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<SEC-DOCUMENT>0000891092-09-003165.txt : 20090807
<SEC-HEADER>0000891092-09-003165.hdr.sgml : 20090807
<ACCEPTANCE-DATETIME>20090807142023
ACCESSION NUMBER:		0000891092-09-003165
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20090630
FILED AS OF DATE:		20090807
DATE AS OF CHANGE:		20090807

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ALBANY INTERNATIONAL CORP /DE/
		CENTRAL INDEX KEY:			0000819793
		STANDARD INDUSTRIAL CLASSIFICATION:	BROADWOVEN FABRIC MILS, MAN MADE FIBER & SILK [2221]
		IRS NUMBER:				140462060
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-10026
		FILM NUMBER:		09994894

	BUSINESS ADDRESS:	
		STREET 1:		1373 BROADWAY
		CITY:			ALBANY
		STATE:			NY
		ZIP:			12204
		BUSINESS PHONE:		5184452200

	MAIL ADDRESS:	
		STREET 1:		1373 BROADWAY
		CITY:			ALBANY
		STATE:			NY
		ZIP:			12204

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ALBINT INC
		DATE OF NAME CHANGE:	19870924
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e36147-10q.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
   <TITLE></TITLE>
</HEAD>

<BODY bgcolor="#ffffff" style="font-family: 'Arial';font-size: 10pt;">





<P align="center">
<B>UNITED STATES</B><BR>
  <B>SECURITIES AND EXCHANGE COMMISSION</B><BR>
  <B>Washington, D.C. 20549</B></P>
<P align="center">
<B><font size="4">Form 10-Q</font></B></P>
<P align="center">
<B><font face="Wingdings">x</font> QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></P>
<P align="center">
For the quarterly period ended: <U>June 30, 2009</U></P>
<P align="center">
OR</P>
<P align="center">
<B><font face="Wingdings">o</font> TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></P>
<P align="center">
For the transition period from __________
   to
  __________<BR>
  <BR>
Commission file number: <U>1-10026</U><BR>
  <BR>
  <U>ALBANY INTERNATIONAL CORP.</U><BR>
(Exact name of registrant as specified in its charter)</P>
<div align="center">
  <TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
    <TR>

      <TD></TD>
      <TD></TD>
    </TR>
    <TR valign="bottom">

      <TD align=center width="50%">
        <div align="center"><FONT size=2>Delaware</FONT>
        </div>
      </TD>
      <TD align=left>
        <div align="center"><FONT size=2>14-0462060</FONT>
        </div>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left height="18">
        <hr noshade width="225" size="1" align="center">
    </TD>
      <TD align=left height="18">
        <hr noshade width="225" size="1" align="center">
    </TD>
    </TR>
    <TR valign="bottom">

      <TD align=left>
        <div align="center"><FONT size=2>(State or other jurisdiction of</FONT>
        </div>
      </TD>
      <TD align=left>
        <div align="center">&nbsp; &nbsp;<FONT size=2>(IRS Employer Identification No.)</FONT>
        </div>
      </TD>
    </TR>
    <TR valign="bottom">

      <TD align=center>
        <div align="center"><FONT size=2>incorporation or organization)</FONT></div>
      </TD>
      <TD align=left>


        <div align="center"></div>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left>&nbsp;</TD>
      <TD align=center>&nbsp;</TD>
    </TR>

    <TR valign="bottom">

      <TD align=left>
        <div align="center"><FONT size=2>1373 Broadway, Albany, New York</FONT>
        </div>
      </TD>
      <TD align=center>
        <div align="center"><FONT size=2>12204</FONT>
        </div>
      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=center>
        <hr noshade width="225" size="1" align="center">
    </TD>
      <TD align=left>
        <hr noshade width="225" size="1" align="center">
    </TD>
    </TR>
    <TR valign="bottom">

      <TD align=center>
        <div align="center"><FONT size=2>(Address of principal executive offices)</FONT>
        </div>
      </TD>
      <TD align=left>
        <div align="center"><FONT size=2>(Zip Code)</FONT>
        </div>
      </TD>
    </TR>
  </TABLE>
</div>
<P align="center">
Registrant&#146;s telephone number, including area code&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>518-445-2200</u></P>
<P>
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 <font size=2><b><font face="Wingdings">x</font></b></font> No <b><font face="Wingdings">o</font></b></P>
<P>
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (&#167;232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes <font size=2><b><font face="Wingdings">x</font></b></font> No <b><font face="Wingdings">o</font></b></P>
<P>
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company.</P>
<div align="center">
  <TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
    <TR>

      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
    </TR>
    <TR valign="bottom">

      <TD align=left width="20%">
<FONT size=2>Large accelerated filer</FONT>
        </TD>
      <TD align=left width="15%">
<font size=2><b><font face="Wingdings">x</font></b></font>
        </TD>
      <TD align=left width="25%">
<FONT size=2>Accelerated filer</FONT>
        </TD>
      <TD align=right>
        <div align="left"><b><font face="Wingdings">o</font></b>
        </div>
      </TD>
    </TR>
    <TR valign="bottom">

      <TD align=left>
<FONT size=2>Non-accelerated filer</FONT>
        </TD>
      <TD align=left>
<b><font face="Wingdings">o</font></b>
        </TD>
      <TD align=left>
<FONT size=2>Smaller reporting company</FONT>
        </TD>
      <TD align=right>
        <div align="left"><b><font face="Wingdings">o</font></b>
        </div>
      </TD>
    </TR>
  </TABLE>
  <BR>
  <TABLE border=0 width=100% cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;">
    <TR>
      <TD width=100%></TD>
    </TR>
    <TR valign="bottom">

      <TD align=left>
<FONT size=2>Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).</FONT>
        </TD>
    </TR>
    <TR valign="bottom">

      <TD align=left>
<FONT size=2>Yes <b><font face="Wingdings">o</font></b> No </FONT><font size=2><b><font face="Wingdings">x</font></b></font>
        </TD>
    </TR>
  </TABLE>
</div>
<P>
The registrant had 27,551,529 shares of Class A Common Stock and 3,236,098 shares of Class B Common Stock outstanding as of June 30, 2009.</P>
<HR noshade align="center" width="100%" size="5">
<!-- *************************************************************************** -->
<div title="EE+ Page Break" style="FONT-SIZE: 1pt; PAGE-BREAK-AFTER: always; WIDTH: 100%; HEIGHT: 1px" align="center"></div>
<!-- -->
<p align="center">ALBANY INTERNATIONAL CORP.<br>
  <br>
TABLE OF CONTENTS</p>
<div align="center">
  <table border=0 width=100% cellspacing=0 cellpadding=4 style="font-family: 'Arial';font-size: 10pt;">
    <tr>

      <td width=8%></td>
      <td width=79%></td>
      <td width=13%></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">&nbsp;

        </td>
      <td align=left width="13%">
        <div align="center"><font size=2>Page No.</font>

      </div>
        <hr noshade size="1" width="80" align="center">
      </td>
    </tr>
    <tr>

      <td colspan=3>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">
<font size=2>Part I</font>
        </td>
      <td align=left width="79%">
<font size=2>Financial information</font>
        </td>
      <td align=right width="13%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<font size=2>Item 1. Financial Statements (unaudited)</font>
        </td>
      <td align=right width="13%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left height="15" width="8%">&nbsp;

        </td>
      <td align=left height="15" width="79%">
<a href="#page1"><font size=2>Consolidated statements of operations - three and six months ended June 30, 2009 and 2008</font>
        </a></td>
      <td align=right height="15" width="13%"><a href="#page1">1

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page2"><font size=2>Consolidated balance sheets - June 30, 2009 and December 31, 2008</font>
        </a></td>
      <td align=right width="13%"><a href="#page2">2

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page3"><font size=2>Consolidated statements of cash flows - six months ended June 30, 2009 and 2008</font>
        </a></td>
      <td align=right width="13%"><a href="#page3">3

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page4"><font size=2>Notes to consolidated financial statements</font>
        </a></td>
      <td align=right width="13%"><a href="#page4">4

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page31"><font size=2>Item 2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</font>
        </a></td>
      <td align=right width="13%"><a href="#page31">31

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page54a"><font size=2>Item 3. Quantitative and Qualitative Disclosures about Market Risk</font>
        </a></td>
      <td align=right width="13%"><a href="#page54a">54

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page54b"><font size=2>Item 4. Controls and Procedures</font>
        </a></td>
      <td align=right width="13%"><a href="#page54b">54

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">
<font size=2>Part II</font>
        </td>
      <td align=left width="79%">
<font size=2>Other information</font>
        </td>
      <td align=right width="13%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page55"><font size=2>Item 1. Legal Proceedings</font>
        </a></td>
      <td align=right width="13%"><a href="#page55">55

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page59a"><font size=2>Item 1A. Risk Factors</font>
        </a></td>
      <td align=right width="13%"><a href="#page59a">59

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page59b"><font size=2>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</font>
        </a></td>
      <td align=right width="13%"><a href="#page59b">59

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page59c"><font size=2>Item 3. Defaults upon Senior Securities</font>
        </a></td>
      <td align=right width="13%"><a href="#page59c">59

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page59d"><font size=2>Item 4. Submission of Matters to a Vote of Security Holders</font>
        </a></td>
      <td align=right width="13%"><a href="#page59d">59

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page60a"><font size=2>Item 5. Other Information</font>
        </a></td>
      <td align=right width="13%"><a href="#page60a">60

        </a></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="8%">&nbsp;

        </td>
      <td align=left width="79%">
<a href="#page61"><font size=2>Item 6. Exhibits</font>
        </a></td>
      <td align=right width="13%"><a href="#page61">61

        </a></td>
    </tr>
  </table>
  <br>

</div>
<hr noshade align="center" width="100%" size="5">
<!-- *************************************************************************** -->
<div title="EE+ Page Break" style="FONT-SIZE: 1pt; PAGE-BREAK-AFTER: always; WIDTH: 100%; HEIGHT: 1px" align="center"></div>
<!-- -->
<p align="center"><a name="page1"></a>ALBANY INTERNATIONAL CORP.<br>
CONSOLIDATED STATEMENTS OF OPERATIONS<br>
(in thousands except per share data)<br>
(unaudited)</p>
<div align="center">
  <table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
    <tr>

      <td></td>
      <td></td>
      <td></td>
      <td></td>
      <td></td>
      <td></td>
      <td></td>
      <td></td>
      <td></td>
    </tr>
    <tr valign="bottom">

      <td align=right colspan=3>
        <div align="center"><font size=2>Three Months Ended</font>
        </div>
      </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right colspan=3>
        <div align="center"><font size=2>Six Months Ended</font>
        </div>
      </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=center colspan=3>
<font size=2>June 30,</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=center colspan=3>
<font size=2>June 30,</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
        <div align="center"><font size=2>2009</font>
      </div>
        <hr noshade size="1" align="center">
        </td>
      <td align=left>


        <div align="center"></div>
      </td>
      <td align=right>
        <div align="center"><font size=2>2008</font>
      </div>
        <hr noshade size="1" align="center">
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
        <div align="center"><font size=2>2009</font>

      </div>
        <hr noshade size="1" align="center">
                </td>
      <td align=left>


        <div align="center"></div>
      </td>
      <td align=right>
        <div align="center"><font size=2>2008</font>

      </div>
        <hr noshade size="1" align="center">
                </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=9>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;212,559</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;297,201</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>Net sales</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;421,764</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;570,409</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>143,671</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>194,003</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>Cost of goods sold</font>
        </td>
      <td align=right>
<font size=2>282,845</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>372,281</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>68,888</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>103,198</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>Gross profit</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>138,919</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>198,128</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>64,633</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>86,940</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp; &nbsp;<font size=2>Selling, technical, general and research expenses</font>
        </td>
      <td align=right>
<font size=2>132,252</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>169,328</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>33,810</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,732</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp;<font size=2>Restructuring and other, net</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>50,989</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>7,094</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td align=right>
<font size=2>(29,555</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>14,526</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>Operating (loss)/income</font>
        </td>
      <td align=right>
<font size=2>(44,322</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>21,706</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>6,086</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>5,880</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp;<font size=2>Interest expense, net</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>11,920</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>11,277</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>(37,201</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>2,114</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp; &nbsp;<font size=2>Other (income)/expense, net</font>
        </td>
      <td align=right>
<font size=2>(37,020</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>1,799</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,560</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>6,532</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>Income/(loss) from continuing operations before income taxes</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(19,222</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>8,630</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>4,339</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>1,293</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp; &nbsp;<font size=2>Income tax expense</font>
        </td>
      <td align=right>
<font size=2>2,734</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>5,411</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>(2,779</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>5,239</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>(Loss)/income before associated companies</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(21,956</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>3,219</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>35</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>58</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 <font size=2>&nbsp; &nbsp;Equity in income/(losses) of associated companies</font>
        </td>
      <td align=right>
<font size=2>315</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>(245</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>(2,744</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>5,297</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>(Loss)/income from continuing operations</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(21,641</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>2,974</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>Discontinued operations:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>(10,000</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>53</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp;<font size=2>(Loss)/income from discontinued operations</font>
        </td>
      <td align=right>
<font size=2>(10,000</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>313</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>97</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp;<font size=2>Income tax expense</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>130</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>(10,000</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(44</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=left>
<font size=2>(Loss)/income from discontinued operations</font>
        </td>
      <td align=right>
<font size=2>(10,000</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>183</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=right>&nbsp;</td>
      <td align=left>&nbsp;</td>
      <td align=right>&nbsp;</td>
      <td align=left>&nbsp;</td>
      <td align=left>&nbsp;</td>
      <td align=right>&nbsp;</td>
      <td align=left>&nbsp;</td>
      <td align=right>&nbsp;</td>
      <td align=left>&nbsp;</td>
    </tr>
    <tr>

      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="1" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;12,744</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;5,253</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>Net (loss)/income</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;31,641</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;3,157</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td>
        <hr noshade size="2" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="2" align="center">
    </td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="2" align="center">
    </td>
      <td>&nbsp;</td>
      <td>
        <hr noshade size="2" align="center">
    </td>
      <td>&nbsp;</td>
    </tr>

    <tr>

      <td colspan=9>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>(Loss)/income from continuing operations per share:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>(&#36;0.08</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>&#36;0.18</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp;<font size=2>Basic</font>
        </td>
      <td align=right>
<font size=2>(&#36;0.71</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>&#36;0.10</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;0.08</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;0.18</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp;<font size=2>Diluted</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;0.71</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;0.10</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=9>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>(Loss)/income from discontinued operations per share:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>(&#36;0.33</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>&#36;0.00</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp;<font size=2>Basic</font>
        </td>
      <td align=right>
<font size=2>(&#36;0.33</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>&#36;0.01</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;0.33</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;0.01</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp;<font size=2>Diluted</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;0.33</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;0.01</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=9>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>Net (loss)/income per share:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>(&#36;0.41</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>&#36;0.18</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp;<font size=2>Basic</font>
        </td>
      <td align=right>
<font size=2>(&#36;1.04</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>&#36;0.11</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;0.41</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;0.17</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp;<font size=2>Diluted</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;1.04</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;0.11</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=9>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>Shares used in computing earnings per share:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>30,723</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>29,760</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
 &nbsp;<font size=2>Basic</font>
        </td>
      <td align=right>
<font size=2>30,386</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>29,686</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=right>
<font size=2>30,723</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>30,051</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left>
 &nbsp;<font size=2>Diluted</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>30,386</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>29,990</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=9>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=right>
<font size=2>&#36;0.12</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>&#36;0.12</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>
<font size=2>Dividends declared per share</font>
        </td>
      <td align=right>
<font size=2>&#36;0.24</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>&#36;0.23</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
  </table>
  <br>
</div>
<p align="center">
The accompanying notes are an integral part of the financial statements</p>
<p align="center">1</p>
<hr noshade align="center" width="100%" size="5">
<!-- *************************************************************************** -->
<div title="EE+ Page Break" style="FONT-SIZE: 1pt; PAGE-BREAK-AFTER: always; WIDTH: 100%; HEIGHT: 1px" align="center"></div>
<!-- -->
<p align="center"><a name="page2"></a>ALBANY INTERNATIONAL CORP.<br>
CONSOLIDATED BALANCE SHEETS<br>
(in thousands, except share and per share data)<br>
(unaudited)</p>
<div align="center">
  <table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
    <tr>

      <td width=67%></td>
      <td width=15%></td>
      <td width=2%></td>
      <td width=14%></td>
      <td width=2%></td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">&nbsp;

        </td>
      <td align=center width="15%">
<font size=2>June 30,</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
        <div align="center"><font size=2>December 31,</font>
        </div>
      </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">&nbsp;

        </td>
      <td align=right width="15%">
        <div align="center"><font size=2>2009</font>
      </div>
        <hr noshade size="1" align="center">
        </td>
      <td align=left width="2%">


        <div align="center"></div>
      </td>
      <td align=right width="14%">
        <div align="center"><font size=2>2008</font>
      </div>
        <hr noshade size="1" align="center">
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
<font size=2>ASSETS</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Cash and cash equivalents</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>&#36;120,708</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>&#36;106,571</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Accounts receivable, net</font>
        </td>
      <td align=right width="15%">
<font size=2>170,843</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>204,157</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Inventories</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>202,170</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>206,488</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Income taxes receivable and deferred</font>
        </td>
      <td align=right width="15%">
<font size=2>26,885</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>26,319</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Prepaid expenses and other current assets</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>9,886</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>11,341</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>Total current assets</font>
        </td>
      <td align=right width="15%">
<font size=2>530,492</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>554,876</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=5>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Property, plant and equipment, net</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>541,526</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>536,576</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Investments in associated companies</font>
        </td>
      <td align=right width="15%">
<font size=2>3,117</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>3,899</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Intangibles</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>8,340</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>9,636</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Goodwill</font>
        </td>
      <td align=right width="15%">
<font size=2>116,658</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>115,415</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Deferred taxes</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>133,274</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>115,818</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Cash surrender value of life insurance policies</font>
        </td>
      <td align=right width="15%">
<font size=2>49,043</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>47,425</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Other assets</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>17,957</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>21,412</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>Total assets</font>
        </td>
      <td align=right width="15%">
<font size=2>&#36;1,400,407</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>&#36;1,405,057</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="2" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="2" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td align=left width="67%">
<font size=2>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Notes and loans payable</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>&#36;8,747</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>&#36;12,597</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Accounts payable</font>
        </td>
      <td align=right width="15%">
<font size=2>45,817</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>74,001</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Accrued liabilities</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>147,729</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>116,361</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Current maturities of long-term debt</font>
        </td>
      <td align=right width="15%">
<font size=2>11</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>13</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Income taxes payable and deferred</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>4,109</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>7,205</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>Total current liabilities</font>
        </td>
      <td align=right width="15%">
<font size=2>206,413</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>210,177</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=5>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Long-term debt</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>524,723</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>508,386</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Other noncurrent liabilities</font>
        </td>
      <td align=right width="15%">
<font size=2>183,851</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>187,968</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Deferred taxes and other credits</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>55,322</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>65,590</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>Total liabilities</font>
        </td>
      <td align=right width="15%">
<font size=2>970,309</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>972,121</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
<font size=2>Commitments and Contingencies</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=5>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
<font size=2>SHAREHOLDERS&#146; EQUITY</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Preferred stock, par value &#36;5.00 per share;</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp;<font size=2>authorized 2,000,000 shares; none issued</font>
        </td>
      <td align=right width="15%">
<font size=2>-</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>-</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Class A Common Stock, par value &#36;.001 per share;</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="15%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left width="14%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp; &nbsp;<font size=2>authorized 100,000,000 shares; issued</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="15%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left width="14%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp; &nbsp;<font size=2>36,048,268 in 2009 and 35,245,482 in 2008</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>36</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>35</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Class B Common Stock, par value &#36;.001 per share;</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp;<font size=2>authorized 25,000,000 shares; issued and</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp;<font size=2>outstanding 3,236,098 in 2009 and 2008</font>
        </td>
      <td align=right width="15%">
<font size=2>3</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>3</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp;<font size=2>Additional paid in capital</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>381,458</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>363,918</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Retained earnings</font>
        </td>
      <td align=right width="15%">
<font size=2>390,862</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>429,804</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Accumulated items of other comprehensive income:</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp; &nbsp;<font size=2>Translation adjustments</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>(16,786</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>(34,196</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp;<font size=2>Pension and post retirement liability adjustments</font>
        </td>
      <td align=right width="15%">
<font size=2>(67,176</font>
        </td>
      <td align=left width="2%">
<font size=2>)</font>
        </td>
      <td align=right width="14%">
<font size=2>(67,757</font>
        </td>
      <td align=left width="2%">
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>688,397</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>691,807</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp;<font size=2>Less treasury stock (Class A), at cost; 8,496,739 shares</font>
        </td>
      <td align=left width="15%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=left width="14%">&nbsp;

        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp;<font size=2>in 2009 and 8,523,139 shares in 2008</font>
        </td>
      <td align=right width="15%">
<font size=2>258,299</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>258,871</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left width="67%">
 &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>Total shareholders&#146; equity</font>
        </td>
      <td bgcolor="#c0c0c0" align=right width="15%">
<font size=2>430,098</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right width="14%">
<font size=2>432,936</font>
        </td>
      <td bgcolor="#c0c0c0" align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="1" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left width="67%">
 &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>Total liabilities and shareholders&#146; equity</font>
        </td>
      <td align=right width="15%">
<font size=2>&#36;1,400,407</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
      <td align=right width="14%">
<font size=2>&#36;1,405,057</font>
        </td>
      <td align=left width="2%">&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left width="67%">&nbsp;</td>
      <td align=right width="15%">
        <hr noshade size="2" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
      <td align=right width="14%">
        <hr noshade size="2" align="center">
    </td>
      <td align=left width="2%">&nbsp;</td>
    </tr>

  </table>
</div>
<p align="center">
The accompanying notes are an integral part of the financial statements</p>
<p align="center">2</p>
<hr noshade align="center" width="100%" size="5">
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<div title="EE+ Page Break" style="FONT-SIZE: 1pt; PAGE-BREAK-AFTER: always; WIDTH: 100%; HEIGHT: 1px" align="center"></div>
<!-- -->
<p align="center"><a name="page3"></a>ALBANY INTERNATIONAL CORP.<br>
CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
(in thousands)<br>
(unaudited)</p>
<div align="center">
  <table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
    <tr>

      <td></td>
      <td></td>
      <td></td>
      <td></td>
      <td></td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left colspan=3>
        <div align="center">&nbsp; &nbsp;<font size=2>Six Months Ended</font>
        </div>
      </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=left colspan="3">
        <div align="center"><font size=2>June 30,</font></div>
      </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>&nbsp;

        </td>
      <td align=right>
        <div align="center"><font size=2>2009</font>
      </div>
        <hr noshade size="1" align="center">
        </td>
      <td align=left>


        <div align="center"></div>
      </td>
      <td align=right>
        <div align="center"><font size=2>2008</font>
      </div>
        <hr noshade size="1" align="center">
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
<font size=2>OPERATING ACTIVITIES</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
<font size=2>Net (loss)/income</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(&#36;31,641</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;3,157</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left colspan=2>
<font size=2>Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Equity in (earnings)/losses of associated companies</font>
        </td>
      <td align=right>
<font size=2>(315</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>245</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Depreciation</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>29,093</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>30,005</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Amortization</font>
        </td>
      <td align=right>
<font size=2>4,406</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>2,364</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Non cash interest expense</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,772</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>2,195</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Gain on early retirement of debt</font>
        </td>
      <td align=right>
<font size=2>(39,453</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>-</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Settlement of accreted debt discount</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(7,457</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Provision for deferred income taxes, other credits and long-term liabilities</font>
        </td>
      <td align=right>
<font size=2>(12,026</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(2,730</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Loss on disposal of property, plant and equipment</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,609</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>790</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Provision for impairment of investment</font>
        </td>
      <td align=right>
<font size=2>2,624</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>-</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Increase in cash surrender value of life insurance</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(1,827</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(1,862</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Unrealized currency transaction gains</font>
        </td>
      <td align=right>
<font size=2>(6,004</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(1,975</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Provision for purchase price adjustment of discontinued operation</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>10,000</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Stock option expense</font>
        </td>
      <td align=right>
<font size=2>70</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>85</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Excess tax benefit of options exercised</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(807</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Compensation and benefits paid or payable in Class A Common Stock</font>
        </td>
      <td align=right>
<font size=2>3,354</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>4,209</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr>

      <td colspan=5>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
<font size=2>Changes in operating assets and liabilities, net of business acquisitions and divestitures:</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Accounts receivable</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>43,308</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(5,757</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Inventories</font>
        </td>
      <td align=right>
<font size=2>8,537</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>425</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Prepaid expenses and other current assets</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,863</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,311</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Accounts payable</font>
        </td>
      <td align=right>
<font size=2>(29,103</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(15,246</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Accrued liabilities</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>19,165</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>5,347</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Income taxes payable</font>
        </td>
      <td align=right>
<font size=2>(2,943</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>3,373</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Other, net</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>1,704</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(2,500</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Net cash (used in)/provided by operating activities</font>
        </td>
      <td align=right>
<font size=2>(3,264</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>22,629</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td align=left>
<font size=2>INVESTING ACTIVITIES</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Purchases of property, plant and equipment</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(26,299</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(73,560</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Purchased software</font>
        </td>
      <td align=right>
<font size=2>(1,873</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(7,404</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Cash received from life insurance policy terminations</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>239</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Net cash used in investing activities</font>
        </td>
      <td align=right>
<font size=2>(27,933</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(80,964</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td align=left>
<font size=2>FINANCING ACTIVITIES</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Proceeds from borrowings</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>105,072</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>64,001</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Principal payments on debt</font>
        </td>
      <td align=right>
<font size=2>(4,633</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(18,321</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Early retirement of debt</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(46,502</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Proceeds from options exercised</font>
        </td>
      <td align=right>
<font size=2>-</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>2,759</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Excess tax benefit of options exercised</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>-</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>807</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Dividends paid</font>
        </td>
      <td align=right>
<font size=2>(7,202</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>(6,514</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
 &nbsp; &nbsp; &nbsp;<font size=2>Net cash provided by financing activities</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>46,735</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>42,732</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td align=left>
<font size=2>Effect of exchange rate changes on cash flows</font>
        </td>
      <td align=right>
<font size=2>(1,401</font>
        </td>
      <td align=left>
<font size=2>)</font>
        </td>
      <td align=right>
<font size=2>1,410</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
<font size=2>Increase/(decrease) in cash and cash equivalents</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>14,137</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>(14,193</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>
<font size=2>)</font>
        </td>
    </tr>
    <tr valign="bottom">

      <td align=left>
<font size=2>Cash and cash equivalents at beginning of year</font>
        </td>
      <td align=right>
<font size=2>106,571</font>
        </td>
      <td align=left>&nbsp;

        </td>
      <td align=right>
<font size=2>73,305</font>
        </td>
      <td align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="1" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>
    <tr valign="bottom">

      <td bgcolor="#c0c0c0" align=left>
<font size=2>Cash and cash equivalents at end of period</font>
        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;120,708</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
      <td bgcolor="#c0c0c0" align=right>
<font size=2>&#36;59,112</font>
        </td>
      <td bgcolor="#c0c0c0" align=left>&nbsp;

        </td>
    </tr>
    <tr valign="bottom">
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="2" align="center">
    </td>
      <td align=left>&nbsp;</td>
      <td align=right>
        <hr noshade size="2" align="center">
    </td>
      <td align=left>&nbsp;</td>
    </tr>

  </table>
</div>
<p align="center">
The accompanying notes are an integral part of the financial statements</p>
<p align="center">3</p>
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<P align="center">
<a name="page4"></a>ALBANY INTERNATIONAL CORP.<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
(unaudited)</P>
<P align="left"> <B>1. Basis of Presentation</B></P>
<P align="left"> In the opinion of management, the accompanying unaudited consolidated
  financial statements contain all adjustments, consisting of only normal, recurring
  adjustments, necessary for a fair presentation of results for such periods.
  The results for any interim period are not necessarily indicative of results
  for the full year. The preparation of financial statements for interim periods
  does not require all of the disclosures normally included in financial statements
  prepared in accordance with accounting principles generally accepted in the
  United States of America. Accordingly, certain information and footnote disclosures
  normally included in financial statements prepared in accordance with accounting
  principles generally accepted in the United States of America have been omitted.
  These consolidated financial statements should be read in conjunction with the
  Company&#146;s Annual Report on Form 10-K as filed with the SEC for the year
  ended December 31, 2008, as supplemented by the Company&#146;s Current Report
  on Form 8-K filed on May 1, 2009 to reflect certain retrospective adjustments
  relating to the adoption of Financial Accounting Standards Board Staff Position
  No. APB 14-1 (FSP 14-1) and the changes in the business segments as discussed
  in this Form 10-Q.</P>
<P align="left"> For purposes of preparing this Form 10-Q, the Company considered
  events through August 6, 2009. See Financial Instruments Footnote 11 for disclosure
  regarding third and fourth quarter note transactions. No material events have
  occurred since June 30, 2009, which have not been disclosed in these financial
  statements.</P>
<P align="center">4</P>
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<P align=left><B>2. Reportable Segment Data</B></P>
<P align=left>The following table shows data by reportable segment, reconciled
  to consolidated totals included in the financial statements:</P>
<div align="center">
  <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 cellpadding=0 border=0 width="100%">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="1">
    </td>
    </tr>


    <tr valign=bottom>

      <td align=center>&nbsp; </td>
      <td align=center colspan=3><font size=2>Three Months Ended</font><br>
      <font size=2>June 30,</font></td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="3"><font size=2>Six Months Ended<br>
      June 30,</font><br>
         </td>
      <td align=center>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>(in thousands)</font></div>
      </td>
      <td align=center><font size=2>2009</font></td>
      <td align=center>&nbsp; </td>
      <td align=center><font size=2>2008</font></td>
      <td align=center>&nbsp; </td>
      <td align=center><font size=2>2009</font></td>
      <td align=center>&nbsp; </td>
      <td align=center><font size=2>2008</font></td>
      <td align=center>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left><b><font size=2>Net Sales</font></b> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Paper Machine Clothing</font> </td>
      <td align=right><font size=2>$145,533</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$199,477</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$284,607</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$382,492</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Albany Door Systems</font> </td>
      <td align=right><font size=2>30,530</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>48,845</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>64,856</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>93,977</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Engineered Fabrics</font> </td>
      <td align=right><font size=2>21,629</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>27,255</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>43,199</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>55,365</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Engineered Composites</font> </td>
      <td align=right><font size=2>7,379</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>13,977</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>16,464</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>25,065</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>PrimaLoft<sup><font size="1">&#174;</font></sup> Products</font> </td>
      <td align=right><font size=2>7,488</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>7,647</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>12,638</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>13,510</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Consolidated total</font> </td>
      <td align=right><font size=2>$212,559</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$297,201</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$421,764</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$570,409</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="2">
    </td>
    </tr>




    <tr valign=bottom>

      <td align=left><b><font size=2>Operating (loss)/income</font></b> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Paper Machine Clothing</font> </td>
      <td align=right><font size=2>($8,732</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>$31,231</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>($1,471</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>$53,770</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Albany Door Systems</font> </td>
      <td align=right><font size=2>(1,639</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>4,836</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>(1,411</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>8,273</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Engineered Fabrics</font> </td>
      <td align=right><font size=2>837</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>3,880</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>4,492</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>9,735</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Engineered Composites</font> </td>
      <td align=right><font size=2>(2,372</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(217</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(4,880</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(2,035</font> </td>
      <td align=left><font size=2>)</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>PrimaLoft<sup><font size="1">&#174;</font></sup> Products</font> </td>
      <td align=right><font size=2>2,594</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>1,718</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>3,683</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>2,830</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Research expense</font> </td>
      <td align=right><font size=2>(5,767</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(8,288</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(11,377</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(14,159</font> </td>
      <td align=left><font size=2>)</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Unallocated expenses</font> </td>
      <td align=right><font size=2>(14,476</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(18,634</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(33,358</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>(36,708</font> </td>
      <td align=left><font size=2>)</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Operating (loss)/income before reconciling items</font> </td>
      <td align=right><font size=2>(29,555</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>14,526</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>(44,322</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>21,706</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr>

      <td colspan=9>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><b><font size=2>Reconciling items:</font></b> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Interest expense, net</font> </td>
      <td align=right><font size=2>6,086</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>5,880</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>11,920</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>11,277</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Other (income)/expense, net</font> </td>
      <td align=right><font size=2>(37,201</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>2,114</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>(37,020</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>1,799</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Income/(loss) from continuing operations before</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>&nbsp;income taxes</font> </td>
      <td align=right><font size=2>$1,560</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$6,532</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>($19,222</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>$8,630</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="9">
        <hr noshade size="1">
    </td>
    </tr>

  </table>
</div>
<p align="center">5<BR>

</p>
<HR align=center width="100%" noshade SIZE=5>

<!-- *************************************************************************** -->
<DIV title="EE+ Page Break" style="FONT-SIZE: 1pt; PAGE-BREAK-AFTER: always; WIDTH: 100%; HEIGHT: 1px" align="center"></DIV>
<!-- -->



<P align=left>In the third quarter of 2006, the Company announced the initial
  steps in its three-year restructuring and performance improvement plan. In addition
  to costs reported as restructuring in the Statement of Operations, the Company
  has incurred costs (referred to as performance improvement costs) that are related
  to terminations of employees or agreements, costs related to relocation of manufacturing
  equipment, and costs related to the implementation of a new enterprise resource
  planning system. The table below presents restructuring and performance improvement
  costs by reportable segment:</P>
<div align="center">
  <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 cellpadding=0 border=0 width="100%">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=center>&nbsp; </td>
      <td align=center colspan=6><font size=2>Three Months Ended</font>   </td>
      <td align=center colspan=5><font size=2>Six Months Ended</font>  </td>
    </tr>

    <tr valign=bottom>

      <td align=center>&nbsp; </td>
      <td align=center colspan="6">   <font size=2>June 30, 2009</font>   </td>
      <td align=center colspan="5">   <font size=2>June 30, 2009</font>  </td>
    </tr>

    <tr>

      <td align=center colspan=12>&nbsp; </td>
    </tr>





    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>(in thousands)</font></div>
      </td>
      <td align=center colspan="2"> <font size=2>Restructuring</font><br>
      <font size=2>and other</font>   </td>
      <td align=center colspan="2"><font size=2>Performance</font><br>
      <font size=2>improvement</font><br>
      <font size=2>costs</font>   </td>
      <td align=center colspan="2">  <font size=2>Total</font>   </td>
      <td align=center colspan="2"> <font size=2>Restructuring</font><br>
      <font size=2>and other</font>   </td>
      <td align=center colspan="2"><font size=2>Performance</font><br>
      <font size=2>improvement</font><br>
      <font size=2>costs</font>   </td>
      <td align=center><font size=2>Total</font></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Paper Machine Clothing</font> </td>
      <td align=right><font size=2>$27,923</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$5,880</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$33,803</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$43,533</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$11,803</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$55,336</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Albany Door Systems</font> </td>
      <td align=right><font size=2>1,900</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>99</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$1,999</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>2,048</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>506</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$2,554</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Engineered Composites</font> </td>
      <td align=right><font size=2>110</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>205</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$315</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>110</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>825</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$935</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>PrimaLoft<sup><font size="1">&#174;</font></sup> Products</font> </td>
      <td align=right><font size=2>19</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$19</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>61</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$61</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Engineered Fabrics</font> </td>
      <td align=right><font size=2>2,515</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$2,515</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>2,515</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$2,515</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Unallocated</font> </td>
      <td align=right><font size=2>1,343</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>1,374</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$2,717</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>2,722</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>3,574</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$6,296</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Consolidated total</font> </td>
      <td align=right><font size=2>$33,810</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$7,558</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$41,368</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$50,989</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$16,708</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$67,697</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>





    <tr>

      <td colspan=12>&nbsp; </td>
    </tr>

    <tr>

      <td colspan=12>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp; </td>
      <td align=right colspan=6>
        <div align="center"><font size=2>Three Months Ended</font> </div>
      </td>
      <td align=right colspan=5>
        <div align="center"><font size=2>Six Months Ended</font> </div>
      </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp; </td>
      <td align=left colspan="6">
        <div align="center"><font size=2>June 30, 2008</font> </div>
      </td>
      <td align=left colspan="5">
        <div align="center"><font size=2>June 30, 2008</font> </div>
      </td>
    </tr>

    <tr>

      <td colspan=12>&nbsp; </td>
    </tr>





    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>(in thousands)</font> </div>
      </td>
      <td align=left colspan="2">
        <div align="center"></div>
        <div align="center"><font size=2>Restructuring</font> </div>
        <div align="center"><font size=2>and other</font> </div>
      </td>
      <td align=right colspan="2">
        <div align="center"><font size=2>Performance</font> </div>
        <div align="center"><font size=2>improvement</font> </div>
        <div align="center"><font size=2>costs</font></div>
      </td>
      <td align=left colspan="2">
        <div align="center"></div>
        <div align="center"></div>
        <div align="center"><font size=2>Total</font></div>
      </td>
      <td align=left colspan="2">
        <div align="center"></div>
        <div align="center"><font size=2>Restructuring</font> </div>
        <div align="center"><font size=2>and other</font> </div>
      </td>
      <td align=right colspan="2">
        <div align="center"><font size=2>Performance</font> </div>
        <div align="center"><font size=2>improvement</font> </div>
        <div align="center"><font size=2>costs</font></div>
      </td>
      <td align=right>
        <div align="center"><font size=2>Total</font> </div>
      </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Paper Machine Clothing</font> </td>
      <td align=right><font size=2>$628</font> </td>
      <td align=left>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$8,958</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$9,586</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$7,031</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$12,965</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$19,996</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Albany Door Systems</font> </td>
      <td align=right><font size=2>322</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>78</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>400</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>322</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>213</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>535</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Research expenses</font> </td>
      <td align=right><font size=2>1,826</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,826</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,827</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,827</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Unallocated</font> </td>
      <td align=right><font size=2>(1,044</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>6,760</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>5,716</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(2,086</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>10,708</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>8,622</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp;<font size=2>Consolidated total</font> </td>
      <td align=right><font size=2>$1,732</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$15,796</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$17,528</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$7,094</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right><font size=2>$23,886</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$30,980</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

  </table>

</div>
<P>There were no material changes in the total assets of the reportable segments during the three and six months ended June 30, 2009.</P>
<P align=center>6</P>
<HR align=center width="100%" noshade SIZE=5>

<!-- *************************************************************************** -->
<DIV title="EE+ Page Break" style="FONT-SIZE: 1pt; PAGE-BREAK-AFTER: always; WIDTH: 100%; HEIGHT: 1px" align="center"></DIV>
<!-- -->



<P align=left><B>3. Pensions and Other Benefits</B></P>
<P align=left>The Company sponsors defined benefit pension plans in various countries.
  The amount of contributions to the plans is based on several factors including
  the funding rules in each country. The Company expects to contribute approximately
  $13,000,000 to its postretirement and pension plans in 2009, compared to $17,700,000
  in 2008. The Company&#146;s current year estimated contribution includes nothing to its US plan. In prior years the Company has also made contributions
  to the US pension plan, and that is possible again this year, particularly in
  light of the decline in the value of equities since October 2007. In the coming
  months, the Company will make the decision about the exact timing and amount.
  Contributions to the US plan over the last few years have ranged from zero to
  $20,000,000 per year. The Company also provides certain medical, dental and
  life insurance benefits (&#147;Other Postretirement Benefits&#148;) for retired
  United States employees that meet program qualifications. The Company currently
  funds this plan as claims are paid.</P>
<P align=left>The components of net periodic benefit cost for the six months ended
  June 30, 2009 and 2008 are, as follows:</P>

<div align="center">
  <table width="100%" border=0 cellpadding=0 cellspacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>Pension Plans</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center>&nbsp; </td>
      <td align=center>&nbsp; </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan=5><font size=2>Other Postretirement Benefits</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>(in thousands)</font></div>
      </td>
      <td align=center colspan="2"><font size=2>2009</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2008</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2009</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2008</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left><font size=2>Service cost</font> </td>
      <td align=right><font size=2>$2,202</font> </td>
      <td align=left>&nbsp;&nbsp;&nbsp; </td>
      <td align=right>&nbsp;&nbsp; </td>
      <td align=right><font size=2>$4,334</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp;&nbsp; </td>
      <td align=right><font size=2>$563</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$1,018</font> </td>
      <td align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Interest cost</font> </td>
      <td align=right><font size=2>9,465</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>12,906</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,910</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>3,100</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Expected return on plan assets</font> </td>
      <td align=right><font size=2>(10,261</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(10,390</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr>

      <td colspan=12>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Amortization:</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp; &nbsp;<font size=2>Transition obligation</font> </td>
      <td align=right><font size=2>47</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp; &nbsp;<font size=2>Prior service cost/(credit)</font> </td>
      <td align=right><font size=2>54</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>388</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(2,163</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(1,904</font> </td>
      <td align=left><font size=2>)</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp; &nbsp;<font size=2>Net actuarial loss</font> </td>
      <td align=right><font size=2>1,016</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,238</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,390</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,778</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr>

      <td colspan=12>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Curtailment loss/(gain)</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>226</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(2,693</font> </td>
      <td align=left><font size=2>)</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Net periodic benefit costs</font> </td>
      <td align=right><font size=2>$2,523</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$8,702</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$1,700</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$1,299</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

