ALBANY INTERNATIONAL CORP /DE/ - 10-Q Quarterly Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: March 31, 2005

OR

o	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


		ALBANY INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)


Delaware			14-0462060

(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

1373 Broadway, Albany, New York			12204

(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code 518-445-2200

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

The registrant had 28,475,262 shares of Class A Common Stock and 3,236,476 shares of Class B Common Stock outstanding as of April 30, 2005.

ALBANY INTERNATIONAL CORP.

TABLE OF CONTENTS


		Page No.


Part I	Financial information

	Item 1. Financial Statements (unaudited)

	Consolidated statements of operations and retained earnings - three months ended March 31, 2005 and 2004

	Consolidated balance sheets - March 31, 2005 and December 31, 2004

	Consolidated statements of cash flows - three months ended March 31, 2005 and 2004

	Notes to consolidated financial statements

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Item 3. Quantitative and Qualitative Disclosures about Market Risk

	Item 4. Controls and Procedures

Part II	Other information

	Item 1. Legal Proceedings

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

	Item 3. Defaults upon Senior Securities

	Item 4. Submission of Matters to a Vote of Security Holders

	Item 5. Other Information

	Item 6. Exhibits and Reports on Form 8-K

Item 1. Financial Statements
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(in thousands except per share data)
(unaudited)


	Three Months Ended March 31,
	2005			2004

Net sales	$	241,064		$	231,306
Cost of goods sold		142,729			139,528


Gross profit		98,335			91,778
Selling, technical, general and research expenses		68,541			67,152
Restructuring, net		-			11,593


Operating income		29,794			13,033
Interest expense, net		3,689			3,654
Other expense, net		1,318			5,787


Income before income taxes		24,787			3,592
Income tax expense		6,048			217


Income before associated companies		18,739			3,375
Equity in earnings/(losses) of associated companies		170			(82	)


Net income		18,909			3,293

Retained earnings, beginning of period		434,057			433,407
Dividends declared		(2,534	)		(2,370	)


Retained earnings, end of period	$	450,432		$	434,330


Earnings per share - basic:
Net income	$	0.60		$	0.10

Earnings per share - diluted:
Net income	$	0.59		$	0.10


Average number of shares used in basic earnings per share computations		31,534			33,596
Average number of shares used in diluted earnings per share computations		32,099			34,240

Dividends per share	$	0.08		$	0.07

The accompanying notes are an integral part of the financial statements.

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


	(unaudited) March 31, 2005			December 31, 2004

ASSETS
Cash and cash equivalents	$	65,883		$	58,982
Accounts receivable, net		135,895			144,950
Note receivable		19,339			18,955
Inventories:
Finished goods		99,662			96,061
Work in process		57,398			57,470
Raw material and supplies		33,575			31,999

		190,635			185,530

Deferred taxes		24,832			26,526
Prepaid expenses		9,018			8,867

Total current assets		445,602			443,810

Property, plant and equipment, net		361,767			378,170
Investments in associated companies		6,206			6,456
Intangibles		13,654			14,207
Goodwill		164,582			171,622
Deferred taxes		87,296			87,848
Cash surrender value of life insurance policies		35,381			34,583
Other assets		21,078			19,064

Total assets	$	1,135,566		$	1,155,760


LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes and loans payable	$	7,839		$	14,617
Accounts payable		39,955			43,378
Accrued liabilities		107,757			120,263
Current maturities of long-term debt		1,231			1,340
Income taxes payable and deferred		24,695			29,620

Total current liabilities		181,477			209,218

Long-term debt		212,831			213,615
Other noncurrent liabilities		156,691			147,268
Deferred taxes and other credits		34,342			34,882

Total liabilities		585,341			604,983


Commitments and Contingencies		-			-
SHAREHOLDERS’ EQUITY
Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued		-			-
Class A Common Stock, par value $.001 per share;authorized 100,000,000 shares; issued 33,464,129 in 2005 and 33,176,872 in 2004		33			33
Class B Common Stock, par value $.001 per share;authorized 25,000,000 shares; issued and outstanding 3,236,476 in 2005 and 3,236,476 in 2004		3			3
Additional paid in capital		303,488			296,045
Retained earnings		450,432			434,057
Accumulated items of other comprehensive income:
Translation adjustments		(37,507	)		(11,711	)
Derivative valuation adjustment		(1,359	)		(2,785	)
Pension liability adjustment		(38,369	)		(38,369	)

		676,721			677,273

Less treasury stock (Class A), at cost (5,004,152 shares in 2005 and in 2004)		126,496			126,496

Total shareholders’ equity		550,225			550,777

Total liabilities and shareholders’ equity	$	1,135,566		$	1,155,760

The accompanying notes are an integral part of the financial statements.

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


	Three Months Ended March 31,
	2005			2004

OPERATING ACTIVITIES
Net income	$	18,909		$	3,293
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in (earnings)/losses of associated companies		(170	)		82
Depreciation		13,376			13,825
Amortization		725			928
Provision for deferred income taxes, other credits and long-term liabilities		5,200			5,392
Provision for write-off of equipment		807			5,269
Provision for impairment of investment		-			4,000
Increase in cash surrender value of life insurance		(798	)		(667	)
Change in unrealized currency transaction gains and losses		(569	)		6,268
Gain on disposition of assets		-			736
Shares contributed to ESOP		2,368			2,588
Tax benefit of options exercised		1,261			913
Changes in operating assets and liabilities:
Accounts receivable		4,409			(1,862	)
Note receivable		(384	)		833
Inventories		(8,451	)		(5,319	)
Prepaid expenses		(339	)		891
Accounts payable		464			930
Accrued liabilities		(2,100	)		(3,357	)
Income taxes payable		(4,841	)		(12,044	)
Other, net		(2,454	)		1,814

Net cash provided by operating activities		27,413			24,513


INVESTING ACTIVITIES
Purchases of property, plant and equipment		(9,508	)		(15,275	)
Purchased software		(411	)		(140	)
Proceeds from sale of assets		-			1,246

Net cash used in investing activities		(9,919	)		(14,169	)


FINANCING ACTIVITIES
Proceeds from borrowings		8,040			8,299
Principal payments on debt		(15,493	)		(6,100	)
Purchase of treasury shares		-			(19,127	)
Proceeds from options exercised		3,814