplied asbestos-containing products during a period in
which Albany’s asbestos-containing products were in use. Based on past experience, communications from certain plaintiffs’ counsel and the
advice of the Company’s Mississippi counsel, the Company expects the percentage of claimants with paper mill exposure in the Mississippi
proceedings to be considerably lower than the total number of claims previously asserted. However, due to the fact that the mandate of the Mississippi
Supreme Court is just beginning to be implemented, the Company does not believe a meaningful estimate can be made regarding the expected reduction in
claims or the range of possible loss with respect to the remaining claims. The Company does not expect the Supreme Court’s ruling to be fully
implemented for many months.
It is the position of Albany 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
to any plaintiff. Furthermore, asbestos contained in Albany’s synthetic products was encapsulated in a resin-coated yarn woven into the interior
of the fabric, further reducing the likelihood of fiber release. While the Company believes it has meritorious defenses to these claims, it has settled
certain of these cases for amounts it considers reasonable given the facts and circumstances of each case. The Company’s insurer, Liberty Mutual,
has defended each case under a standard reservation of rights. As of February 11, 2005, the Company had resolved, by means of settlement or dismissal,
8,189 claims, and had reached tentative agreement to resolve an additional 4,563 claims reported above as pending. The total cost of resolving all
12,752 such claims was $5,931,000. Of this amount, $5,896,000, or 99%, was paid by the Company’s insurance carrier. The Company has more than $130
million in confirmed insurance coverage that should be available with respect to current and future asbestos claims, as well as additional insurance
coverage that it should be able to access.
Brandon Drying Fabrics, Inc.
Brandon Drying Fabrics, Inc.
(“Brandon”), a subsidiary of Geschmay Corp., is also a separate defendant in most of these cases. Brandon was defending against 9,599
claims as of February 11, 2005. This compares with 9,985 such claims as of December 31, 2004, 9,980 claims as of October 22, 2004, 10,242 claims as of
December 31, 2003, 11,802 claims as of December 31, 2002, 8,759 claims as of December 31, 2001, 3,598 claims as of December 31, 2000, and 1,887 claims
as of December 31, 1999. The Company acquired Geschmay Corp., formerly known as Wangner Systems Corporation, in 1999. Brandon is a wholly-owned
subsidiary of Geschmay Corp. In 1978, Brandon acquired certain assets from Abney Mills (“Abney”), a South Carolina textile
manufacturer. Among the assets acquired by Brandon from Abney were assets of Abney’s wholly-owned subsidiary, Brandon Sales, Inc. which, among
other things, had sold dryer fabrics containing asbestos made by its parent, Abney. It is believed
21
that Abney ceased production of
asbestos-containing fabrics prior to the 1978 transaction. Although Brandon manufactured and sold dryer fabrics under its own name subsequent to the
asset purchase, none of such fabrics contained asbestos. Under the terms of the Assets Purchase Agreement between Brandon and Abney, Abney agreed to
indemnify, defend, and hold Brandon harmless from any actions or claims on account of products manufactured by Abney 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 has since been dissolved.
Nevertheless, a representative of Abney has been notified of the pendency of these actions and demand has been made that it assume the defense of these
actions. Because Brandon did not manufacture asbestos-containing products, and because it does not believe that it was the legal successor to, or
otherwise responsible for obligations of, Abney with respect to products manufactured by Abney, it believes it has strong defenses to the claims that
have been asserted against it. In some instances, plaintiffs have voluntarily dismissed claims against it, while in others it has entered into what it
considers to be reasonable settlements. As of February 11, 2005, Brandon has resolved, by means of settlement or dismissal, 6,923 claims for a total of
$152,499. Brandon’s insurance carriers initially agreed to pay 88.2% of the total indemnification and defense costs related to these proceedings,
subject to the standard reservation of rights. The remaining 11.8% of the costs has been borne directly by Brandon. During 2004, Brandon’s
insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to
reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings.
Mount Vernon
In some of these cases, the Company is named both as
a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). The Company acquired
certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount
Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such
products. The Company denies any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its
contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, the Company has successfully moved for
dismissal in a number of actions.