  </table>
  <div align="left"><BR>
    On December 17, 2008, the Company amended its United States defined benefit
    plan to freeze benefit accruals under the plan. As a result of the freeze,
    employees covered by the Pension Plus plan will receive, at retirement, benefits
    already accrued through February 28, 2009, but no new benefits will accrue
    after that date. Benefit accruals under the Company&#146;s Supplemental Executive
    Retirement Plan (&#147;SERP&#148;) were similarly frozen.</div>
</div>
<P align=center>7</P>
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<P align=left><B>4. Restructuring</B></P>
<P align=left>The Company has ongoing restructuring activities related to the
  reduction of manufacturing capacity, reduction of administrative personnel,
  and curtailment of benefits under pension and postretirement plans. The actions
  are part of a three-year restructuring and performance improvement plan and
  have affected each of the Company&#146;s reportable segments. The actions taken
  to reduce manufacturing capacity are driven by the need to balance the Company&#146;s
  manufacturing capacity with anticipated demand.</P>
<P align=left>The following table summarizes charges reported in the Statement
  of Operations under &#147;Restructuring and other, net&#148; for the first six
  months of 2009:</P>

<div align="center">
  <table width="100%" border=0 cellpadding=0 cellspacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="7">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=center rowspan="3">
        <p align="left"><b><font size=2>Six months ended June 30, 2009</font></b> </p>
        <p align="left"><b><font size=2>(in thousands)</font></b></p>
      </td>
      <td align=center rowspan="3" colspan="2">
        <div align="right"><b><font size=2>Total</font></b>  <b><font size=2>restructuring</font></b><br>
      <b><font size=2>costs incurred</font></b></div>
      </td>
      <td align=center rowspan="3" colspan="2">
        <div align="right"><b><font size=2>Termination and</font></b><br>
      <b><font size=2>other costs</font></b></div>
      </td>
      <td align=center rowspan=3 colspan="2"><b><font size=2>Writedown of plant,</font></b><br>
      <b><font size=2>equipment, and</font></b><br>
      <b><font size=2>investment</font></b></td>
    </tr>

    <tr valign=bottom><td></td>

    </tr>

    <tr valign=bottom><td></td>

    </tr>
    <tr valign=bottom>
      <td align=center colspan="7">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Paper Machine Clothing</font> </td>
      <td align=right><font size=2>$43,533</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$40,466</font> </td>
      <td align=right>&nbsp;&nbsp; </td>
      <td align=right><font size=2>$3,067</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Albany Door Systems</font> </td>
      <td align=right><font size=2>2,048</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>2,048</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Engineered Composites</font> </td>
      <td align=right><font size=2>110</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>110</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>PrimaLoft&#174; Products</font> </td>
      <td align=right><font size=2>61</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>61</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Engineered Fabrics</font> </td>
      <td align=right><font size=2>2,515</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>2,515</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Unallocated</font> </td>
      <td align=right><font size=2>2,722</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>2,722</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right>&nbsp;</td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="7">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Total</font> </td>
      <td align=right><font size=2>$50,989</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$47,922</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$3,067</font> </td>
      <td align=right>&nbsp;</td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="7">
        <hr noshade size="1">
    </td>
    </tr>

  </table>
  <div align="left">
    <p><br>
      The Company expects that substantially all of its accruals for restructuring
      liabilities will be paid out within one year. The table below presents a
      year to date summary of changes in restructuring liabilities:</p>
  </div>
</div>
<div align="center">
  <table width="100%" border=0 cellpadding=0 cellspacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=center>
        <div align="left"><b><font size=2>(in thousands)</font></b></div>
      </td>
      <td align=center colspan="2"><b><font size=2>Restructuring</font></b><br>
      <b><font size=2>charges accrued</font></b><br>
      <b><font size=2>December 31, 2008</font></b>   </td>
      <td align=center colspan="2"><b><font size=2>Restructuring</font></b><br>
      <b><font size=2>accruals in</font></b><br>
      <b><font size=2>2009</font></b>   </td>
      <td align=center colspan="2">  <b><font size=2>Payments</font></b>   </td>
      <td align=center colspan="2"> <b><font size=2>Currency</font></b><br>
      <b><font size=2>translation/other</font></b>   </td>
      <td align=center colspan="2"><b><font size=2>Restructuring</font></b><br>
      <b><font size=2>charges accrued</font></b><br>
      <b><font size=2>June 30, 2009</font></b></td>
    </tr>




    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Termination</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>costs</font> </td>
      <td align=right><font size=2>$21,284</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$43,707</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>($23,793</font> </td>
      <td align=left><font size=2>)</font>&nbsp;&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$937</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$42,135</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Other</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>restructuring</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp;</td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>costs</font> </td>
      <td align=right><font size=2>624</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>480</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(817</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>8</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>295</font> </td>
      <td align=right>&nbsp;</td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Total</font> </td>
      <td align=right><font size=2>$21,908</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$44,187</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>($24,610</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right><font size=2>$945</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$42,430</font> </td>
      <td align=right>&nbsp;</td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>

  </table>
</div>
<p align="center">&nbsp;</p>
<p align="center">8<BR>

</p>
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<P align=left><B>5. Other (Income)/Expense, net</B></P>
<P align=left>Other (income)/expense, net consists of the following:</P>

<div align="center">
  <table width="100%" border=0 cellpadding=0 cellspacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=center>&nbsp; </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan=5><font size=2>Three Months Ended</font><br>
      <font size=2>June 30,</font> </td>
      <td align=center colspan=4><font size=2>Six Months Ended</font><br>
      <font size=2>June 30,</font></td>
      <td align=center>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>(in thousands)</font></div>
      </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2009</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2008</font> </td>
      <td align=center colspan="2"><font size=2>2009</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center><font size=2>2008</font></td>
      <td align=center>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left><font size=2>Currency transactions</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>($1,236</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$612</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$228</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$325</font> </td>
      <td align=left>&nbsp;&nbsp;&nbsp;&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Amortization of debt issuance costs and loan</font> </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left>&nbsp; &nbsp;<font size=2>origination fees</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>468</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>558</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,351</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>1,103</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Gain on early retirement of debt</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(36,631</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(39,453</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>License fee/(income)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>52</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>45</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(103</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(180</font> </td>
      <td align=left><font size=2>)</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Other miscellaneous expense</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>146</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>899</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>957</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>551</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Total</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>($37,201</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$2,114</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>($37,020</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$1,799</font> </td>
      <td align=left>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="12">
        <hr noshade size="1">
    </td>
    </tr>

  </table>
</div>
<p align="center">&nbsp;</p>
<p align="center">9<BR>

</p>
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<P align="left"> <B>6. Discontinued Operations</B></P>
<P align="left"> In July 2008, the Company closed on the sale of its Filtration
  Technologies business, the principal operations of which were in Gosford, Australia,
  and Zhangjiagang, China. At closing, the Company received approximately &#36;45,000,000,
  which resulted in a pre-tax gain of &#36;5,413,000.</P>
<P align="left"> In evaluating the financial statement presentation, the Company
  concluded that the business met the definition of a discontinued operation,
  as defined in Statement of Financial Accounting Standards No. 144, &#147;Accounting
  for Impairment or Disposal of Long-Lived Assets&#148; (FAS No. 144) and, accordingly,
  the results of operations of this business have been reported as income from
  discontinued operations for all periods presented. For the six months ended
  June 30, 2008, Income from discontinued operations was &#36;183,000. As permitted
  by FAS No. 144, cash flows of the discontinued operation were combined with
  cash flows from continuing operations in the consolidated statements of cash
  flows.</P>
<P align="left"> Results for the second quarter of 2009 include a charge of &#36;10,000,000
  representing an estimated purchase price adjustment related to the Company&#146;s
  2008 sale of its discontinued Filtration Technologies business. The charge results
  from a tentative agreement between the Company and the purchaser of the Filtration
  Technologies business to return a portion of the original &#36;45,000,000 purchase
  price in exchange for a release of certain future claims under the related sale
  agreement.</P>
<P align="center">10</P>
<HR noshade align="center" width="100%" size="5">
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<P align=left><B>7. Income Taxes</B></P>
<P align=left>The following tables present components of income tax expense for
  the three and six month periods ending June 30, 2009 and 2008:</P>
<div align="center">
  <table width="100%" border=0 cellpadding=0 cellspacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

    <tr>

      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
      <td align=center></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=center>&nbsp; </td>
      <td align=center colspan=5><font size=2>Three Months Ended</font><br>
      <font size=2>June 30,</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="4"><font size=2>Six Months Ended<br>
      June 30,</font>   </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>(in thousands)</font></td>
      <td align=center colspan="2"><font size=2>2009</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2008</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center colspan="2"><font size=2>2009</font> </td>
      <td align=center>&nbsp; </td>
      <td align=center><font size=2>2008</font></td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>



    <tr valign=bottom>

      <td align=left><font size=2>Income tax based on ordinary (loss)/income</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>from continuing operations before income</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>taxes at estimated tax rates of 23% in 2009</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>and 14% in 2008.</font> </td>
      <td align=right><font size=2>($7,960</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$1,043</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>($13,320</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp;&nbsp;&nbsp; </td>
      <td align=right><font size=2>$1,215</font> </td>
    </tr>

    <tr>

      <td colspan=11>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Provision for change in estimated tax rates</font> </td>
      <td align=right><font size=2>(2,663</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>(41</font> </td>
      <td align=left><font size=2>)</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
    </tr>

    <tr>

      <td colspan=11>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Discrete tax expense:</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>&nbsp;&nbsp;&nbsp;Provision for Extinguishment of Debt Gain</font> </div>
      </td>
      <td align=right><font size=2>14,286</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>-</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>15,387</font> </td>
      <td align=right>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>-</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=center>
        <div align="left"><font size=2>&nbsp;&nbsp;&nbsp;Provision for/resolution of tax audits and</font> </div>
      </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>contingencies</font> </td>
      <td align=right><font size=2>676</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>291</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>667</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>4,196</font> </td>
    </tr>

    <tr>

      <td colspan=11>&nbsp; </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Total income tax expense from continuing</font> </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=left>&nbsp; </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>operations</font> </td>
      <td align=right><font size=2>$4,339</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$1,293</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$2,734</font> </td>
      <td align=left>&nbsp; </td>
      <td align=right>&nbsp; </td>
      <td align=right><font size=2>$5,411</font> </td>
    </tr>
    <tr valign=bottom>
      <td align=center colspan="11">
        <hr noshade size="1">
    </td>
    </tr>

  </table>
  <div align="left"><BR>
    The Company is currently under audit in the U.S. and non-U.S. taxing jurisdictions. In the second quarter of 2009, the Company recognized a decrease of $8,206,000 in the gross amounts of prior years unrecognized tax benefits due to settlements with tax authorities in the US and non-US taxing jurisdictions.  Included in this decrease are unrecognized tax benefits of $7,000,000 that do not impact the effective tax rate.</div>
</div>
<P align=left>In the Company&#146;s Annual Report on Form 10-K for the period ending December 31, 2008, it was disclosed that tax benefits of approximately $23,096,000 claimed in Germany were under challenge and that a reassessment notice in the amount of $47,007,000 had been issued by the Canadian Revenue Agency. There has been no change to the Company&#146;s view of its position with regard to either of these matters. As warranted, the Company will continue to assess its positions.</P>
<P align=left>The Company records reserves for the outcome of these uncertainties in accordance with FASB Interpretation No. 48, &#147;Accounting for Uncertainty in Income Taxes, an interpretation of FAS No. 109.&#148; It is reasonably possible that a change in the reserve for these uncertainties could occur in the next twelve months. However, it is not possible to estimate a range at this time.</P>
<P align=center>11</P>
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<P align=left><B>8. Earnings Per Share</B></P>
<P align=left>Earnings per share are computed using the weighted average number of shares of Class A Common Stock and Class B Common Stock outstanding during the period. Diluted earnings per share include the effect of all potentially dilutive securities.</P>
<P align=left>The amounts used in computing earnings per share, including the effect on income and the weighted average number of shares of potentially dilutive securities, are as follows:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=4><FONT size=2>Three Months Ended <br>
        June 30,
        </FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=4><FONT size=2>Six Months Ended <br>
        June 30,
        </FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands, except market price data)</FONT></TD>
      <TD align=center><BR>
         <FONT size=2>2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp;&nbsp; </TD>
      <TD align=center><FONT size=2>2008</FONT></TD>
      <TD align=center>&nbsp;&nbsp; </TD>
      <TD align=center><BR>
         <FONT size=2>2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp;&nbsp; </TD>
      <TD align=center><FONT size=2>2008</FONT></TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Net (loss)/income</FONT> </TD>
      <TD align=right><FONT size=2>($12,744</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$5,253</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($31,641</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$3,157</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>Weighted average number of shares:</FONT></B>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Weighted average number of shares
        used in</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>calculating basic earnings per
        share</FONT> </TD>
      <TD align=right><FONT size=2>30,723</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>29,760</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>30,386</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>29,686</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>Effect of dilutive stock-based compensation</FONT></B>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>awards:</FONT></B> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Stock options</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>261</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>274</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Long-term incentive awards</FONT>
      </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>30</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>30</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Weighted average number of shares used in</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>calculating diluted earnings per share</FONT>
      </TD>
      <TD align=right><FONT size=2>30,723</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>30,051</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>30,386</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>29,990</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Effect of stock-based compensation awards that
        were not</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>included in the computation of diluted earnings
        per share</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>because to do so would be antidilutive</FONT>
      </TD>
      <TD align=right><FONT size=2>132</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>277</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Average market price of common stock used</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>for calculation of dilutive shares</FONT> </TD>
      <TD align=right><FONT size=2>$10.82</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$34.33</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$10.15</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT> <FONT size=2>34.53</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
    <TR>
      <TD colSpan=10>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>Net (loss)/income per share:</FONT></B> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Basic</FONT> </TD>
      <TD align=right><FONT size=2>($0.41</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$0.18</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($1.04</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$0.11</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Diluted</FONT> </TD>
      <TD align=right><FONT size=2>($</FONT><FONT size=2>0.41</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$0.17</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($1.04</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$0.11</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=10><hr size="1" noshade> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    As of June 30, 2009 and 2008, there was no dilution resulting from the convertible
    debt instrument, purchased call option, and warrant that are described in
    Note 11.</div>
</div>
<P align=center>12</P>
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<P align=left>The following table presents the number of shares issued and outstanding:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Class A</FONT><BR> <FONT size=2>Shares</FONT></TD>
      <TD align=center><FONT size=2>Class B</FONT><BR> <FONT size=2>Shares</FONT></TD>
      <TD align=center><FONT size=2>Less: Treasury</FONT><BR> <FONT size=2>Shares</FONT></TD>
      <TD align=center><FONT size=2>Net shares</FONT><BR> <FONT size=2>Outstanding</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>December 31, 2008</FONT> </TD>
      <TD align=center><FONT size=2>35,245,482</FONT> </TD>
      <TD align=center>&nbsp;<FONT size=2>3,236,098</FONT> </TD>
      <TD align=center><FONT size=2>(8,523,139</FONT><FONT size=2>)</FONT></TD>
      <TD align=center>&nbsp; &nbsp;<FONT size=2>29,958,441</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>March 31, 2009</FONT> </TD>
      <TD align=center><FONT size=2>35,970,944</FONT> </TD>
      <TD align=center>&nbsp;<FONT size=2>3,236,098</FONT> </TD>
      <TD align=center><FONT size=2>(8,523,139</FONT><FONT size=2>)</FONT></TD>
      <TD align=center>&nbsp; &nbsp;<FONT size=2>30,683,903</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>June 30, 2009</FONT> </TD>
      <TD align=center><FONT size=2>36,048,268</FONT> </TD>
      <TD align=center>&nbsp;<FONT size=2>3,236,098</FONT> </TD>
      <TD align=center><FONT size=2>(8,496,739</FONT><FONT size=2>)</FONT></TD>
      <TD align=center>&nbsp; &nbsp;<FONT size=2>30,787,627</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>
</div>
<p align="center">13<BR>
</p>
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<P align=left><B>9. Inventories</B></P>
<P align=left>Inventories consist of the following:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD width="68%" align=center></TD>
      <TD width="10%" align=center></TD>
      <TD width="10%" align=center></TD>
      <TD width="12%" align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="4" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands)</FONT></TD>
      <TD align=center><FONT size=2>June 30,</FONT><BR> <FONT size=2>2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>December 31,</FONT><BR> <FONT size=2>2008</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="4" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Finished goods</FONT> </TD>
      <TD align=right><FONT size=2>$95,004</FONT> </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>$97,090</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Work in process</FONT> </TD>
      <TD align=right><FONT size=2>60,360</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>57,582</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Raw material and supplies</FONT> </TD>
      <TD align=right><FONT size=2>46,806</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>51,816</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="4" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total inventories</FONT> </TD>
      <TD align=right><FONT size=2>$202,170</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$206,488</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="4" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>

</div>
<P align=left>Inventories are stated at the lower of cost or market and are valued
  at average cost, net of reserves. The Company records a provision for obsolete
  inventory based on the age and category of the inventories.</P>
<P align=center>14</P>
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<P align=left><B>10. Goodwill and Other Intangible Assets</B></P>
<P align=left>The Company accounts for goodwill and other intangible assets under
  the provisions of Statement of Financial Accounting Standards No. 142 (FAS No.
  142), &#147;Goodwill and Other Intangible Assets&#148;. FAS No. 142 requires
  that goodwill and intangible assets with indefinite useful lives no longer be
  amortized, but instead tested for impairment at least annually. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. The Company&#146;s reporting units are consistent with the Company&#146;s operating segments.  The Company completed its annual evaluation of goodwill by for its Paper Machine Clothing reporting unit and Albany Door System reporting unit as of June 30, 2009. The Company&#146;s assessment of goodwill impairment indicated that the fair value of each of the Company&#146;s reporting units exceeded its carrying value and therefore goodwill in each of the reporting units was not impaired.</P>
<P align=left>Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. Goodwill and other long-lived
  assets are reviewed for impairment whenever events, such as significant changes
  in the business climate, plant closures, changes in product offerings, or other
  circumstances indicate that the carrying amount may not be recoverable.</P>
<P align=left>To determine fair value, the Company utilized two market-based approaches and an income approach. Under the market-based approaches, the Company utilized information regarding the Company as well as publicly available industry information to determine earnings multiples and sales multiples. Under the income approach, the Company determined fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. </P>
<P align=left>The Company is continuing to amortize certain patents, trade names,
  customer contracts and technology assets that have finite lives. The changes
  in intangible assets and goodwill from January 1, 2009 to June 30, 2009, were
  as follows:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="9" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands)</FONT></TD>
      <TD align=right><FONT size=2>Balance at</FONT><BR>
         <FONT size=2>January 1,
        2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=right><FONT size=2>Amortization</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=right><FONT size=2>Currency</FONT><BR>
         <FONT size=2>translation</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=right><FONT size=2>Balance at</FONT><BR>
         <FONT size=2>June 30,
        2009</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="9" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>Amortized intangible assets:</FONT></B> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Patents</FONT> </TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>1,420</FONT> </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>($242</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>10</FONT> </TD>
      <TD align=right>&nbsp;&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>1,188</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Trade names</FONT> </TD>
      <TD align=right><FONT size=2>1,164</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(325</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>7</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>846</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Customer contracts</FONT> </TD>
      <TD align=right><FONT size=2>6,701</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(726</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>5,975</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Technology</FONT> </TD>
      <TD align=right><FONT size=2>351</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(20</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>331</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="9" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total amortized intangible assets</FONT> </TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>9,636</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($1,313</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>17</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>8,340</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="9" align=left><hr size="1" noshade></TD>
    </TR>
    <TR>
      <TD colSpan=9>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>Unamortized intangible assets:</FONT></B>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>&nbsp; &nbsp;<FONT size=2></FONT>Goodwill</FONT>
      </TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>115,415</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$</FONT> &nbsp;<FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>1,243</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$</FONT><FONT size=2>116,658</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="9" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    As of June 30, 2009, the balance of goodwill was $79,310,000 in the Paper
    Machine Clothing segment and $37,348,000 in the Albany Door Systems segment.</div>
</div>
<P align=center>15</P>
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<P align="left"> Estimated amortization expense of intangibles for the years ending
  December 31, 2009 through 2013 is as follows:</P>
<table width="300" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td colspan="2"><hr size="1" noshade></td>
  </tr>
  <tr valign="bottom">
    <td width="94" align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif">Year</font></strong></td>
    <td width="206" align="right"><p><strong><font size="2" face="Arial, Helvetica, sans-serif">Annual
        amortization<br>
        (in thousands)</font></strong></p></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2"><hr size="1" noshade></td>
  </tr>
  <tr valign="bottom">
    <td align="center"><font size="2" face="Arial, Helvetica, sans-serif">2009</font></td>
    <td align="right"><font size="2" face="Arial, Helvetica, sans-serif">$2,700</font></td>
  </tr>
  <tr valign="bottom">
    <td align="center"><font size="2" face="Arial, Helvetica, sans-serif">2010</font></td>
    <td align="right"><font size="2" face="Arial, Helvetica, sans-serif">2,600</font></td>
  </tr>
  <tr valign="bottom">
    <td align="center"><font size="2" face="Arial, Helvetica, sans-serif">2011</font></td>
    <td align="right"><font size="2" face="Arial, Helvetica, sans-serif">1,400</font></td>
  </tr>
  <tr valign="bottom">
    <td align="center"><font size="2" face="Arial, Helvetica, sans-serif">2012</font></td>
    <td align="right"><font size="2" face="Arial, Helvetica, sans-serif">900</font></td>
  </tr>
  <tr valign="bottom">
    <td align="center"><font size="2" face="Arial, Helvetica, sans-serif">2013</font></td>
    <td align="right"><font size="2" face="Arial, Helvetica, sans-serif">900</font></td>
  </tr>
  <tr>
    <td colspan="2"><hr size="1" noshade></td>
  </tr>
</table>
<P align="center">      16</P>
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<P align=left><B>11. Financial Instruments</B></P>
<P align=left><B>Long-term debt consists of:</B></P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="6" align=left>
        <hr size="1" noshade>
      </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands)</FONT></TD>
      <TD align=right><FONT size=2>June 30,</FONT><BR>
         <FONT size=2>2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=right><FONT size=2>December 31,</FONT><BR>
         <FONT size=2>2008</FONT></TD>
      <TD align=center>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="6" align=left>
        <hr size="1" noshade>
      </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Convertible notes issued in March 2006</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>with fixed contractual interest rates of</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>2.25%, due in year 2026</FONT> </TD>
      <TD align=right><FONT size=2>$70,353</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;&nbsp;&nbsp;</TD>
      <TD align=right><FONT size=2>$158,019</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Private placement with an interest rate of</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>6.84%, due in years 2013 through 2017</FONT>
      </TD>
      <TD align=right><FONT size=2>150,000</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>150,000</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>April 2006 revolving credit agreement</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>with borrowings outstanding at an</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>average interest rate of 2.68% in 2009</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>and 1.93% in 2008.</FONT> </TD>
      <TD align=right><FONT size=2>294,000</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>190,000</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Various notes and mortgages relative</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>to operations principally outside the</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>United States, at an average rate of</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>4.81% in 2009 and 4.84% in 2008 due in</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>varying amounts through 2021</FONT> </TD>
      <TD align=right><FONT size=2>10,381</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>10,380</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="6" align=left>
        <hr size="1" noshade>
      </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Long term debt</FONT> </TD>
      <TD align=right><FONT size=2>524,734</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>508,399</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Less: current portion</FONT> </TD>
      <TD align=right><FONT size=2>(11</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>(13</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="6" align=left>
        <hr size="1" noshade>
      </TD>
    </TR>
    <TR>
      <TD colSpan=6>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Long term debt, net of current portion</FONT>
      </TD>
      <TD align=right><FONT size=2>$524,723</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>$508,386</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="6" align=left>
        <hr size="1" noshade>
      </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    The weighted average interest rate for all debt was 4.45% as of June 30, 2009
    and 4.58% as of December 31, 2008.</div>
</div>
<P align=left>In October 2005, the Company entered into a Note Agreement and Guaranty
  (&#147;the Prudential Agreement&#148;) with the Prudential Insurance Company
  of America, and certain other purchasers, in an aggregate principal amount of
  $150,000,000, with interest at 6.84% and a maturity date of October 25, 2017.
  There are mandatory prepayments of $50,000,000 on October 25, 2013 and October
  25, 2015. At the noteholders&#146; election, certain prepayments may also be
  required in connection with certain asset dispositions or financings. The notes
  may not otherwise be prepaid without a premium, under certain market conditions.
  The Note Agreement contains customary terms, as well as affirmative covenants,
  negative covenants and events of default comparable to those in the Company&#146;s
  current principal revolving credit facility. For disclosure purposes, the Company
  is required to measure the fair value of outstanding debt on a recurring basis.
  The fair value of the note agreement was approximately $138,955,000, which was
  measured using active market interest rates.</P>
<P align=center>        17</P>
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<P align="left"> In December 2008, the Company and Prudential amended the agreement
  to increase the allowed leverage ratio from 3.00 to 3.50, which is effective
  through December 2010, after which time the allowed leverage ratio changes to
  2.50. The amendment to the agreement also requires that the Company pay a higher
  rate of interest. The maximum interest rate is 1.50% over the 5.34% in the original
  agreement. The Company anticipates it will pay interest on this loan at the
  rate of 6.84% in 2009.</P>
<P align="left"> In March 2006, the Company issued &#36;180,000,000 principal
  amount of 2.25% convertible notes. The notes are convertible upon the occurrence
  of specified events and at any time on or after February 15, 2013, into cash
  up to the principal amount of notes converted and shares of the Company&#146;s
  Class A common stock with respect to the remainder, if any, of the Company&#146;s
  conversion obligation at a conversion rate of 22.7633 shares per &#36;1,000
  principal amount of notes (equivalent to a conversion price of &#36;43.93 per
  share of Class A common stock). As of June 30, 2009, &#36;78,937,000 principal amount of convertible notes were outstanding, with a fair value of approximately
  &#36;47,757,000, which was measured using quoted prices in active markets. These
  amounts reflect the reduction in fair value as a result of the purchase made
  in March and April 2009 as described below.</P>
<P align="left"> Holders may convert their notes at any time on or after February
  15, 2013. Before February 15, 2013, a holder may convert notes during the five-business
  day period immediately after any period of five consecutive trading days in
  which the trading price per note for each of such five days was less than 103%
  of the product of the last reported sale price of the Company&#146;s Class A
  common stock and the conversion rate on such day. Additionally, holders may
  convert prior to February 15, 2013 if the Company elects to distribute to all
  or substantially all of its Class A shareholders (a) rights or warrants to purchase
  shares of Class A common stock for less than their trading value, or (b) assets,
  debt securities or rights to purchase securities, which distribution has a per-share
  value exceeding 15% of the current trading value of the Class A common stock.</P>
<P align="left"> Converting holders are entitled to receive, upon conversion of
  their notes, (1) an amount in cash equal to the lesser of the principal amount
  of the note and the note&#146;s conversion value, and (2) if the conversion
  value of the note exceeds the principal amount, shares of the Company&#146;s
  Class A common stock in respect of the excess conversion value. The conversion
  rate of the notes (subject to adjustment upon the occurrence of certain events)
  is 22.7633 shares per &#36;1,000 principal amount of notes (equivalent to a
  conversion price of &#36;43.93 per share of Class A common stock). The exact
  amount payable upon conversion would be determined in accordance with the terms
  of the indenture pursuant to which the notes were issued and will be based on
  a daily conversion value calculated on a proportionate basis by reference to
  the volume-weighted average price of the Company&#146;s Class A common stock
  for each day during a twenty-five day period relating to the conversion.</P>
<P align="left"> The notes are not redeemable before March 15, 2013. On or after
  March 15, 2013, the Company may, at its option, redeem for cash all or part
  of the notes for a price equal to 100% of the principal amount of the notes
  to be purchased, plus any accrued and unpaid interest, including any additional
  interest, up to but excluding the redemption date.</P>
<P align="left"> On each of March 15, 2013 and March 15, 2021, holders may require
  the Company to purchase all or a portion of their notes at a purchase price
  equal to 100% of the principal amount of the notes to be purchased, plus any
  accrued and unpaid interest, including any additional interest, to but excluding
  the purchase date. Holders also have the right to require the Company to repurchase
  notes upon the occurrence of certain fundamental events, including, without
  limitation, (1) a person or group, other than the Standish family, becoming
  beneficial owner of shares of common stock carrying more than 50% of the voting
  power of our common stock, (2) consummation of an exchange offer, tender offer
  or similar event whereby our Class A common stock is converted into cash, securities
  or other property, or any sale, lease or other transfer of all or substantially
  all of our consolidated assets, (3) approval by our stockholders of a plan or
  proposal of liquidation or dissolution, or (4) the delisting of our Class A
  common stock under certain circumstances.</P>
<P align="center">18</P>
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<P align=left>In connection with the sale of the notes, the Company entered into
  hedge and warrant transactions with respect to its Class A common stock. These
  transactions are intended to reduce the potential dilution upon conversion of
  the notes by providing the Company with the option, subject to certain exceptions,
  to acquire shares in an amount equal to the number of shares which the Company
  would be required to deliver upon conversion of the notes. These transactions
  had the economic effect to the Company of increasing the conversion price of
  the Notes to $52.25 per share.</P>
<P align=left>Pursuant to the hedge transactions, if the Company delivers notice
  to the counterparties of any conversion of the Notes on or prior to March 15,
  2013, the counterparties are in the aggregate obligated to deliver to the Company
  the number of shares of Class A common stock that the Company is obligated to
  deliver to the holders of the notes with respect to such conversion, exclusive
  of any shares deliverable by the Company by reason of any additional (or &#147;make
  whole&#148;) premium relating to the notes or by reason of any election by the
  Company to unilaterally increase the conversion rate. The note hedge and warrant
  transactions had a net cost of $14,700,000.</P>
<P align=left>Pursuant to the warrant transactions, the Company sold a total of
  4,123,986 warrants, each exercisable to buy a single share of Class A common
  stock at an initial strike price of $52.25 per share. The warrants are American-style
  warrants (exercisable at any time), and expire over a period of sixty trading
  days beginning on September 15, 2013. If the warrants are exercised when they
  expire, the Company may choose either net cash or net share settlement. If the
  warrants are exercised before they expire, they must be net share settled. If
  the Company elects to net cash settle the warrants, the Company will pay cash
  in an amount equal to, for each exercise of warrants, (i) the number of warrants
  exercised multiplied by (ii) the excess of the volume weighted average price
  of the Company&#146;s Class A common stock on the expiration date of such warrants
  (the &#147;Settlement Price&#148;) over the strike price. Under net share settlement,
  the Company will deliver to the warrant holders a number of shares of the Company&#146;s
  Class A common stock equal to, for each exercise of warrants, (x) the amount
  payable upon net cash settlement divided by (y) the Settlement Price.</P>
<P align=left>During 2009 the Company entered into several agreements to exchange
  Company 2.25% Convertible Senior Notes due 2026 for cash plus an equivalent
  amount of the Company&#146;s 2.25% Senior Notes due 2026 (the &#147;New Notes&#148;).
  In each case, the Company simultaneously entered into additional agreements
  to purchase the New Notes. Information pertinent to these transactions is noted
  below:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands)</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="20%"><B><FONT size=2>Month of agreement</FONT></B></TD>
      <TD width="20%"><B><FONT size=2>Month of settlement</FONT></B></TD>
      <TD width="20%" align=center><B><FONT size=2>Par value</FONT></B></TD>
      <TD width="20%" align=center><B><FONT size=2>Aggregate cost</FONT></B></TD>
      <TD width="20%" align=center><B><FONT size=2>Pretax gain on early</FONT></B><BR>
        <B><FONT size=2>retirement of debt</FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>March 2009</FONT> </TD>
      <TD align=left><FONT size=2>March 2009</FONT> </TD>
      <TD align=center><FONT size=2>$7,074</FONT> </TD>
      <TD align=center><FONT size=2>$3,360</FONT> </TD>
      <TD align=center><FONT size=2>$2,822</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>April 2009</FONT> </TD>
      <TD align=left><FONT size=2>April 2009</FONT> </TD>
      <TD align=center><FONT size=2>93,989</FONT> </TD>
      <TD align=center><FONT size=2>53,515</FONT> </TD>
      <TD align=center><FONT size=2>36,631</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>May 2009</FONT> </TD>
      <TD align=left><FONT size=2>July 2009</FONT> </TD>
      <TD align=center><FONT size=2>30,500</FONT> </TD>
      <TD align=center><FONT size=2>18,887</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; 7,500</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>May 2009</FONT> </TD>
      <TD align=left><FONT size=2>October 2009</FONT> </TD>
      <TD align=center><FONT size=2>20,000</FONT> </TD>
      <TD align=center><FONT size=2>13,100</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; 4,500</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>

</div>
<P align=left>The July and October 2009 pretax gains on early retirement of debt
  are estimates.</P>
<P align=center>19</P>
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<P align=left>Financial Accounting Standards Board Staff Position No. APB 14-1
  (FSP 14-1), requires that the liability and equity components of convertible
  debt instruments that may be settled in cash upon conversion (including partial
  cash settlement) be separately accounted for in a manner that reflects an issuer&#146;s
  nonconvertible debt borrowing rate. In the first quarter of 2009, the Company
  implemented FSP 14-1 and filed a Form 8-K on May 1, 2009 with restated income
  statement and balance sheet items for quarterly periods in 2008, as well as
  annual data for 2006, 2007, and 2008.</P>
<P align=left>As of June 30, 2009, the carrying amounts of the debt and equity
  components of the Company&#146;s bifurcated convertible debt instrument were
  $70,361,000 and $28,760,000, respectively. The carrying values of the debt and
  equity components include reductions of $89,430,000 and $5,326,000, respectively,
  related to the Company&#146;s convertible note purchases in March and April
  2009. The equity component is included in additional paid in capital in the
  equity section of the Company&#146;s balance sheet.</P>
<P align=left>Adopting FSP 14-1 had the impact of increasing interest expense
  by approximately $1,187,000 for the first quarter 2009. Due to the note transactions
  in March and April, reducing outstanding 2.25% Convertible Senior Notes due
  2026, the effect of FSP 14-1 for the second quarter had the impact of increasing
  interest expense by approximately $585,000. The additional interest is non-cash
  and represents the difference between the rate at the time of the offering (2.25%)
  and the Company&#146;s non-convertible debt borrowing rate (5.59%). The non-cash
  interest is amortized into interest expense and increases the book value of
  the notes until the time that the notes can be redeemed on March 15, 2013. The
  Company has concluded that the amortization period of 7 years is appropriate
  because March 15, 2013 is the earliest date that the convertible noteholders
  can require the Company to buy back the notes.</P>
<P align=left>Including amortization of non-cash interest, the effective interest
  rate on the convertible notes for the second quarterly periods of 2009 and 2008
  was 5.59%. Unamortized non-cash interest was $12,752,000 at June 30, 2009 with
  a remaining amortization period of approximately 4 years.</P>
<P align=left>The following table details interest expense on convertible debt:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=2><B><FONT size=2>Three months-ended <br>
        June 30,
        </FONT></B></TD>
      <TD align=center colSpan=2><B><FONT size=2>Six months-ended <br>
        June 30,
        </FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>(in thousands)</FONT></B></TD>
      <TD align=center><B><FONT size=2>2009</FONT></B></TD>
      <TD align=center><B><FONT size=2>2008</FONT></B></TD>
      <TD align=center><B><FONT size=2>2009</FONT></B></TD>
      <TD align=center><B><FONT size=2>2008</FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Contractual interest (2.25%)</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; $478</FONT> </TD>
      <TD align=center><FONT size=2>$1,009</FONT> </TD>
      <TD align=center><FONT size=2>$1,470</FONT> </TD>
      <TD align=center><FONT size=2>$2,008</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Non-cash interest (3.34%)</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; &nbsp; 585</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; 1,117</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp;  1,772</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; 2,195</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total (5.59%)</FONT> </TD>
      <TD align=center><FONT size=2>$1,063</FONT> </TD>
      <TD align=center><FONT size=2>$2,126</FONT> </TD>
      <TD align=center><FONT size=2>$3,242</FONT> </TD>
      <TD align=center><FONT size=2>$4,203</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    On April 14, 2006, the Company entered into a $460,000,000 five-year revolving
    credit agreement (the &#147;Credit Agreement&#148;), under which $294,000,000
    was outstanding as of June 30, 2009. The applicable interest rate for borrowings
    under the agreement is LIBOR plus a spread, based on the Company&#146;s leverage
    ratio at the time of borrowing. The agreement includes covenants that could
    limit the Company&#146;s ability to purchase Common Stock, pay dividends,
    acquire other companies or dispose of its assets.</div>
</div>
<P align=left>Reflecting, in each case, the effect of subsequent amendments to
  each agreement, the Company is required to maintain a leverage ratio of not
  greater than 3.50 to 1.00 under the Credit Agreement and under the Prudential
  Agreement. The Company is also required to maintain minimum interest coverage
  of 3.00 to 1.00 under each agreement. As of June 30, 2009, the Company&#146;s
  leverage ratio under the agreement was 2.40 to 1.00 and the interest coverage
  ratio was 6.59 to 1.00. The Company may purchase its Common Stock or pay dividends
  to the extent its leverage ratio remains at or below 3.50 to 1.00, and may make
  acquisitions for cash provided its</P>
<P align=center>20</P>
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<P align=left>leverage ratio would not exceed 3.50 to 1.00 after giving pro forma
  effect to the acquisition. The Company&#146;s ability to borrow additional amounts
  under the credit agreement is conditional upon the absence of any defaults,
  as well as the absence of any material adverse change. Based on the maximum
  leverage ratio and the Company&#146;s consolidated EBITDA (as defined in the
  agreement), and without modification to any other credit agreements as of June
  30, 2009, the Company would have been able to borrow an additional $167,108,000
  under its credit agreements.</P>
<P align=left>Indebtedness under the Note and Guaranty agreement, the convertible
  notes, and the revolving credit agreement is ranked equally in right of payment
  to all unsecured senior debt of the Company.</P>
<P align=left>As of June 30, 2009, the Company issued letters of credit totaling
  $47,400,000 in respect of preliminary assessments for income tax contingencies.</P>
<P align=left>The Company was in compliance with all debt covenants as of June 30, 2009.</P>
<P align=left><B>Fair Value Measurements:</B></P>
<P align=left>Financial Accounting Statement No. 157 issued by the Financial Accounting
  Standards Board establishes a hierarchy for inputs used in measuring fair value
  that maximizes the use of observable inputs and minimizes the use of unobservable
  inputs by requiring that the most observable inputs be used when available.
  The hierarchy is broken down into three general levels: Level 1 inputs are quoted
  prices in active markets for identical assets or liabilities; Level 2 inputs
  include data points that are observable such as quoted prices for similar assets
  or liabilities in active markets, quoted prices for identical assets or similar
  assets or liabilities in markets that are not active, and inputs (other than
  quoted prices) such as interest rates and yield curves that are observable for
  the asset and liability, either directly or indirectly; Level 3 inputs are unobservable
  data points for the asset or liability, and include situations in which there
  is little, if any, market activity for the asset or liability.</P>
<P align=left>The following table presents the fair value hierarchy for the Company&#146;s
  financial assets and liabilities measured at fair value on a recurring basis
  as of June 30, 2009:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>(in thousands)</FONT></B></TD>
      <TD width="18%" align=center><B><FONT size=2>Total Fair</FONT></B><BR> <B><FONT size=2>Value
        at</FONT></B><BR> <B><FONT size=2>June 30, 2009</FONT></B></TD>
      <TD width="18%" align=center><B><FONT size=2>Quoted prices</FONT></B><BR>
        <B><FONT size=2>in active markets</FONT></B><BR> <B><FONT size=2>(Level
        1)</FONT></B></TD>
      <TD width="18%" align=center><B><FONT size=2>Significant other</FONT></B><BR>
        <B><FONT size=2>observable inputs</FONT></B><BR> <B><FONT size=2>(Level
        2)</FONT></B></TD>
      <TD width="18%" align=center><B><FONT size=2>Significant</FONT></B><BR>
        <B><FONT size=2>unobservable inputs</FONT></B><BR> <B><FONT size=2>(Level
        3)</FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>Assets:</FONT></I> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Cash equivalents</FONT> </TD>
      <TD align=center><FONT size=2>$4,052</FONT> </TD>
      <TD align=center><FONT size=2>$4,052</FONT> </TD>
      <TD align=center><FONT size=2>-</FONT> </TD>
      <TD align=center>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT>
      </TD>
    </TR>
    <TR>
      <TD colSpan=5>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=5>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Available for sale securities</FONT>
      </TD>
      <TD align=center><FONT size=2>&nbsp; 709</FONT> </TD>
      <TD align=center><FONT size=2>&nbsp; 709</FONT> </TD>
      <TD align=center><FONT size=2>-</FONT> </TD>
      <TD align=center>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT>
      </TD>
    </TR>
    <TR>
      <TD colSpan=5>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=5>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp; &nbsp;<FONT size=2>Foreign currency contracts</FONT>
      </TD>
      <TD align=center><FONT size=2>2,040</FONT> </TD>
      <TD align=center><FONT size=2>2,040</FONT> </TD>
      <TD align=center><FONT size=2>-</FONT> </TD>
      <TD align=center>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT>
      </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    Cash equivalents include short-term securities that are considered to be highly
    liquid and easily tradable. These securities are valued using inputs observable
    in active markets for identical securities.</div>
</div>
<P align=left>Available for sale securities represent shares of common stock that
  are traded in an active market exchange. The shares are measured at fair value
  using closing stock prices and are recorded in the Consolidated Balance Sheets
  as Other assets. Because the securities are classified as available for sale,
  any resulting gain or loss is recorded to the shareholders&#146; equity section
  of the balance sheet, rather than to the statements of</P>
<P align=center>21</P>
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<P align=left>operations. When the security is sold or impaired, gains and losses
  are reported on the statement of operations. Investments are considered to be
  impaired when a decline in fair value is judged to be other-than-temporary.</P>
<P align=left>Foreign currency contracts consist of foreign exchange forward contracts
  that are valued using market-based inputs obtained from independent pricing
  sources. The contracts are measured using market foreign exchange prices and
  are recorded in the Consolidated Balance Sheets as Accounts receivable. For
  all positions there is risk from the possible inability of the counterparties
  (major financial institutions) to meet the terms of the contracts and the risk
  of unfavorable changes in interest and currency rates, which may reduce the
  benefit of the contracts. However, for most forward exchange contracts, both
  the purchase and sale sides of the Company&#146;s exposures are with the same
  financial institution. The Company seeks to control risk by evaluating the creditworthiness
  of counterparties and by monitoring the currency exchange and interest rate
  markets, hedging risks in compliance with internal guidelines and reviewing
  all principal economic hedging contracts with designated directors of the Company.</P>
<P align=left>Financial Accounting Statement No. 161 issued by the Financial Accounting
  Standards Board requires enhanced disclosures about derivative instruments,
  amending and expanding the disclosure requirements of Financial Accounting Statement
  No. 133 (FAS No. 133), to provide users of financial statements with enhanced
  understanding of (i) how and why an entity uses derivative instruments, (ii)
  how derivative instruments and related hedged items are accounted for under
  FAS No. 133 and its related interpretations, and (iii) how derivative instruments
  and related hedged items affect an entity&#146;s financial position, results
  of operations, and cash flows.</P>
<P align=left>The Company operates in many geographic regions of the world, and
  more than half of the Company&#146;s business is in countries outside the United
  States. A substantial portion of the Company&#146;s sales is denominated in
  euros or other foreign currencies. As a result, changes in the relative values
  of U.S. dollars, euros and such other currencies impact reported net sales and
  operating income. If the value of the euro or other currencies were to decline
  relative to the U.S. dollar, the Company&#146;s reported net sales and operating
  income could decline. In some locations, the profitability of transactions is
  affected by the fact that sales are denominated in a currency different from
  the currency in which the costs to manufacture and distribute the products are
  denominated. These sales are typically denominated in U.S. dollars while the
  manufacturing costs are based mainly on local currencies, which could have a
  negative effect on earnings if the local currencies were to strengthen against
  the U.S. dollar. As a result, the Company enters into foreign currency contracts
  from time to time, which are generally less than 12 months in duration, in order
  to mitigate volatility in the Company&#146;s earnings that can be caused by
  changes in currency exchange rates. There were no foreign currency forward contracts
  designated as hedging instruments at June 30, 2009.</P>
<P align=left>The following table presents foreign currency forward contract information
  as of June 30, 2009:</P>
<div align="center">
  <TABLE border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" width="100%">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>(in thousands)</FONT></B></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
    </TR>
    <TR>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left colSpan=2>
        <div align="center"><b><font size=2>Contract Amount</font></b></div>
      </TD>
      <TD align=left>&nbsp;</TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2><b>Buy currency:</b></FONT></TD>
      <TD align=center><FONT size=2><b>Sell currency:</b></FONT></TD>
      <TD align=center><B><FONT size=2>Buy</FONT></B></TD>
      <TD align=center><B><FONT size=2>Sell</FONT></B></TD>
      <TD align=center><B><FONT size=2>Fair Value</FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left>
        <hr size="1" noshade>
      </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Mexican peso</FONT> </TD>
      <TD align=left>
        <div align="center"><FONT size=2>U.S. dollar</FONT> </div>
      </TD>
      <TD align=right><FONT size=2>$12,208</FONT> </TD>
      <TD align=right><FONT size=2>$13,658</FONT> </TD>
      <TD align=right><FONT size=2>$1,450</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Australian dollar</FONT> </TD>
      <TD align=left>
        <div align="center"><FONT size=2>U.S. dollar</FONT> </div>
      </TD>
      <TD align=right><FONT size=2>3,000</FONT> </TD>
      <TD align=right><FONT size=2>3,232</FONT> </TD>
      <TD align=right><FONT size=2>232</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>South Korean won</FONT> </TD>
      <TD align=left>
        <div align="center"><FONT size=2>U.S. dollar</FONT> </div>
      </TD>
      <TD align=right><FONT size=2>3,912</FONT> </TD>
      <TD align=right><FONT size=2>4,270</FONT> </TD>
      <TD align=right><FONT size=2>358</FONT> </TD>
    </TR>
  </TABLE>
</div>
<p align="center">&nbsp;</p>
<p align="center">22<BR>

</p>
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<P align=left><B>12. Contingencies</B></P>
<P align=left>Albany International Corp. (&#147;Albany&#148;) 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 produced asbestos-containing
  paper machine clothing 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.</P>
<P align=left>Albany was defending against 16,060 claims as of July 23, 2009.
  This compares with 16,818 such claims as of May 1, 2009, 17,854 claims as of
  February 6, 2009, 18,385 claims as of October 27, 2008, 18,462 claims as of
  July 25, 2008, 18,529 claims as of May 2, 2008, 18,789 claims as of February
  1, 2008, 18,791 claims as of October 19, 2007, 18,813 claims as of July 27,
  2007, 19,120 claims as of April 27, 2007, 19,388 claims as of February 16, 2007,
  19,416 claims as of December 31, 2006, 24,451 claims as of December 31, 2005,
  29,411 claims as of December 31, 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. The following table sets forth
  the number of claims filed, the number of claims settled, dismissed or otherwise
  resolved, and the aggregate settlement amount during the periods presented:</P>
<div align="center">
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=center><I><FONT size=2>Year ended</FONT></I><BR> <I><FONT size=2>December</FONT></I><BR>
        <I><FONT size=2>31,</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Opening Number</FONT></I><BR>
        <I><FONT size=2>of claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Claims Dismissed,</FONT></I><BR>
        <I><FONT size=2>Settled or</FONT></I><BR> <I><FONT size=2>Resolved</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>New Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Closing</FONT></I><BR> <I><FONT size=2>Number</FONT></I><BR>
        <I><FONT size=2>of</FONT></I><BR> <I><FONT size=2>Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Amounts Paid</FONT></I><BR>
        <I><FONT size=2>(thousands) to</FONT></I><BR> <I><FONT size=2>Settle or</FONT></I><BR>
        <I><FONT size=2>Resolve ($$)</FONT></I></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2005</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT color=#1f497d size=2>29,411</FONT></I>
      </TD>
      <TD width="16%" align=right><I><FONT color=#1f497d size=2>6,257</FONT></I>
      </TD>
      <TD width="16%" align=right><I><FONT color=#1f497d size=2>1,297</FONT></I>
      </TD>
      <TD width="16%" align=right><I><FONT size=2>24,451</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>504</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2006</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>24,451</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>6,841</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>1,806</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>19,416</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>3,879</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2007</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>19,416</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>808</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>190</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>18,798</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>15</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2008</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>18,798</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>523</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>110</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>18,385</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>52</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2009 to date</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>18,385</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>2,358</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>33</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>16,060</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>78</FONT></I> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    (The data reported in the above table (as well as elsewhere in this report)
    does not reflect a significant number of additional dismissals that have been
    granted in recent weeks but which the Company has not yet been able to reflect
    in its databases.)</div>
</div>
<P align=left>Albany anticipates that additional claims will be filed against
  it and 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 twenty to more than two hundred defendants, and the complaints usually
  fail to identify the plaintiffs&#146; work history or the nature of the plaintiffs&#146;
  alleged exposure to Albany&#146;s products. Pleadings and discovery responses
  in those cases in which work histories have been provided indicate claimants
  with paper mill exposure in approximately 10% of the total claims filed against
  Albany, 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.</P>
<P align=left>As of July 23, 2009, approximately 11,358 of the claims pending
  against Albany were pending in Mississippi. Of these, approximately 10,816 are
  in federal court, at the multidistrict litigation panel (&#147;MDL&#148;), either
  through removal or original jurisdiction. (In addition to the 10,816 Mississippi
  claims pending against the Company at the MDL, there are approximately 509 claims
  pending against the Company at the MDL removed from various United States District
  Courts in other states.)</P>
<P align=center>23</P>
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<P align="left"> On May 31, 2007 the MDL issued an administrative order that required
  each MDL plaintiff to provide detailed information regarding, among other things,
  the alleged asbestos-related medical diagnoses. The order did not require exposure
  information with this initial filing. The deadline for submission of such filings
  was December 1, 2007, but the process continued for several months thereafter
  with defense counsel monitoring filing obligations and reviewing the submissions
  for compliance. On December 23, 2008, the MDL issued another administrative
  order providing a mechanism whereby defendants could seek dismissals against
  plaintiffs who failed to comply with the prior administrative order. The deadline
  for such motions was originally set as January 31, 2009, but was amended when
  the court began scheduling hearings based upon the original jurisdiction of
  the underlying claim. Filing deadlines were set as 30 days prior to the hearing
  dates, which were scheduled beginning in April 2009. The Company has already
  begun to see dismissals as a result of this procedure, including some which
  have yet to be fully processed and therefore not reflected in the table above.
  At this point, the Company cannot currently predict how many more dismissals
  will be granted through this process. Also in April 2009, the MDL also ordered
  that the claims of individual plaintiffs in mass joinder cases be severed and
  that the severed plaintiffs re-file their claims, accompanied by payment of
  the statutory filing fee. It is unclear how many of the severed plaintiffs will
  re-file their claims, though it can be expected that some claims will be abandoned.</P>
<P align="left"> With respect to the remaining claims where plaintiffs have complied
  with the original administrative order, the MDL expects to begin conducting
  settlement conferences, at which time the plaintiffs will be required to submit
  short position statements setting forth exposure information. The MDL has not
  yet begun the process of scheduling the settlement conferences, but it has instituted
  a procedure by which plaintiffs may request remand of their claims back to the
  court of original jurisdiction for trial. Since a settlement conference is a
  prerequisite to remand, it is expected that institution of this procedures will
  expedite the requests for settlement conferences. The Company believes that
  the effects of these administrative orders may not be fully known or realized
  for some time.</P>
<P align="left"> Based on past experience, communications from certain plaintiffs&#146;
  counsel, and the advice of the Company&#146;s Mississippi counsel, the Company
  expects the percentage of Mississippi claimants able to demonstrate time spent
  in a paper mill to which Albany supplied asbestos-containing products during
  a period in which Albany&#146;s asbestos-containing products were in use to
  be considerably lower than the total number of claims still pending. However,
  due to the still large number of inactive claims pending in the MDL and the
  lack of alleged exposure information, the Company does not believe a meaningful
  estimate can be made regarding the range of possible loss with respect to these
  remaining claims.</P>
<P align="left"> As of July 23, 2009, the remaining 4,702 claims pending against
  Albany were pending in states other than Mississippi. Pleadings and discovery
  responses in those cases in which work histories have been provided indicate
  claimants with paper mill exposure in approximately 25% of total claims reported,
  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. For
  these reasons, the Company expects the percentage of these remaining claimants
  able to demonstrate time spent in a paper mill to which Albany supplied asbestos-containing
  products during a period in which Albany&#146;s asbestos-containing products
  were in use to be considerably lower than the total number of pending claims.
  In addition, over half of these remaining non-Mississippi claims have not provided
  any disease information. Detailed exposure and disease information sufficient
  meaningfully to estimate a range of possible loss of a particular claim is typically
  not available until late in the discovery process, and often not until a trial
  date is imminent and a settlement demand has been received. For these reasons,
  the Company does not believe a meaningful estimate can be made regarding the
  range of possible loss with respect to these remaining claims.</P>
<P align="left"> 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</P>
<P align="center">24</P>
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<P align=left>plaintiff. Furthermore, asbestos contained in Albany&#146;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&#146;s insurer, Liberty Mutual, has defended each
  case and funded settlements under a standard reservation of rights. As of July
  23, 2009, the Company had resolved, by means of settlement or dismissal, 24,404
  claims. The total cost of resolving all claims was $6,836,000. Of this amount,
  $6,791,000, or 99%, was paid by the Company&#146;s insurance carrier. The Company
  has approximately $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.</P>
<P align=left><B>Brandon Drying Fabrics, Inc.</B></P>
<P align=left>Brandon Drying Fabrics, Inc. (&#147;Brandon&#148;), a subsidiary
  of Geschmay Corp., which is a subsidiary of the Company, is also a separate
  defendant in many of the asbestos cases in which Albany is named as a defendant.
  Brandon was defending against 8,139 claims as of July 23, 2009. This compares
  with 8,604 such claims as of May 1, 2009, 8,607 claims as of February 6, 2009,
  8,664 such claims as of October 27, 2008, 8,672 claims as of July 25, 2008,
  8,689 claims as of May 2, 2008, 8,741 claims as of February 1, 2008 and October
  19, 2007, 9,023 claims as of July 27, 2007, 9,089 claims as of April 27, 2007,
  9,189 claims as of February 16, 2007, 9,114 claims as of December 31, 2006,
  9,566 claims as of December 31, 2005, 9,985 claims as of December 31, 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 following table sets forth the
  number of claims filed, the number of claims settled, dismissed or otherwise
  resolved, and the aggregate settlement amount during the periods presented:</P>
<div align="center">
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=center><I><FONT size=2>Year ended</FONT></I><BR> <I><FONT size=2>December</FONT></I><BR>
        <I><FONT size=2>31,</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Opening Number</FONT></I><BR>
        <I><FONT size=2>of claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Claims Dismissed,</FONT></I><BR>
        <I><FONT size=2>Settled or</FONT></I><BR> <I><FONT size=2>Resolved</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>New Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Closing</FONT></I><BR> <I><FONT size=2>Number</FONT></I><BR>
        <I><FONT size=2>of</FONT></I><BR> <I><FONT size=2>Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Amounts Paid</FONT></I><BR>
        <I><FONT size=2>(thousands) to</FONT></I><BR> <I><FONT size=2>Settle or</FONT></I><BR>
        <I><FONT size=2>Resolve ($$)</FONT></I></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2005</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT color=#1f497d size=2>9,985</FONT></I>
      </TD>
      <TD width="16%" align=right><I><FONT color=#1f497d size=2>642</FONT></I>
      </TD>
      <TD width="16%" align=right><I><FONT color=#1f497d size=2>223</FONT></I>
      </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>9,566</FONT></I>
      </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2006</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>9,566</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>1182</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>730</FONT></I> </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>9,114</FONT></I>
      </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2007</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>9,114</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>462</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>88</FONT></I> </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>8,740</FONT></I>
      </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2008</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>8,740</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>86</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>10</FONT></I> </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>8,664</FONT></I>
      </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=left><I><FONT size=2>2009 to date</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>8,664</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>528</FONT></I> </TD>
      <TD width="16%" align=right><I><FONT size=2>3</FONT></I> </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>8,139</FONT></I>
      </TD>
      <TD width="16%" align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    (The data reported in the above table (as well as elsewhere in this report)
    does not reflect a significant number of additional dismissals that have been
    granted in recent weeks but which the Company has not yet been able to reflect
    in its databases.)</div>
</div>
<P align=left>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 (&#147;Abney&#148;),
  a South Carolina textile manufacturer. Among the assets acquired by Brandon
  from Abney were assets of Abney&#146;s wholly-owned subsidiary, Brandon Sales,
  Inc. which had sold, among other things, dryer fabrics containing asbestos made
  by its parent, Abney. It is believed 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</P>
<P align=center>25</P>
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<P align="left"> 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 July 23, 2009, Brandon has resolved, by means of settlement
  or dismissal, 9,439 claims for a total of &#36;152,499. Brandon&#146;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 had been borne directly by Brandon. During
  2004, Brandon&#146;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.</P>
<P align="left"> As of July 23, 2009, 6,821 (or approximately 84%) of the claims
  pending against Brandon were pending in Mississippi. For the same reasons set
  forth above with respect to Albany&#146;s Mississippi and other claims, as well
  as the fact that no amounts have been paid to resolve any Brandon claims since
  2001, the Company does not believe a meaningful estimate can be made regarding
  the range of possible loss with respect to these remaining claims.</P>
<P align="left"> <B>Mount Vernon</B></P>
<P align="left"> In some of these asbestos cases, the Company is named both as
  a direct defendant and as the &#147;successor in interest&#148; to Mount Vernon
  Mills (&#147;Mount Vernon&#148;). 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.</P>
<hr align="center" width="120" size="1" noshade>
<P align="left"> 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 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. 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.</P>
<P align="center">26</P>
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<P align=left><B>13. Changes in Stockholders&#146; Equity</B></P>
<P align=left>The following table summarizes changes in Stockholders&#146; Equity:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="20" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands)</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Class A</FONT><BR> <FONT size=2>Common</FONT><BR>
        <FONT size=2>Stock</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Class B</FONT><BR> <FONT size=2>Common</FONT><BR>
        <FONT size=2>Stock</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Additional</FONT><BR> <FONT size=2>paid in</FONT><BR>
        <FONT size=2>capital</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Retained</FONT><BR> <FONT size=2>earnings</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Accumulated</FONT><BR> <FONT size=2>items
        of other</FONT><BR> <FONT size=2>comprehensive</FONT><BR> <FONT size=2>income</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Treasury</FONT><BR> <FONT size=2>stock</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>Total</FONT><BR>
         <FONT size=2>Shareholders&#146;</FONT><BR>
        <FONT size=2>Equity</FONT></TD>
      <TD align=center>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="20" align=left><hr size="1" noshade></TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>December 31, 2008</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$35</FONT> </TD>
      <TD align=right>&nbsp;&nbsp;</TD>
      <TD align=right><FONT size=2>$3</FONT> </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>$363,918</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>$429,804</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>($101,953</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>($258,871</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;&nbsp;</TD>
      <TD align=right><FONT size=2>$432,936</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Net (loss)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(31,641</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(31,641</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Shares contributed</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>to ESOP</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>1</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>1,926</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>1,927</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Dividends declared</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(7,301</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(7,301</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Stock option</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>expense</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>70</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>70</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Compensation paid</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>or payable in Class</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>A Common Stock</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>1,428</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>1,428</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Convertible notes</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>purchased</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(5,326</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(5,326</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Settlement of</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>equity related tax</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>issues</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>19,658</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>19,658</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Amortization of</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>adjustment of</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>pension liability</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>581</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>581</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR>
      <TD colSpan=20>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Cumulative</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>translation</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>adjustment/other</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(216</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>17,410</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>572</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>17,766</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="20" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>June 30, 2009</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$36</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$3</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$381,458</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$390,862</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($83,962</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($258,299</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$430,098</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="20" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>
</div>
<p align="center">27<BR>
</p>
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<P align=left><B>14. Comprehensive Income/(Loss)</B></P>
<P align=left>Comprehensive income/(loss) consists of the following:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=4><FONT size=2>Three Months Ended <br>
        June 30,
        </FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=4><FONT size=2>Six Months Ended <br>
        June 30,
        </FONT></TD>
      <TD align=center>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>(in thousands)</FONT></TD>
      <TD align=center><FONT size=2>2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>2008</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>
         <FONT size=2>2009</FONT></TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center>&nbsp; </TD>
      <TD align=center><FONT size=2>2008</FONT></TD>
      <TD align=center>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
    <TR>
      <TD colSpan=12>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Net (loss)/income</FONT> </TD>
      <TD align=right><FONT size=2>($</FONT><FONT size=2>12,744</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>$5,253</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>($</FONT><FONT size=2>31,641</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp;&nbsp; </TD>
      <TD align=right><FONT size=2>$3,157</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
    <TR>
      <TD colSpan=12>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Other comprehensive income, before tax:</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Foreign currency translation adjustments</FONT>
      </TD>
      <TD align=right><FONT size=2>79,771</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>4,355</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>17,410</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>40,688</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Amortization of pension liability adjustment</FONT>
      </TD>
      <TD align=right><FONT size=2>953</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>371</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>953</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>742</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Pension and postretirement liability adjustments</FONT>
      </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(1,385</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(6,127</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Derivative valuation adjustment</FONT>
      </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>414</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(9,479</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR>
      <TD colSpan=12>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Income taxes related to items of other</FONT>
      </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>comprehensive income:</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Amortization of pension liability adjustment</FONT>
      </TD>
      <TD align=right><FONT size=2>(372</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(145</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(372</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(290</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Pension and postretirement liability adjustments</FONT>
      </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>540</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>2,362</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left>&nbsp;<FONT size=2>Derivative valuation adjustment</FONT>
      </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>(628</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>3,246</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Other comprehensive income, net of tax</FONT>
      </TD>
      <TD align=right><FONT size=2>80,352</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>3,522</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>17,991</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>31,142</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
    <TR>
      <TD colSpan=12>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Comprehensive income/(loss)</FONT> </TD>
      <TD align=right><FONT size=2>$67,608</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$8,775</FONT> </TD>
      <TD align=left>&nbsp; </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>($</FONT><FONT size=2>13,650</FONT> </TD>
      <TD align=left><FONT size=2>)</FONT> </TD>
      <TD align=right>&nbsp; </TD>
      <TD align=right><FONT size=2>$34,299</FONT> </TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="12" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>
</div>
<p align="center">28<BR>
</p>
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<P align="left"> <B>15. Recent Accounting Pronouncements</B></P>
<P align="left"> In December 2008, the FASB issued FASB Staff Position (FSP) No.132
  (R)-1, &#147;Employers&#146; Disclosures about Pensions and Other Postretirement
  Benefits&#148; (FSP 132R-1). FSP 132R-1 requires enhanced disclosures about
  the plan assets of a Company&#146;s defined benefit pension and other postretirement
  plans. The enhanced disclosures required by this FSP are intended to provide
  users of financial statements with a greater understanding of: (1) how investment
  allocation decisions are made, including the factors that are pertinent to an
  understanding of investment policies and strategies; (2) the major categories
  of plan assets; (3) the inputs and valuation techniques used to measure the
  fair value of plan assets; (4) the effect of fair value measurements using significant
  unobservable inputs (Level 3) on changes in plan assets for the period; and
  (5) significant concentrations of risk within plan assets. FSP No. FAS 132(R)-1
  is effective for financial statements issued for fiscal years ending after December
  15, 2009. It is expected that the adoption of FSP No. FAS 132(R)-1 will not
  have a material effect on the Company&#146;s financial statements.</P>
<P align="left"> In April 2009, the FASB issued FSP No. FAS 157-4, &#147;Determining
  Fair Value When the Volume and Level of Activity for the Asset or the Liability
  Have Significantly Decreased and Identifying Transactions That Are Not Orderly&#148;.
  FSP No. FAS 157-4 amends SFAS No. 157 to provide additional guidance on (i)
  estimating fair value when the volume and level of activity for an asset or
  liability have significantly decreased in relation to normal market activity
  for the asset or liability, and (ii) circumstances that may indicate that a
  transaction is not orderly. FSP No. FAS 157-4 also requires additional disclosures
  about fair value measurements in interim and annual reporting periods. FSP No.
  FAS 157-4 is effective for interim and annual reporting periods ending after
  June 15, 2009. The Company&#146;s adoption of this Standard did not have a material
  effect on its financial statements.</P>
<P align="left"> In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
  &#147;Recognition and Presentation of Other-Than-Temporary Impairments&#148;
  (&#147;FSP No. FAS 115-2&#148;). FSP No. FAS 115-2 provides additional guidance
  on the timing of impairment recognition and greater clarity about the credit
  and noncredit components of impaired debt securities that are not expected to
  be sold. FSP No. FAS 115-2 also requires additional disclosures about impairments
  in interim and annual reporting periods. FSP No. FAS 115-2 is effective for
  interim and annual reporting periods ending after June 15, 2009. The Company&#146;s
  adoption of this Standard did not have a material effect on its financial statements.</P>
<P align="left"> In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,
  &#147;Interim Disclosures about Fair Value of Financial Instruments&#148;. FSP
  No. FAS 107-1 and APB 28-1 amends SFAS No. 107, Disclosures about Fair Value
  of Financial Instruments, to require disclosures about fair value of financial
  instruments in interim as well as in annual financial statements. This FSP also
  amends Accounting Principles Board (&#147;APB&#148;) Opinion No. 28, Interim
  Financial Reporting, to require those disclosures in all interim financial statements.
  FSP No. FAS 107-1 and APB 28-1 is effective for interim reporting periods ending
  after June 15, 2009. The Company&#146;s adoption of this Standard did not have
  a material effect on its financial statements.</P>
<P align="left"> In May 2009, the FASB issued Statement No. 165, &#147;Subsequent
  Events&#148; (&#147;SFAS 165&#148;), which establishes general standards of
  accounting for, and requires disclosure of, events that occur after the balance
  sheet date but before financial statements are issued or are available to be
  issued. The provisions of SFAS 165 were adopted for the quarter ended June 30,
  2009. The adoption of these provisions did not have a material effect on the
  Company&#146;s consolidated financial statements.</P>
<P align="left"> In June 2009, the FASB issued Statement No. 166, &#147;Accounting
  for Transfers of Financial Assets, an amendment to FASB Statement No. 140&#148;
  (&#147;SFAS 166&#148;). SFAS 166 eliminates the concept of a &#147;qualifying
  special-purpose entity,&#148; changes the requirements for derecognizing financial
  assets, and requires additional disclosures in order to enhance information
  reported to users of financial statements by providing greater</P>
<P align="center">29</P>
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<P align="left"> transparency about transfers of financial assets, including securitization
  transactions, and an entity&#146;s continuing involvement in and exposure to
  the risks related to transferred financial assets. SFAS 166 is effective for
  fiscal years beginning after November 15, 2009. The Company expects that adoption
  of SFAS 166 in fiscal year 2010 will not have a material effect on its financial
  statements.</P>
<P align="left"> In June 2009, the FASB issued Statement No. 167, &#147;Amendments
  to FASB Interpretation No. 46(R)&#148; (&#147;SFAS 167&#148;). The amendments
  include: (1) the elimination of the exemption for qualifying special purpose
  entities, (2) a new approach for determining who should consolidate a variable-interest
  entity, and (3) changes to when it is necessary to reassess who should consolidate
  a variable-interest entity. SFAS 167 is effective for the first annual reporting
  period beginning after November 15, 2009 and for interim periods within that
  first annual reporting period. The Company expects that adoption of SFAS 167
  in fiscal year 2010 will not have a material effect on its financial statements.</P>
<P align="left"> In June 2009, the FASB issued Statement No. 168, &#147;The FASB
  Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
  Principles- a replacement of FASB Statement No. 162&#148; (&#147;SFAS 168&#148;).
  SFAS 168 replaces FASB Statement No. 162, The Hierarchy of Generally Accepted
  Accounting Principles, and establishes the FASB Accounting Standards Codification<sup><font size=1>TM</font></sup> (the Codification) as the source of authoritative accounting principles recognized
  by the FASB to be applied by nongovernmental entities in the preparation of
  financial statements in conformity with generally accepted accounting principles
  (GAAP). SFAS 168 is effective for interim and annual periods ending after September
  15, 2009. The Company will begin to use the new Codification when referring
  to GAAP in its Form 10-Q for the quarter ending September 30, 2009. The Company
  expects that adoption of SFAS 168 will not have a material effect on its financial
  statements.</P>
<P align="center">30</P>
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<P align="left"> <B><a name="page31"></a>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS</B></P>
<P align="left"> The following Management&#146;s Discussion and Analysis (&#147;MD&amp;A&#148;)
  is intended to help the reader understand the results of operations and financial
  condition of the Company. The MD&amp;A is provided as a supplement to, and should
  be read in conjunction with, the Company&#146;s Consolidated Financial Statements
  and the accompanying Notes.</P>
<P align="left"> <B><I>Overview</I></B></P>
<P align="left"> Albany International Corp. (the Registrant, the Company, or we)
  and its subsidiaries are engaged in five business segments.</P>
<P align="left"> The Paper Machine Clothing segment includes fabrics and belts
  used in the manufacture of paper and paperboard (PMC or paper machine clothing).
  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. PMC consists of large permeable and non-permeable
  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. PMC products are consumable products
  of technologically sophisticated design that utilize polymeric materials in
  a complex structure. The design and material composition of PMC can have a considerable
  effect on the quality of paper products produced and the efficiency of the paper
  machines on which it is used. Principal products in the PMC segment include
  forming, pressing and dryer fabrics, and process belts. A forming fabric assists
  in sheet formation and conveys the very dilute sheet through the section. Press
  fabrics are designed to carry the sheet through the presses, where water pressed
  from the sheet is carried through the press nip in the fabric. In the dryer
  section, dryer fabrics manage air movement and hold the sheet against heated
  cylinders to enhance drying. Process belts are used in the press section to
  increase dryness and enhance sheet properties, as well as in other sections
  of the machine to improve runnability and enhance sheet qualities. The Company&#146;s
  customers in the PMC segment are paper industry companies, some of which operate
  in multiple regions of the world. The Company&#146;s products, manufacturing
  processes and distribution channels for PMC are substantially the same in each
  region of the world in which it operates.</P>
<P align="left"> Albany Door Systems (ADS) designs, manufactures, sells, and services
  high-speed, high-performance industrial doors worldwide, for a wide range of
  interior, exterior, and machine protection industrial applications. Already
  a high performance door leader, ADS added to its product offerings through its
  acquisitions of Aktor GmbH in 2008 and R-Bac Industries in 2007. The business
  segment also derives revenue from aftermarket sales and service.</P>
<P align="left"> The Company&#146;s other reportable segments are emerging businesses
  that apply the Company&#146;s core competencies in advanced textiles and materials
  to other industries, including specialty materials and composite structures
  for aircraft and other applications (Albany Engineered Composites); a variety
  of products similar to PMC for application in the corrugators, pulp, nonwovens,
  building products, tannery and textile industries (Albany Engineered Fabrics); and
  insulation for outdoor clothing, gloves, footwear, sleeping bags and home furnishings
  (PrimaLoft<sup><font size="1">&#174;</font></sup> Products). No class of similar products or services within
  these segments accounted for 10% or more of the Company&#146;s consolidated
  net sales in any of the past three years.</P>
<P align="center">31</P>
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<P align="left"> <B><I>Trends</I></B></P>
<P align="left"> The Company&#146;s primary segment, Paper Machine Clothing, accounted
  for approximately 67% of consolidated revenues during 2008. Paper machine clothing
  is purchased primarily by manufacturers of paper and paperboard. According to
  data published by RISI, Inc., world paper and paperboard production volumes
  grew at an annual rate of approximately 2.6% between 1999 and 2008. However,
  recent economic changes have led to uncertainty about paper and paperboard production
  volumes in the near term.</P>
<P align="left"> The paper and paperboard industry has been characterized by an
  evolving but essentially stable manufacturing technology based on the wet-forming
  papermaking process. This process, of which paper machine clothing is an integral
  element, requires a very large capital investment. Consequently, management
  does not believe that a commercially feasible substitute technology to paper
  machine clothing is likely to be developed and incorporated into the paper production
  process by paper manufacturers in the foreseeable future. For this reason, management
  expects that demand for paper machine clothing will continue into the foreseeable
  future.</P>
<P align="left"> The world paper and paperboard industry tends to be cyclical,
  with periods of healthy paper prices followed by increases in new capacity,
  which then leads to increased production and higher inventories of paper and
  paperboard, followed by a period of price competition and reduced profitability
  among the Company&#146;s customers. Although sales of paper machine clothing
  do not tend to be as cyclical, the Company may experience somewhat greater demand
  during periods of increased production and somewhat reduced demand during periods
  of lesser production.</P>
<P align="left"> The world paper and paperboard industry has experienced a significant
  period of consolidation and rationalization since 2000. During this period,
  a number of older, less efficient machines in areas where significant established
  capacity existed were closed or were the subject of planned closure announcements,
  while at the same time a number of newer, faster and more efficient machines
  began production or plans for the installation of such newer machines were announced
  in areas of growing demand for paper and paperboard (such as Asia and South
  America). Management anticipates that this trend is likely to continue in the
  near term.</P>
<P align="left"> At the same time, technological advances in paper machine clothing,
  while contributing to the papermaking efficiency of customers, have lengthened
  the useful life of many of the Company&#146;s products and reduced the number
  of pieces required to produce the same volume of paper. As the Company introduces
  new value creating products and services, it is often able to charge higher
  prices or increase market share in certain areas as a result of these improvements.
  However, increased prices and share have not always been sufficient to offset
  completely a decrease in the number of fabrics sold.</P>
<P align="left"> The factors described above result in a steady decline in the
  number of pieces of paper machine clothing, while the average fabric size is
  increasing. The net effect of these trends in recent years was that the specific
  volume of paper machine clothing consumption (measured in kilograms or square
  meters) had been increasing at a rate of approximately 1% per year. For the
  first six months of 2009, however, the global recession contributed to a reduction
  of 26% in the Company&#146;s PMC sales, compared to the same period in 2008.
  Although there is evidence that the decline in sales has reached the bottom
  in some regions and some product lines, the Company is unable to determine whether
  overall consumption of PMC will increase or decrease in the short term.</P>
<P align="left"> During 2006, the Company reported that price competition in Western
  Europe had an adverse impact on the Company&#146;s operating results in the
  PMC segment. In the third and fourth quarters of 2006, and in the first two
  quarters of 2007, sales of paper machine clothing to customers in Western Europe
  were significantly lower</P>
<P align="center">32</P>
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<P align="left"> than the same quarter of the previous year. This also contributed
  to reduced operating income within this segment, as well as overall operating
  income, during those quarters.</P>
<P align="left"> The Company&#146;s response to that pricing disruption was to
  initiate a deliberate, intensive three-year process of restructuring and performance
  improvement initiatives. In PMC, the Company&#146;s strategy has been to offset
  the impacts of the maturation of the North American and Western European markets
  by (a) growing volume in these mature markets, (b) growing with the emerging
  markets in Asia and South America, and (c) reducing costs significantly through
  a company-wide, three-year restructuring and performance improvement program.</P>
<P align="left"> During this process of adjusting its manufacturing footprint
  to align with these regional markets, the Company has incurred restructuring
  charges. Specific charges reported have been incurred in connection with the
  reduction of PMC manufacturing capacity in the United States, Canada, Germany,
  Finland, France and Australia, and Doors segment manufacturing in Sweden and
  Germany. The Company has also incurred costs for idle capacity and equipment
  relocation that are related to the shutdown of these plants, and underutilized
  costs related to the new PMC plant in China. Expenses related to these items
  are included in &#147;Cost of Goods Sold&#148;. In addition, the Company also
  incurred restructuring charges related to the centralization of PMC administrative
  functions in Europe, and reorganization of the Company&#146;s research and development
  function that has improved the Company&#146;s ability to bring value-added products
  to market faster.</P>
<P align="left"> In addition to these restructuring and restructuring-related
  activities, management has launched significant cost reduction and performance
  improvement initiatives. In 2006, the Company announced a plan to migrate its
  global enterprise resource planning system to SAP, and began a strategic procurement
  initiative designed to establish a world-class supply chain organization and
  processes that would lead to significant cost savings. Expenses incurred in
  connection with these actions are included in Selling Technical, General and
  Research (STG&amp;R) expenses. These expenses were not allocated to the reportable
  segments because they are Corporate-wide initiatives.</P>
<P align="left"> The Company expects its three-year plan of restructuring and
  performance improvement initiatives to come to a conclusion by the end of 2009.
  The only remaining planned process improvement initiatives that will run through
  2010 will be the conversion of the Company&#146;s Eurasia and Brazilian operations
  to SAP, and the relocation of equipment related to recent restructuring announcements.</P>
<P align="left"> The Albany Door Systems segment derives most of its revenue from
  the sale of high-performance doors, particularly to customers in Europe. The
  purchase of these doors is normally a capital expenditure item for customers
  and, as such, market opportunities tend to fluctuate with industrial capital
  spending. If economic conditions weaken, customers may reduce levels of capital
  expenditures, which could have a negative effect on sales and earnings in the
  Albany Door Systems segment. The Company&#146;s response to this trend includes
  expansion of its aftermarket business which tends to be more profitable than
  sales of new doors. The large amount of revenue derived from sales and manufacturing
  outside the United States could cause the reported financial results for the
  Albany Door Systems segment to be more sensitive than the other segments of
  the Company to changes in currency rates. Orders for new doors began to drop
  off at the end of the year and into January, and the Company experienced a substantial
  decline in product and aftermarket sales in the first half of 2009. Accordingly,
  the Company has been taking steps, across the business, to accelerate structural
  changes that permanently reduce costs.</P>
<P align="left"> The Engineered Fabrics segment derives its revenue from various
  industries that use fabrics and belts for industrial applications other than
  the manufacture of paper and paperboard. Approximately 40% of revenue in this
  segment is derived from sales to the nonwovens industry, which includes the
  manufacture of diapers, personal care and household wipes, and fiberglass-reinforced
  roofing shingles. Approximately 30% of segment revenue is derived from sales
  to markets that are adjacent to the paper industry, and 20% of revenue is derived
  from the building products market. Segment sales in the European and Pacific
  regions combined</P>
<P align="center">33</P>
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<P align="left"> are almost at the same level as sales within the Americas. Sales
  in the first half of 2009 were 22% lower than the same quarter of 2008, and
  management expects the top line weakness to continue through 2009, reflecting
  the effects of the global recession.</P>
<P align="left"> The Engineered Composites segment (AEC) serves primarily the
  aerospace industry, with custom-designed composite and advanced composite parts
  for static and dynamic applications. AEC has experienced significant growth
  in net sales during the last few years, due both to the introduction of new
  products as well as growth in demand and application for previously existing
  products. The global recession is forcing many of AEC&#146;s customers to sharply
  curtail production, which has led to a sharp decline in segment sales and operating
  income.</P>
<P align="left"> The PrimaLoft<sup><font size="1">&#174;</font></sup>  Products segment includes sales of insulation
  for outdoor clothing, gloves, footwear, sleeping bags, and home furnishings.
  The segment has manufacturing and sales operations in the United States, Europe,
  and Asia. Reflecting global economic pressures, segment sales for the first
  half of 2009 were 6.5 percent lower than the same period of 2008.</P>
<P align="left"> <B>Foreign Currency</B></P>
<P align="left"> The Company operates in many geographic regions of the world,
  and more than half of the Company&#146;s business is in countries outside the
  United States. A substantial portion of the Company&#146;s sales is denominated
  in euros or other foreign currencies. As a result, changes in the relative values
  of U.S. dollars, euros and such other currencies impact reported net sales and
  operating income. If the value of the euro or other currencies were to decline
  relative to the U.S. dollar, the Company&#146;s reported net sales and operating
  income could decline. In some locations, the profitability of transactions is
  affected by the fact that sales are denominated in a currency different from
  the currency in which the costs to manufacture and distribute the products are
  denominated. These sales are typically denominated in U.S. dollars while the
  manufacturing costs are based mainly on local currencies, which could have a
  negative effect on earnings if the local currencies were to strengthen against
  the U.S. dollar. As a result, the Company enters into foreign currency contracts
  from time to time, which are generally less than 12 months in duration, in order
  to mitigate volatility in the Company&#146;s earnings that can be caused by
  changes in currency exchange rates. There were no foreign currency forward contracts
  designated as hedging instruments at June 30, 2009.</P>
<P align="center">34</P>
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<P align=left><B><I>Review of Operations</I></B></P>
<P align=left><I>Total Company &#150; three months ended June 30, 2009</I></P>
<P align=left>In Q1 2009, the Company modified its business segment reporting
  by reclassifying global information systems expenses from each of the segments
  to unallocated expenses. Also during that quarter, the Company implemented Financial
  Accounting Standards Board Staff Position No. APB 14-1 (FSP 14-1). Prior year
  data has been modified to conform to the current year presentation. The Company
  filed a Form 8-K on May 1, 2009 with reclassified segment data and restated
  income statement and balance sheet items for quarterly periods in 2008, as well
  as annual data for 2006, 2007, and 2008.</P>
<P align=left>Net sales were $212.6 million, an increase of 1.6 percent compared
  to Q1 2009 and a decrease of 28.5 percent compared to Q2 2008. Excluding the
  effect of changes in currency translation rates, net sales in Q2 2009 decreased
  23.0 percent as compared to Q2 2008, as shown in Table 1 below:</P>
<P align=left><FONT size=2>Table 1</FONT></P>
<div align="center">
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT></TD>
      <TD align=center colSpan=2><FONT size=2>Net Sales</FONT><BR> <FONT size=2>Three
        Months ended</FONT><BR> <FONT size=2>June 30,</FONT></TD>
      <TD align=center rowSpan=2><FONT size=2>Percent</FONT><BR> <FONT size=2>Change</FONT></TD>
      <TD align=center rowSpan=2><FONT size=2>Impact of</FONT><BR> <FONT size=2>Changes</FONT><BR>
        <FONT size=2>in Currency</FONT><BR> <FONT size=2>Translation</FONT><BR>
        <FONT size=2>Rates</FONT></TD>
      <TD align=center rowSpan=2><FONT size=2>Percent Change</FONT><BR> <FONT size=2>excluding</FONT><BR>
        <FONT size=2>Currency Rate</FONT><BR> <FONT size=2>Effect</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center><FONT size=2>2009</FONT></TD>
      <TD align=center><FONT size=2>2008</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
      <TD align=right><FONT size=2>$145,533</FONT> </TD>
      <TD align=right><FONT size=2>$199,477</FONT> </TD>
      <TD align=right><FONT size=2>-27.0%</FONT> </TD>
      <TD align=right><FONT size=2>($9,247)</FONT> </TD>
      <TD align=right><FONT size=2>-22.4%</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
      <TD align=right><FONT size=2>30,530</FONT> </TD>
      <TD align=right><FONT size=2>48,845</FONT> </TD>
      <TD align=right><FONT size=2>-37.5&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>(4,225)</FONT> </TD>
      <TD align=right><FONT size=2>-28.8&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
      <TD align=right><FONT size=2>21,629</FONT> </TD>
      <TD align=right><FONT size=2>27,255</FONT> </TD>
      <TD align=right><FONT size=2>-20.6&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>(2,330)</FONT> </TD>
      <TD align=right><FONT size=2>-12.1&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
      <TD align=right><FONT size=2>7,379</FONT> </TD>
      <TD align=right><FONT size=2>13,977</FONT> </TD>
      <TD align=right><FONT size=2>-47.2&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-47.2&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
      </TD>
      <TD align=right><FONT size=2>7,488</FONT> </TD>
      <TD align=right><FONT size=2>7,647</FONT> </TD>
      <TD align=right><FONT size=2>-2.1&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>(341)</FONT> </TD>
      <TD align=right><FONT size=2>2.4&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total</FONT> </TD>
      <TD align=right><FONT size=2>$212,559</FONT> </TD>
      <TD align=right><FONT size=2>$297,201</FONT> </TD>
      <TD align=right><FONT size=2>-28.5%</FONT> </TD>
      <TD align=right><FONT size=2>($16,143)</FONT> </TD>
      <TD align=right><FONT size=2>-23.0%</FONT> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    Gross profit was 32.4 percent of net sales in Q2 2009, compared to 34.7 percent
    in the same period of 2008. Cost-reduction initiatives helped to offset the
    effects of lower sales. As described in the paragraphs that follow Table 4,
    costs associated with idle-capacity and performance-improvement initiatives
    were $6.2 million in Q2 2009 and $7.9 million in Q2 2008.</div>
</div>
<P align=left>Selling, technical, general, and research (STG&amp;R) expenses were
  $64.6 million, or 30.4 percent of net sales, in Q2 2009 in comparison to $86.9
  million or 29.3 percent of net sales in Q2 2008. Changes in currency translation
  rates had the effect of decreasing STG&amp;R expenses by $6.9 million in comparison
  to Q2 2008. Q2 STG&amp;R expenses include costs related to performance-improvement
  initiatives totaling $1.4 million in 2009 and $7.9 million in 2008. Revaluation
  of non-functional currency assets and liabilities resulted in losses of $1.7
  million in Q2 2009 and $0.5 million in Q2 2008.</P>
<P align=left>STG&amp;R expenses were $67.6 million, or 32.3 percent of net sales,
  in Q1 2009. Q1 2009 STG&amp;R expenses included costs related to performance-improvement
  initiatives totaling $2.2 million. Revaluation of non-functional currency assets
  and liabilities resulted in a gain of $1.9 million in Q1 2009.</P>
<P align=left>Operating income/loss was a loss of $29.6 million in Q2 2009, compared
  to income of $14.5 million for the same period of 2008.</P>
<P align=center>35</P>
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<P align=left>The following table presents Q2 segment operating income:</P>
<P align=left><FONT size=2>Table 2</FONT></P>
<div align="center">
  <div align="center">
    <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
      <TR>
        <TD align=center></TD>
        <TD align=center></TD>
        <TD align=center></TD>
      </TR>
      <TR vAlign=bottom>
        <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT> </TD>
        <TD align=center colSpan=2><FONT size=2>Operating (loss)/income</FONT><BR>
          <FONT size=2>Three Months ended</FONT><BR> <FONT size=2>June 30,</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD width="15%" align=center><FONT size=2>2009</FONT> </TD>
        <TD width="15%" align=center><FONT size=2>2008</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
        <TD align=right><FONT size=2>($8,732)</FONT> </TD>
        <TD align=right><FONT size=2>$31,231&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
        <TD align=right><FONT size=2>(1,639)</FONT> </TD>
        <TD align=right><FONT size=2>4,836&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
        <TD align=right><FONT size=2>837&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>3,880&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
        <TD align=right><FONT size=2>(2,372)</FONT> </TD>
        <TD align=right><FONT size=2>(217)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
        </TD>
        <TD align=right><FONT size=2>2,594&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>1,718&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Research expenses</FONT> </TD>
        <TD align=right><FONT size=2>(5,767)</FONT> </TD>
        <TD align=right><FONT size=2>(8,288)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Unallocated expenses</FONT> </TD>
        <TD align=right><FONT size=2>(14,476)</FONT> </TD>
        <TD align=right><FONT size=2>(18,634)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Total</FONT> </TD>
        <TD align=right><FONT size=2>($29,555)</FONT> </TD>
        <TD align=right><FONT size=2>$14,526&nbsp;</FONT> </TD>
      </TR>
    </TABLE>
    <p align="left"> Q2 segment operating income included the following expenses
      associated with restructuring and performance-improvement initiatives:</p>
    <p align="left"><FONT size=2>Table 3</FONT></p>
  </div>
  <div align="center">
    <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
      <TR>
        <TD align=center></TD>
        <TD align=center></TD>
        <TD align=center></TD>
        <TD align=center></TD>
        <TD align=center></TD>
      </TR>
      <TR vAlign=bottom>
        <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT></TD>
        <TD colspan="4" align=center> <FONT size=2>Q2 2009</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD width="11%" align=center><FONT size=2>Restructuring</FONT><BR>
           <FONT size=2>and
          Other, <br>
           Net</FONT></TD>
        <TD width="11%" align=center><FONT size=2>Idle-</FONT><BR>
           <FONT size=2>capacity</FONT><BR>
          <FONT size=2>Costs</FONT></TD>
        <TD width="11%" align=center><FONT size=2>Performance-</FONT><BR>
           <FONT size=2>improvement</FONT><BR>
          <FONT size=2>Initiatives</FONT></TD>
        <TD width="11%" align=center><FONT size=2>Total</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
        <TD align=right><FONT size=2>$27,923</FONT> </TD>
        <TD align=right><FONT size=2>$3,099</FONT> </TD>
        <TD align=right><FONT size=2>$2,781</FONT> </TD>
        <TD align=right><FONT size=2>$33,803</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
        <TD align=right><FONT size=2>1,900</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>99</FONT> </TD>
        <TD align=right><FONT size=2>1,999</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
        <TD align=right><FONT size=2>2,515</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>2,515</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
        <TD align=right><FONT size=2>110</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>205</FONT> </TD>
        <TD align=right><FONT size=2>315</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
        </TD>
        <TD align=right><FONT size=2>19</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>19</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Research expenses</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Unallocated expenses</FONT> </TD>
        <TD align=right><FONT size=2>1,343</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>1,374</FONT> </TD>
        <TD align=right><FONT size=2>2,717</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Total</FONT> </TD>
        <TD align=right><FONT size=2>$33,810</FONT> </TD>
        <TD align=right><FONT size=2>$3,099</FONT> </TD>
        <TD align=right><FONT size=2>$4,459</FONT> </TD>
        <TD align=right><FONT size=2>$41,368</FONT> </TD>
      </TR>
    </TABLE>
  </div>
  <p align="left"><FONT size=2>Table 4</FONT> </p>
  <table width="100%" border=1 cellpadding=4 cellspacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