While the Company does not
believe, based on currently available information and for the reasons stated above, that a meaningful estimate of a range of possible loss can be made
with respect to such claims, based on its understanding of the insurance policies available, how settlement amounts have been allocated to various
policies, its recent settlement experience, the absence of any judgments against the Company or Brandon, the ratio of paper mill claims to total claims
filed, and the defenses available, the Company currently does not anticipate any material liability relating to the resolution of the aforementioned
pending proceedings in excess of existing insurance limits. Consequently, the Company currently does not anticipate, based on currently available
information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of
operations or cash flows of the Company. Although the Company cannot predict the number and timing of future claims, based on the foregoing factors and
the trends in claims against it to date, the Company does not anticipate that additional claims likely to be filed against it in the future will have a
material adverse effect on its financial position, results of operations or cash flows. However, the Company is aware that litigation is inherently
uncertain, especially when the outcome is dependent primarily on determinations of factual matters to be made by juries. The Company is also aware that
numerous other defendants in asbestos cases, as well as others who claim to have knowledge and expertise on the subject, have found it difficult to
anticipate the outcome of asbestos litigation, the volume of future asbestos claims and the anticipated settlement values of those claims. For these
reasons, there can be no assurance that the foregoing conclusions will not change.
There have been a number of proposals discussed in
recent months in United States Senate that would provide compensation for persons injured as the result of exposure to asbestos. The Judiciary
Committee of the current United States Senate has recently begun discussing such a proposal that would require the Company to make payments of up to
$500,000 per year for up to 30 years. Such payments would not be covered by any of the Company’s insurance policies. The proposal has not been
offered as proposed legislation and is subject to
22
negotiation and modification. The Company cannot
predict whether any proposal will be offered as legislation or, if so, whether such proposal will ultimately be enacted into law.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
There were no matters submitted during the fourth
quarter of 2004 to a vote of security holders.
23
PART II
| Item 5. |
|
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
The Registrant’s common stock is principally
traded on the New York Stock Exchange under symbol AIN. On December 31, 2004, there were approximately 5,500 registered holders on record of the
Registrant’s common stock. The Registrant’s cash dividends and the high and low common stock prices per share were as
follows:
Quarter Ended
|
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
|
|
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.08 |
|
|
$ |
0.08 |
|
Class A
Common Stock prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
|
$ |
35.00 |
|
|
$ |
33.75 |
|
|
$ |
33.60 |
|
|
$ |
35.16 |
|
Low |
|
|
|
$ |
26.40 |
|
|
$ |
27.20 |
|
|
$ |
28.65 |
|
|
$ |
28.19 |
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
|
|
|
$ |
0.055 |
|
|
$ |
0.055 |
|
|
$ |
0.07 |
|
|
$ |
0.07 |
|
Class A
Common Stock prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
|
$ |
23.67 |
|
|
$ |
27.76 |
|
|
$ |
31.82 |
|
|
$ |
34.20 |
|
Low |
|
|
|
$ |
20.30 |
|
|
$ |
22.00 |
|
|
$ |
26.62 |
|
|
$ |
29.46 |
|
Restrictions on dividends and other distributions
are described in Note 6 of the Consolidated Financial Statements (see Item 8).
In January 1998, the Board authorized the purchase
of 3,000,000 shares of Class A Common Stock, in the open market or otherwise, at such prices as management may from time to time consider to be
advantageous to the Company’s shareholders. The Company has purchased 2,946,900 shares of its Class A Common Stock pursuant to this authorization,
including 1,330,000 purchased in 2004. In July 2004, the Company purchased 1,489,943 shares of its Class A Common Stock in a private transaction. The
authorization given by the Board for this purchase was separate from the authorization given in 1998. The total cost of treasury shares purchased in
2004 was $81,135,000. In November 2004, the Board authorized the purchase of up to 1,000,000 additional shares of its Class A Common Stock. As of
December 31, 2004, the Company remains authorized to purchase 1,053,100 shares without further announcement.
Period
|
|
|
|
Total number of
shares
purchased
|
|
Average
price paid
|
|
Total number of shares
purchased as part of publicly
announced
plans or programs
|
|
Maximum number of shares
that may yet be purchased
under the
plans or programs
|
March 1 to
31, 2004 |
|
|
|
|
764,300 |
|
|
$ |
27.68 |
|
|
|
not applicable |
|
|
|
not applicable |
|
April 1 to
30, 2004 |
|
|
|
|
65,700 |
|
|
|
29.88 |
|
|
|
not applicable |
|
|
|
not applicable |
|
July 1 to
31, 2004 |
|
|
|
|
1,489,943 |
|
|
|
28.87 |
|
|
|
not applicable |
|
|
|
not applicable |
|
November 1
to 30, 2004 |
|
|
|
|
500,000 |
|
|
|
30.00 |
|
|
|
not applicable |
|
|
|
not applicable |
|
24
Item 6. SELECTED FINANCIAL DATA
The following selected historical financial data
have been derived from the Consolidated Financial Statements of the Registrant (see Item 8). The data should be read in conjunction with those
financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations (see Item 7).
(in thousands, except per share amounts)
|
|
|
|