    <tr valign=bottom>

      <td rowspan="2" align=left> <font size=2>(in thousands)</font> </td>
      <td colspan="4" align=center> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<font size=2>Q2 2008</font> </td>
    </tr>

    <tr valign=bottom>

      <td width="11%" align=center><font size=2>Restructuring<br>
        and Other,<br>
         Net</font> </td>
      <td width="11%" align=center><font size=2>Idle-</font> <font size=2><br>
        capacity</font> <font size=2><br>
        Costs</font> </td>
      <td width="11%" align=center><font size=2>Performance-<br>
        improvement<br>
        Initiatives</font> </td>
      <td width="11%" align=center><font size=2>Total</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Paper Machine Clothing</font> </td>
      <td align=right><font size=2>$628&nbsp;</font> </td>
      <td align=right><font size=2>$1,735</font> </td>
      <td align=right><font size=2>$7,225</font> </td>
      <td align=right><font size=2>$9,587</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Albany Door Systems</font> </td>
      <td align=right><font size=2>322&nbsp;</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>78</font> </td>
      <td align=right><font size=2>400</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Engineered Fabrics</font> </td>
      <td align=right><font size=2>-&nbsp;</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Engineered Composites</font> </td>
      <td align=right><font size=2>-&nbsp;</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>PrimaLoft</font><sup><font size=2>&#174; </font></sup><font size=2>Products</font>
      </td>
      <td align=right><font size=2>-&nbsp;</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Research expenses</font> </td>
      <td align=right><font size=2>1,827&nbsp;</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>1,827</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Unallocated expenses</font> </td>
      <td align=right><font size=2>(1,045)</font> </td>
      <td align=right><font size=2>-</font> </td>
      <td align=right><font size=2>6,759</font> </td>
      <td align=right><font size=2>5,714</font> </td>
    </tr>

    <tr valign=bottom>

      <td align=left><font size=2>Total</font> </td>
      <td align=right><font size=2>$1,732&nbsp;</font> </td>
      <td align=right><font size=2>$1,735</font> </td>
      <td align=right><font size=2>$14,062</font> </td>
      <td align=right><font size=2>$17,528</font> </td>
    </tr>

  </table>
</div>
<p align="center">36<BR>
</p>
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<P align="left"> Q2 2009 restructuring costs totaled &#36;33.8 million and included
  charges related to restructuring announced in June and July 2009. The Company
  has not yet completed a review for potential asset impairment associated with
  these recent announcements, and expects that review to result in non-cash restructuring
  charges in the third quarter.</P>
<P align="left"> Q2 2009 idle-capacity costs of &#36;3.1 million were related
  to previously announced restructuring at PMC plants in the U.S. and Europe.
  As a result of the recent restructuring announcements, the Company expects idle-capacity
  costs to continue at least through the next two quarters.</P>
<P align="left"> Q2 2009 performance-improvement initiatives totaled &#36;4.5
  million, of which &#36;3.1 million was reported in cost of goods sold, and &#36;1.4
  million was reported in STG&amp;R expenses. Items reported in cost of goods
  sold include &#36;1.3 million for equipment relocation and &#36;1.1 million
  related to underutilized capacity at the new plant in Hangzhou, China. Included
  in underutilized expense and idle-capacity costs was &#36;0.9 million of depreciation
  expense. Performance-improvement costs reported as STG&amp;R expenses included
  &#36;1.4 million related to the ongoing implementation of SAP.</P>
<P align="left"> Q2 2008 costs for restructuring and performance-improvement initiatives
  amounted to &#36;17.5 million, of which &#36;1.7 million was reported as restructuring,
  &#36;7.9 million was included in cost of goods sold, and &#36;7.9 million was
  included in STG&amp;R expenses.</P>
<P align="left"> Cost reduction initiatives contributed to an improvement of &#36;3.7
  million in Q2 2009 Adjusted EBITDA, compared with Q1 2009. The Company estimates
  that cost reduction initiatives announced to date will contribute to an improvement
  in Adjusted EBITDA of &#36;3.0 million per quarter by Q4 2009, growing to &#36;7.0
  million per quarter by Q2 2010. These estimates assume all other factors that
  influence EBITDA such as sales, currency, and inflation remain constant.</P>
<P align="left"> Research expense decreased &#36;2.5 million due to reductions
  from restructuring and cost reduction initiatives. Unallocated expenses decreased
  by &#36;4.2 million principally due to lower restructuring and performance expenses.</P>
<P align="left"> Interest expense increased to &#36;6.1 million for Q2 2009, compared
  with &#36;5.9 million for Q2 2008. The increase is due to slightly higher average
  levels of debt outstanding during 2009.</P>
<P align="left"> Other income/expense, net was income of &#36;37.2 million in
  Q2 2009, including a &#36;36.6 million or &#36;0.73 per share gain on extinguishment
  of debt and income of &#36;1.2 million related to revaluation of non-functional
  currency intercompany balances. Other income/expense, net was expense of &#36;2.1
  million for Q2 2008. Other income/expense, net was expense of &#36;0.2 million
  in Q1 2009, including a &#36;2.8 million or &#36;0.06 per share gain on extinguishment
  of debt, which was partially offset by losses totaling &#36;1.5 million related
  to revaluation of non-functional currency intercompany balances.</P>
<P align="left"> Q2 2009 income tax benefit/expense includes a provision of &#36;14.3
  million related to the gain on extinguishment of debt. Additionally, Q2 2009
  results include a discrete tax charge of &#36;0.7 million or &#36;0.02 per share,
  and an income tax benefit in the quarter related to a change in the estimated
  tax rate that increased earnings by &#36;2.7 million or &#36;0.09 per share.
  Q2 2008 income tax expense includes discrete tax adjustments that decreased
  net income by &#36;0.3 million or &#36;0.01 per share.</P>
<P align="left"> Net loss per share was &#36;0.41, after reductions of &#36;1.04
  from net restructuring charges, related idle-capacity costs, and costs related
  to continuing performance-improvement initiatives. A gain on extinguishment
  of debt increased earnings by &#36;0.73 per share and tax adjustments increased
  earnings by &#36;0.07 per share. Results for Q2 2009 also include a charge of
  &#36;10 million, or &#36;0.33 per share, representing an estimated purchase
  price</P>
<P align="center">37</P>
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<P align=left>adjustment related to the Company&#146;s 2008 sale of its discontinued
  Filtration Technologies business. The charge results from a tentative agreement
  between the Company and the purchaser of the Filtration Technologies business
  to return a portion of the original $45 million purchase price in exchange for
  a release of certain future claims under the related sale agreement.</P>
<P align=left>Net Income per share for Q2 2008 was $0.18, after reductions of
  $0.47 from net restructuring charges, related idle-capacity costs, and costs
  related to performance-improvement initiatives and $0.01 for income tax adjustments.</P>
<P align=left><I>Total Company &#150; six months ended June 30, 2009</I></P>
<P align=left>Net sales were $421.8 million, a decrease of 26.1 percent compared
  to the same period last year. Excluding the effect of changes in currency translation
  rates, net sales decreased 19.4 percent as shown in Table 5 below:</P>
<P align=left><FONT size=2>Table 5</FONT></P>
<div align="center">
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT></TD>
      <TD align=center colSpan=2><FONT size=2>Net Sales</FONT><BR> <FONT size=2>Six
        Months ended</FONT><BR> <FONT size=2>June 30,</FONT></TD>
      <TD align=center rowSpan=2><FONT size=2>Percent</FONT><BR> <FONT size=2>Change</FONT></TD>
      <TD align=center rowSpan=2><FONT size=2>Impact of</FONT><BR> <FONT size=2>Changes</FONT><BR>
        <FONT size=2>in Currency</FONT><BR> <FONT size=2>Translation</FONT><BR>
        <FONT size=2>Rates</FONT></TD>
      <TD align=center rowSpan=2><FONT size=2>Percent Change</FONT><BR> <FONT size=2>excluding</FONT><BR>
        <FONT size=2>Currency Rate</FONT><BR> <FONT size=2>Effect</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center><FONT size=2>2009</FONT></TD>
      <TD align=center><FONT size=2>2008</FONT></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
      <TD width="12%" align=right><FONT size=2>$284,607</FONT> </TD>
      <TD width="12%" align=right><FONT size=2>$382,492</FONT> </TD>
      <TD width="12%" align=right><FONT size=2>-25.6%</FONT> </TD>
      <TD width="12%" align=right><FONT size=2>($22,296)</FONT> </TD>
      <TD width="12%" align=right><FONT size=2>-19.8%</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
      <TD align=right><FONT size=2>64,856</FONT> </TD>
      <TD align=right><FONT size=2>93,977</FONT> </TD>
      <TD align=right><FONT size=2>-31.0&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>(9,983)</FONT> </TD>
      <TD align=right><FONT size=2>-20.4&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
      <TD align=right><FONT size=2>43,199</FONT> </TD>
      <TD align=right><FONT size=2>55,365</FONT> </TD>
      <TD align=right><FONT size=2>-22.0&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>(5,224)</FONT> </TD>
      <TD align=right><FONT size=2>-12.5&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
      <TD align=right><FONT size=2>16,464</FONT> </TD>
      <TD align=right><FONT size=2>25,065</FONT> </TD>
      <TD align=right><FONT size=2>-34.3&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT>   &nbsp;</TD>
      <TD align=right><FONT size=2>-34.3&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
      </TD>
      <TD align=right><FONT size=2>12,638</FONT> </TD>
      <TD align=right><FONT size=2>13,510</FONT> </TD>
      <TD align=right><FONT size=2>-6.5&nbsp;&nbsp;&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>(472)</FONT> </TD>
      <TD align=right><FONT size=2>-3.0&nbsp;&nbsp;&nbsp;</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total</FONT> </TD>
      <TD align=right><FONT size=2>$421,764</FONT> </TD>
      <TD align=right><FONT size=2>$570,409</FONT> </TD>
      <TD align=right><FONT size=2>-26.1%</FONT> </TD>
      <TD align=right><FONT size=2>($37,975)</FONT> </TD>
      <TD align=right><FONT size=2>-19.4%</FONT> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    Gross profit was 32.9 percent of net sales compared to 34.7 percent in the
    same period of 2008. Cost-reduction initiatives helped to offset the effects
    of lower sales. As described in the paragraphs that follow Table 8, costs
    associated with idle-capacity and performance-improvement initiatives were
    $16.7 million in 2009 and $23.9 million in 2008.</div>
</div>
<P align=left>Selling, technical, general, and research (STG&amp;R) expenses were
  $132.3 million, or 31.4 percent of net sales, in 2009, in comparison to $169.3
  million, or 29.7 percent of net sales, in 2008. Changes in currency translation
  rates had the effect of decreasing STG&amp;R expenses by $14.7 million in comparison
  to 2008. STG&amp;R expenses in 2009 include costs related to performance-improvement
  initiatives totaling $3.6 million in 2009 and $13.1 million in 2008. STG&amp;R
  expenses were reduced by employee reductions due to restructuring activities
  along with reductions in travel and other expenses due to cost reduction initiatives.
  Revaluation of non-functional currency assets and liabilities resulted in a
  gain of $0.3 million in 2009 and a loss of $1.0 million in 2008.</P>
<P align=left>Operating income/loss was a loss of $44.3 million compared to income
  of $21.7 million for the same period of 2008.</P>
<P align=center>38</P>
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<P align=left>The following table presents second-quarter segment operating income:</P>
<P align=left><FONT size=2>Table 6</FONT></P>
<div align="center">
  <div align="center">
    <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

      <TR vAlign=bottom>
        <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT></TD>
        <TD align=center colSpan=2><FONT size=2>Operating (loss)/income</FONT><BR>
          <FONT size=2>Six Months ended</FONT><BR> <FONT size=2>June 30,</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD width="15%" align=center><FONT size=2>2009</FONT></TD>
        <TD width="15%" align=center><FONT size=2>2008</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
        <TD align=right><FONT size=2>($1,471)</FONT> </TD>
        <TD align=right><FONT size=2>$53,770&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
        <TD align=right><FONT size=2>(1,411)</FONT> </TD>
        <TD align=right><FONT size=2>8,273&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
        <TD align=right><FONT size=2>4,492&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>9,735&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
        <TD align=right><FONT size=2>(4,880)</FONT> </TD>
        <TD align=right><FONT size=2>(2,035)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
        </TD>
        <TD align=right><FONT size=2>3,683&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>2,830&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Research expenses</FONT> </TD>
        <TD align=right><FONT size=2>(11,377)</FONT> </TD>
        <TD align=right><FONT size=2>(14,159)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Unallocated expenses</FONT> </TD>
        <TD align=right><FONT size=2>(33,358)</FONT> </TD>
        <TD align=right><FONT size=2>(36,708)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Total</FONT> </TD>
        <TD align=right><FONT size=2>($44,322)</FONT> </TD>
        <TD align=right><FONT size=2>$21,706&nbsp;</FONT> </TD>
      </TR>
    </TABLE>
    <div align="left"><BR>
      Operating income included the following expenses associated with restructuring
      and performance-improvement initiatives:</div>
  </div>
  <P align=left><FONT size=2>Table 7</FONT></P>
  <div align="center">
    <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

      <TR vAlign=bottom>
        <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT></TD>
        <TD colspan="4" align=center> <FONT size=2>2009</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD width="11%" align=center><FONT size=2>Restructuring</FONT><BR>
           <FONT size=2>and
          Other, Net</FONT></TD>
        <TD width="11%" align=center><FONT size=2>Idle-</FONT><BR>
           <FONT size=2>capacity</FONT><BR>
          <FONT size=2>Costs</FONT></TD>
        <TD width="11%" align=center><FONT size=2>Performance-</FONT><BR>
           <FONT size=2>improvement</FONT><BR>
          <FONT size=2>Initiatives</FONT></TD>
        <TD width="11%" align=center><FONT size=2>Total</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
        <TD align=right><FONT size=2>$43,533</FONT> </TD>
        <TD align=right><FONT size=2>$6,178</FONT> </TD>
        <TD align=right><FONT size=2>$5,625</FONT> </TD>
        <TD align=right><FONT size=2>$55,336</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
        <TD align=right><FONT size=2>2,048</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>506</FONT> </TD>
        <TD align=right><FONT size=2>2,554</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
        <TD align=right><FONT size=2>2,515</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>2,515</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
        <TD align=right><FONT size=2>110</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>825</FONT> </TD>
        <TD align=right><FONT size=2>935</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
        </TD>
        <TD align=right><FONT size=2>61</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>61</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Research expenses</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Unallocated expenses</FONT> </TD>
        <TD align=right><FONT size=2>2,722</FONT> </TD>
        <TD align=right><FONT size=2>-</FONT> </TD>
        <TD align=right><FONT size=2>3,575</FONT> </TD>
        <TD align=right><FONT size=2>6,297</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Total</FONT> </TD>
        <TD align=right><FONT size=2>$50,989</FONT> </TD>
        <TD align=right><FONT size=2>$6,178</FONT> </TD>
        <TD align=right><FONT size=2>$10,531</FONT> </TD>
        <TD align=right><FONT size=2>$67,698</FONT> </TD>
      </TR>
    </TABLE>
  </div>
  <p align="left"><FONT size=2>Table 8</FONT> </p>
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR vAlign=bottom>
      <TD rowspan="2" align=left> <FONT size=2>(in thousands)</FONT> </TD>
      <TD colspan="4" align=center> <FONT size=2>2008</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="11%" align=center><FONT size=2>Restructuring<br>
        and Other, Net</FONT> </TD>
      <TD width="11%" align=center><FONT size=2>Idle-</FONT> <FONT size=2><br>
        capacity </FONT><FONT size=2><br>
        Costs</FONT> </TD>
      <TD width="11%" align=center><FONT size=2>Performance-<br>
        improvement<br>
        Initiatives</FONT> </TD>
      <TD width="11%" align=center><FONT size=2>Total</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </TD>
      <TD align=right><FONT size=2>$7,031&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>$2,418</FONT> </TD>
      <TD align=right><FONT size=2>$10,547</FONT> </TD>
      <TD align=right><FONT size=2>$19,996</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Albany Door Systems</FONT> </TD>
      <TD align=right><FONT size=2>322&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>213</FONT> </TD>
      <TD align=right><FONT size=2>535</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Engineered Fabrics</FONT> </TD>
      <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Engineered Composites</FONT> </TD>
      <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>PrimaLoft</FONT><SUP><FONT size=2>&#174; </FONT></SUP><FONT size=2>Products</FONT>
      </TD>
      <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Research expenses</FONT> </TD>
      <TD align=right><FONT size=2>1,827&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>1,827</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Unallocated expenses</FONT> </TD>
      <TD align=right><FONT size=2>(2,086)</FONT> </TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right><FONT size=2>10,708</FONT> </TD>
      <TD align=right><FONT size=2>8,622</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total</FONT> </TD>
      <TD align=right><FONT size=2>$7,094&nbsp;</FONT> </TD>
      <TD align=right><FONT size=2>$2,418</FONT> </TD>
      <TD align=right><FONT size=2>$21,468</FONT> </TD>
      <TD align=right><FONT size=2>$30,980</FONT> </TD>
    </TR>
  </TABLE>
</div>
<p align="center">39<BR>
</p>
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<P align="left"> Restructuring costs in 2009 totaled &#36;51.0 million and included
  charges related to restructuring of PMC operations in North America and Europe.
  Restructuring costs also included charges to restructure the Company&#146;s
  Doors operations in Europe and Engineered Fabrics operations in Australia, Europe,
  and North America.</P>
<P align="left"> Idle-capacity costs in 2009 of &#36;6.2 million were related
  to previously announced restructuring at PMC plants in the U.S. and Europe.</P>
<P align="left"> Costs associated with performance-improvement initiatives totaled
  &#36;10.5 million in 2009, of which &#36;6.9 million was reported in cost of
  goods sold, and &#36;3.6 million was reported in STG&amp;R expenses. Items reported
  in cost of goods sold include &#36;3.3 million for equipment relocation and
  &#36;2.9 million related to underutilized capacity at the new plant in Hangzhou,
  China. Included in underutilized expense and idle-capacity costs was &#36;1.9
  million of depreciation expense. Performance-improvement costs reported as STG&amp;R
  expenses included &#36;3.6 million related to the ongoing implementation of
  SAP.</P>
<P align="left"> Restructuring and performance-improvement initiatives costs in
  2008 amounted to &#36;31.0 million, of which &#36;7.1 million was reported as
  restructuring, &#36;10.9 million was included in cost of goods sold, and &#36;13.0
  million was included in STG&amp;R expenses.</P>
<P align="left"> Research expense decreased &#36;2.8 million due to reductions
  from restructuring and cost reduction initiatives. Unallocated expenses decreased
  by &#36;3.3 million principally due to lower restructuring and performance expenses.</P>
<P align="left"> Interest expense increased to &#36;11.9 million in 2009, compared
  with &#36;11.3 million in 2008. The increase is due to higher average levels
  of debt outstanding during 2009.</P>
<P align="left"> Other income/expense, net was income of &#36;37.0 million in
  2009, including a &#36;39.5 million or &#36;0.79 per share gain on extinguishment
  of debt and expense of &#36;0.7 million related to revaluation of non-functional
  currency intercompany balances. Other income/expense, net was expense of &#36;1.8
  million for 2008.</P>
<P align="left"> The effective tax rate before discrete tax items was 23% in 2009
  and 20% in 2008. Included in income tax expense in 2009 includes a provision
  of &#36;15.4 million related to the gain on extinguishment of debt. 2009 income
  tax expense also includes &#36;0.7 million related to discrete tax items that
  increased earnings by &#36;0.02 per share. Discrete tax adjustments decreased
  2008 net income by &#36;4.2 million or &#36;0.14 per share.</P>
<P align="left"> Net loss per share was &#36;1.04, after reductions of &#36;1.71
  from net restructuring charges, related idle-capacity costs, and costs related
  to continuing performance-improvement initiatives. A gain on extinguishment
  of debt increased earnings by &#36;0.79 per share and discrete tax adjustments decreased
  earnings by &#36;0.02 per share. Results in 2009 also include a charge of &#36;10
  million or &#36;0.33 per share representing an estimated purchase price adjustment
  related to the Company&#146;s 2008 sale of its discontinued Filtration Technologies
  business.</P>
<P align="left"> Net income per share for 2008 was &#36;0.11, after reductions
  of &#36;0.83 from net restructuring charges, related idle-capacity costs, and
  costs related to performance-improvement initiatives, and &#36;0.14 for discrete income
  tax adjustments.</P>
<P align="center">40</P>
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<P align="left"> <B>Paper Machine Clothing (PMC)</B></P>
<P align="left"> <I>This segment includes Paper Machine Clothing and Process Belts
  used in the manufacture of paper and paperboard products.</I></P>
<P align="left"> <I>Three months ended June 30, 2009</I></P>
<P align="left"> Q2 2009 global net sales decreased 27.0 percent compared to Q2
  2008, but increased 4.6 percent compared to Q1 2009. Compared to Q1 2009, trade
  sales increased 2.6 percent in the Americas and 37.8 percent in Asia, while
  sales in Europe (in euros) declined 5.7 percent.</P>
<P align="left"> Cost reduction and other performance-improvement initiatives
  are ongoing throughout all facets of the PMC organization.</P>
<P align="left"> <I>Six months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased 25.6 percent compared to the same period
  of 2008. Excluding the effect of currency translation rates, net sales decreased
  19.8 percent. The declines were primarily due to lower volume.</P>
<P align="left"> Gross profit as a percentage of net sales was 36.0 percent compared
  with 37.3 percent for 2008. The difference is principally due to lower sales
  offset in part by cost savings resulting from plant closings, related reductions
  in employee expense, and other performance-improvement initiatives. Geographically,
  the majority of the decline in gross profit percentage was in Europe and Asia.
  The decrease in those regions is principally due to the ramp-up of operations
  at the new plant in Hangzhou, China and an increase in idle capacity costs in
  Europe due to restructuring activities.</P>
<P align="left"> Segment operating income decreased from income of &#36;53.8 million
  in 2008 to a loss of &#36;1.5 million in 2009. Restructuring and performance
  improvement costs reduced operating income by &#36;55.3 million in 2009 and
  &#36;20.0 million in 2008. The remaining decrease in segment operating income
  is the result of lower gross margin offset by improvements in STG&amp;R expenses
  due to employee reductions and cost savings initiatives.</P>
<P align="left"> <B>Albany Door Systems (ADS)</B></P>
<P align="left"> <I>This segment includes products, parts, and service sales of
  High Performance Doors to a variety of industrial customers.</I></P>
<P align="left"> <I>Three months ended June 30, 2009</I></P>
<P align="left"> Compared to Q2 2008, net sales in Europe were down 32.0 percent;
  net sales in North America decreased 24.5 percent and net sales in Asia decreased
  39.6 percent. Ongoing cost reduction initiatives resulted in a Q2 restructuring
  charge of &#36;1.9 million. Operating income from aftermarket sales more than
  offset losses incurred by product sales.</P>
<P align="left"> <I>Six months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased 31.0 percent compared to the same period
  of 2008. Excluding the effect of currency translation rates, net sales decreased
  20.4 percent. The declines were primarily due lower product sales experienced
  in the European and North American markets with less significant declines in
  aftermarket sales.</P>
<P align="left"> Gross profit as a percentage of net sales was 29.7 percent compared
  with 32.5 percent for 2008. The decrease is due to lower product and aftermarket
  sales. Segment operating income decreased from income of</P>
<P align="center">41</P>
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<P align="left"> &#36;8.3 million in 2008 to a loss of &#36;1.4 million in 2009.
  Segment operating income included restructuring and performance improvements
  costs of &#36;2.6 million in 2009 and &#36;0.5 million in 2008.</P>
<P align="left"> <B>Albany Engineered Composites (AEC)</B></P>
<P align="left"> <I>This segment includes sales of specialty materials and composite
  structures for aerospace and defense applications.</I></P>
<P align="left"> <I>Three months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased from &#36;14.0 million in Q2 2008 to &#36;7.4
  million in Q2 2009, a decrease of 47.2 percent. Q2 2008 net sales included &#36;3.1
  million of sales to Eclipse Aviation. AEC reported an operating loss of &#36;2.4
  million in Q2 2009, including expenses of &#36;0.3 million related to performance-improvement
  initiatives. The operating loss in Q2 2008 was &#36;0.2 million.</P>
<P align="left"> <I>Six months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased from &#36;25.1 million in 2008 to &#36;16.5
  million in 2009 or a decline of 34.3 percent. Sales during 2008 included &#36;6.2
  million in sales to Eclipse Aviation.</P>
<P align="left"> Gross profit as a percentage of net sales was a negative 16.6
  percent compared with a positive 3.7 percent for 2008. The decrease is principally
  due to lower sales in 2009. Segment operating income decreased from a loss of
  &#36;2.0 million in 2008 to a loss of &#36;4.5 million in 2009. Segment operating
  income included restructuring and performance improvements costs of &#36;0.9
  million in 2009.</P>
<P align="left"> <B>Albany Engineered Fabrics (EF)</B></P>
<P align="left"> <I>This segment includes sales of a variety of products similar
  to PMC for application in the corrugator, pulp, nonwovens, building products,
  tannery, and textile industries.</I></P>
<P align="left"> <I>Three months ended June 30, 2009</I></P>
<P align="left"> Compared to Q2 2008, net sales decreased 20.6 percent, while
  sales were flat compared to Q1 of 2009. Q2 2009 results include charges related
  to the restructuring of operations in Australia and Europe. Operating margins
  compared to Q2 2008, excluding restructuring and performance-improvement initiatives,
  improved due to continued efforts to reduce costs.</P>
<P align="left"> <I>Six months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased 22.0 percent compared to the same period
  of 2008. Excluding the effect of currency translation rates, net sales decreased
  12.5 percent. The declines in sales were experienced throughout all product
  lines in the segment.</P>
<P align="left"> Gross profit as a percentage of net sales was 35.4 percent compared
  with 37.3 percent for 2008. The decrease was principally due to lower sales.
  Segment operating income decreased from &#36;9.7 million in 2008 to &#36;4.5
  million in 2009. Segment operating income included restructuring and performance
  improvements costs of &#36;2.5 million in 2009. The remaining decrease in operating
  income was the result of lower gross margin due to lower sales offset in part
  employee reductions due to restructuring activities.</P>
<P align="center">42</P>
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<P align="left"> <B>PrimaLoft</B><B><SUP>&#174; </SUP></B><B>Products</B></P>
<P align="left"> <I>This segment includes sales of insulation for outdoor clothing,
  gloves, footwear, sleeping bags, and home furnishings.</I></P>
<P align="left"> <I>Three months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased 2.1 percent compared to the same period last
  year while the effect of cost reduction initiatives contributed to a 51.0 percent
  improvement in operating income.</P>
<P align="left"> <I>Six months ended June 30, 2009</I></P>
<P align="left"> Net sales decreased 6.5 percent compared to the same period of
  2008. Excluding the effect of currency translation rates, net sales decreased
  3.0 percent.</P>
<P align="left"> Gross profit as a percentage of net sales was 50.7 percent compared
  with 47.3 percent for 2008. Segment operating income increased from &#36;2.8
  million in 2008 to &#36;3.7 million in 2009. The increase in gross profit percentage and operating income is the result of
  cost reduction initiatives.</P>
<P align="left"> <B>International Activities</B></P>
<P align="left"> The Company conducts more than half of its business in countries
  outside of the United States. As a result, the Company experiences transaction
  and translation gains and losses because of currency fluctuations. The Company
  periodically enters into foreign currency contracts to hedge this exposure (see
  Notes 5 and 11 of Notes to Consolidated Financial Statements). The Company believes
  that the risks associated with its operations and locations outside the United
  States are not other than those normally associated with operations in such
  locations.</P>
<P align="left"> <B>Liquidity and Capital Resources</B></P>
<P align="left"> The Company finances its business activities primarily with cash
  generated from operations and borrowings, primarily under its 2.25% convertible
  notes issued in March 2006, 6.84% long-term indebtedness to Prudential Capital
  Group issued in October 2005, and its revolving credit agreement as described
  in Notes to Consolidated Financial Statements. Company subsidiaries outside
  of the United States may also maintain working capital lines with local banks,
  but borrowings under such local facilities tend not to be significant.</P>
<P align="left"> Net cash (used in)/provided by operating activities was (&#36;3.3)
  million for the six months ended June 30, 2009, compared to &#36;22.6 million
  for the same period of 2008</P>
<P align="left"> Capital spending during the second quarter of 2009 was &#36;11.4
  million, bringing the year-to-date total to &#36;26.3 million. The Company is
  on track with its estimate for 2009 capital spending of &#36;50.0 million, of
  which &#36;30.0 million is a carryover from 2008. Depreciation and amortization
  were &#36;14.5 million and &#36;2.3 million for the second quarter of 2009 and
  are estimated to total &#36;58.0 million and &#36;10.0 million for 2009. For
  2010, the Company expects depreciation and amortization to be close to current
  year levels, and for 2010 capital expenditures to be at or below depreciation.</P>
<P align="left"> In the second quarter the Company purchased &#36;94.0 million
  principal amount of the 2.25% Convertible Senior Notes due in 2026 at a cost
  of &#36;53.5 million, which had the effect of reducing debt on the balance sheet
  by</P>
<P align="center">43</P>
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<P align="left"> &#36;29.2 million, and contributed &#36;36.6 million to earnings.
  In the second quarter, the Company entered into additional transactions to purchase
  &#36;30 million of the 2.25% Convertible Senior Notes in July, and &#36;20 million
  of the 2.25% Convertible Senior Notes in October. The Company expects those
  transactions to result in gains of approximately &#36;7 million in the third
  quarter, and &#36;4 million in the fourth quarter. The combined effect of the
  four purchase agreements entered into by the Company in the first half of 2009
  will result in the repurchase of &#36;151.6 million principal value of convertible
  notes at a cost of &#36;88.9 million, for a net reduction of &#36;62.7 million
  in obligations which the Company would otherwise have been required to pay.
  This will reduce net debt on the balance sheet by approximately &#36;45.0 million.
  After completing all of these buyback transactions, approximately &#36;28.4
  million principal value of the 2.25% Convertible Senior Notes will remain outstanding.</P>
<P align="left"> Earnings before interest, taxes, depreciation, and amortization
  (EBITDA) were &#36;14.5 million in Q2 2009, and included expenses related to
  restructuring and performance-improvement initiatives totaling &#36;40.5 million,
  a gain of &#36;36.6 million related to extinguishment of debt, and a charge
  of &#36;10 million representing an estimated purchase price adjustment related
  to the Company&#146;s 2008 sale of its discontinued Filtration Technologies
  business. EBITDA for the same period last year was &#36;28.9 million and included
  expenses related to restructuring and performance-improvement initiatives totaling
  &#36;16.9 million.</P>
<P align="left"> Adjusted EBITDA was &#36;28.3 million in Q2 2009 compared to
  &#36;24.6 million in Q1 2009 and &#36;45.9 million in Q2 2008 (see non-GAAP
  disclosure below). The improvement compared to Q1 2009 reflects the positive
  impact of lower STG&amp;R expenses resulting from previously announced restructuring
  and performance-improvement initiatives.</P>
<P align="left"> The Company currently expects that its tax rate for the remainder
  of 2009 will be approximately 23 percent, before any discrete items. However,
  there is no assurance that this estimate will not change in future periods.</P>
<P align="left"> Under &#147;Trends&#148;, management discussed certain recent
  trends in its paper machine clothing segment that have had a negative impact
  on demand for the Company&#146;s products within that segment, as well as its
  strategy for addressing these trends. Management also discussed pricing competition
  within this segment and the negative effect of such competition on segment sales
  and earnings. If these trends continue or intensify, and if management&#146;s
  strategy for addressing them should prove inadequate, the Company&#146;s operating
  cash flow could be adversely affected. In any event, although historical cash
  flows may not, for all of these reasons, necessarily be indicative of future
  cash flows, the Company believes that cash generated from operations and other
  resources will be sufficient for short and long-term liquidity.</P>
<P align="left"> In October 2005, the Company entered into a Note Agreement and
  Guaranty (&#147;the Prudential Agreement&#148;) with the Prudential Insurance
  Company of America, and certain other purchasers, in an aggregate principal
  amount of &#36;150 million, with interest at 6.84% and a maturity date of October
  25, 2017. There are mandatory prepayments of &#36;50 million on October 25,
  2013 and October 25, 2015. At the noteholders&#146; election, certain prepayments
  may also be required in connection with certain asset dispositions or financings.
  The notes may not otherwise be prepaid without a premium, under certain market
  conditions. The Note Agreement contains customary terms, as well as affirmative
  covenants, negative covenants and events of default comparable to those in the
  Company&#146;s current principal revolving credit facility. For disclosure purposes,
  the Company is required to measure the fair value of outstanding debt on a recurring
  basis. The fair value of the note agreement was approximately &#36;139 million,
  which was measured using active market interest rates.</P>
<P align="left"> In December 2008, the Company and Prudential amended the agreement
  to increase the allowed leverage ratio from 3.00 to 3.50, which is effective
  through December 2010, after which time the allowed leverage ratio changes to
  2.50. The amendment to the agreement also requires that the Company pay a higher
  rate of interest. The maximum interest rate is 1.50% over the 5.34% in the original
  agreement. The Company anticipates it will pay interest on this loan at the
  rate of 6.84% in 2009.</P>
<P align="center">44</P>
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<P align="left"> In March 2006, the Company issued &#36;180,000,000 principal
  amount of 2.25% convertible notes. The notes are convertible upon the occurrence
  of specified events and at any time on or after February 15, 2013, into cash
  up to the principal amount of notes converted and shares of the Company&#146;s
  Class A common stock with respect to the remainder, if any, of the Company&#146;s
  conversion obligation at a conversion rate of 22.7633 shares per &#36;1,000
  principal amount of notes (equivalent to a conversion price of &#36;43.93 per
  share of Class A common stock). As of June 30, 2009, &#36;78,937,000 principal amount of convertible notes were outstanding, with a fair value of approximately
  &#36;47,757,000, which was measured using quoted prices in active markets. These
  amounts reflect the reduction in fair value as a result of the purchase made
  in March and April 2009 as described below.</P>
<P align="left"> Holders may convert their notes at any time on or after February
  15, 2013. Before February 15, 2013, a holder may convert notes during the five-business
  day period immediately after any period of five consecutive trading days in
  which the trading price per note for each of such five days was less than 103%
  of the product of the last reported sale price of the Company&#146;s Class A
  common stock and the conversion rate on such day. Additionally, holders may
  convert prior to February 15, 2013 if the Company elects to distribute to all
  or substantially all of its Class A shareholders (a) rights or warrants to purchase
  shares of Class A common stock for less than their trading value, or (b) assets,
  debt securities or rights to purchase securities, which distribution has a per-share
  value exceeding 15% of the current trading value of the Class A common stock.</P>
<P align="left"> Converting holders are entitled to receive, upon conversion of
  their notes, (1) an amount in cash equal to the lesser of the principal amount
  of the note and the note&#146;s conversion value, and (2) if the conversion
  value of the note exceeds the principal amount, shares of the Company&#146;s
  Class A common stock in respect of the excess conversion value. The conversion
  rate of the notes (subject to adjustment upon the occurrence of certain events)
  is 22.5351 shares per &#36;1,000 principal amount of notes (equivalent to a
  conversion price of &#36;44.38 per share of Class A common stock). The exact
  amount payable upon conversion would be determined in accordance with the terms
  of the indenture pursuant to which the notes were issued and will be based on
  a daily conversion value calculated on a proportionate basis by reference to
  the volume-weighted average price of the Company&#146;s Class A common stock
  for each day during a twenty-five day period relating to the conversion.</P>
<P align="left"> In May 2008, the Financial Accounting Standards Board issued
  Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments that
  May be Settled in Cash Upon Conversion (&#147;FSP APB 14-1&#148;). FSP APB 14-1
  requires that the liability and equity components of convertible debt instruments
  that may be settled in cash upon conversion (including partial cash settlement)
  be separately accounted for in a manner that reflects an issuer&#146;s nonconvertible
  debt borrowing rate.</P>
<P align="left"> As of June 30, 2009, the carrying amounts of the debt and equity
  components of the Company&#146;s bifurcated convertible debt instrument were
  &#36;70.4 million and &#36;28.8 million, respectively. The carrying values of
  the debt and equity components include reductions of &#36;89.4 million and &#36;5.3
  million, respectively, related to the Company&#146;s convertible note purchases
  in March and April 2009. The equity component is included in additional paid
  in capital in the equity section of the Company&#146;s balance sheet.</P>
<P align="left"> Adopting FSP 14-1 had the impact of increasing interest expense
  by approximately &#36;1.2 million for the first quarter 2009. Due to the note
  transactions in March and April, reducing outstanding 2.25% Convertible Senior
  Notes due 2026, the effect of FSP 14-1 for the second quarter had the impact
  of increasing interest expense by approximately &#36;585 thousand. The additional
  interest is non-cash and represents the difference between the rate at the time
  of the offering (2.25%) and the Company&#146;s non-convertible debt borrowing
  rate (5.59%). The non-cash interest is amortized into interest expense and
  increases the book value of the notes until the time that the notes can be redeemed
  on March 15, 2013. The Company has concluded that the amortization period of
  7 years is appropriate because March 15, 2013 is the earliest date that the
  convertible noteholders can require the Company to buy back the notes.</P>
<P align="center">45</P>
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<P align=left>Including amortization of non-cash interest, the effective interest
  rate on the convertible notes for the second quarterly periods of 2009 and 2008
  was 5.59%. Unamortized non-cash interest was $12.8 million at June 30, 2009
  with a remaining amortization period of approximately 4 years.</P>
<P align=left>The following table details interest expense on convertible debt:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=2><B><FONT size=2>Three months-ended <br>
        June 30,
        </FONT></B></TD>
      <TD align=center colSpan=2><B><FONT size=2>Six months-ended <br>
        June 30,
        </FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><B><FONT size=2>(in thousands)</FONT></B></TD>
      <TD width="12%" align=center>
         <B><FONT size=2>2009</FONT></B></TD>
      <TD width="12%" align=center><B><FONT size=2>2008</FONT></B></TD>
      <TD width="12%" align=center>
         <B><FONT size=2>2009</FONT></B></TD>
      <TD width="12%" align=center><B><FONT size=2>2008</FONT></B></TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Contractual interest (2.25%)</FONT> </TD>
      <TD align=right><FONT size=2>$478</FONT> </TD>
      <TD align=right><FONT size=2>$1,009</FONT> </TD>
      <TD align=right><FONT size=2>$1,470</FONT> </TD>
      <TD align=right><FONT size=2>$2,008</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Non-cash interest (3.34%)</FONT> </TD>
      <TD align=right><FONT size=2>585</FONT> </TD>
      <TD align=right><FONT size=2>1,117</FONT> </TD>
      <TD align=right><FONT size=2>1,772</FONT> </TD>
      <TD align=right><FONT size=2>2,195</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Total (5.59%)</FONT> </TD>
      <TD align=right><FONT size=2>$1,063</FONT> </TD>
      <TD align=right><FONT size=2>$2,126</FONT> </TD>
      <TD align=right><FONT size=2>$3,242</FONT> </TD>
      <TD align=right><FONT size=2>$4,203</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="5" align=left><hr size="1" noshade></TD>
    </TR>
  </TABLE>

</div>
<P align=left>On April 14, 2006, the Company entered into a $460 million five-year
  revolving credit agreement (the &#147;Credit Agreement&#148;), under which $294
  million was outstanding as of June 30, 2009. The applicable interest rate for
  borrowings under the agreement is LIBOR plus a spread, based on the Company&#146;s
  leverage ratio at the time of borrowing. The agreement includes covenants that
  could limit the Company&#146;s ability to purchase Common Stock, pay dividends,
  acquire other companies or dispose of its assets.</P>
<P align=left>Reflecting, in each case, the effect of subsequent amendments to
  each agreement, the Company is required to maintain a leverage ratio of not
  greater than 3.50 to 1.00 under the Credit Agreement and under the Prudential
  Agreement. The Company is also required to maintain minimum interest coverage
  of 3.00 to 1.00 under each agreement. As of June 30, 2009, the Company&#146;s
  leverage ratio under the agreement was 2.40 to 1.00 and the interest coverage
  ratio was 6.59 to 1.00. The Company may purchase its Common Stock or pay dividends
  to the extent its leverage ratio remains at or below 3.50 to 1.00, and may make
  acquisitions for cash provided its leverage ratio would not exceed 3.50 to 1.00
  after giving pro forma effect to the acquisition. The Company&#146;s ability
  to borrow additional amounts under the credit agreement is conditional upon
  the absence of any defaults, as well as the absence of any material adverse
  change. Based on the maximum leverage ratio and the Company&#146;s consolidated
  EBITDA (as defined in the agreement), and without modification to any other
  credit agreements as of June 30, 2009, the Company would have been able to borrow
  an additional $167,108,000 under its loan agreements.</P>
<P align=left>If the Company&#146;s earnings were to decline as a result of continued
  difficult market conditions or for other reasons, it may impact the Company&#146;s
  ability to maintain compliance with these covenants. If the Company determined
  that its compliance with these covenants may be under pressure, the Company
  may elect to take a number of actions, including reducing expenses in order
  to increase earnings, using available cash to repay all or a portion of the
  outstanding debt subject to these covenants or seeking to negotiate with lenders
  to modify the terms or to restructure the debt. Using available cash to repay
  indebtedness would make the cash unavailable for other uses and might affect
  the liquidity discussions and conclusions above. Entering into any modification
  or restructuring of the Company&#146;s debt would likely result in additional
  fees or interest payments.</P>
<P align=left>As of June 30, 2009, the Company has issued letters of credit totaling
  $47.4 million in respect of preliminary assessments for income tax contingencies.</P>
<P align=left>Restructuring costs had a non-operational effect in the quarter
  of $33.8 million in connection with layoffs, plant closures and downsizings.
  Cash payments for restructuring activities were $25.0 million in 2009 and $12.7
  million in 2008. Restructuring costs of $42.4 million are accrued on the balance
  sheet as of the end of the</P>
<P align=center>46</P>
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<P align="left"> second quarter. There will be approximately &#36;25.0 to &#36;30.0
  million in cash payments in the second half of 2009 associated with the accrual
  for restructuring, and most of the remainder of the &#36;42.4 million will be
  paid in the first half of 2010.</P>
<P align="left"> The Company expects to contribute approximately &#36;13,000,000
  to its postretirement and pension plans in 2009, compared to 17,700,000 in 2008.
  The Company&#146;s current year estimated contribution includes nothing to its US plan. In prior years the Company has also made contributions to the
  US pension plan, and that is possible again this year, particularly in light
  of the decline in the value of equities since October 2007. In the coming months,
  the Company will make the decision about the exact timing and amount. Contributions
  to the US plan over the last few years have ranged from zero to &#36;20,000,000
  per year.</P>
<P align="left"> Dividends have been declared each quarter since the fourth quarter
  of 2001, and second quarter dividends per share were &#36;0.12 in 2009 and 2008.
  Decisions with respect to whether a dividend will be paid, and the amount of
  the dividend, are made by the Board of Directors each quarter. To the extent
  the Board declares cash dividends in the future, the Company would expect to
  pay such dividends out of operating cash flow. Future cash dividends will be
  dependent on debt covenants and on the Board&#146;s assessment of the Company&#146;s
  ability to generate sufficient cash flows.</P>
<P align="left"> In August 2006, the Company announced that the Board of Directors
  authorized management to purchase up to 2 million additional shares of its Class
  A Common Stock. The Board&#146;s action authorizes management to purchase shares
  from time to time, in the open market or otherwise, whenever it believes such
  purchase to be advantageous to the Company&#146;s shareholders, and it is otherwise
  legally permitted to do so. As of June 30, 2009, no share purchases had been
  made under the 2006 authorization.</P>
<P align="center">47</P>
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<P align="left"> <B>Outlook</B></P>
<P align="left"> The Company&#146;s second quarter results were affected by several
  large, non-operational items, most notably the previously announced buyback
  of convertible debt, which had an unusually large effect on net income. But
  management observed three other developments that should have an enduring impact
  on future operating results:</P>
<div align="left">
  <UL>
    <LI>
      <p> First, for the first time since Q2 2008, sequential quarter-to-quarter
        global sales increased and the end- markets in each of the Company&#146;s
        businesses showed signs of having bottomed.</p>
    </LI>
    <LI>
      <p> Second, the recently announced plant closures and reductions represent
        the final steps in the Company&#146;s three year restructuring program.</p>
    </LI>
    <LI>
      <p> Third, for the first time since Q2 2008, sequential quarter-to-quarter
        Adjusted EBITDA also improved, reflecting the growing impact of previously
        completed restructuring.</p>
    </LI>
  </UL>
</div>
<P align="left"> Ever since the third quarter of 2008, when it became clear that
  the economy was sliding into global recession, management&#146;s near term objective
  has been to take the steps necessary to generate strong free cash flow in 2010.
  Specifically, management&#146;s objective is to exit 2009 as a fundamentally
  more profitable business with the capacity for sustained and growing free cash
  flow in 2010, even if the recession extends beyond 2009. The three major Q2
  developments -- the stabilizing sales outlook, the approaching completion of
  the restructuring process, and improving EBITDA -- indicate that the Company
  is firmly on track toward realizing that objective.</P>
<P align="left"> Sales in Q2 were 29 percent lower than in Q2 2008. But in this
  economic environment, year-over-year trends are less relevant than sequential
  quarter-to-quarter trends. And in Q2, sales were roughly flat compared to the
  previous quarter. Perhaps of greater significance, in Q2 management finally
  began to see evidence across all of the Company&#146;s businesses that the end-markets
  served appear to be bottoming. The only exceptions are Asia, especially China,
  where the paper industry is well off the bottom, and the newsprint markets in
  North America and Europe, which continue to erode. There was one other significant
  market development in Q2. Average prices of PMC orders in Europe were comparable
  to those of the previous quarter, suggesting that the Company may finally be
  entering a period of price stability in Europe.</P>
<P align="left"> Despite these signs of stabilization in the Company&#146;s markets,
  management still sees short term downside risk in its sales in PMC in the Americas
  and Europe. Primarily because of seasonal and inventory effects, orders in Q2
  in these PMC markets declined. But there is no question that management sees
  growing evidence of an approaching end to the recessionary effect on sales.
  As for the nature of the recovery when sales finally do bottom, the available
  evidence suggests a &#147;V&#148; shaped recovery in PMC in Asia and in AEC,
  and an &#147;L&#148; shaped recovery in PMC in the Americas and Europe. The
  nature of recovery in ADS, Engineered Fabrics and PrimaLoft<SUP>&#174; </SUP>products
  is still uncertain.</P>
<P align="left"> Q2 also marks the rapidly approaching completion of the Company&#146;s
  three year restructuring program. The magnitude of the restructuring and associated
  charges in Q2 was greater than had originally been planned, but as the recession
  drove sales to even lower levels in Q1 than had been anticipated, management
  took additional measures. While there will be more charges in Q3 and perhaps
  Q4 associated with the steps recently announced, cash charges will decline sharply.
  The only remaining planned process improvement initiatives that will run through
  2010 will be the conversion of the Company&#146;s Eurasian and Brazilian operations
  to SAP and the relocation of equipment related to the recently announced restructuring.</P>
<P align="left"> Reflecting the growing impact of previously announced restructuring
  and process improvement initiatives, Q2 Adjusted EBITDA improved by almost &#36;4
  million compared to Q1 Adjusted EBITDA. Management now estimates that lower
  costs from restructuring and performance-improvement initiatives, including
  the recently announced measures, will lead to an additional improvement in EBITDA
  of about &#36;3 million per quarter by Q4</P>
<P align="center">48</P>
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<P align="left"> 2009, growing to &#36;7 million per quarter by Q2 2010. These
  estimates assume all other factors that influence EBITDA, such as sales, currency
  and inflation remain constant.</P>
<P align="left"> In sum, developments in Q2 suggest the Company is on trend toward
  its 2010 objective. While there remains downside risk for sales in the short
  term because of seasonal and inventory effects, the signs of stabilization in
  the Company&#146;s end-markets, the announcements of the final steps in the
  Company&#146;s three year restructuring process, and the continued improvement
  in profitability all point in the same direction: barring unforeseen further
  deterioration in the Company&#146;s markets, management believes the Company
  is well on its way toward exiting 2009 as a fundamentally more profitable company.
  Coupled with an end to restructuring charges, and 2010 capital expenditure spending
  at or below depreciation, these higher levels of profitability should assure
  strong free cash flow in 2010, even if 2010 sales remain 20 percent below 2008
  sales.</P>
<P align="left"> <B>Non-GAAP Measures:</B></P>
<P align="left"> This Form 10-Q contains certain items, such as sales excluding
  currency effects, earnings before interest, taxes, depreciation, and amortization
  (EBITDA), costs associated with restructuring and performance-improvement initiatives,
  Adjusted EBITDA, net charges for special items, and certain income and expense
  items on a per share basis that could be considered non-GAAP financial measures.
  Such items are provided because management believes that, when presented together
  with the GAAP items to which they relate, they provide additional useful information
  to investors regarding the registrant&#146;s financial condition, results of
  operations, and cash flows. Presenting increases or decreases in sales, after
  currency effects are excluded, can give management and investors insight into
  underlying sales trends. An understanding of the impact in a particular quarter
  of specific restructuring and performance-improvement measures, and in particular
  of the costs associated with the implementation of such measures, on the Company&#146;s
  net income (both absolute and on a per share basis), operating income, operating
  margins and EBITDA can give management and investors additional insight into
  quarterly performance, especially when compared to quarters in which such measures
  had a greater or lesser effect, or no effect.</P>
<P align="left"> The effect of changes in currency translation rates is calculated
  by converting amounts reported in local currencies into U.S. dollars at the
  exchange rate of a prior period. That amount is then compared to the U.S. dollar
  amount reported in the current period. The Company calculates EBITDA by adding
  Interest expense net, Income taxes, Depreciation and Amortization to Net income.
  Adjusted EBITDA is calculated by adding to EBITDA, costs associated with restructuring
  and performance improvement initiatives, and then adding or subtracting certain
  losses or gains. The Company believes that EBITDA and Adjusted EBITDA provide
  useful information to investors because they provide an indication of the strength
  and performance of the Company&#146;s ongoing business operations, including
  its ability to fund discretionary spending such as capital expenditures and
  strategic investments, as well as its ability to incur and service debt. While
  depreciation and amortization are operating costs under GAAP, they are non-cash
  expenses equal to current period allocation of costs associated with capital
  and other long-lived investments made in prior periods. While the Company will
  continue to make capital and other investments in the future, it is currently
  in the process of concluding a period of significant investment in plant, equipment
  and software. Depreciation and amortization associated with these investments
  has a significant impact on the Company&#146;s net income. While other losses
  or gains have an impact on the Company&#146;s cash position, they are removed
  when calculating Adjusted EBITDA because doing so provides, in the opinion of
  the Company, a better measure of operating performance. EBITDA is also a calculation
  commonly used by investors and analysts to evaluate and compare the periodic
  and future operating performance and value of companies. EBITDA, as defined
  by the Company, may not be similar to EBITDA measures of other companies, is
  not a measurement under GAAP and should be considered in addition to, but not
  as a substitute for, the information contained in the Company&#146;s statements
  of operations.</P>
<P align="center">49</P>
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<P align=left>The following table contains the calculation of EBITDA and Adjusted
  EBITDA:</P>
<div align="center">
  <div align="center">
    <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

      <TR vAlign=bottom>
        <TD rowspan="3" align=left> <FONT size=2>(in thousands)</FONT> </TD>
        <TD align=center colSpan=3><FONT size=2>Three Months ended</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD colspan="2" align=center><FONT size=2>June 30,</FONT> </TD>
        <TD align=center><FONT size=2>March 31,</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD width="10%" align=center><FONT size=2>2009</FONT> </TD>
        <TD width="10%" align=center><FONT size=2>2008</FONT> </TD>
        <TD width="10%" align=center><FONT size=2>2009</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Net (loss)/income</FONT> </TD>
        <TD align=right><FONT size=2>($12,744)</FONT> </TD>
        <TD align=right><FONT size=2>$5,253&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>($18,897)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Interest expense, net</FONT> </TD>
        <TD align=right><FONT size=2>6,086&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>5,880&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>5,834&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Income tax (benefit)/expense</FONT> </TD>
        <TD align=right><FONT size=2>4,339&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>1,390&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>(1,605)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Depreciation</FONT> </TD>
        <TD align=right><FONT size=2>14,520&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>15,217&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>14,573&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Amortization</FONT> </TD>
        <TD align=right><FONT size=2>2,268&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>1,182&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>2,138&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><B><FONT size=2>EBITDA</FONT></B> </TD>
        <TD align=right><B><FONT size=2>14,469&nbsp;</FONT></B> </TD>
        <TD align=right><B><FONT size=2>28,922&nbsp;</FONT></B> </TD>
        <TD align=right><B><FONT size=2>2,043&nbsp;</FONT></B> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Restructuring and other, net</FONT> </TD>
        <TD align=right><FONT size=2>33,810&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>1,732&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>17,179&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Idle-capacity costs</FONT> </TD>
        <TD align=right><FONT size=2>3,099&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>1,734&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>3,079&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Depreciation included in idle-capacity costs</FONT>
        </TD>
        <TD align=right><FONT size=2>(919)</FONT> </TD>
        <TD align=right><FONT size=2>(592)</FONT> </TD>
        <TD align=right><FONT size=2>(936)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Performance-improvement initiatives</FONT>
        </TD>
        <TD align=right><FONT size=2>4,459&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>14,062&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>6,069&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Gain on extinguishment of debt</FONT> </TD>
        <TD align=right><FONT size=2>(36,631)</FONT> </TD>
        <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>(2,822)</FONT> </TD>
      </TR>

      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Discontinued operations purchase price</FONT>  <FONT size=2>adjustment</FONT> </TD>
        <TD align=right><FONT size=2>10,000&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><B><FONT size=2>Adjusted EBITDA</FONT></B> </TD>
        <TD align=right><B><FONT size=2>$28,287&nbsp;</FONT></B> </TD>
        <TD align=right><B><FONT size=2>$45,858&nbsp;</FONT></B> </TD>
        <TD align=right><B><FONT size=2>$24,612&nbsp;</FONT></B> </TD>
      </TR>
    </TABLE>
    <div align="left"><BR>
      The Company discloses certain income and expense items on a per share basis.
      The Company believes that such disclosures provide important insight of
      the underlying quarterly earnings and are financial performance metrics
      commonly used by investors. The Company calculates the per share amount
      for items included in continuing operations by using the effective tax rate
      utilized during the applicable reporting period and the weighted average
      number of shares outstanding for the period.</div>
  </div>
  <P align=left><B>Quarter ended June 30, 2009</B></P>
  <div align="center">
    <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

      <TR vAlign=bottom>
        <TD align=left><FONT size=2>(in thousands, except per share</FONT><BR>

          <FONT size=2>amounts)</FONT></TD>
        <TD width="10%" align=center><FONT size=2>Pretax</FONT><BR>
           <FONT size=2>amounts</FONT></TD>
        <TD width="10%" align=center><FONT size=2>Tax Effect</FONT></TD>
        <TD width="10%" align=center><FONT size=2>After-tax</FONT><BR>
           <FONT size=2>Effect</FONT></TD>
        <TD width="10%" align=center><FONT size=2>Shares</FONT><BR>
           <FONT size=2>Outstanding</FONT></TD>
        <TD width="10%" align=center><FONT size=2>Per Share</FONT><BR>
           <FONT size=2>Effect</FONT></TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Special items:</FONT> </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Restructuring and other, net</FONT> </TD>
        <TD align=right><FONT size=2>$33,810&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>$7,776&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>$26,034&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>30,723</FONT> </TD>
        <TD align=right><FONT size=2>$0.85&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Idle-capacity and performance-</FONT> </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>improvement costs</FONT> </TD>
        <TD align=right><FONT size=2>7,558&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>1,738&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>&nbsp;5,820&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>30,723</FONT> </TD>
        <TD align=right><FONT size=2>0.19&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Discontinued business purchase price</FONT>
        </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>adjustment</FONT> </TD>
        <TD align=right><FONT size=2>10,000&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>&nbsp;10,000&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>30,723</FONT> </TD>
        <TD align=right><FONT size=2>0.33&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Gain on extinguishment of debt</FONT> </TD>
        <TD align=right><FONT size=2>(36,631)</FONT> </TD>
        <TD align=right><FONT size=2>(14,286)</FONT> </TD>
        <TD align=right><FONT size=2>(22,345)</FONT> </TD>
        <TD align=right><FONT size=2>30,723</FONT> </TD>
        <TD align=right><FONT size=2>(0.73)</FONT> </TD>
      </TR>

      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Effect of change in estimated income</FONT>  <FONT size=2>tax rate</FONT> </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=right><FONT size=2>(2,663)</FONT> </TD>
        <TD align=right><FONT size=2>30,723</FONT> </TD>
        <TD align=right><FONT size=2>(0.09)</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Other discrete tax adjustments</FONT> </TD>
        <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=right><FONT size=2>676&nbsp;</FONT> </TD>
        <TD align=right><FONT size=2>30,723</FONT> </TD>
        <TD align=right><FONT size=2>0.02&nbsp;</FONT> </TD>
      </TR>
      <TR vAlign=bottom>
        <TD align=left><FONT size=2>Total special items</FONT> </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=left>&nbsp; </TD>
        <TD align=right><FONT size=2>$0.57&nbsp;</FONT> </TD>
      </TR>
    </TABLE>
  </div>
</div>
<p align="center">&nbsp;</p>
<p align="center">50<BR>

</p>
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<div align="center">
  <p align="left"><b><font size=2>Six months ended June 30, 2009</font></b></p>
  <div align="center">
    <div align="center">
      <div align="center">
        <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">

          <TR vAlign=bottom>
            <TD align=left><FONT size=2>(in thousands, except per share</FONT>
              <FONT size=2><br>
              amounts)</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Pretax</FONT> <FONT size=2><br>
              amounts</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Tax Effect</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>After-tax</FONT> <FONT size=2><br>
              Effect</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Shares<br>
              Outstanding</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Per Share<br>
              Effect</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Special items:</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Restructuring and other, net</FONT> </TD>
            <TD align=right><FONT size=2>$50,989&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>$11,727&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>$39,262&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>30,386</FONT> </TD>
            <TD align=right><FONT size=2>$1.29&nbsp;</FONT> </TD>
          </TR>

          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Idle-capacity and performance-</FONT><FONT size=2>improvement costs</FONT> </TD>
            <TD align=right><FONT size=2>16,708&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>3,843&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>12,865&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>30,386</FONT> </TD>
            <TD align=right><FONT size=2>0.42&nbsp;</FONT> </TD>
          </TR>

          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Discontinued business purchase price</FONT> <FONT size=2>adjustment</FONT> </TD>
            <TD align=right><FONT size=2>10,000&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>10,000&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>30,386</FONT> </TD>
            <TD align=right><FONT size=2>0.33&nbsp;</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Gain on extinguishment of debt</FONT>
            </TD>
            <TD align=right><FONT size=2>(39,453)</FONT> </TD>
            <TD align=right><FONT size=2>(15,387)</FONT> </TD>
            <TD align=right><FONT size=2>(24,066)</FONT> </TD>
            <TD align=right><FONT size=2>30,386</FONT> </TD>
            <TD align=right><FONT size=2>(0.79)</FONT> </TD>
          </TR>


          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Other discrete tax adjustments</FONT>
            </TD>
            <TD align=right><FONT size=2>-&nbsp;</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=right><FONT size=2>676&nbsp;</FONT> </TD>
            <TD align=right><FONT size=2>30,386</FONT> </TD>
            <TD align=right><FONT size=2>0.02&nbsp;</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Total special items</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=right><FONT size=2>$1.27</FONT> </TD>
          </TR>
        </TABLE>
        <p align="left"><B><FONT size=2>Quarter ended June 30, 2008</FONT></B>
        </p>
        <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>(in thousands, except per share</FONT>
              <FONT size=2><br>
              amounts)</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Pretax</FONT> <FONT size=2><br>
              amounts</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Tax Effect</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>After-tax</FONT> <FONT size=2><br>
              Effect</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Shares<br>
              Outstanding</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Per Share<br>
              Effect</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Special items:</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Restructuring and other, net</FONT> </TD>
            <TD align=right><FONT size=2>$1,732</FONT> </TD>
            <TD align=right><FONT size=2>$346</FONT> </TD>
            <TD align=right><FONT size=2>$1,386</FONT> </TD>
            <TD align=right><FONT size=2>29,760</FONT> </TD>
            <TD align=right><FONT size=2>$0.05</FONT> </TD>
          </TR>

          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Idle-capacity and performance-</FONT><FONT size=2>improvement costs</FONT> </TD>
            <TD align=right><FONT size=2>15,796</FONT> </TD>
            <TD align=right><FONT size=2>3,159</FONT> </TD>
            <TD align=right><FONT size=2>12,637</FONT> </TD>
            <TD align=right><FONT size=2>29,760</FONT> </TD>
            <TD align=right><FONT size=2>0.42</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Other discrete tax adjustments</FONT>
            </TD>
            <TD align=right><FONT size=2>-</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=right><FONT size=2>291</FONT> </TD>
            <TD align=right><FONT size=2>29,760</FONT> </TD>
            <TD align=right><FONT size=2>0.01</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Total special items</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=right><FONT size=2>$0.48</FONT> </TD>
          </TR>
        </TABLE>
        <p align="left"><b><font size=2>Six months ended June 30, 2008</font></b>
        </p>
        <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>(in thousands, except per share</FONT>
              <FONT size=2><br>
              amounts)</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Pretax</FONT> <FONT size=2><br>
              amounts</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Tax Effect</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>After-tax</FONT> <FONT size=2><br>
              Effect</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Shares<br>
              Outstanding</FONT> </TD>
            <TD width="10%" align=center><FONT size=2>Per Share<br>
              Effect</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Special items:</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Restructuring and other, net</FONT> </TD>
            <TD align=right><FONT size=2>$7,094</FONT> </TD>
            <TD align=right><FONT size=2>$1,419</FONT> </TD>
            <TD align=right><FONT size=2>$5,675</FONT> </TD>
            <TD align=right><FONT size=2>29,686</FONT> </TD>
            <TD align=right><FONT size=2>$0.19</FONT> </TD>
          </TR>

          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Idle-capacity and performance-</FONT><FONT size=2>improvement costs</FONT> </TD>
            <TD align=right><FONT size=2>23,886</FONT> </TD>
            <TD align=right><FONT size=2>4,777</FONT> </TD>
            <TD align=right><FONT size=2>19,109</FONT> </TD>
            <TD align=right><FONT size=2>29,686</FONT> </TD>
            <TD align=right><FONT size=2>0.64</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Other discrete tax adjustments</FONT>
            </TD>
            <TD align=right><FONT size=2>-</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=right><FONT size=2>4,196</FONT> </TD>
            <TD align=right><FONT size=2>29,686</FONT> </TD>
            <TD align=right><FONT size=2>0.14</FONT> </TD>
          </TR>
          <TR vAlign=bottom>
            <TD align=left><FONT size=2>Total special items</FONT> </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=left>&nbsp; </TD>
            <TD align=right><FONT size=2>$0.97</FONT> </TD>
          </TR>
        </TABLE>
        <br>
      </div>
    </div>
  </div>
</div>
<p align="center">51<BR>
</p>
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<P align="left"> <B>Tax rate disclosures:</B></P>
<P align="left"> The Company discloses its tax rate before the effect of any discrete
  items as a forward looking estimate of the income tax rate that would be incurred
  in future quarters. Management believes that this information can provide valuable
  insight about possible future operating results or cash flows. The estimated
  tax rate is subject to many variables, including geographical distribution of
  income or loss, and the total amount of income or loss. The estimated tax rate
  does not take into account any discrete tax items that could arise in future
  quarters.</P>
<P align="left"> <B>Recent Accounting Pronouncements</B></P>
<P align="left"> In December 2008, the FASB issued FASB Staff Position (FSP) No.132
  (R)-1, &#147;Employers&#146; Disclosures about Pensions and Other Postretirement
  Benefits&#148; (FSP 132R-1). FSP 132R-1 requires enhanced disclosures about
  the plan assets of a Company&#146;s defined benefit pension and other postretirement
  plans. The enhanced disclosures required by this FSP are intended to provide
  users of financial statements with a greater understanding of: (1) how investment
  allocation decisions are made, including the factors that are pertinent to an
  understanding of investment policies and strategies; (2) the major categories
  of plan assets; (3) the inputs and valuation techniques used to measure the
  fair value of plan assets; (4) the effect of fair value measurements using significant
  unobservable inputs (Level 3) on changes in plan assets for the period; and
  (5) significant concentrations of risk within plan assets. FSP No. FAS 132(R)-1
  is effective for financial statements issued for fiscal years ending after December
  15, 2009. It is expected that the adoption of FSP No. FAS 132(R)-1 will not
  have a material effect on the Company&#146;s financial statements.</P>
<P align="left"> In April 2009, the FASB issued FSP No. FAS 157-4, &#147;Determining
  Fair Value When the Volume and Level of Activity for the Asset or the Liability
  Have Significantly Decreased and Identifying Transactions That Are Not Orderly&#148;.
  FSP No. FAS 157-4 amends SFAS No. 157 to provide additional guidance on (i)
  estimating fair value when the volume and level of activity for an asset or
  liability have significantly decreased in relation to normal market activity
  for the asset or liability, and (ii) circumstances that may indicate that a
  transaction is not orderly. FSP No. FAS 157-4 also requires additional disclosures
  about fair value measurements in interim and annual reporting periods. FSP No.
  FAS 157-4 is effective for interim and annual reporting periods ending after
  June 15, 2009. The Company&#146;s adoption of this Standard did not have a material
  effect on its financial statements.</P>
<P align="left"> In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
  &#147;Recognition and Presentation of Other-Than-Temporary Impairments&#148;
  (&#147;FSP No. FAS 115-2&#148;). FSP No. FAS 115-2 provides additional guidance
  on the timing of impairment recognition and greater clarity about the credit
  and noncredit components of impaired debt securities that are not expected to
  be sold. FSP No. FAS 115-2 also requires additional disclosures about impairments
  in interim and annual reporting periods. FSP No. FAS 115-2 is effective for
  interim and annual reporting periods ending after June 15, 2009. The Company&#146;s
  adoption of this Standard did not have a material effect on its financial statements.</P>
<P align="left"> In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,
  &#147;Interim Disclosures about Fair Value of Financial Instruments&#148;. FSP
  No. FAS 107-1 and APB 28-1 amends SFAS No. 107, Disclosures about Fair Value
  of Financial Instruments, to require disclosures about fair value of financial
  instruments in interim as well as in annual financial statements. This FSP also
  amends Accounting Principles Board (&#147;APB&#148;) Opinion No. 28, Interim
  Financial Reporting, to require those disclosures in all interim financial statements.
  FSP No. FAS 107-1 and APB 28-1 is effective for interim reporting periods ending
  after June 15, 2009. The Company&#146;s adoption of this Standard did not have
  a material effect on its financial statements.</P>
<P align="left"> In May 2009, the FASB issued Statement No. 165, &#147;Subsequent
  Events&#148; (&#147;SFAS 165&#148;), which establishes general standards of
  accounting for, and requires disclosure of, events that occur after the balance
  sheet date</P>
<P align="center">52</P>
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<P align="left"> but before financial statements are issued or are available to
  be issued. The provisions of SFAS 165 were adopted for the quarter ended June
  30, 2009. The adoption of these provisions did not have a material effect on
  the Company&#146;s consolidated financial statements.</P>
<P align="left"> In June 2009, the FASB issued Statement No. 166, &#147;Accounting
  for Transfers of Financial Assets, an amendment to FASB Statement No. 140&#148;
  (&#147;SFAS 166&#148;). SFAS 166 eliminates the concept of a &#147;qualifying
  special-purpose entity,&#148; changes the requirements for derecognizing financial
  assets, and requires additional disclosures in order to enhance information
  reported to users of financial statements by providing greater transparency
  about transfers of financial assets, including securitization transactions,
  and an entity&#146;s continuing involvement in and exposure to the risks related
  to transferred financial assets. SFAS 166 is effective for fiscal years beginning
  after November 15, 2009. The Company expects that adoption of SFAS 166 in fiscal
  year 2010 will not have a material effect on its financial statements.</P>
<P align="left"> In June 2009, the FASB issued Statement No. 167, &#147;Amendments
  to FASB Interpretation No. 46(R)&#148; (&#147;SFAS 167&#148;). The amendments
  include: (1) the elimination of the exemption for qualifying special purpose
  entities, (2) a new approach for determining who should consolidate a variable-interest
  entity, and (3) changes to when it is necessary to reassess who should consolidate
  a variable-interest entity. SFAS 167 is effective for the first annual reporting
  period beginning after November 15, 2009 and for interim periods within that
  first annual reporting period. The Company expects that adoption of SFAS 167
  in fiscal year 2010 will not have a material effect on its financial statements.</P>
<P align="left"> In June 2009, the FASB issued Statement No. 168, &#147;The FASB
  Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
  Principles- a replacement of FASB Statement No. 162&#148; (&#147;SFAS 168&#148;).
  SFAS 168 replaces FASB Statement No. 162, The Hierarchy of Generally Accepted
  Accounting Principles, and establishes the FASB Accounting Standards Codification<sup><font size=1>TM</font></sup> (the Codification) as the source of authoritative accounting principles recognized
  by the FASB to be applied by nongovernmental entities in the preparation of
  financial statements in conformity with generally accepted accounting principles
  (GAAP). SFAS 168 is effective for interim and annual periods ending after September
  15, 2009. The Company will begin to use the new Codification when referring
  to GAAP in its Form 10-Q for the quarter ending September 30, 2009. The Company
  expects that adoption of SFAS 168 will not have a material effect on its financial
  statements.</P>
<P align="left"> <B>Critical Accounting Policies and Assumptions</B></P>
<P align="left"> There have been no material changes to the Company&#146;s Critical
  Accounting Policies and Assumptions filed in the Company&#146;s 2008 Annual
  Report on Form 10-K.</P>
<P align="left"> <B>Forward-looking statements</B></P>
<P align="left"> This quarterly report and the documents incorporated or deemed
  to be incorporated by reference in this quarterly report contain statements
  concerning our future results and performance and other matters that are &#147;forward-looking&#148;
  statements within the meaning of Section 27A of the Securities Act and Section
  21E of the Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;).
  The words &#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;intend,&#148;
  &#147;plan,&#148; &#147;project,&#148; &#147;may,&#148; &#147;will&#148; and
  variations of such words or similar expressions are intended, but are not the
  exclusive means, to identify forward-looking statements. Because forward-looking
  statements are subject to risks and uncertainties, actual results may differ
  materially from those expressed or implied by the forward-looking statements.</P>
<P align="left"> There are a number of risks, uncertainties and other important
  factors that could cause actual results to differ materially from the forward-looking
  statements, including, but not limited to: changes in conditions in the</P>
<P align="center">53</P>
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<P align="left"> industry in which the Company&#146;s Paper Machine Clothing segment
  competes or in the papermaking industry in general could change; failure to
  remain competitive in the industry in which the Company&#146;s Paper Machine
  Clothing segment competes; material and petroleum-related costs could increase
  more or faster than anticipated; failure to receive, or a delay in receiving,
  the benefits from the Company&#146;s capital expenditures and investments; the
  strategies described in this report to address certain business or operational
  matters could fail to be effective, or their effectiveness could be delayed;
  other risks and uncertainties detailed from time to time in the Company&#146;s
  filings with the SEC.</P>
<P align="left"> Further information concerning important factors that could cause
  actual events or results to be materially different from the forward-looking
  statements can be found in &#147;Trends,&#148; &#147;Liquidity,&#148; &#147;Outlook,&#148;
  and &#147;Legal Proceedings&#148; sections of this quarterly report, as well
  as in the &#147;Risk Factors&#148;, section of the Company&#146;s most recent
  Annual Report on Form 10-K. Although the Company believes the expectations reflected
  in the Company&#146;s forward-looking statements are based upon reasonable assumptions,
  it is not possible to foresee or identify all factors that could have a material
  and negative impact on future performance. The forward-looking statements included
  or incorporated by reference in this quarterly report are made on the basis
  of management&#146;s assumptions and analyses, as of the time the statements
  are made, in light of their experience and perception of historical conditions,
  expected future developments and other factors believed to be appropriate under
  the circumstances.</P>
<P align="left"> Except as otherwise required by the federal securities laws,
  the Company disclaims any obligations or undertaking to publicly release any
  updates or revisions to any forward-looking statement contained or incorporated
  by reference in this report to reflect any change in the Company&#146;s expectations
  with regard thereto or any change in events, conditions or circumstances on
  which any such statement is based.</P>
<P align="left"> <B><a name="page54a"></a>Item 3. Quantitative and Qualitative Disclosures about Market
  Risk</B></P>
<P align="left"> For discussion of the Company&#146;s exposure to market risk,
  refer to &#147;Quantitative and Qualitative Disclosures About Market Risk&#148;
  under Item 7A of form 10-K, which is included as an exhibit to this Form 10-Q.</P>
<P align="left"> <B><a name="page54b"></a>Item 4. Controls and Procedures</B><BR>
  <BR>
  (a) Disclosure controls and procedures.</P>
<P align="left"> The principal executive officers and principal financial officer,
  based on their evaluation of disclosure controls and procedures (as defined
  in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
  by this Quarterly Report on Form 10-Q, have concluded that the Company&#146;s
  disclosure controls and procedures are effective for ensuring that information
  required to be disclosed in the reports that it files or submits under the Securities
  Exchange Act of 1934 is recorded, processed, summarized and reported within
  the time periods specified in the Commission&#146;s rules and forms. Disclosure
  controls and procedures, include, without limitation, controls and procedures
  designed to ensure that information required to be disclosed in filed or submitted
  reports is accumulated and communicated to the Company&#146;s management, including
  its principal executive officer and principal financial officer as appropriate,
  to allow timely decisions regarding required disclosure.</P>
<P align="left"> (b) Changes in internal control over financial reporting.</P>
<P align="left"> There were no changes in the Company&#146;s internal control
  over financial reporting that occurred during the last fiscal quarter that have
  materially affected, or are reasonably likely to materially affect, the Company&#146;s
  internal control over financial reporting.</P>
<P align="center">54</P>
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<P align=center><B>PART II &#150; OTHER INFORMATION</B></P>
<P><B><a name="page55"></a>Item 1. LEGAL PROCEEDINGS</B></P>
<P align=left>Albany International Corp. (&#147;Albany&#148;) 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 produced asbestos-containing
  paper machine clothing 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.</P>
<P align=left>Albany was defending against 16,060 claims as of July 23, 2009.
  This compares with 16,818 such claims as of May 1, 2009, 17,854 claims as of
  February 6, 2009, 18,385 claims as of October 27, 2008, 18,462 claims as of
  July 25, 2008, 18,529 claims as of May 2, 2008, 18,789 claims as of February
  1, 2008, 18,791 claims as of October 19, 2007, 18,813 claims as of July 27,
  2007, 19,120 claims as of April 27, 2007, 19,388 claims as of February 16, 2007,
  19,416 claims as of December 31, 2006, 24,451 claims as of December 31, 2005,
  29,411 claims as of December 31, 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. The following table sets forth
  the number of claims filed, the number of claims settled, dismissed or otherwise
  resolved, and the aggregate settlement amount during the periods presented:</P>
<div align="center">
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=center><I><FONT size=2>Year ended</FONT></I><BR> <I><FONT size=2>December</FONT></I><BR>
        <I><FONT size=2>31,</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Opening Number</FONT></I><BR>
        <I><FONT size=2>of claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Claims Dismissed,</FONT></I><BR>
        <I><FONT size=2>Settled or</FONT></I><BR> <I><FONT size=2>Resolved</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>New Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Closing</FONT></I><BR> <I><FONT size=2>Number</FONT></I><BR>
        <I><FONT size=2>of</FONT></I><BR> <I><FONT size=2>Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Amounts Paid</FONT></I><BR>
        <I><FONT size=2>(thousands) to</FONT></I><BR> <I><FONT size=2>Settle or</FONT></I><BR>
        <I><FONT size=2>Resolve ($$)</FONT></I></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2005</FONT></I> </TD>
      <TD align=right><I><FONT color=#1f497d size=2>29,411</FONT></I> </TD>
      <TD align=right><I><FONT color=#1f497d size=2>6,257</FONT></I> </TD>
      <TD align=right><I><FONT color=#1f497d size=2>1,297</FONT></I> </TD>
      <TD align=center><I><FONT size=2>24,451</FONT></I> </TD>
      <TD align=right><I><FONT size=2>504</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2006</FONT></I> </TD>
      <TD align=right><I><FONT size=2>24,451</FONT></I> </TD>
      <TD align=right><I><FONT size=2>6,841</FONT></I> </TD>
      <TD align=right><I><FONT size=2>1,806</FONT></I> </TD>
      <TD align=center><I><FONT size=2>19,416</FONT></I> </TD>
      <TD align=right><I><FONT size=2>3,879</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2007</FONT></I> </TD>
      <TD align=right><I><FONT size=2>19,416</FONT></I> </TD>
      <TD align=right><I><FONT size=2>808</FONT></I> </TD>
      <TD align=right><I><FONT size=2>190</FONT></I> </TD>
      <TD align=center><I><FONT size=2>18,798</FONT></I> </TD>
      <TD align=right><I><FONT size=2>15</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2008</FONT></I> </TD>
      <TD align=right><I><FONT size=2>18,798</FONT></I> </TD>
      <TD align=right><I><FONT size=2>523</FONT></I> </TD>
      <TD align=right><I><FONT size=2>110</FONT></I> </TD>
      <TD align=center><I><FONT size=2>18,385</FONT></I> </TD>
      <TD align=right><I><FONT size=2>52</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2009 to date</FONT></I> </TD>
      <TD align=right><I><FONT size=2>18,385</FONT></I> </TD>
      <TD align=right><I><FONT size=2>2,358</FONT></I> </TD>
      <TD align=right><I><FONT size=2>33</FONT></I> </TD>
      <TD align=center><I><FONT size=2>16,060</FONT></I> </TD>
      <TD align=right><I><FONT size=2>78</FONT></I> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    (The data reported in the above table (as well as elsewhere in this report)
    does not reflect a significant number of additional dismissals that have been
    granted in recent weeks but which the Company has not yet been able to reflect
    in its databases.)</div>
</div>
<P align=left>Albany anticipates that additional claims will be filed against
  it and 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 twenty to more than two hundred defendants, and the complaints usually
  fail to identify the plaintiffs&#146; work history or the nature of the plaintiffs&#146;
  alleged exposure to Albany&#146;s products. Pleadings and discovery responses
  in those cases in which work histories have been provided indicate claimants
  with paper mill exposure in approximately 10% of the total claims filed against
  Albany, 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.</P>
<P align=left>As of July 23, 2009, approximately 11,358 of the claims pending
  against Albany were pending in Mississippi. Of these, approximately 10,816 are
  in federal court, at the multidistrict litigation panel (&#147;MDL&#148;), either
  through removal or original jurisdiction. (In addition to the 10,816 Mississippi
  claims pending against the Company at the MDL, there are approximately 509 claims
  pending against the Company at the MDL removed from various United States District
  Courts in other states.)</P>
<P align=center>55</P>
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<P align="left"> On May 31, 2007 the MDL issued an administrative order that required
  each MDL plaintiff to provide detailed information regarding, among other things,
  the alleged asbestos-related medical diagnoses. The order did not require exposure
  information with this initial filing. The deadline for submission of such filings
  was December 1, 2007, but the process continued for several months thereafter
  with defense counsel monitoring filing obligations and reviewing the submissions
  for compliance. On December 23, 2008, the MDL issued another administrative
  order providing a mechanism whereby defendants could seek dismissals against
  plaintiffs who failed to comply with the prior administrative order. The deadline
  for such motions was originally set as January 31, 2009, but was amended when
  the court began scheduling hearings based upon the original jurisdiction of
  the underlying claim. Filing deadlines were set as 30 days prior to the hearing
  dates, which were scheduled beginning in April 2009. The Company has already
  begun to see dismissals as a result of this procedure, including some which
  have yet to be fully processed and therefore not reflected in the table above.
  At this point, the Company cannot currently predict how many more dismissals
  will be granted through this process. Also in April 2009, the MDL also ordered
  that the claims of individual plaintiffs in mass joinder cases be severed and
  that the severed plaintiffs re-file their claims, accompanied by payment of
  the statutory filing fee. It is unclear how many of the severed plaintiffs will
  re-file their claims, though it can be expected that some claims will be abandoned.</P>
<P align="left"> With respect to the remaining claims where plaintiffs have complied
  with the original administrative order, the MDL expects to begin conducting
  settlement conferences, at which time the plaintiffs will be required to submit
  short position statements setting forth exposure information. The MDL has not
  yet begun the process of scheduling the settlement conferences, but it has instituted
  a procedure by which plaintiffs may request remand of their claims back to the
  court of original jurisdiction for trial. Since a settlement conference is a
  prerequisite to remand, it is expected that institution of this procedures will
  expedite the requests for settlement conferences. The Company believes that
  the effects of these administrative orders may not be fully known or realized
  for some time.</P>
<P align="left"> Based on past experience, communications from certain plaintiffs&#146;
  counsel, and the advice of the Company&#146;s Mississippi counsel, the Company
  expects the percentage of Mississippi claimants able to demonstrate time spent
  in a paper mill to which Albany supplied asbestos-containing products during
  a period in which Albany&#146;s asbestos-containing products were in use to
  be considerably lower than the total number of claims still pending. However,
  due to the still large number of inactive claims pending in the MDL and the
  lack of alleged exposure information, the Company does not believe a meaningful
  estimate can be made regarding the range of possible loss with respect to these
  remaining claims.</P>
<P align="left"> As of July 23, 2009, the remaining 4,702 claims pending against
  Albany were pending in states other than Mississippi. Pleadings and discovery
  responses in those cases in which work histories have been provided indicate
  claimants with paper mill exposure in approximately 25% of total claims reported,
  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. For
  these reasons, the Company expects the percentage of these remaining claimants
  able to demonstrate time spent in a paper mill to which Albany supplied asbestos-containing
  products during a period in which Albany&#146;s asbestos-containing products
  were in use to be considerably lower than the total number of pending claims.
  In addition, over half of these remaining non-Mississippi claims have not provided
  any disease information. Detailed exposure and disease information sufficient
  meaningfully to estimate a range of possible loss of a particular claim is typically
  not available until late in the discovery process, and often not until a trial
  date is imminent and a settlement demand has been received. For these reasons,
  the Company does not believe a meaningful estimate can be made regarding the
  range of possible loss with respect to these remaining claims.</P>
<P align="left"> 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</P>
<P align="center">56</P>
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<P align=left>plaintiff. Furthermore, asbestos contained in Albany&#146;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&#146;s insurer, Liberty Mutual, has defended each
  case and funded settlements under a standard reservation of rights. As of July
  23, 2009, the Company had resolved, by means of settlement or dismissal, 24,404
  claims. The total cost of resolving all claims was $6,836,000. Of this amount,
  $6,791,000, or 99%, was paid by the Company&#146;s insurance carrier. The Company
  has approximately $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.</P>
<P align=left><B>Brandon Drying Fabrics, Inc.</B></P>
<P align=left>Brandon Drying Fabrics, Inc. (&#147;Brandon&#148;), a subsidiary
  of Geschmay Corp., which is a subsidiary of the Company, is also a separate
  defendant in many of the asbestos cases in which Albany is named as a defendant.
  Brandon was defending against 8,139 claims as of July 23, 2009. This compares
  with 8,604 such claims as of May 1, 2009, 8,607 claims as of February 6, 2009,
  8,664 such claims as of October 27, 2008, 8,672 claims as of July 25, 2008,
  8,689 claims as of May 2, 2008, 8,741 claims as of February 1, 2008 and October
  19, 2007, 9,023 claims as of July 27, 2007, 9,089 claims as of April 27, 2007,
  9,189 claims as of February 16, 2007, 9,114 claims as of December 31, 2006,
  9,566 claims as of December 31, 2005, 9,985 claims as of December 31, 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 following table sets forth the
  number of claims filed, the number of claims settled, dismissed or otherwise
  resolved, and the aggregate settlement amount during the periods presented:</P>
<div align="center">
  <TABLE width="100%" border=1 cellPadding=4 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD width="16%" align=center><I><FONT size=2>Year ended</FONT></I><BR> <I><FONT size=2>December</FONT></I><BR>
        <I><FONT size=2>31,</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Opening Number</FONT></I><BR>
        <I><FONT size=2>of claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Claims Dismissed,</FONT></I><BR>
        <I><FONT size=2>Settled or</FONT></I><BR> <I><FONT size=2>Resolved</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>New Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Closing</FONT></I><BR> <I><FONT size=2>Number</FONT></I><BR>
        <I><FONT size=2>of</FONT></I><BR> <I><FONT size=2>Claims</FONT></I></TD>
      <TD width="16%" align=center><I><FONT size=2>Amounts Paid</FONT></I><BR>
        <I><FONT size=2>(thousands) to</FONT></I><BR> <I><FONT size=2>Settle or</FONT></I><BR>
        <I><FONT size=2>Resolve ($$)</FONT></I></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2005</FONT></I> </TD>
      <TD align=right><I><FONT color=#1f497d size=2>9,985</FONT></I> </TD>
      <TD align=right><I><FONT color=#1f497d size=2>642</FONT></I> </TD>
      <TD align=right><I><FONT color=#1f497d size=2>223</FONT></I> </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>9,566</FONT></I>
      </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2006</FONT></I> </TD>
      <TD align=right><I><FONT size=2>9,566</FONT></I> </TD>
      <TD align=right><I><FONT size=2>1182</FONT></I> </TD>
      <TD align=right><I><FONT size=2>730</FONT></I> </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>9,114</FONT></I>
      </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2007</FONT></I> </TD>
      <TD align=right><I><FONT size=2>9,114</FONT></I> </TD>
      <TD align=right><I><FONT size=2>462</FONT></I> </TD>
      <TD align=right><I><FONT size=2>88</FONT></I> </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>8,740</FONT></I>
      </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2008</FONT></I> </TD>
      <TD align=right><I><FONT size=2>8,740</FONT></I> </TD>
      <TD align=right><I><FONT size=2>86</FONT></I> </TD>
      <TD align=right><I><FONT size=2>10</FONT></I> </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>8,664</FONT></I>
      </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><I><FONT size=2>2009 to date</FONT></I> </TD>
      <TD align=right><I><FONT size=2>8,664</FONT></I> </TD>
      <TD align=right><I><FONT size=2>528</FONT></I> </TD>
      <TD align=right><I><FONT size=2>3</FONT></I> </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT size=2>8,139</FONT></I>
      </TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp;<I><FONT size=2>0</FONT></I> </TD>
    </TR>
  </TABLE>

</div>
<P align=left>(The data reported in the above table (as well as elsewhere in this
  report) does not reflect a significant number of additional dismissals that
  have been granted in recent weeks but which the Company has not yet been able
  to reflect in its databases.)</P>
<P align=left>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 (&#147;Abney&#148;),
  a South Carolina textile manufacturer. Among the assets acquired by Brandon
  from Abney were assets of Abney&#146;s wholly-owned subsidiary, Brandon Sales,
  Inc. which had sold, among other things, dryer fabrics containing asbestos made
  by its parent, Abney. It is believed 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</P>
<P align=center>57</P>
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<P align="left"> 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 July 23, 2009, Brandon has resolved, by means of settlement
  or dismissal, 9,439 claims for a total of &#36;152,499. Brandon&#146;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 had been borne directly by Brandon. During
  2004, Brandon&#146;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.</P>
<P align="left"> As of July 23, 2009, 6,821 (or approximately 84%) of the claims
  pending against Brandon were pending in Mississippi. For the same reasons set
  forth above with respect to Albany&#146;s Mississippi and other claims, as well
  as the fact that no amounts have been paid to resolve any Brandon claims since
  2001, the Company does not believe a meaningful estimate can be made regarding
  the range of possible loss with respect to these remaining claims.</P>
<P align="left"> <B>Mount Vernon</B></P>
<P align="left"> In some of these asbestos cases, the Company is named both as
  a direct defendant and as the &#147;successor in interest&#148; to Mount Vernon
  Mills (&#147;Mount Vernon&#148;). 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.</P>
<hr width="120" size="1" noshade>
<P align="left"> 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 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. 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.</P>
<P align="center">58</P>
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<P align=left><B><a name="page59a"></a>Item 1A. Risk Factors</B>.</P>
<P align=left>There have been no material changes in risks since December 31,
  2008. For discussion of risk factors, refer to Item 1A of the Company&#146;s
  Annual Report on Form 10-K for the year ended December 31, 2008.</P>
<P align=left><B><a name="page59b"></a>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</B></P>
<P align=left>Management made no share purchases during the second quarter of
  2009. Management remains authorized by the Board of Directors to purchase up
  to 2, million shares of its Class A Common Stock.</P>
<P align=left><B><a name="page59c"></a>Item 3. Defaults Upon Senior Securities</B> </P>
<P align=left>
  None.</P>
<P align=left><B><a name="page59d"></a>Item 4. Submission of Matters to a Vote of Security Holders</B></P>
<P align=left>At the annual meeting of shareholders held May 29, 2009, there were
  three items subject to a vote of security holders. The first item was for the
  election of eight members of the Board of Directors of the Company, the second
  item was for approval of the Directors&#146; Annual Retainer Plan, and the third
  item was the ratification of the selection of PricewaterhouseCoopers LLP as
  the Company&#146;s independent auditor.</P>
<P align=left>In the vote for the election of eight members of the Board of Directors
  of the Company, the number of votes cast for, and the number of votes withheld
  from, each of the nominees were as follows:</P>
<div align="center">
  <TABLE width="100%" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
      <TD align=center></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=center>&nbsp; </TD>
      <TD align=center colSpan=3><FONT size=2>Number of Votes For</FONT> <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD colSpan=3 align=center><font size=2>Number of Votes Withheld</font>
        <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD colSpan=3 align=center><font size=2>Broker Non-Votes</font> <hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Nominee</FONT> <hr align="left" width="50" size="1" noshade></TD>
      <TD align=center><FONT size=2>Class A</FONT> <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Class B</FONT> <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Class A</FONT> <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Class B</FONT> <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Class A</FONT> <hr size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Class B</FONT> <hr size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Joseph G. Morone</FONT> </TD>
      <TD align=right><FONT size=2>23,260,286</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>914,991</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Christine L. Standish</FONT> </TD>
      <TD align=right><FONT size=2>10,700,007</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>13,475,270</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Erland E. Kailbourne</FONT> </TD>
      <TD align=right><FONT size=2>23,490,163</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>685,114</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>John C. Standish</FONT> </TD>
      <TD align=right><FONT size=2>11,884,490</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>12,290,787</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Juhani Pakkala</FONT> </TD>
      <TD align=right><FONT size=2>14,236,726</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>9,938,551</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Paula H. J. Cholmondeley</FONT> </TD>
      <TD align=right><FONT size=2>14,148,528</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>10,025,606</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>1,143</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>John F. Cassidy, Jr.</FONT> </TD>
      <TD align=right><FONT size=2>14,232,103</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>9,942,031</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>1,040</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>1,143</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>Edgar G. Hotard</FONT> </TD>
      <TD align=right><FONT size=2>23,396,583</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>32,339,440</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>777,551</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>-</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right><FONT size=2>1,143</FONT> </TD>
      <TD align=right>&nbsp;</TD>
      <TD align=right>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp; &nbsp;<FONT size=2>-</FONT> </TD>
    </TR>
  </TABLE>
  <p align="left"> In the vote for the approval of the Directors&#146; Annual
    Retainer Plan, the number of votes cast for, the number of votes cast against,
    and the number cast as abstentions were as follows:</p>
</div>
<div align="center">
  <TABLE width="500" border=0 cellPadding=0 cellSpacing=0 style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'">
    <TR>
      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>For</FONT> <hr align="left" width="20" size="1" noshade></TD>
      <TD align=left>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Against</FONT> <hr width="55" size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Abstain</FONT> <hr width="55" size="1" noshade></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>54,126,118</FONT> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=center><FONT size=2>336,474</FONT> </TD>
      <TD align=center>&nbsp;</TD>
      <TD align=center><FONT size=2>1,021,009</FONT> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    In the vote for the ratification of the selection of PricewaterhouseCoopers
    LLP as the Company&#146;s independent auditor, the number of votes cast for,
    the number of votes cast against, and the number cast as abstentions were
    as follows:</div>
</div>
<P align=center>59</P>
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<div align="center">
  <TABLE width=500 border=0 cellpadding=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;">
    <TR>
      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
    </TR>
    <TR vAlign=bottom>
      <TD align=left><FONT size=2>For</FONT> <hr align="left" width="20" size="1" noshade></TD>
      <TD align=left>&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Against</FONT> <hr width="55" size="1" noshade></TD>
      <TD align=center>&nbsp;&nbsp;&nbsp;</TD>
      <TD align=center><FONT size=2>Abstain</FONT> <hr width="55" size="1" noshade></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left> <FONT size=2>55,985,709</FONT> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=center> <FONT size=2>524,854</FONT> </TD>
      <TD align=center>&nbsp;</TD>
      <TD align=center> <FONT size=2>4,154</FONT> </TD>
    </TR>
  </TABLE>
  <div align="left"><BR>
    <B><a name="page60a"></a>Item 5. Other Information</B></div>
</div>
<P align="left"> On August 5, 2009, the Company entered into an Executive Separation
  Agreement with departing Chief Financial Officer Michael C. Nahl. Mr. Nahl will
  step down as the Company&#146;s Chief Financial Officer effective upon the close
  of business on August 7, 2009. A copy of the agreement is filed with this report
  as <B>Exhibit 10(o) (xiv) </B>and is incorporated herein by reference.</P>
<P align="left"> Albany International Corp. (the &#147;Company&#148;) has entered
  into Severance Agreements (collectively the &#147;Severance Agreements&#148;)
  with various corporate officers or key executives including two named executive
  officers, but excluding its principal executive officer and principal financial
  officer (each a &#147;Counterparty&#148;). The Severance Agreements became effective
  August 5, 2009. The material terms of the Severance Agreements provide that
  in the event a Counterparty&#146;s employment is terminated by the Company at
  any time before December 31, 2012 for any reason other than Cause (as defined
  in the Severance Agreement), the Counterparty shall be entitled to receive his
  or her gross monthly base salary in effect at the time of termination, less
  applicable withholdings and deductions, for the period of months specified in
  the Severance Agreement (the &#147;Severance Period&#148;). The Severance Period
  differs among Counterparty, and ranges from 12 months to 18 months. For named
  executive officers Michael J. Joyce and Daniel A. Halftermeyer, the Severance
  Period is 18 months. In order to receive the severance benefits, the Counterparty
  is obligated to execute a release in favor of the Company at the time of termination.
  The Counterparty is also bound to a restrictive covenant during the Severance
  Period. A copy of the form of Severance Agreement is attached and being filed
  as exhibit <B>Exhibit 10(o) (xv) </B>to this report. The foregoing summary of
  provisions is not complete and reference is made to the exhibit for the complete
  terms.</P>
<P align="left"> In the second quarter, the Company entered into agreements to
  exchange &#36;50.5 million principal amount of the Company&#146;s 2.25% Convertible
  Senior Notes due 2026 for cash plus any accrued unpaid interest, plus an equivalent
  amount of the Company&#146;s 2.25% Senior Notes due 2026 (the &#147;New Notes&#148;). The Company
  simultaneously entered into another agreement to purchase the New Notes. Closing
  for the exchange of &#36;30.5 million principal amount of Convertible Notes
  took place in July and closing on the remaining &#36;20.0 million is expected
  to take place in October. The Company expects these transactions to result in
  gains of approximately &#36;7.5 million in the third quarter, and &#36;4.5 million in
  the fourth quarter. A Form 8-K was filed with the SEC on May 22, 2009 describing
  these agreements. Attached to this Form 10-Q are <B>Exhibits 10.9 and 10.10</B>, which depict Securities Purchase and Exchange Agreements between Albany
  International Corp. and Citadel Equity Fund Ltd. related to these second quarter
  transactions.</P>
<P align="center">60</P>
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<P align="left"> <B><a name="page61"></a>Item 6. Exhibits</B></P>
<div align="center">
  <TABLE border=0 width=100% cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;">
    <TR>
      <TD width=14%></TD>
      <TD width=86%></TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P><B>Exhibit No.</B></P>
        <P>10(o) (xiv)</P>
      </TD>
      <TD width=86% colspan=1>
        <P><B>Description</B></P>
        <P>Executive Separation Agreement between Albany International Corp. and Michael C. Nahl (filed herewith)</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>10(o) (xv)</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Form of Severance Agreement between Albany International Corp. and certain corporate officers or key executives (filed herewith)</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>10.9</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Securities Purchase Agreement between Albany International Corp. and Citadel Equity Fund Ltd. dated May 21, 2009.</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>10.10</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Securities Exchange Agreement between Albany International Corp. and Citadel Equity Fund Ltd. dated May 21, 2009.</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>31.1</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>31.2</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>32.1</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)</P>
      </TD>
    </TR>
    <TR>

      <TD colspan=2>&nbsp;

        </TD>
    </TR>
    <TR valign="top">

      <TD width=14%>
        <P>99.1</P>
      </TD>
      <TD width=86% colspan=1>
        <P>Quantitative and qualitative disclosures about market risks as reported at December 31, 2008.</P>
      </TD>
    </TR>
  </TABLE>
  <br>
</div>
<p align="center">61<BR>
</p>
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<P align="center">
<B>SIGNATURES</B></P>
<P align="left"> Pursuant to the requirements 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.</P>
<div align="center">
  <TABLE width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;">
    <TR>
      <TD></TD>
      <TD width=2%></TD>
      <TD width=28%></TD>
    </TR>
    <TR valign="top">
      <TD width="70%" align=left>&nbsp; </TD>
      <TD colspan="2" align=left> <FONT size=2>ALBANY INTERNATIONAL CORP</FONT><FONT size=2>.</FONT>
        <hr align="left" width="200" size="1" noshade> </TD>
    </TR>
    <TR valign="top">
      <TD align=left>&nbsp; </TD>
      <TD colspan="2" align=left> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
        &nbsp; &nbsp;<FONT size=2>(Registrant)</FONT> </TD>
    </TR>
    <TR valign="top">
      <TD colspan=3>&nbsp;&nbsp; </TD>
    </TR>
    <TR valign="top">
      <TD align=left> <FONT size=2>Date: August 6, 2009</FONT> </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left>&nbsp; </TD>
    </TR>
    <TR valign="top">
      <TD colspan=3>&nbsp; </TD>
    </TR>
    <TR valign="top">
      <TD align=left>&nbsp; </TD>
      <TD align=left><font size=2>By </font><font size=2>&nbsp;</font></TD>
      <TD align=left> <FONT size=2>/s/ Michael C. Nahl</FONT> <hr align="left" width="285" size="1" noshade></TD>
    </TR>
    <TR valign="top">
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left> &nbsp; &nbsp; &nbsp;<FONT size=2>Michael C. Nahl</FONT>
      </TD>
    </TR>
    <TR valign="top">
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left> &nbsp; &nbsp; &nbsp;<FONT size=2>Executive Vice President
        and Chief Financial</FONT> </TD>
    </TR>
    <TR valign="top">
      <TD align=left>&nbsp; </TD>
      <TD align=left>&nbsp;</TD>
      <TD align=left> &nbsp; &nbsp; &nbsp;<FONT size=2>Officer (Principal Financial
        Officer)</FONT> </TD>
    </TR>
  </TABLE>
  <BR>

</div>
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<DOCUMENT>
<TYPE>EX-10.(O)(XIV)
<SEQUENCE>2
<FILENAME>e36147ex10oxiv.htm
<DESCRIPTION>EXECUTIVE SEPARATION AGREEMENT
<TEXT>
<HTML>
<HEAD>
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<BODY bgcolor="#ffffff" style="font-family: 'Times New Roman';font-size: 10pt;">
<P align="left"> <font face="Times New Roman, Times, serif"><strong>Exhibit 10(o)(xiv)</strong></font></P>
<P align="center"> <font face="Times New Roman, Times, serif"><B>AGREEMENT</B></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
  Executive Separation Agreement (the &#147;Agreement&#148;) is dated as of the
  5th day of August, 2009, and is entered into by and between Albany International
  Corp., a Delaware corporation with offices and a principal place of business
  at 1373 Broadway, Albany, New York, (&#147;Albany&#148;) and Michael C. Nahl,
  a resident of Albany County, New York (&#147;Executive&#148;).</font></P>
<P align="center"><font face="Times New Roman, Times, serif"> WITNESSETH</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Executive is employed by Albany as Executive Vice President and Chief Financial
  Officer and may serve as a director or officer of various Albany subsidiaries
  and affiliates, or as a fiduciary to various employee benefit plans; and</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Executive has notified Albany of his desire to voluntarily retire; and</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Albany seeks to retain Executive for the purposes of assisting in the orientation
  of his successor, to assist in the transition of his duties to the successor
  and to temporarily continue to offer advice and counsel in connection with important
  strategic initiatives and has requested that Executive delay his retirement
  in consideration for the benefits set forth herein;</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Albany and Executive seek to enter into this Agreement (the &#147;Agreement&#148;)
  with the intent to establish a mutually acceptable retirement date and to settle
  all claims and issues that have been raised, or could have been raised in relation
  to Executive&#146;s employment with Albany or in relation to any positions he
  held with any of Albany&#146;s subsidiaries, affiliates, employee benefits plans
  or trusts, or in any way related to the termination of such employment and/or
  service;</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW
  THEREFORE, in consideration of the promises and mutual agreements herein, it
  is hereby agreed as follows:</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.
  Executive acknowledges that he was given this Agreement on <B>June 16, 2009
  </B>and was afforded 21 days to consider same.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
  Executive was, and hereby is, advised to consult a lawyer before signing this
  Agreement and did in fact have the opportunity to obtain advice from counsel.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
  Executive may accept this Agreement only by signing, dating and delivering the
  Agreement to Albany (in the manner set forth in Paragraph 25) on or before Albany&#146;s
  normal close of business on <B>August 5, 2009</B>. <B><U>Time is of the essence
  with regard to this Paragraph 3.</U></B></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
  Executive may revoke this Agreement at any time within seven (7) days after
  signing and delivering it to Albany by notifying Albany in writing (in the manner
  set forth in Paragraph 25) of Executive&#146;s decision to revoke. <B><U>Time
  is of the essence with regard to this Paragraph 4.</U></B></font></P>
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<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
  The effective date of this Agreement (&#147;Effective Date&#148;) shall be the
  <B>8th day </B>after Executive signs and delivers the Agreement in accordance
  with Paragraph 3 above, unless Executive revokes the Agreement in accordance
  with Paragraph 4 above. If Executive revokes this Agreement in accordance with
  Paragraph 4 above, this Agreement will not become operative and will not be
  binding on Executive or Albany.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.
  Executive elects to voluntarily retire, and his employment with Albany shall
  terminate, effective as of the close of business on <B>August 31, 2009</B>,
  (the &#147;Retirement Date&#148;) unless terminated earlier in accordance with
  Paragraph 7 or 8 hereof. The Retirement Date may be accelerated or extended
  by mutual agreement of the parties, evidenced in writing. Effective as of the
  close of business on August 7, 2009, Executive shall no longer serve as Albany&#146;s
  Chief Financial Officer, but shall retain the title of Executive Vice President
  until the Retirement Date. Effective as of the Retirement Date, or the date
  of any earlier termination pursuant to Paragraph 7 or 8, Executive resigns all
  offices, directorships and any other positions held with Albany or any of Albany&#146;s
  subsidiaries or affiliates, or any of their employee benefit plans or trusts.
  Albany agrees to provide Executive with a positive written reference.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.
  Nothing herein is intended to alter the at-will nature of Executive&#146;s employment
  relationship with Albany. Albany reserves the right to terminate Executive prior
  to the Retirement Date with or without cause. Cause shall be deemed to exist
  if Albany determines that Executive has:</font></P>
<blockquote>
  <blockquote>
    <p><font face="Times New Roman, Times, serif"> (i) undertaken a position in
      competition with Albany;</font></p>
    <p><font face="Times New Roman, Times, serif"> (ii) caused substantial harm
      to Albany with intent to do so or as a result of gross negligence in the
      performance of his duties; </font></p>
    <p><font face="Times New Roman, Times, serif"> (iii) wrongfully and substantially
      enriched himself at the expense of Albany; or </font></p>
    <p><font face="Times New Roman, Times, serif"> (iv) been convicted of felony;</font></p>
  </blockquote>
</blockquote>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.
  Executive reserves the right to terminate his employment with Albany at any
  time prior to the Retirement Date.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.
  From the date hereof until the date Executive&#146;s employment with Albany
  terminates (either as of the Retirement Date or earlier), Executive shall continue
  to perform the duties of his current position and assist in the transition of
  his duties as directed by the Chief Executive Officer or the Board of Directors.
  Executive further covenants and agrees, for a reasonable time thereafter not
  to exceed twenty-four months, to provide the additional services set forth in
  <B><U>Schedule 9</U></B>. If such services are still needed after such twenty-four
  month period, the parties agree to negotiate a consulting agreement with terms
  mutually acceptable to both parties. During the remainder of Executive&#146;s
  employment with Albany, Albany shall continue to pay Executive at his current
  rate of compensation less (i) applicable withholdings and deductions required
  bylaw or otherwise agreed to by the parties, (ii) deductions of premiums due
  for any health care, life insurance or other insurance</font></P>
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<P align="left"> <font face="Times New Roman, Times, serif">coverage provided by or through Albany, (iii) 401(k) savings
  plan or other Albany benefit plan contributions and (iv) any other applicable
  withholdings. During the remainder of Executive&#146;s employment with Albany,
  Executive will be eligible to receive the standard package of employee benefits
  available to similarly situated Albany employees. Albany reserves the right
  to modify, supplement, amend or eliminate the standard benefits provided to
  its employees, including, without limitation, the eligibility requirements and/or
  premiums, deductibles, co-payments or other charges relating thereto.</font></P>
</font></font>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.
  Executive agrees that on or after the last date of his employment with Albany
  he shall execute an additional release in the form annexed hereto (the &#147;Supplemental
  Release&#148;) covering the period from the date of Executive&#146;s execution
  of this Agreement through his last date of employment. Executive covenants and
  agrees that the obligations to be performed by Albany under this Agreement after
  the last date of Executive&#146;s employment shall be contingent upon the execution
  of the Supplemental Release. Failure to execute the Supplemental Release, however,
  will not affect the validity of the release contained in Paragraph 17 of this
  Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.
  In the case that Executive&#146;s employment is terminated at the Retirement
  Date and not prior thereto as contemplated by Paragraph 7 or 8, Albany agrees
  to provide Executive with the following benefits to which he would not otherwise
  be entitled. Executive acknowledges and agrees that these benefits constitute
  adequate legal consideration for the promises and representations made by him
  in this Agreement, and are in lieu of any benefits payable under any severance
  plan now in existence or adopted prior to the Retirement Date:</font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (a)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Albany will pay Executive
      the gross sum of &#36;37,491.66 per month for a period of twelve (12) months
      from the Retirement Date, for a total of &#36;449,900.00 in the first twelve
      (12) months following the Retirement Date, then the gross sum of &#36;46,191.66
      per month for an additional twelve (12) month period (combined, the &#147;Payment
      Period&#148;) for a total of &#36;1,004,200.00 in the first 24 months following
      the Retirement Date. The aforesaid monthly payments (the &#147;Post-Retirement
      Payments&#148;) shall be paid net of all applicable withholdings and deductions
      required by law or otherwise agreed to by the parties. The Post-Retirement
      Payments will made by check, or direct deposit, on the 15<SUP>th </SUP>day
      of the month and will begin after the Retirement Date and after this Agreement
      becomes irrevocable and continue on or about the 15<SUP>th </SUP>day of
      every month thereafter until paid in full (and may contain <I>pro rata </I>payment
      for any partial month). In the event Executive dies before the last Post-Retirement
      Payment is made hereunder, the balance of such payments shall be paid to
      his spouse or, if he shall have no such spouse at that time, to his estate.
      </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (b)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Executive may elect, pursuant
      to the protections afforded by the Consolidated Omnibus Budget Reconciliation
      Act, to continue group health care coverage as is from time to time provided
      by or through Albany to all similarly situated eligible employees for up
      to eighteen (18) months by paying the then-applicable required contribution
      for such coverage. Notwithstanding the foregoing, the parties acknowledge
      that it may be more advantageous for Executive to elect retiree health </font></TD>
  </TR>
</TABLE>
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<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD>&nbsp;</TD>
    <TD><font face="Times New Roman, Times, serif"> care benefits under the Albany
      International Corp. Health Care Plan as of the Retirement Date. In that
      event, Executive shall be responsible for the payment of the retiree contribution
      in accordance with the terms of that Plan. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (c)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Albany reserves the right
      to modify, supplement, amend or eliminate the coverages described in subparagraph
      (b) above, including, without limitation, the eligibility requirements and/or
      premiums, deductibles, co-payments or other charges relating thereto. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (d)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Albany shall pay Executive
      for any accrued, unused vacation pursuant to existing corporate policy at
      Executive&#146;s last rate of salary, less applicable withholdings and deductions
      required by law or otherwise agreed to by the parties. Said payment shall
      be made at the first normal pay date following the Retirement Date and irrevocability
      of this Agreement. Albany and Executive agree that has accrued 25 unused
      vacation days. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (e)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Any stock options, restricted
      stock units or long-term incentive awards that have been previously awarded
      to Executive shall be treated in accordance with the terms of plans under
      which such awards were granted and/or the applicable award agreement. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (f)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Effective as of the Retirement
      Date, or such earlier date as Executive&#146;s employment may be terminated
      in accordance with Paragraph 7 or 8, hereof, Executive will no longer be
      an employee of Albany, and will cease to accrue benefits under any pension,
      deferred compensation, 401(k), profit-sharing or other Albany employee welfare
      benefit plan. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (g)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Executive shall be permitted
      to retain possession of his current Albany laptop, as well as his current
      mobile phone and Blackberry; provided that such devices will be cleansed
      of any Albany content by Albany GIS personnel, and any telecommunications
      or other services related to such device (or any other phone, mobile, data
      or computing devices) are to be provided by the Executive at his expense.
      </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (i)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Executive acknowledges and
      agrees that, except for this Agreement, Executive would have no right to
      receive all of the benefits described above. </font></TD>
  </TR>
</TABLE>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.
  In the event Executive&#146;s employment with Albany is terminated prior to
  the Retirement Date for cause, Executive shall not be entitled to, and Albany
  shall not be obligated to provide, any of the benefits described in Paragraph
  11, and in such case the treatment of any stock options, restricted stock units
  or long term incentive awards will be in strict conformity with the terms of
  the plans under which such option or restricted stock units were granted. In
  the event Albany terminates Executive&#146;s employment prior to the Retirement
  Date without cause, Executive shall be entitled to receive the benefits described
  in Paragraph 11, including treatment of his stock options, restricted stock
  units and long term incentive awards as if the separation was a voluntary retirement
  after reaching the age of 62, provided however that the Payment Period shall
  begin as of the date of such termination and cease twenty-four (24) months thereafter.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.
  In accordance with the terms of the Company&#146;s annual cash incentive program,
  Executive shall not be eligible for any bonus relating to his employment during
  2009.</font></P>
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<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.
  In the event Executive elects to begin receiving benefits under the Albany International
  Corp. Supplemental Executive Retirement Plan (&#147;SERP Benefits&#148;) at
  any time within the first six months after Executive&#146;s Retirement Date,
  Albany shall, in accordance with Section 409A of the Code, delay payment, for
  up to six months, of the SERP Benefits that accrued after January 1, 2005. Albany
  shall pay Executive any SERP Benefit withheld pursuant Section 409A of the Code
  in a lump sum, along with the next regularly scheduled SERP benefit payment
  next following the expiration of the six month period described above.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.
  It is the intent of the parties that this Agreement provides payments and benefits
  that satisfy the distribution requirements of Section 409A of Code. In the event
  any payments or benefits are deemed by the IRS to be non-compliant, this Agreement,
  at Executive&#146;s option, shall be modified, to the extent practical, so as
  to make it compliant by altering the payments or the timing of their receipt.
  The methodology to effect or address any necessary modifications shall be subject
  to reasonable and mutual agreement between the parties.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.
  As used in this Agreement, the term &#147;Albany&#148; means, individually and
  collectively, Albany, each subsidiary, parent company or affiliate of Albany,
  and their respective employee welfare benefit plans, employee pension benefit
  plans, successors and assigns (including all present and former shareholders,
  directors, officers, fiduciaries, agents, representatives and employees of those
  companies and other entities).</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.
  Subject to Executive&#146;s right to revoke stated in Paragraph 4 above, by
  signing this Agreement, Executive immediately gives up and releases Albany from,
  and with respect to, any and all rights and claims that Executive may have against
  Albany, whether or not Executive presently is aware of such rights or claims.
  In addition, and without limiting the foregoing:</font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (a)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Executive on behalf of himself,
      his agents, spouse, representatives, assignees, attorneys, heirs, executors
      and administrators, fully releases Albany and Albany&#146;s past and present
      successors, assigns, parents, divisions, subsidiaries, affiliates, officers,
      directors, shareholders, employees, agents and representatives from any
      and all liability, claims, demands, actions, causes of action, suits, grievances,
      debts, sums of moneys, controversies, agreements, promises, damages, back
      and front pay, costs, expenses, attorneys fees, and remedies of any type,
      which Executive now has or hereafter may have, by reason of any matter,
      cause, act or omission arising out of or in connection with Executive&#146;s
      employment or the termination of his employment with Albany, including,
      without limiting the generality of the foregoing, any claims, demands or
      actions arising under the Age Discrimination in Employment Act of 1967,
      the Older Worker&#146;s Benefit Protection Act, the Employee Retirement
      Income Security Act of 1974, Title VII of the Civil Rights Act of 1964,
      the Civil Rights act of 1991, the Civil Rights Act of 1866, the Rehabilitation
      Act of 1973, the Americans with Disabilities Act of 1990, and any other
      federal, state or local statute, ordinance or common law of any state regarding
      employment, discrimination in employment, or </font></TD>
  </TR>
</TABLE>
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<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD>&nbsp;</TD>
    <TD><font face="Times New Roman, Times, serif"> the termination of employment.
      Notwithstanding the foregoing, Executive is not waiving any right that cannot,
      as a matter of law, be voluntarily waived, including the right to file or
      participate in the adjudication of a claim of discrimination filed with
      any state or federal administrative agency, though Executive expressly waives
      any right to recover monetary damages as a result of any claim filed with
      any state or federal administrative agency. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (b)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> If Executive breaches any
      obligation under this Agreement, Executive agrees that Albany shall not
      be obligated to continue to make payments under Paragraph 11, and to reimburse
      Albany for any and all payments previously made pursuant to Paragraph 11.
      </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (c)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Notwithstanding the foregoing,
      nothing herein shall relieve Albany of any indemnification obligations it
      might owe to Executive by virtue of Executive&#146;s position as on officer
      of Albany under its certificate of incorporation, corporate Bylaws or other
      written agreement. </font></TD>
  </TR>
</TABLE>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.
  Executive acknowledges that as a consequence of his employment with Albany,
  proprietary and confidential information relating to the business of Albany
  may be or have been disclosed to or developed or acquired by Executive which
  is not generally known to the trade or the general public and which is of considerable
  value to Albany. Such information includes, without limitation, information
  about trade secrets, inventions, patents, licenses, research projects, costs,
  profits, markets, sales, customer lists, proprietary computer programs, proprietary
  records, and proprietary software; plans for future development, and any other
  information not available to the trade or the general public, including information
  obtained from or developed in conjunction with a third party that is subject
  to a confidentiality or similar agreement between Albany and such third party.
  During the remainder, if any, of, and after, his employment by Albany, Executive
  shall not use such information, as denoted above, for his own benefit, or for
  the benefit of any other employer or for any other purpose whatsoever other
  than the performance of his remaining work for Albany, if any, and Executive
  shall maintain all such information in confidence and shall not disclose any
  thereof to any person other than employees of Albany authorized to receive such
  information. This obligation is in addition to any similar obligations Executive
  may have pursuant to any other agreement, statute or common-law. Nothing herein,
  however, shall preclude Executive from describing his duties with Albany in
  future job interviews.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.
  Executive acknowledges and recognizes the highly competitive nature of Albany&#146;s
  business and accordingly agrees as follows:</font></P>
<table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <tr>
    <td nowrap valign=top><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;</font></td>
    <td nowrap valign=top><font face="Times New Roman, Times, serif"> (a)&nbsp;
      &nbsp; &nbsp; </font></td>
    <td><font face="Times New Roman, Times, serif"> For a period of two years
      following Executive&#146;s Retirement Date, whether on the Executive&#146;s
      own behalf or on behalf of or in conjunction with any person, firm, partnership,
      joint venture, association, corporation or other business, organization,
      entity or enterprise whatsoever (&#147;Person&#148;), directly or indirectly:
      </font></td>
  </tr>


</table>
<br>
<table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <tr>
    <td nowrap valign=top width="41"><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;</font></td>
    <td valign=top width="1187" colspan="2"><font face="Times New Roman, Times, serif"> (i) </font><font face="Times New Roman, Times, serif">engage in any business which is in competition with Albany or any of
      its subsidiaries or affiliates in the same geographical areas as Albany
      or any of its subsidiaries or affiliates are engaged in their business (a
      &#147;Competitive Business&#148;); </font></td>
  </tr>


</table>
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    <td nowrap valign=top><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td nowrap valign=top> <font face="Times New Roman, Times, serif">&nbsp; &nbsp;
      &nbsp; </font></td>
    <td><font face="Times New Roman, Times, serif"> (ii)&nbsp; &nbsp; &nbsp; enter
      into the employ of, or render any services to, any Person in respect of
      any Competitive Business;</font></td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td><font face="Times New Roman, Times, serif">(iii)&nbsp; &nbsp; &nbsp; acquire
      a financial interest in, or otherwise become actively involved with, any
      Competitive Business, directly or indirectly, as an individual, partner,
      shareholder, officer, director, principal, agent, trustee or consultant;
      provided, however, that in no event shall ownership of less than 2% of the
      outstanding capital stock of any corporation, in and of itself, be deemed
      a violation of this Agreement is such capital stock is listed on a national
      securities exchange or regularly traded in an over-the- counter market;
      or </font></td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td><font face="Times New Roman, Times, serif">(iv)&nbsp; &nbsp; &nbsp; interfere
      with, or attempt to interfere with, any business relationships (whether
      formed before or after the Retirement Date) between Albany or any of its
      subsidiaries or affiliates and their customers, clients, suppliers or investors.
      </font></td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top><font face="Times New Roman, Times, serif">(b)&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">During the period of time ending
      two years after the Retirement Date Executive will not, whether on Executive&#146;s
      own behalf or on behalf of or in conjunction with any Person, directly or
      indirectly: </font></td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td><font face="Times New Roman, Times, serif">(i)&nbsp; &nbsp; &nbsp; solicit
      or encourage any employee of Albany or any of its subsidiaries or affiliates
      to leave the employment of Albany or any of its subsidiaries or affiliates;
      or </font></td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td><font face="Times New Roman, Times, serif">(ii)&nbsp; &nbsp; &nbsp; hire
      any such employee who was employed by Albany or any of its subsidiaries
      or affiliates as of the Retirement Dates or, if later, within the six-month
      period prior to such date of hire. </font></td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td nowrap valign=top>&nbsp;</td>
    <td nowrap valign=top><font face="Times New Roman, Times, serif">(c)&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif">It is expressly understood
      and agreed that although Executive and Albany consider the restrictions
      in this Paragraph 19 to be reasonable, if a final determination is made
      by a court of competent jurisdiction or an arbitrator that the time or territory
      or any other restriction contained in this Agreement is an unenforceable
      restriction against Executive, the provisions of this Agreement shall not
      be rendered void but shall be deemed amended to apply as to such maximum
      time and territory and to such maximum extent as such court or arbitrator
      may determine or indicate to be enforceable. </font></td>
  </tr>
</table>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.
  Executive specifically agrees and promises that he will not directly or indirectly
  disparage Albany, (as defined in Paragraph 16) or any of Albany&#146;s officers,
  directors, employees, attorneys or representatives, or any of Albany&#146;s
  products or services in any manner, at any time, to any person or entity. Albany
  specifically agrees and promises that it will not directly or indirectly disparage
  Executive in any manner, at any time, to any person or entity. &#147;Disparage&#148;
  is defined as any utterance whatsoever either verbal, in writing, by gesture
  or any behavior of any kind, which criticizes or defames the goodwill or reputation
  of, or which is intended to embarrass or adversely affect, the other party.
  Notwithstanding the foregoing, nothing in this Section 20 (a) shall prohibit
  any of the Company&#146;s executive officers nor any member of the Company's Board
  of Directors from making non-public statements to one another in the course
  of carrying out their duties as such, and (b) shall prohibit any person from
  making truthful statements when required by order of a court or other body having
  jurisdiction, or as otherwise may be required by law or legal process.</font></P>
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<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.
  This Agreement does not constitute an admission by Albany of any liability to
  Executive, and Executive understands and agrees that Albany denies any such
  liability to Executive.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.
  This Agreement constitutes the entire agreement between Albany and Executive
  relating to the subject matter thereof, and may not be amended or modified in
  any way whatsoever except in writing signed by the parties hereto. This Agreement
  shall not be in derogation of Executive&#146;s rights under any Albany stock,
  pension, retirement, QSERP, or other similar plan or agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.
  Albany and Executive intend for every provision of this Agreement to be fully
  enforceable. But, if a court with jurisdiction over this Agreement determines
  that all or part of any provision of this Agreement is unenforceable for any
  reason, Albany and Executive intend for each remaining provision and part to
  be fully enforceable as though the unenforceable provision or part had not been
  included in this Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24.
  Executive acknowledges that he has read this entire Agreement, that he fully
  understands its meaning and effect, and that he has voluntarily signed this
  Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25.
  Notices or other deliveries required or permitted to be given or made under
  this Agreement by Executive to Albany shall, except to the extent otherwise
  required by law, be deemed given or made if delivered by hand or by express
  mail or overnight courier service to Albany International Corp., 1373 Broadway,
  Albany, New York 12204, Attention: Charles J. Silva, Jr. Notice by Albany to
  Executive shall be given by hand of express mail or overnight courier service
  at Executive&#146;s last known address or any other address subsequently provided
  by Executive.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26.
  The terms of this Agreement are binding upon and shall be for the benefit of
  Executive and Albany, as well as their respective heirs, executors, administrators,
  successors and assigns.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.
  Executive and Albany each agree that if an action is commenced by any party
  alleging breach of this Agreement, the non-prevailing party shall be liable
  to the prevailing party for any and all available legal and equitable relief,
  as well as reasonable attorneys&#146; fees and costs associated with pursuing
  or defending such legal action.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28.
  Executive understands that the release contained in Paragraph 17 hereof is a
  general release, and represents that he has been advised to seek counsel on
  the legal and practical effect of a general release, and recognizes that he
  is executing and delivering this release, intending thereby to be legally bound
  by the terms and provisions thereof, of his own free will, without promises
  or threats or the exertion of duress. He also acknowledges that he has had adequate
  time to review it, have it explained to him, and understands its provisions.</font></P>
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<P align="center"><font face="Times New Roman, Times, serif"> [SIGNATURE PAGES
  FOLLOW]</font></P>
<P align="center"><font face="Times New Roman, Times, serif"> Page 9 of 12</font></P>
</font>
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<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
  WITNESS WHEREOF, Executive and a duly authorized representative of Albany have
  signed this Agreement as of the dates set forth below.</font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width="50%">&nbsp; </TD>
    <TD align=left colspan=2> <FONT size=2 face="Times New Roman, Times, serif">Albany
      International Corp.</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">Dated: August
      5, 2009</FONT> </TD>
    <TD align=left width="2%"> <FONT size=2 face="Times New Roman, Times, serif">By:</FONT>
    </TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">/s/ Joseph
      G. Morone</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <hr noshade size="1" width="250" align="left"> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">Name: Joseph
      G. Morone</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">President
      and CEO</FONT> </TD>
  </TR>
</TABLE>
<P align="left"> <font face="Times New Roman, Times, serif"><B>THE UNDERSIGNED
  FURTHER STATES THAT HE HAS CAREFULLY READ THE FOREGOING SETTLEMENT AGREEMENT
  AND KNOWS THE CONTENTS THEREOF AND SIGNS THE SAME AS HIS OWN FREE ACT. THIS
  SETTLEMENT AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.</B></font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <TR>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width="50%"> <FONT size=2 face="Times New Roman, Times, serif">Dated:
      August 5, 2009</FONT> </TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">/s/ Michael
      C. Nahl</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <hr noshade size="1" width="250" align="left"> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">Michael
      C. Nahl</FONT> </TD>
  </TR>
</TABLE>
<P align="center"> <font face="Times New Roman, Times, serif"><B>FOR COMPANY USE
  ONLY</B></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  foregoing Executive Separation Agreement, signed and dated by Executive, was
  received by me on behalf of Albany International Corp. this August 5, 2009.</font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <TR>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width="50%"><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">/s/ Charles
      J. Silva, Jr</FONT><font face="Times New Roman, Times, serif">.</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <hr noshade size="1" width="250" align="left"> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">Charles
      J. Silva, Jr.</FONT> </TD>
  </TR>
</TABLE>
<font face="Times New Roman, Times, serif"><BR>
<font face="Arial, Helvetica, sans-serif">
<P align="center"> Page 10 of 12</P>
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<P align="center"> <font face="Times New Roman, Times, serif"><U>SUPPLEMENTAL
  RELEASE</U></font></P>
<P align="left"><font face="Times New Roman, Times, serif"> This supplemental
  release given to Albany International Corp. (&#147;Albany&#148;) by Michael C. Nahl (&#147;Executive&#148;)
  is executed in consideration for the covenants made by Albany in an Executive
  Separation Agreement signed by the Executive on _________.</font></P>
<P align="left"><font face="Times New Roman, Times, serif"> The Executive and
  his heirs, assigns, and agents release, waive, and discharge Albany, its directors,
  officers, employees, subsidiaries, affiliates, and agents from each and every
  claim, action or right of any sort, known or unknown, arising on or before the
  date of this Supplemental Release.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)
  The foregoing release includes, but is not limited to, any claim of discrimination
  on the basis of race, sex, religion, marital status, sexual orientation, national
  origin, handicap or disability, age, veteran status, special disabled veteran
  status, citizenship status; any other claim based on a statutory prohibition;
  any claim arising out of or related to an express or implied employment contract,
  any other contract affecting terms and conditions of employment, or a covenant
  of good faith and fair dealing; all tort claims; and all claims for attorney&#146;s
  fees or expenses.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)
  The Executive represents that he understands the foregoing release, that rights
  and claims under the Age Discrimination in Employment Act of 1967, as amended,
  are among the rights and claims against Albany he is releasing, and that he
  understands that he is not releasing any rights or claims arising after the
  date of this Supplemental Release.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)
  This Release shall not affect any rights of Executive pursuant to the aforesaid
  Release and Separation Agreement.</font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <TR>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">EXECUTIVE</FONT>
    </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width="50%"><font face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left><font size=2 face="Times New Roman, Times, serif">______________________________</font>
    </TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">DATE: _________________</FONT>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <font face="Times New Roman, Times, serif"><B><FONT size=2>Michael
      C. Nahl</FONT></B> </font></TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">WITNESS:
      _____________________</FONT> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
</TABLE>
<font face="Times New Roman, Times, serif"><BR>
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<P align="right"> <font face="Times New Roman, Times, serif"><B><U>Schedule 9</U></B></font></P>
<P align="center"> <font face="Times New Roman, Times, serif"><U>Post-Retirement
  Services</U></font></P>
<P align="left"><font face="Times New Roman, Times, serif"> Executive shall provide
  any and all reasonable assistance requested by his successor or by Albany&#146;s
  Chief Executive Officer that relates to his current job duties, including, without
  limitation: (a) assistance in discussions, meetings or negotiations with lenders
  or other financial institutions, (b) assistance or participation in meetings
  with or presentations to investors and analysts, and (c) providing such information
  as may be in his possession relating to any financial or other business matters
  of Albany; in each case, from time to time as may reasonably be requested. Such
  assistance shall not exceed 32 hours per month.</font></P>
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<DOCUMENT>
<TYPE>EX-10.(O)(XV)
<SEQUENCE>3
<FILENAME>e36147ex10oxv.htm
<DESCRIPTION>FORM OF SEVERANCE AGREEMENT
<TEXT>
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<BODY bgcolor="#ffffff" style="font-family: 'Times New Roman';font-size: 10pt;">
<P align="left"> <font face="Times New Roman, Times, serif"><U>Exhibit 10(o) (xv)</U></font></P>
<P align="center"> <font face="Times New Roman, Times, serif"><B>SEVERANCE AGREEMENT</B></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS
  SEVERANCE AGREEMENT (the &#147;Agreement&#148;), is made and entered into this 5th day
  of August, 2009 (the &#147;Effective Date&#148;) by and between Albany International Corp.,
  a Delaware corporation with its principal place of business at 1373 Broadway,
  Albany, New York (the &#147;Company&#148;), and ____________________ (&#147;Employee&#148;).</font></P>
<P align="center"> <font face="Times New Roman, Times, serif"><U>RECITALS</U></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Employee has been, and is currently, employed by the Company as an officer,
  or a key officer, in a critical managerial position; and</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Employee is employed by the Company on an at-will basis; and</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  the Company wishes to encourage Employee&#146;s continued service and dedication
  to the performance of his or her duties; and</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  Employee and the Company each believe it to be in their best interests to provide
  Employee with certain severance protections; and</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
  in order to induce Employee to remain in the employ of the Company, and in consideration
  for Employee&#146;s continued service to the Company, the Company agrees that
  Employee shall receive the benefits set forth in this Agreement in the event
  that Employee&#146;s employment with the Company is terminated in the circumstances
  described herein.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
  THEREFORE, in consideration of the mutual covenants and promises contained herein,
  and other good and valuable consideration, the receipt and sufficiency of which
  are hereby acknowledged, the parties hereto agree as follows:</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.
  <U>Employment</U>. The Company hereby agrees to continue Employee&#146;s current
  employment on an at-will basis in accordance with provisions contained herein
  below. Employee shall be based at the Company&#146;s headquarters in Albany, New
  York or such other place, as may be reasonably requested by the Company. Employee
  shall be subject to the supervision of, and shall have such authority as is
  delegated to him or her by the Chief Executive Officer, or the Board of Directors
  (the &#147;Board&#148;), as the case may be.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
  <U>Effect of Termination Without Cause</U>. If Employee&#146;s employment is terminated
  by the Company at any time before December 31, 2012 other than for <I>Cause
  </I>(as defined herein below), the Company shall pay to Employee, as severance,
  his or her gross monthly salary in effect as of the date of such termination
  (the &#147;Termination Date&#148;), less applicable withholdings and deductions
  required by law, or otherwise agreed to by the parties (the &#147;Severance Amount&#148;)
  for a period of eighteen (18) months. The number of months over which the Severance
  Amount shall be paid shall hereinafter be referred to as the &#147;Severance Period&#148;.
  The Severance Amount shall be paid in monthly installments during the Severance
  Period in accordance with the Company&#146;s customary payroll practices by
  check or direct deposit until paid in full and may contain a pro rata payment
  for any partial month or to account for any prepaid, but unearned salary. Notwithstanding
  the foregoing, any severance payments that otherwise would be due after the
  second anniversary of the Termination Date shall be paid in a lump sum on the
  Company&#146;s regular payroll date immediately preceding said second anniversary,
  together with any other severance payment due on that date.</font></P>
<P align="left"><font face="Times New Roman, Times, serif"> Payment of the severance
  benefits provided for under this Agreement shall be contingent upon Employee&#146;s
  timely execution, and nonrevocation, of a General Release and Separation Agreement
  substantially in the</font></P>
<P align="center"><font face="Times New Roman, Times, serif"> - 1 -</font></P>
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<P align="left"><font face="Times New Roman, Times, serif"> form attached hereto
  as <U>Exhibit A</U>. Payment of the severance benefits provided for under this
  Agreement shall not commence prior to the effective date of said General Release
  and Separation Agreement.</font></P>
<P align="left"><font face="Times New Roman, Times, serif"> For the purposes of
  this Section 2, &#147;Cause&#148; shall be deemed to exist upon:</font></P>
</font>
<blockquote>
  <blockquote>
    <p><font face="Times New Roman, Times, serif"> (i) the conviction of Employee
      for, or the entry of a plea of guilty or nolo contendere by Employee to,
      a felony charge or any crime involving moral turpitude;</font></p>
    <p><font face="Times New Roman, Times, serif"> (ii) Unlawful conduct on the
      part of Employee that may reasonably be considered to reflect negatively
      on the Company or compromise the effective performance of Employee&#146;s
      duties as determined by the Company in its sole discretion;</font></p>
    <p><font face="Times New Roman, Times, serif"> (iii) Employee&#146;s willful
      misconduct in connection with his or her duties or willful failure to use
      reasonable effort to perform substantially his or her responsibilities in
      the best interest of the Company (including, without limitation, breach
      by the Employee of this Agreement), except in cases involving Employee&#146;s
      mental or physical incapacity or disability;</font></p>
    <p><font face="Times New Roman, Times, serif"> (iv) Employee&#146;s willful
      violation of the Company&#146;s Business Ethics Policy or any other Company
      policy that may reasonably be considered to reflect negatively on the Company
      or compromise the effective performance of Employee&#146;s duties as determined
      by the Company in its sole discretion;</font></p>
    <p><font face="Times New Roman, Times, serif"> (v) fraud, material dishonesty,
      or gross misconduct in connection with the Company perpetrated by Employee;</font></p>
    <p><font face="Times New Roman, Times, serif"> (vi) Employee undertaking a
      position in competition with Company;</font></p>
    <p><font face="Times New Roman, Times, serif"> (vii) Employee having caused
      substantial harm to the Company with intent to do so or as a result of gross
      negligence in the performance of his or her duties; or</font></p>
    <p><font face="Times New Roman, Times, serif"> (viii) Employee having wrongfully
      and substantially enriched himself or herself at the expense of the Company.</font></p>
  </blockquote>
</blockquote>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
  <U>Restrictive Covenants.</U> Employee acknowledges the highly competitive nature
  of the Company&#146;s business and in recognition thereof agrees as follows:</font></P>
<blockquote>
  <p> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.
    During the Severance Period, whether on Employee&#146;s own behalf or on behalf
    of or in conjunction with any person, firm, partnership, joint venture, association,
    corporation or other business, organization, entity or enterprise whatsoever
    (&#147;Person&#148;), Employee shall not directly or indirectly:</font></p>
  <blockquote>
    <p><font face="Times New Roman, Times, serif"> (i) engage in any business
      which is in competition with the Company or any of its subsidiaries or affiliates
      in the same geographical areas as the Company or any of its subsidiaries
      or affiliates are engaged in their business (a &#147;Competitive Business&#148;);</font></p>
    <p><font face="Times New Roman, Times, serif"> (ii) enter into the employ
      of, or render any services to, any Person in respect of any Competitive
      Business;</font></p>
    <p><font face="Times New Roman, Times, serif"> (iii) acquire a financial interest
      in, or otherwise become actively involved with, any Competitive Business,
      directly or indirectly, as an individual, partner, shareholder, officer,
      director, principal, agent, trustee or consultant; provided, however, that
      in no event shall ownership of less than 2% of the outstanding capital stock
      of any corporation, in and of itself, be deemed a violation of this covenant
      if such capital stock is listed on a national securities exchange or regularly
      traded in an over-the-counter market; or</font></p>
  </blockquote>
</blockquote>
<P align="center"><font face="Times New Roman, Times, serif"> - 2 -</font></P>
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<blockquote>
  <blockquote>
    <p><font face="Times New Roman, Times, serif"> (iv) interfere with, or attempt
      to interfere with, any business relationships (whether formed before or
      after the Termination Date) between the Company or any of its subsidiaries
      or affiliates and their customers, clients, suppliers or investors.</font></p>
  </blockquote>
  <p> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.
    During the Severance Period, whether on Employee&#146;s own behalf or on behalf
    of or in conjunction with any Person, Employee shall not directly or indirectly:</font></p>
  <blockquote>
    <p><font face="Times New Roman, Times, serif"> (i) solicit or encourage any
      employee of the Company or any of its subsidiaries or affiliates to leave
      the employment of the Company or any of its subsidiaries or affiliates;
      or</font></p>
    <p><font face="Times New Roman, Times, serif"> (ii) hire any such employee
      who was employed by the Company or any of its subsidiaries or affiliates
      as of the Termination Date or, if later, within the six-month period prior
      to such date of hire.</font></p>
  </blockquote>
</blockquote>
<P align="left"><font face="Times New Roman, Times, serif"> It is expressly understood
  and agreed that although the parties consider the restrictions in this Paragraph
  3 to be reasonable, if a final determination is made by a court of competent
  jurisdiction that the time or territory or any other restriction contained in
  this paragraph is an unenforceable restriction against the Employee, the provisions
  of this paragraph shall not be rendered void but shall be deemed amended to
  apply as to such maximum time and territory and to such maximum extent as such
  court may determine to be enforceable.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
  <U>Confidential Information</U>. Employee acknowledges that as a consequence
  of his or her employment with the Company proprietary and confidential information
  relating to the Company&#146;s business may be, or have been, disclosed to or
  developed or acquired by the Employee which is not generally known to the trade
  or the general public and which is of actual or potential value to the Company
  (&#147;Proprietary Information&#148;). Such Proprietary Information includes,
  without limitation, information about trade secrets, inventions, patents, licenses,
  research projects, costs, profits, markets, sales, customer lists, proprietary
  computer programs, proprietary records, and proprietary software; plans for
  future development, and any other information not available to the trade or
  the general public, including information obtained from or developed in conjunction
  with a third party that is subject to a confidentiality or similar agreement
  between the Company and such third party. The Employee acknowledges and agrees
  that his or her relationship with the Company with respect to such Proprietary
  Information has been and shall be fiduciary in nature. Consequently, during
  the remainder of, and after, his or her employment by the Company, the Employee
  shall not use any Proprietary Information for his or her own benefit, or for
  the benefit of any other person or entity or for any other purpose whatsoever
  other than the performance of his or her work for the Company, and the Employee
  shall maintain all such information in confidence and shall not disclose any
  thereof to any person other than employees of the Company authorized to receive
  such information. This obligation is in addition to any similar obligations
  the Employee may have pursuant to any other agreement, statute or common-law.
  Nothing herein, however, shall preclude the Employee from describing his or
  her duties with the Company in future job interviews. After the fifth anniversary
  of the end of the Employee&#146;s employment by the Company, the term Proprietary
  Information shall be limited to information constituting trade secrets of the
  Company.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
  <U>Non-disparagement</U>. Employee specifically agrees and covenants that he
  or she will not directly or indirectly disparage the Company or any subsidiary
  or affiliate of the Company, or any of their respective officers, directors,
  employees, attorneys or representatives, or any of their respective products
  or services in any manner, at any time, to any person or entity. &#147;Disparage&#148;
  is defined as, but not limited to, any utterance whatsoever either verbal, in
  writing, by gesture or any behavior of any kind that might tend to or actually
  harm or injure the Company or any subsidiary or affiliate of the Company, whether
  intended or not.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.
  <U>Clawback</U>. Employee shall forfeit any unpaid Severance Amount due pursuant
  to this Agreement and shall, upon demand, repay any Severance Amounts already
  paid hereunder if, after the Termination Date:</font></P>
<P align="center"><font face="Times New Roman, Times, serif"> - 3 -</font></P>
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<blockquote>
  <blockquote>
    <p> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
      there is a significant restatement of the Company&#146;s financial results,
      caused or substantially caused by the fraud or intentional misconduct of
      the Employee;</font></p>
    <p> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
      Employee breaches any provision of this Agreement, including, without limitation,
      the covenants set for in paragraphs 3, 4 and 5; or</font></p>
    <p> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)
      the Company discovers conduct by Employee that would have permitted termination
      for Cause, provided that such conduct occurred prior to the Termination
      Date.</font></p>
  </blockquote>
</blockquote>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.
  <U>Remedies for Breach</U>. The Company and Employee agree that a breach by
  Employee of the provisions of this Agreement may cause irreparable harm to the
  Company which will be difficult to quantify and for which money damages will
  not be adequate. Accordingly, the Employee agrees that the Company shall have
  the right to obtain an injunction against the Employee, without any requirement
  for posting any bond or other security, enjoining any such breach or threatened
  breach in addition to any other rights or remedies available to the Company
  on account of any breach or threatened breach of this Agreement. Employee and
  the Company each further agree that if an action is commenced by any party alleging
  breach of this Agreement, the non-prevailing party shall be liable to the prevailing
  party for any and all available legal and equitable relief, as well as reasonable
  attorneys&#146; fees and costs associated with pursuing or defending such legal action.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.
  <U>Internal Revenue Code Section 409A.</U></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
  The payments and the payment schedules set forth herein are intended to be exempt
  from, or comply with, Section 409A of the Internal Revenue Code (&#147;Section
  409A&#148;). Accordingly, the Agreement shall be interpreted and performed so
  as to be exempt from Section 409A, but if that is not possible, the Agreement
  shall be interpreted and performed so as to comply with Section 409A. In the
  event any payments or benefits are deemed by the IRS to be non-compliant, this
  Agreement, at Employee&#146;s option, shall be modified, to the extent practical,
  so as to make it compliant by altering the payments or the timing of their receipt.
  The methodology to effect or address any necessary modifications shall be subject
  to reasonable and mutual agreement between the parties.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
  It is the intent of the parties that this Agreement provides payments and benefits
  that are either exempt from the distribution requirements of Section 409A of
  Code, or satisfy those requirements. Any distribution that is subject to the
  requirements of Section 409A may only be made based on the Employee&#146;s &#147;separation
  from service&#148; (as that term is defined under the final regulations under Section
  409A).</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
  Notwithstanding anything to the contrary in this Agreement, in the event that
  (i) a distribution of benefits is subject to Section 409A, (ii) at the time
  the distribution would otherwise be made to the Employee, the Employee is a
  &#147;specified employee&#148; (as that term is defined in the final regulations under
  Section 409A), and (iii) the distribution would otherwise be made during the
  6-month period commencing on the date of the Employee&#146;s separation from service,
  then such distribution will instead be paid to the Employee in a lump sum at
  the end of the 6-month period. The foregoing delay in the distribution of benefits
  shall be made in conformance with the final regulations under Section 409A.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.
  <U>Severability</U>. Employee and the Company intend for every provision of
  this Agreement to be fully enforceable. But, if a court with jurisdiction over
  this Agreement determines that all or part of any provision of this Agreement
  is unenforceable for any reason, the Company and Employee intend for each remaining
  provision and part to be fully enforceable as though the unenforceable provision
  or part had not been included in this Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.
  <U>Entire Agreement</U>. This Agreement and the exhibit hereto constitutes the
  entire agreement between the parties and supersedes all prior agreements and
  understandings, whether written or oral, relating to the subject matter of this
  Agreement.</font></P>
<P align="center"><font face="Times New Roman, Times, serif"> - 4 -</font></P>
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<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.
  <U>Amendment</U>. This Agreement may be amended or modified only by a written
  instrument executed by both the Company and Employee.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.
  <U>Governing Law</U>. This Agreement shall be construed, interpreted and enforced
  in accordance with the laws of the State of New York, except to the extent preempted
  by federal law.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.
  <U>Term</U>. This Agreement shall terminate on December 31, 2012; provided,
  however, that if Employee&#146;s employment is terminated by the Company on
  or before December 31, 2012 other than for cause, the parties&#146; respective
  rights and obligations under this Agreement shall survive for a period of five
  (5) years following the termination of this Agreement</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.
  <U>Successors and Assigns</U>. This Agreement will be binding upon and inure
  to the benefit of (a) the heirs, executors, and legal representatives of Employee
  upon Employee&#146;s death, and (b) any successor of the Company. Any such successor
  of the Company will be deemed substituted for the Company under the terms of
  this Agreement for all purposes. For this purpose, &#147;successor&#148; means any person,
  firm, corporation, or other business entity which at any time, whether by purchase,
  merger, or otherwise, directly or indirectly acquires all or substantially all
  of the assets or business of the Company. None of the rights of Employee to
  receive any payment pursuant to this Agreement may be assigned or transferred
  except by will or the laws of descent and distribution. Any other attempted
  assignment, transfer, conveyance, or other disposition of any right of the Employee
  under this Agreement will be null and void.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.
  <U>Waiver of Jury Trial</U>. The parties agree that they have waived, and hereby
  waive, their right to a jury trial with respect to any controversy, claim, or
  dispute arising out of or relating to this Agreement, or the breach thereof,
  or arising out of or relating to the employment of the Employee, or the termination
  thereof, including any claims under federal, state, or local law, and that any
  such controversy, claim, or dispute shall be heard and adjudicated in the state
  courts of the State of New York, in Albany County.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.
  <U>Non-admission of Liability</U>. This Agreement does not constitute an admission
  by the Company of any liability to Employee, and Employee understands and agrees
  that the Company denies any such liability to Employee.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.
  <U>Headings</U>. All captions and Section headings used in this Agreement are
  for convenient reference only and do not form a part of this Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
  WITNESS WHEREOF, Employee and a duly authorized representative of the Company
  have signed this Agreement as of the dates set forth below.</font></P>
<TABLE width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD></TD>
    <TD colspan="2"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">Employee</FONT>
    </TD>
    <TD width="3%" align=left>&nbsp; </TD>
    <TD width="57%" align=left><font size=2 face="Times New Roman, Times, serif">Albany
      International Corp.</font> </TD>
  </TR>
  <TR>
    <TD colspan=3><font face="Times New Roman, Times, serif">&nbsp;&nbsp; </font></TD>
  </TR>
  <TR valign="bottom">
    <TD width="40%" align=left><font face="Times New Roman, Times, serif">____________________
      </font></TD>
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">By:</FONT>
    </TD>
    <TD align=left><font face="Times New Roman, Times, serif">_______________________________</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size=2 face="Times New Roman, Times, serif">Name: Joseph
      G. Morone</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left><font size=2 face="Times New Roman, Times, serif">President
      and CEO</font> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left><font face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left> <FONT size=2 face="Times New Roman, Times, serif">Dated: ____________
      , 2009</FONT> </TD>
    <TD align=left colspan="2"> <FONT size=2 face="Times New Roman, Times, serif">Dated:
      </FONT> <font size=2 face="Times New Roman, Times, serif">_____________
      , 2009</font> </TD>
  </TR>
</TABLE>
<font face="Times New Roman, Times, serif"><BR>
<font face="Arial, Helvetica, sans-serif">
<P align="center"> - 5 -</P>
</font></font>
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<P align="center"> EXHIBIT A<BR>
  <BR>
  <U>General Release and Separation Agreement</U></P>
</font></font>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
  General Release and Separation Agreement (the or this &#147;Agreement&#148;)
  is made and entered into this ____ day of ___________ , 20___ by and between
  Albany International Corp. (the &#147;Company&#148;) and ____________ (&#147;Employee&#148;).</font></P>
<P align="left"><font face="Times New Roman, Times, serif"> In consideration of
  the acknowledgements and mutual covenants hereinafter set forth, and for other
  good and valuable consideration, the receipt and sufficiency of which are hereby
  acknowledged, the parties hereto agree as follows:</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.
  <U>Presentation of Agreement</U>. Employee acknowledges that on ____________
  ___, 20___ he or she was given this Agreement and was afforded _____ days to
  consider same.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
  <U>Legal Advice</U>. Employee was, and hereby is, advised to consult a lawyer
  before signing this Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
  <U>Acceptance of Agreement</U>. Employee may accept this Agreement only by signing,
  dating and delivering the Agreement to the Company (in the manner set forth
  in Section 12) on or before the Company&#146;s normal close of business on ___________
  ___, 20___. Time is of the essence with regard to this Section 3.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
  <U>Revocation</U>. Employee may revoke this Agreement at any time within seven
  (7) days after signing and delivering it to the Company by notifying the Company
  in writing (in the manner set forth in Section 12) of Employee&#146;s decision
  to revoke. Time is of the essence with regard to this Section 4.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
  <U>Effective Date</U>. The effective date of this Agreement shall be the eighth
  (8th) day after Employee signs and delivers it to the Company in accordance
  with Section 3 above, unless Employee revokes the Agreement before then in accordance
  with Section 4 above. If Employee fails to accept this Agreement in accordance
  with Section 3 above, or timely revokes the Agreement in accordance with Section
  4 above, the Agreement will not become effective and will not be binding on
  Employee or the Company.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.
  <U>Termination of Employment</U>. Employee&#146;s employment by the Company
  has been terminated effective ___________ ____, 20__. The parties agree that
  said termination of employment was a termination by the Company other than for
  Cause within the meaning of Section 2 of that certain Severance Agreement (the
  &#147;Severance Agreement&#148;) entered into by and between the parties with
  an effective date of July 13, 2009.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.
  <U>Severance Payments</U>. In accordance with, and subject to, the terms of
  the Severance Agreement, the Company shall pay to Employee the Severance Amount
  as specified in the Severance Agreement.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.
  <U>Employee&#146;s Acknowledgement</U>. Employee acknowledges and agrees that,
  except for this Agreement, Employee would have no right to receive the benefits
  described in Section 7.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.
  <U>Defined Term</U>. As used in this Agreement, the term &#147;Albany&#148;
  means, individually and collectively, Albany, each subsidiary and affiliate
  of Albany, and their respective employee welfare benefit plans, employee pension
  benefit plans, successors and assigns, as well as all present and former shareholders,
  directors, officers, fiduciaries, agents, representatives and employees of those
  companies and other entities.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.
  <U>General Release</U>. By signing this Agreement Employee immediately gives
  up and releases Albany from, and with respect to, any and all rights and claims
  that Employee may have against Albany (except as expressly state in subsection
  10(c) below), whether or not Employee presently is aware of such rights or claims
  or suspects them to exist. In addition, and without limiting the foregoing:</font></P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (a)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> The Employee on behalf of
      himself or herself, his or her agents, spouse, representatives, assignees,
      attorneys, heirs, executors and administrators, fully releases Albany and
      Albany&#146;s past and present successors, assigns, parents, divisions,
      subsidiaries, affiliates, officers, directors, shareholders, </font></TD>
  </TR>
</TABLE>
<p align="center"><font face="Times New Roman, Times, serif">- 6 -</font></p>
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<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD><font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TD>
    <TD>&nbsp;</TD>
    <TD><font face="Times New Roman, Times, serif"> employees, agents and representatives
      from any and all liability, claims, demands, actions, causes of action,
      suits, grievances, debts, sums of moneys, controversies, agreements, promises,
      damages, back and front pay, costs, expenses, attorneys fees, and remedies
      of any type, which Employee now has or hereafter may have, by reason of
      any matter, cause, act or omission arising out of or in connection with
      Employee&#146;s employment or the termination of his or her employment with
      Albany prior to Employee signing this Agreement, including, without limiting
      the generality of the foregoing, any claims, demands or actions arising
      under the Age Discrimination in Employment Act of 1967, the Older Workers
      Benefit Protection Act, the Employee Retirement Income Security Act of 1974,
      Title VII of the Civil Rights Act of 1964, the Civil Rights act of 1991,
      the Civil Rights Act of 1866, the Rehabilitation Act of 1973, the Americans
      with Disabilities Act of 1990, and any other federal, state or local statute,
      ordinance or common law regarding employment, discrimination in employment,
      or the termination of employment. Notwithstanding the foregoing, Employee
      is not waiving any right that cannot, as a matter of law, be voluntarily
      waived, including the right to file a charge or complaint with, or participate
      in the adjudication of charge or complaint of discrimination filed with,
      any federal, state or local administrative agency, though Employee expressly
      waives any right to recover any money or obtain any other relief or benefit
      as a result of any complaint or charge being filed with any federal, state
      or local administrative agency. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><font face="Times New Roman, Times, serif"> The foregoing release includes,
      but is not limited to, any claim of discrimination on the basis of race,
      sex, religion, marital status, sexual orientation, national origin, handicap
      or disability, age, veteran status, special disabled veteran status, citizenship
      status; any other claim based on a statutory prohibition; any claim arising
      out of or related to an express or implied employment contract, any other
      contract affecting terms and conditions of employment, or any covenant of
      good faith and fair dealing; all tort claims; and all claims for attorney&#146;s
      fees or expenses. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><font face="Times New Roman, Times, serif"> The Employee represents that
      he or she understands the foregoing release, that rights and claims under
      the Age Discrimination in Employment Act of 1967, as amended, are among
      the rights and claims against Albany he or she is releasing, and that he
      or she understands that he or she is not releasing any rights or claims
      arising after the date Employee signs this Agreement. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (b)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> If Employee breaches any obligation
      under this Agreement, Employee agrees that Albany shall not be obligated
      to continue to make payments under Section 7, and that Employee shall reimburse
      Albany for all payments made pursuant to Section 7. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top><font face="Times New Roman, Times, serif"> (c)&nbsp;
      &nbsp; &nbsp; </font></TD>
    <TD><font face="Times New Roman, Times, serif"> Nothing in this Agreement,
      however, shall be deemed a waiver of any vested rights or entitlements Employee
      may have under any retirement or other employee benefit plans administered
      by Albany. Nor shall anything in this Agreement operate to release Albany
      from its obligations under this Agreement. </font></TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
</TABLE>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.
  <U>Non-admission of Liability</U>. This Agreement does not constitute an admission
  by Albany of any liability to Employee, and Employee understands and agrees
  that Albany denies any such liability to Employee.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.
  <U>Notices</U>. Notices or other deliveries required or permitted to be given
  or made under this Agreement by Employee to Albany shall, except to the extent
  otherwise required by law, be deemed given or made if delivered by hand or by
  express mail or overnight courier service to Albany International Corp., 1373
  Broadway, Albany, New York 12204, Attention: _________________.</font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.
  <U>Headings</U>. All captions and Section headings used in this Agreement are
  for convenient reference only and do not form a part of this Agreement.</font></P>
<P align="center"><font face="Times New Roman, Times, serif"> - 7 -</font></P>
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<P align="left"> <font face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
  WITNESS WHEREOF, Employee and a duly authorized representative of the Company
  have signed this Agreement as of the dates set forth below.</font></P>
<table width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <tr>
    <td width="37%"></td>
    <td colspan="2"></td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="Times New Roman, Times, serif">Employee</font>
    </td>
    <td width="3%" align=left>&nbsp; </td>
    <td width="60%" align=left><font size=2 face="Times New Roman, Times, serif">Albany
      International Corp.</font> </td>
  </tr>
  <tr>
    <td colspan=3><font face="Times New Roman, Times, serif">&nbsp;&nbsp; </font></td>
  </tr>
  <tr valign="bottom">
    <td align=left><font face="Times New Roman, Times, serif">____________________
      </font></td>
    <td align=left> <font size=2 face="Times New Roman, Times, serif">By:</font>
    </td>
    <td align=left><font face="Times New Roman, Times, serif">_______________________________</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp; </td>
    <td align=left><font size=2 face="Times New Roman, Times, serif">Name: Joseph
      G. Morone</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp; </td>
    <td align=left><font size=2 face="Times New Roman, Times, serif">President
      and CEO</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=left><font face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td align=left> <font size=2 face="Times New Roman, Times, serif">Dated: ____________
      , 20__</font> </td>
    <td align=left colspan="2"> <font size=2 face="Times New Roman, Times, serif">Dated:
      </font> <font size=2 face="Times New Roman, Times, serif">_____________
      , 20__</font> </td>
  </tr>
</table>
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<P align="center"> - 8 -</P>
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<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>4
<FILENAME>e36147ex10-09.htm
<DESCRIPTION>SECURITIES PURCHASE AGREEMENT
<TEXT>
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<P align="right"> <B>E<font size="1">XECUTION</font> V<font size="1">ERSION</font></B></P>
<P align="center">
<B>EXHIBIT (10.9)</B></P>
<P align="center">
<B><U>SECURITIES PURCHASE AGREEMENT</U></B></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This SECURITIES PURCHASE AGREEMENT, dated as of May 21, 2009 (this &#147;<U>Agreement</U>&#148;), is by and between Albany International Corp., a corporation organized under the laws of Delaware (the
&#147;<U>Company</U>&#148;), and Citadel Equity Fund Ltd., a company organized under the laws of the Cayman Islands (the &#147;<U>Noteholder</U>&#148;).</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Noteholder is the beneficial owner of &#36;40,000,000 in aggregate principal amount of the Company&#146;s 2.25% Convertible Senior Notes Due 2026 (the &#147;<U>Convertible Notes</U>&#148;);</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Noteholder has requested that the Company exchange certain principal amounts of the Convertible Notes beneficially owned by the Noteholder for (i) equal aggregate principal amounts of the Company&#146;s
2.25% Senior Notes due 2026 (the &#147;<U>Securities</U>&#148;) <U>plus </U>(ii) cash in the amount of &#36;7.50 per &#36;1,000 principal amount of Convertible Notes delivered for exchange available from cash on hand at the Company <U>plus </U>(iii)
accrued but unpaid interest on the Convertible Notes delivered for exchange (each such transaction, an &#147;<U>Exchange</U>&#148;); and</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, on each of the First Closing Date and the Second Closing Date, immediately following each Exchange, the Noteholder desires to sell, and the Company desires to purchase, upon the terms and subject to the
conditions set forth in this Agreement, &#36;20,000,000 in aggregate principal amount of the Securities beneficially owned by the Noteholder for certain purchase prices per Security set forth below, which purchase prices will be paid from cash on
hand and/or a borrowing under the Company&#146;s Revolving Credit Facility (as defined below) (each such transaction, a &#147;<U>Repurchase</U>&#148;).</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the foregoing and the covenants, agreements and warranties contained herein, the sufficiency of which as consideration is hereby acknowledged, the parties agree as follows:</P>
<P align="left">
1. <B><U>Definitions</U></B><B>. </B>When used herein, the following terms shall have the indicated meanings:</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Encumbrance</U>&#148; means any pledge, hypothecation, assignment, lien, restriction, charge, claim, security interest, option, preference, priority or other preferential arrangement of any kind or nature
whatsoever.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exchange Agreement</U>&#148; means the Exchange Agreement dated as of the date hereof by and between the Company and the Noteholder.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>First Closing Date</U>&#148; means July 1, 2009, or such other date as the parties may mutually agree upon in writing.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchase Price</U>&#148; means in respect of (i) the Securities purchased on the First Closing Date, an amount equal to &#36;622.50 per &#36;1,000 principal amount of Securities purchased on such date and (ii)
the Securities purchased on the Second Closing Date (as defined below), an amount equal to &#36;647.50 per &#36;1,000 principal amount of the Securities purchased on such date.</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Revolving Credit Facility</U>&#148; means the credit facility established by the &#36;460,000,000 Five-Year Revolving Credit Facility Agreement, dated as of April 14, 2006, among the Company, the lenders party
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Europe Limited, as London Agent, as amended from time to time.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Second Closing Date</U>&#148; means October 1, 2009, or such other date as the parties may mutually agree upon in writing.</P>
<P align="left">
2. <B><U>Sale and Purchase. </U></B>(a) Upon the terms and subject to the conditions of this Agreement, on each of the First Closing Date and the Second Closing Date (each such date, a &#147;<U>Closing Date</U>&#148;), the Noteholder shall sell to
the Company free and clear of any and all Encumbrances, and the Company shall purchase from the Noteholder, &#36;20,000,000 in aggregate principal amount of the Securities held by the Noteholder.</P>
<P align="left">
(b) Subject to the satisfaction or waiver of the conditions contained in this Agreement, the transactions contemplated by this Agreement shall occur at 10:00 a.m. (New York City time) on each Closing Date.</P>
<P align="left">
(c) On each Closing Date, the Company shall pay the Purchase Price to the Noteholder by wire transfer of immediately available funds to the following bank account (or to such other account as the Noteholder shall indicate to the Company in writing
no less than three (3) business days before the relevant Closing Date):</P>
<table border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <tr>
    <td></td>
    <td></td>
    <td></td>
  </tr>
  <tr valign="bottom">
    <td align=left width="3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=left width="20%"> <font size=2>Account Name:</font> </td>
    <td align=left> <font size=2>Citadel Equity Fund</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=left> <font size=2>Bank:</font> </td>
    <td align=left> <font size=2>Bank of New York</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=left> <font size=2>Attention:</font> </td>
    <td align=left> <font size=2>Joe Franklin</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=left> <font size=2>Account Number:</font> </td>
    <td align=left> <font size=2>8900-472-545</font> </td>
  </tr>
  <tr valign="bottom">
    <td align=left>&nbsp;</td>
    <td align=left> <font size=2>ABA Number:</font> </td>
    <td align=left> <font size=2>021000018</font> </td>
  </tr>
</table>
<P align="left">
against delivery of the Securities by the Noteholder to the Company for cancellation.</P>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
        <TD nowrap valign=top>
3.&nbsp; &nbsp; &nbsp;  </TD>
        <TD width=100%>
<B><U>Representations and Warranties of the Noteholder. </U></B>The Noteholder hereby represents and warrants on the date hereof:       </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top> (a)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <U>Organization; Requisite Authority</U>. The Noteholder is
      a company duly organized, validly existing and in good standing under the
      laws of the Cayman Islands. The Noteholder has full power and authority
      to enter into this Agreement and to consummate the transactions contemplated
      hereby. </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <U>Authorization; No Breach</U>. The execution, delivery and
      performance of this Agreement have been duly authorized by the Noteholder.
      This Agreement, when executed and delivered by the Noteholder in accordance
      with the terms hereof, shall constitute a valid, binding and enforceable
      obligation of the Noteholder. The execution of this Agreement by the Noteholder
      and the consummation by the Noteholder of the transactions contemplated
      hereby do not and will not (i) require the consent, approval, authorization,
      order, registration or qualification of, or filing with, any governmental
      authority or court, or body or arbitrator having jurisdiction over the Noteholder;
      and (ii) constitute or result in a breach, violation or </TD>
  </TR>
</TABLE>
<P align="center"> 2</P>

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<TD>&nbsp;</TD> <TD width=100%>
default under any material note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license, whether written or oral, express or implied, or the Noteholder&#146;s charter, bylaws or other organizational document, or any
statute, law, ordinance, decree, order, injunction, rule, directive, judgment or regulation of any court, administrative or regulatory body, governmental authority, arbitrator, mediator or similar body having jurisdiction over the Noteholder or
cause the acceleration or termination of any obligation or right of the Noteholder under any such document.     </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(c)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Beneficial Ownership</U>. The Noteholder is the beneficial owner of the aggregate principal amount of the Securities set forth in Section 2(a), and such Securities are owned free and clear of all Encumbrances (other than Encumbrances that the
Noteholder may have created in the ordinary course of its business in connection with financing its holdings). There are no proceedings relating to the Securities pending or, to the Noteholder&#146;s knowledge, threatened before any court,
arbitrator or administrative or governmental body that would adversely affect the Noteholder&#146;s right to transfer the Securities to the Company and the Securities will be transferred to the Company, free and clear of any and all
Encumbrances.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(d)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Broker&#146;s Fees</U>. Neither the Noteholder nor any person acting on behalf of the Noteholder has retained or authorized any investment banker, broker, finder or other intermediary to act on behalf of the Noteholder or incurred any liability
for any banker&#146;s, broker&#146;s or finder&#146;s fees or commissions in connection with the transactions contemplated by this Agreement.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(e)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Qualified Institutional Buyer</U>. The Noteholder holds the Securities for its own account and it is a &#147;qualified institutional buyer&#148; within the meaning of Rule 144A under the Securities Act of 1933, as amended (the &#147;Securities
Act&#148;). The Noteholder has not communicated with and will not communicate with any person in connection with the transactions contemplated by this Agreement and the Exchange Agreement. The Noteholder is a sophisticated institutional investor and
has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Exchange and an investment in the Securities.    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(f)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Reporting Obligations</U>. The Noteholder has no obligation to, and will not, report the sale of the Securities to the Company in a manner that would result in contemporaneous public disclosure of the transactions contemplated by this
Agreement.      </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
        <TD nowrap valign=top>
4.&nbsp; &nbsp; &nbsp;  </TD>
        <TD width=100%>
<B><U>Representations and Warranties of the Company</U></B>. The Company hereby represents and warrants as of the date hereof:  </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top> (a)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <U>Organization; Requisite Authority</U>. The Company is a
      corporation duly organized, validly existing and in good standing under
      the laws of the State of Delaware. The Company possesses all requisite power
      and authority necessary to enter into this Agreement and to consummate the
      transactions contemplated by this Agreement, to own and operate its properties,
      and to conduct its business as described in the Company&#146;s statements,
      reports, schedules, forms and other documents filed by the Company with
      the Securities and Exchange Commission (the &#147;<U>SEC</U>&#148;) since
      January 1, 2008 (the &#147;<U>SEC Documents</U>&#148;) and as now being
      conducted. </TD>
  </TR>
</TABLE>
<P align="center"> 3</P>

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(b)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Authorization; No Breach</U>. The execution, delivery and performance of this Agreement have been duly authorized by the Company. This Agreement, when executed and delivered by the Company in accordance with the terms hereof, shall constitute a
valid, binding and enforceable obligation of the Company. The execution of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not (i) require the consent, approval,
authorization, order, registration or qualification of, or filing with, any governmental authority or court, or body or arbitrator having jurisdiction over the Company; and (ii) constitute or result in a breach, violation or default under any
material note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license, whether written or oral, express or implied, or with the Company&#146;s charter, by-laws or other organizational document, or any statute, law,
ordinance, decree, order, injunction, rule, directive, judgment or regulation of any court, administrative or regulatory body, governmental authority, arbitrator, mediator or similar body having jurisdiction over the Company or cause the
acceleration or termination of any obligation or right of the Company under any such document.  </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(c)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Reports and Financial Statements</U>. The Company has filed all reports on Form 10-K, Form 10-Q, Form 8-K and all other reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the &#147;<U>Exchange
Act</U>&#148;), since January 1, 2008, and all such filings, as may have been amended, complied in all material respects with the Exchange Act and the rules and regulations promulgated thereunder as of the date filed with the SEC or amended, as the
case may be. None of the SEC Documents, as of their respective dates (as amended through the date hereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(d)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<U>Broker&#146;s Fees</U>. Neither the Company nor any person acting on behalf of the Company has retained or authorized any investment banker, broker, finder or other intermediary to act on behalf of the Company or incurred any liability for any
banker&#146;s, broker&#146;s or finder&#146;s fees or commissions in connection with the transactions contemplated by this Agreement.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
        <TD nowrap valign=top>
5.&nbsp; &nbsp; &nbsp;  </TD>
        <TD width=100%>
<B><U>Conditions Precedent to Obligations of the Company. </U></B>The obligations of the Company are subject to the satisfaction of the following conditions precedent: </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
        <TD nowrap valign=top>
(a)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
The representations and warranties of the Noteholder contained herein shall be true and correct as of each Closing Date as if made on each Closing Date.        </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(b)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
The Noteholder shall have complied with all of its covenants and agreements contained herein to be performed by it on or prior to each Closing Date.    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(c)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
An Exchange under the Exchange Agreement shall have occurred and the Repurchase of the Securities issued under such Exchange shall not have occurred.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top> 6.&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>Conditions Precedent to Obligations of the Noteholder.
      </U></B>The obligations of the Noteholder are subject to the satisfaction
      of the following conditions precedent: </TD>
  </TR>
</TABLE>
<P align="center"> 4</P>

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<TR>
        <TD nowrap valign=top>
(a)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
The representations and warranties of the Company contained herein shall be true and correct as of each Closing Date as if made on each Closing Date.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(b)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
The Company shall have complied with all of its covenants and agreements contained herein to be performed by it on or prior to each Closing Date.       </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(c)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
An Exchange under the Exchange Agreement shall have occurred and the Repurchase of the Securities issued under such Exchange shall not have occurred.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
        <TD nowrap valign=top>
7.&nbsp; &nbsp; &nbsp;  </TD>
        <TD width=100%>
<B><U>Disclosure</U></B><B>. </B>The Company shall disclose to the public generally, no later than four business days immediately following the date of this Agreement, such of the Confidential Information as is necessary to permit the Noteholder
(including its affiliates and representatives) to purchase and sell (without contravening applicable securities or other law) any securities of the Company. For purposes of this Section 7, &#147;Confidential Information&#148; shall mean any
non-public information that the Company or any of its representatives may have furnished to the Noteholder (including its affiliates and representatives), in either case whether oral, written, electronic or in some other form, including &#150;
without limitation &#150; the existence of the transactions contemplated by this Agreement and the Exchange Agreement. In the event of the failure of the Company to make the disclosure contemplated by the first sentence of this Section 7, the
Noteholder shall be authorized to make any such disclosure.     </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
<B>8.</B>&nbsp; &nbsp; &nbsp;   </TD>
        <TD width=100%>
<B><U>Termination</U></B><B>. </B>In the event the Exchange Agreement is terminated pursuant to the terms thereof, or the First Closing Date hereunder has not occurred for any other reason by July 10, 2009, or the First Closing Date and the Second
Closing Date hereunder have not occurred for any other reason by October 10, 2009, either party may terminate this Agreement by notice to the other party, <U>provided</U>, however, that the party seeking to terminate this Agreement pursuant to this
Section 8 shall not have such right if its failure to (i) fulfill any obligation under this Agreement or the Exchange Agreement, or (ii) act in good faith has been a significant cause of, or resulted in, the failure of the transactions contemplated
by this Agreement or the Exchange Agreement to have occurred by such date.      </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
9.&nbsp; &nbsp; &nbsp;  </TD>
        <TD width=100%>
<B><U>Miscellaneous</U></B>.    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top> (a)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>Further Assurances</U></B><B>. </B>In case at any time
      after each Closing Date any further action is necessary or desirable to
      carry out the purposes of this Agreement or the transactions contemplated
      hereby, each of the parties will take such further action (including the
      execution and delivery of such further instruments and documents) as any
      other party may reasonably request. </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>Severability</U></B><B>. </B>If any provision of this
      Agreement shall be held invalid, illegal or unenforceable, the validity,
      legality and enforceability of the other provisions hereof shall not be
      affected thereby. </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>Counterparts. </U></B>This Agreement may be executed
      in any number of counterparts (including by facsimile transmission), each
      of which shall be deemed an original, but all of which together shall constitute
      one and the same agreement. </TD>
  </TR>
</TABLE>
<P align="center"> 5</P>

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<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
        <TD nowrap valign=top>
(d)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<B><U>Descriptive Headings; Interpretation</U></B>. The headings and captions used in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(e)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<B><U>Entire Agreement. </U></B>This Agreement and the agreements and documents referred to herein contain the entire agreement and understanding between the parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter in any way.    </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(f)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<B><U>Amendment, Waiver. </U></B>This Agreement may be amended, modified or supplemented but only in a writing signed by the Noteholder and the Company. No waiver of any of the provisions or conditions of this Agreement or any of the rights of a
party hereto shall be effective or binding unless such waiver shall be in writing and signed by the party claimed to have given or consented thereto.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(g)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<B><U>Expenses. </U></B>Each party hereto will bear its own expenses in connection with the transactions contemplated hereby.   </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
        <TD nowrap valign=top>
(h)&nbsp; &nbsp; &nbsp;         </TD>
        <TD width=100%>
<B><U>Notices. </U></B>Any notice, request, instruction or other document to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given, (a) when received if given in person or by a courier or a courier service
or (b) on the date of transmission if sent by electronic transmission:  </TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD nowrap valign=top> (a)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> If to the Noteholder, addressed as follows: </TD>
  </TR>
  <TR>
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width=100%> Citadel Solutions LLC <br>
      131 S. Dearborn Street <br>
      Chicago, IL 60603 <br>
      Attention: Kevin Newstead <br>
      Telephone: 312-443-5497 <br>
      Facsimile: 312-267-7764 </TD>
  </TR>
  <TR>
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top>&nbsp;</TD>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> If to the Company, addressed as follows: </TD>
  </TR>
  <TR>
    <TD colspan=4>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width=100%> Albany International Corp. <br>
      1373 Broadway <br>
      Menands, NY 12204 <br>
      Attention: Charles J. Silva, Jr. <br>
      Telephone: 518-445-2277 <br>
      Facsimile: 518-447-6575 </TD>
  </TR>
</TABLE>
<p>or to such other person or address as a party hereto may designate for itself
  by notice given as herein provided.</p>
<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD nowrap valign=top> (i)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>APPLICABLE LAW; WAIVER OF JURY TRIAL</U></B><U>. </U>THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED  </TD>
  </TR>


</TABLE>
<P align="center"> 6</P>

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<TABLE border=0 cellspacing=0 cellpadding=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD>&nbsp;</TD>
    <TD width=100%> INTO AND TO BE PERFORMED IN SUCH STATE. THE PARTIES HERETO
      AGREE TO WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE ARISING FROM OR
      RELATED TO THIS AGREEMENT. </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (j)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>Submission to Jurisdiction</U></B>. Each party agrees
      that any suit, action or proceeding brought by it against the other party
      arising out of or based upon this Agreement or the transactions contemplated
      hereby may be instituted in any state or federal court in The City of New
      York, New York, and waives any objection which it may now or hereafter have
      to the laying of venue of any such proceeding, and irrevocably submits to
      the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
    </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap valign=top> (k)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>Specific Performance. </U></B>The parties acknowledge
      that money damages will not be a sufficient remedy for breach of this Agreement
      and that the parties hereto may obtain specific performance or other injunctive
      relief, without the necessity of posting a bond or security therefor. </TD>
  </TR>
  <TR>
    <TD colspan=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD height="31" valign=top nowrap> (l)&nbsp; &nbsp; &nbsp; </TD>
    <TD width=100%> <B><U>No Construction Against Draftsperson</U></B>. The parties
      have participated jointly in the negotiation and drafting of this Agreement.
      In the event an ambiguity or question of intent or interpretation arises,
      this Agreement shall be construed as if drafted jointly by the parties,
      and no presumption or burden of proof shall arise favoring or disfavoring
      any party by virtue of the authorship of any of the provisions of this Agreement.
    </TD>
  </TR>
</TABLE>
<P align="center">
<I>[Remainder of page intentionally left blank]</I></P>
<P align="center"> 7</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.</P>
<TABLE width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="top">
    <TD width="65%"></TD>
    <TD colspan="2">ALBANY INTERNATIONAL CORP.</TD>
  </TR>
  <TR valign="top">
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD></TD>
    <TD>By:</TD>
    <TD>/s/ Michael C. Nahl <hr size="1" noshade>
      Name: Michael C. Nahl<br>
      Title: Executive Vice President<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      and Chief Financial Officer </TD>
  </TR>
  <TR valign="top">
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD></TD>
    <TD colspan="2">CITADEL EQUITY FUND LTD.</TD>
  </TR>
  <TR valign="top">
    <TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD></TD>
    <TD>By: </TD>
    <TD>/s/ Erica L. Tarpey <hr size="1" noshade>
      Name: Erica L. Tarpey <br>
      Title: Authorized Signatory</TD>
  </TR>
</TABLE>
<BR>
<P align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Signature Page <br>
  Purchase Agreement</I></P>

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</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>5
<FILENAME>e36147ex10-10.htm
<DESCRIPTION>EXCHANGE AGREEMENT
<TEXT>
<HTML>
<HEAD>
   <TITLE></TITLE>
</HEAD>

<BODY bgcolor="#ffffff" style="font-family: 'Times New Roman';font-size: 10pt;">





<P align="right">
<B>EXECUTION VERSION</B></P>
<P align="center">
<B>EXHIBIT (10.10)</B></P>
<P align="center">
<B><U>EXCHANGE AGREEMENT</U></B></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Exchange Agreement (this &#147;<U>Agreement</U>&#148;) is made and entered into as of May 21, 2009 by and between Albany International Corp., a Delaware corporation (the &#147;<U>Company</U>&#148;), and Citadel
Equity Fund Ltd., a company organized under the laws of the Cayman Islands (the &#147;<U>Noteholder</U>&#148;). The Company and the Noteholder are sometimes collectively referred to herein as the &#147;<U>Parties</U>&#148; and individually as a
&#147;<U>Party</U>.&#148;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Noteholder is the beneficial owner of &#36;40,000,000 in aggregate principal amount of the Company&#146;s 2.25% Convertible Senior Notes due 2026 (the &#147;<U>Convertible Notes</U>&#148;);</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Noteholder has requested that the Company exchange, and the Company is willing to exchange certain principal amounts of the Convertibles Notes beneficially owned by the Noteholder for (i) equal aggregate
principal amounts of the Company&#146;s 2.25% Senior Notes due 2026 (the &#147;<U>New Notes</U>&#148;), in the form attached as <U>Annex A </U>hereto plus (ii) the Cash Payment (as defined below) available from cash on hand at the Company (each such
transaction, an &#147;<U>Exchange</U>&#148;); and</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, on each of the First Closing Date and the Second Closing Date (as defined below), immediately following each Exchange, the Noteholder desires to sell, and the Company desires to purchase, upon the terms and
subject to the conditions set forth in a Securities Purchase Agreement, dated as of the date hereof (the &#147;<U>Securities Purchase Agreement</U>&#148;), between the Noteholder and the Company, in the form attached as <U>Annex B </U>hereto,
&#36;20,000,000 in aggregate principal amount of New Notes beneficially owned by the Noteholder for certain purchase prices per New Note set forth in the Securities Purchase Agreement, which purchase prices will be paid from cash on hand and/or a
borrowing under the Company&#146;s &#36;460,000,000 Five-Year Revolving Credit Facility Agreement, dated as of April 14, 2006, among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Europe
Limited, as London Agent, as amended from time to time.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the mutual covenants, agreements and understandings herein contained, the Parties hereby agree as follows:</P>
<P align="left">
SECTION 1. <U>Exchange of Notes</U>.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <U>The Exchange</U>. On and subject to the terms and conditions set forth in this Agreement, on each Closing Date (as defined below), the Noteholder shall sell, assign and transfer to the Company, free and clear of
any and all Encumbrances, all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of, &#36;20,000,000 in aggregate principal amount of Convertible Notes beneficially owned by the
Noteholder in exchange for (i) the issuance by the Company of an equal aggregate principal amount of the New Notes and (ii) the payment by the Company of an amount in cash equal to &#36;150,000, <U>plus </U>any accrued but unpaid interest through
the relevant Closing Date on the</P>

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<P align="left">
Convertible Notes delivered for Exchange (the &#147;<U>Cash Payment</U>&#148;), payable from cash on hand at the Company available for general corporate purposes.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <U>Closing Date </U>. The transactions contemplated hereunder shall take place at 10:00a.m. (New York City time) on each of July 1, 2009 and October 1, 2009, or at such other time or on such other date as the
parties may mutually agree upon in writing (each such date, a &#147;<U>Closing Date</U>&#148;). On each Closing Date:</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
  the Noteholder shall deliver to the Company &#36;20,000,000 in aggregate principal
  amount of Convertible Notes via book-entry delivery to the following account:</P>

  <table width="100%" border="0" cellpadding="4" cellspacing="0">
    <tr valign="top">
      <td width="40%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
      <td><font size="2">DTC Participant Name: Bank of New York <br>
        DTC Participant Number: 901 <br>
        ID Agent: Citizens Bank #80901 <br>
        ID Agent Account No.: 101400<br>
        Further Credit: Albany International Corp. #7011536</font></td>
    </tr>
  </table>

<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
  the Company shall deliver to the Noteholder &#36;20,000,000 in aggregate principal
  amount of New Notes via physical delivery.</p>

<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
  the Company shall make the Cash Payment by wire transfer in immediately available
  funds to the following bank account (or to such other account as the Noteholder
  shall indicate to the Company in writing no less than three (3) business days
  before the relevant Closing Date):</P>
<blockquote>
  <p align="left"> Account Name: Citadel Equity Fund<BR>
    Bank: Bank of New York<BR>
    Attention: Joe Franklin<BR>
    Account Number: 8900-472-545<BR>
    ABA Number: 021000018</p>
</blockquote>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 2. <U>Conditions to the Obligations of the Noteholder</U>. The obligations of the Noteholder to consummate the transactions contemplated hereby are subject to the satisfaction as of each Closing Date of the
following conditions:</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1
  <U>Representations and Warranties</U>. The representations and warranties contained
  in <U>Section 4 </U>hereof shall be true and correct at and as of each Closing
  Date as though made on each Closing Date.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2
  <U>Compliance with Covenants</U>. The Company shall have complied with all of
  its covenants and agreements contained herein to be performed by it on or prior
  to each Closing Date.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3
  <U>Securities Purchase Agreement</U>. The Securities Purchase Agreement shall
  (i) have been duly executed and delivered by the Company, (ii) be in full force
  and effect and (iii) not have been modified, amended or terminated as of each
  Closing Date.</P>
<P align="center">
2</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 3. <U>Conditions to the Obligations of the Company</U>. The obligations of the Company to consummate the transactions contemplated hereby are subject to the satisfaction as of each Closing Date of the following
conditions:</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1
  <U>Representations and Warranties</U>. The representations and warranties contained
  in <U>Section 5 </U>hereof shall be true and correct at and as of each Closing
  Date as though made on each Closing Date.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2
  <U>Compliance with Covenants</U>. The Noteholder shall have complied with all
  of its covenants and agreements contained herein to be performed by it on or
  prior to each Closing Date.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3
  <U>Securities Purchase Agreement</U>. The Securities Purchase Agreement shall
  (i) have been duly executed and delivered by the Noteholder, (ii) be in full
  force and effect and (iii) not have been modified, amended or terminated as
  of each Closing Date.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 4. <U>Representations and Warranties of the Company</U>. As a material inducement to the Noteholder to enter into this Agreement, the Company hereby represents and warrants to the Noteholder that the following
statements are true and correct as of the date of this Agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1
  <U>Organization; Requisite Authority</U>. The Company is a corporation duly
  organized, validly existing and in good standing under the laws of the State
  of Delaware. The Company possesses all requisite power and authority necessary
  to enter into this Agreement and to consummate the transactions contemplated
  by this Agreement, to own and operate its properties, and to conduct its business
  as described in the Company&#146;s statements, reports, schedules, forms and
  other documents filed by the Company with the Securities and Exchange Commission
  (the &#147;<U>SEC</U>&#148;) since January 1, 2008 (the &#147;<U>SEC Documents</U>&#148;)
  and as now being conducted.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2
  <U>Authorization; No Breach</U>. The execution, delivery and performance of
  this Agreement have been duly authorized by the Company. This Agreement, when
  executed and delivered by the Company in accordance with the terms hereof, shall
  constitute a valid, binding and enforceable obligation of the Company. The execution
  of this Agreement by the Company and the consummation by the Company of the
  transactions contemplated hereby do not and will not (i) require the consent,
  approval, authorization, order, registration or qualification of, or filing
  with, any governmental authority or court, or body or arbitrator having jurisdiction
  over the Company; and (ii) constitute or result in a breach, violation or default
  under any material note, bond, mortgage, deed, indenture, lien, instrument,
  contract, agreement, lease or license, whether written or oral, express or implied,
  or the Company&#146;s charter, bylaws or other organizational document, or any
  statute, law, ordinance, decree, order, injunction, rule, directive, judgment
  or regulation of any court, administrative or regulatory body, governmental
  authority, arbitrator, mediator or similar body having jurisdiction over the
  Company or cause the acceleration or termination of any obligation or right
  of the Company under any such document.</P>
<P align="center">
3</P>

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<!-- -->
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3
  <U>Reports and Financial Statements</U>. The Company has filed all reports on
  Form 10-K, Form 10-Q, Form 8-K and all other reports required to be filed with
  the SEC pursuant to the Securities Exchange Act of 1934, as amended (the &#147;<U>Exchange
  Act</U>&#148;), since January 1, 2008, and all such filings, as may have been
  amended, complied in all material respects with the Exchange Act and the rules
  and regulations promulgated thereunder as of the date filed with the SEC or
  amended, as the case may be. None of the SEC Documents, as of their respective
  dates (as amended through the date hereof), contained any untrue statement of
  a material fact or omitted to state a material fact required to be stated therein
  or necessary to make the statements therein, in light of the circumstances under
  which they were made, not misleading.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4
  <U>Broker&#146;s Fees</U>. Neither the Company nor any person acting on behalf
  of the Company has retained or authorized any investment banker, broker, finder
  or other intermediary to act on behalf of the Company or incurred any liability
  for any banker&#146;s, broker&#146;s or finder&#146;s fees or commissions in
  connection with the transactions contemplated by this Agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5
  <U>New Notes</U>. The New Notes have been duly and validly authorized and, when
  executed and delivered to and paid for by the Noteholder under this Agreement,
  will constitute legal, valid and binding obligations of the Company (subject,
  as to enforcement remedies, to applicable bankruptcy, insolvency, moratorium,
  reorganization or similar laws affecting creditors&#146; rights generally and
  by general equitable principles).</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6
  <U>Private Placement</U>. The Company acknowledges and agrees that the New Notes
  have not been and will not be registered under the U.S. Securities Act of 1933,
  as amended (the &#147;<U>Securities Act</U>&#148;), and may not be offered,
  sold, transferred or otherwise disposed of at any time except (i) to the Company
  or a subsidiary thereof or (ii) pursuant to another available exemption under
  the Securities Act. The Company has not made and will not make, directly or
  indirectly, offers or sales of the New Notes or any other securities, or solicit
  offers to buy the New Notes or any other securities, under circumstances that
  would require the registration of any of the New Notes under the Securities
  Act in connection with the transactions contemplated by this Agreement.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 5. <U>Representations and Warranties of the Noteholder</U>. As a material inducement to the Company to enter into this Agreement, the Noteholder hereby represents and warrants to the Company that the following
statements are true and correct as of the date of this Agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1
  <U>Organization; Requisite Authority</U>. The Noteholder is a company duly organized,
  validly existing and in good standing under the laws of the Cayman Islands.
  The Noteholder has full power and authority to enter into this Agreement and
  to consummate the transactions contemplated hereby.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2
  <U>Authorization; No Breach</U>. The execution, delivery and performance of
  this Agreement have been duly authorized by the Noteholder. This Agreement,
  when executed and delivered by the Noteholder in accordance with the terms hereof,
  shall constitute a valid,</P>
<P align="center">
4</P>

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<P align="left">
binding and enforceable obligation of the Noteholder. The execution of this Agreement by the Noteholder and the consummation by the Noteholder of the transactions contemplated hereby do not and will not (i) require the consent, approval,
authorization, order, registration or qualification of, or filing with, any governmental authority or court, or body or arbitrator having jurisdiction over the Noteholder; and (ii) constitute or result in a breach, violation or default under any
material note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license, whether written or oral, express or implied, or the Noteholder&#146;s charter, bylaws or other organizational document, or any statute, law,
ordinance, decree, order, injunction, rule, directive, judgment or regulation of any court, administrative or regulatory body, governmental authority, arbitrator, mediator or similar body having jurisdiction over the Noteholder or cause the
acceleration or termination of any obligation or right of the Noteholder under any such document.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3
  <U>Ownership</U>. The Noteholder is the beneficial owner of the aggregate principal
  amount of, and any and all accrued and unpaid interest on, the Convertible Notes,
  and such Convertible Notes are owned free and clear of all Encumbrances (other
  than Encumbrances that the Noteholder may have created in the ordinary course
  of its business in connection with financing its holdings). There are no proceedings
  relating to the Convertible Notes pending or, to the Noteholder&#146;s knowledge,
  threatened before any court, arbitrator or administrative or governmental body
  that would adversely affect the Noteholder&#146;s right to transfer the Convertible
  Notes to the Company and the Convertible Notes will be transferred to the Company,
  free and clear of any and all Encumbrances. For purposes of this Agreement,
  &#147;Encumbrance&#148; means any pledge, hypothecation, assignment, lien, restriction,
  charge, claim, security interest, option, preference, priority or other preferential
  arrangement of any kind or nature whatsoever.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4
  <U>Broker&#146;s Fees</U>. Neither the Noteholder nor any person acting on behalf
  of the Noteholder has retained or authorized any investment banker, broker,
  finder or other intermediary to act on behalf of the Noteholder or incurred
  any liability for any banker&#146;s, broker&#146;s or finder&#146;s fees or
  commissions in connection with the transactions contemplated by this Agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5
  <U>Qualified Institutional Buyer</U>. The Noteholder is a &#147;qualified institutional
  buyer,&#148; as defined in Rule 144A under the Securities Act, purchasing the
  New Notes for its own account or the account of such a qualified institutional
  buyer. The Noteholder has not communicated with and will not communicate with
  any person in connection with the transactions contemplated by this Agreement
  and the Securities Purchase Agreement. The Noteholder is a sophisticated institutional
  investor and has such knowledge and experience in financial and business matters
  as to be capable of evaluating the merits and risks of the Exchange and an investment
  in the New Notes.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6
  <U>Private Placement</U>. The Noteholder acknowledges and agrees that the New
  Notes have not been and will not be registered under the Securities Act and
  may not be offered, sold, transferred or otherwise disposed of at any time except
  (i) to the Company or a subsidiary thereof or (ii) in accordance with another
  available exemption under the Securities Act. The Noteholder has not made and
  will not make directly or indirectly offers or sales of the New Notes, or solicit
  offers to buy the New Notes, under circumstances that would require the</P>
<P align="center">
5</P>

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<P align="left">
registration of any of the New Notes under the Securities Act in connection with the transactions contemplated by this Agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7
  <U>Reporting Obligations</U>. The Noteholder has no obligation to, and will
  not, report the Exchange in a manner that would result in contemporaneous public
  disclosure of the transactions contemplated by this Agreement and the Securities
  Purchase Agreement.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 6. <U>Disclosure</U>. The Company shall disclose to the public generally, no later than four business days immediately following the date of this Agreement, such of the Confidential Information as is necessary
to permit the Noteholder (including its affiliates and representatives) to purchase and sell (without contravening applicable securities or other law) any securities of the Company. For purposes of this Section 6, &#147;Confidential
Information&#148; shall mean any non-public information that the Company or any of its representatives may have furnished to the Noteholder (including its affiliates and representatives), in either case whether oral, written, electronic or in some
other form, including &#150; without limitation &#150; the existence of the transactions contemplated by this Agreement and the Securities Purchase Agreement. In the event of the failure of the Company to make the disclosure contemplated by the
first sentence of this Section 6, the Noteholder shall be authorized to make any such disclosure.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 7. <U>Termination</U>.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1
  <U>Conditions of Termination</U>. This Agreement may be terminated at any time
  prior to October 1, 2009 (or such other date designated in writing by the Parties
  to be the second Closing Date):</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
  by the mutual written consent of the Parties;</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
  by the Company if there has been a material misrepresentation or a material
  breach of warranty by the Noteholder in the representations and warranties set
  forth in this Agreement;</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
  by the Noteholder if there has been a material misrepresentation or a material
  breach of warranty by the Company in the representations and warranties set
  forth in this Agreement;</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
  by either Party if the Securities Purchase Agreement is terminated for any reason;
  or</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
  by either Party in the event that the First Closing Date hereunder has not occurred
  for any reason by July 10, 2009, or the First Closing Date and the Second Closing
  Date hereunder have not occurred for any reason by October 10, 2009;</P>
<P align="left">
<U>provided</U>, <U>however</U>, that insofar as termination under Section 7(d) or 7(e) is concerned, the Party seeking to terminate this Agreement pursuant to such Section shall not have such right if its failure to (i) fulfill any obligation under
this Agreement or the Securities Purchase Agreement or (ii) act in good faith has been a significant cause of, or resulted in, the failure of the transactions</P>
<P align="center">
6</P>

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<P align="left">
contemplated by this Agreement and/or the Securities Purchase Agreement to have occurred by such date.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 8. <U>Miscellaneous</U>.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1
  <U>Further Assurances</U>. In case at any time after each Closing Date any further
  action is necessary or desirable to carry out the purposes of this Agreement
  or the transactions contemplated hereby, each of the Parties will take such
  further action (including the execution and delivery of such further instruments
  and documents) as any other Party may reasonably request.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2
  <U>Severability</U>. If any provision of this Agreement shall be held invalid,
  illegal or unenforceable, the validity, legality and enforceability of the other
  provisions hereof shall not be affected thereby.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3
  <U>Counterparts</U>. This Agreement may be executed in any number of counterparts
  (including by facsimile transmission), each of which shall be deemed an original,
  but all of which together shall constitute one and the same agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4
  <U>Descriptive Headings; Interpretation</U>. The headings and captions used
  in this Agreement are for reference purposes only and shall not affect in any
  way the meaning or interpretation of this Agreement.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5
  <U>Entire Agreement</U>. This Agreement and the agreements and documents referred
  to herein contain the entire agreement and understanding between the Parties
  with respect to the subject matter hereof and supersede all prior agreements
  and understandings, whether written or oral, relating to such subject matter
  in any way.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6
  <U>Amendment, Waiver</U>. This Agreement may be amended, modified or supplemented
  but only in a writing signed by the Noteholder and the Company. No waiver of
  any of the provisions or conditions of this Agreement or any of the rights of
  a party hereto shall be effective or binding unless such waiver shall be in
  writing and signed by the Party claimed to have given or consented thereto.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7
  <U>Expenses</U>. Each Party will bear its own expenses in connection with the
  transactions contemplated hereby.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8
  <U>Notices</U>. Any notice, request, instruction or other document to be given
  hereunder by a party hereto shall be in writing and shall be deemed to have
  been given, (a) when received if given in person or by a courier or a courier
  service or (b) on the date of transmission if sent by facsimile transmission:</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
  to the Company, addressed as follows:<BR>
  <BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Albany International
  Corp.<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1373 Broadway<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Menands, NY 12204</P>
<P align="center"> 7</P>

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<!-- -->
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attention:
  Charles J. Silva, Jr.<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telephone: 518-445-2277<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Facsimile: 518-447-6575<BR>
  <BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If to the Noteholder,
  addressed as follows:<BR>
  <BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Citadel Solutions
  LLC<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;131 S. Dearborn
  Street<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chicago, IL 60603<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attention: Kevin
  Newstead<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telephone: 312-443-5497<BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Facsimile: 312-267-7764</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.9
  <U>APPLICABLE LAW; WAIVER OF JURY TRIAL. </U>THIS AGREEMENT SHALL BE GOVERNED
  BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
  YORK APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN SUCH STATE.
  THE PARTIES HERETO AGREE TO WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE
  ARISING FROM OR RELATED TO THIS AGREEMENT.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.10
  <U>Submission to Jurisdiction</U>. Each Party agrees that any suit, action or
  proceeding brought by it against the other Party arising out of or based upon
  this Agreement or the transactions contemplated hereby may be instituted in
  any state or federal court in The City of New York, New York, and waives any
  objection which it may now or hereafter have to the laying of venue of any such
  proceeding, and irrevocably submits to the non-exclusive jurisdiction of such
  courts in any suit, action or proceeding.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.11
  <U>Specific Performance. </U>The Parties acknowledge that money damages will
  not be a sufficient remedy for breach of this Agreement and that the Parties
  hereto may obtain specific performance or other injunctive relief, without the
  necessity of posting a bond or security therefor.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.12
  <U>No Construction Against Draftsperson</U>. The Parties have participated jointly
  in the negotiation and drafting of this Agreement. In the event an ambiguity
  or question of intent or interpretation arises, this Agreement shall be construed
  as if drafted jointly by the Parties, and no presumption or burden of proof
  shall arise favoring or disfavoring any Party by virtue of the authorship of
  any of the provisions of this Agreement.</P>
<P align="center"> 8</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Parties hereto have executed this Exchange Agreement on the date first written above.</P>
<TABLE width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="top">
    <TD width="65%" align=left>&nbsp;</TD>
    <TD colspan="2" align=left><b><font size=2>ALBANY INTERNATIONAL CORP.</font></b>
    </TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp; </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size=2>By:</font></TD>
    <TD align=left><FONT size=2>/s/ Michael C. Nahl</FONT> <hr size="1" noshade></TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2>Name: Michael C. Nahl</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2>Title: Executive Vice President</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; a<FONT size=2>nd Chief
      Financial Officer</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp; </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD colspan="2" align=left><b><font size=2>CITADEL EQUITY FUND LTD.</font></b>
    </TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp; </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left><font size=2>By:</font></TD>
    <TD align=left><FONT size=2>/s/ Christopher Ramsey</FONT> <hr size="1" noshade></TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2>Name: Christopher Ramsey</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2>Title: Authorized Signatory</FONT> </TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <I>Signature Page <br>
  Exchange Agreement</I></P>

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<P align="center">
<B><U>ANNEX A</U></B></P>
<P align="center">
FORM OF NEW NOTE</P>
<P align="left">
THIS SECURITY HAS NOT BEEN AND WILL NOT BE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE &#147;SECURITIES ACT&#148;), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) TO THE COMPANY OR A SUBSIDIARY
THEREOF OR (II) PURSUANT TO ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT AS AFORESAID.</P>

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<P align="center">
ALBANY INTERNATIONAL CORP.<BR>
<BR>
2.25% Senior Notes due 2026</P>
<TABLE width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;">
<TR>
     <TD></TD>
     <TD></TD></TR>
<TR valign="bottom">
        <TD width="50%" align=left>
No. [&#149;]
        </TD>
        <TD width="50%" align=left>
&#36;[&#149;]
        </TD>
</TR>
</TABLE>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Albany International Corp., a corporation duly organized and validly existing under the laws of the State of Delaware (herein called the &#147;<B>Company</B>,&#148; which term includes any successor corporation), for
value received hereby promises to pay to the order of Citadel Equity Fund Ltd. (the &#147;<B>Holder</B>&#148;), or registered assigns, the principal amount of &#36;[&#149;] on March 15, 2026, as evidenced by this senior note.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Note shall bear interest at the rate of 2.25% per year from [&#149;], 2009, or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until
March 15, 2013. As of March 15, 2013, this Note shall bear interest at the rate of 3.25% per year from March 15, 2013, to, but excluding, the next scheduled Interest Payment Date until the principal hereof shall have been paid or made available for
payment. Interest is payable semi-annually in arrears on each March 15 and September 15, commencing September 15, 2009, to the holder of record at the close of business on the preceding March 1 and September 1 (whether or not such day is a Business
Day), respectively. Interest on the Note shall be computed on the basis of a 360-day year comprised of twelve 30-day months.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of the principal of and premium, if any (including the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price, as the case may be), and accrued and unpaid interest on this Note shall be paid
by wire transfer in immediately available funds in accordance with the wire transfer instruction supplied by the Holder to the Company.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference is made to the further provisions of this Note set forth on the reverse hereof and in the attached Annex of Terms (the &#147;<B>Annex</B>&#148;). Such further provisions shall for all purposes have the same
effect as though fully set forth at this place. Any capitalized term used and not otherwise defined herein shall have the meaning assigned to such term in the Annex.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State (without regard to the conflicts
of laws provisions thereof).</P>
<P align="center">
[Remainder of page intentionally left blank]</P>
<P align="center"> F-1</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.</P>
<TABLE width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;">
  <TR>
    <TD></TD>
    <TD width="2%"></TD>
    <TD width="33%"></TD>
  </TR>
  <TR valign="bottom">
    <TD width="65%" align=left>&nbsp;</TD>
    <TD colspan="2" align=left><font size=2>ALBANY INTERNATIONAL CORP.</font>
    </TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;&nbsp;&nbsp;</TD>
    <TD width="2%" align=left><font size=2>By:</font> </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <hr size="1" noshade>
      <FONT size=2>Name:</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left> <FONT size=2>Title:</FONT> </TD>
  </TR>
</TABLE>
<BR>
<P align="left"> Dated: _______________________</P>

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<P align="center">
REVERSE OF NOTE<BR>
<BR>
ALBANY INTERNATIONAL CORP.<BR>
2.25% Senior Notes due 2026</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Note is a duly authorized issue of securities of the Company, designated as its 2.25% Senior Notes due 2026 in the principal amount of &#36;[&#149;] (the&#147;<B>Notes</B>&#148;).</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions set forth in the Annex, the Company will make all payments in respect of the Redemption Price, Repurchase Price, the Fundamental Change Repurchase Price, and the principal amount on
the Maturity Date, as the case may be, to the Holder if it surrenders this Note to the Company to collect such payments in respect of the Note. The Company will pay in money of the United States that at the time of payment is legal tender for
payment of public and private debts.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No reference herein to the Annex and no provision of this Note or of the Annex shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and
accrued and unpaid interest on this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In case an Event of Default, as defined in the Annex, shall have occurred and be continuing, the principal of, premium, if any, and interest on the Note may be declared, by the Holder, and upon said declaration shall
become, due and payable, in the manner, with the effect and subject to the conditions provided in the Annex.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Annex contains provisions permitting the Holder to waive any past Default or Event of Default under the Notes and its consequences except as provided in the Annex.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Notes are issuable in definitive, registered form without coupons in denominations of &#36;1,000 principal amount and integral multiples thereof. Without payment of any service charge but with payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration or exchange of this Note, this Note may be exchanged for a like aggregate principal amount of Notes of other authorized
denominations.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Note is not subject to redemption through the operation of any sinking fund. Prior to March 15, 2013, this Note will not be redeemable at the Company&#146;s option. Subject to the terms and conditions set forth in
the Annex, beginning on March 15, 2013, the Company, at its option, may redeem this Note for cash at any time as a whole, or from time to time in part, at a price equal to the principal amount of this Note redeemed plus accrued and unpaid interest
on the principal amount of this Note redeemed to (but excluding) the Redemption Date.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions set forth in the Annex, the Company shall become obligated to purchase, at the option of the Holder, all or any portion of this Note held by the Holder on March 15, 2013 and March 15,
2021, in integral multiples of &#36;1,000 at a Repurchase Price equal to the principal amount of this Note repurchased.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the occurrence of a Fundamental Change, the Holder has the right, at its option, to require the Company to repurchase all of the Holder&#146;s Note or any portion thereof (in principal</P>
<P align="center"> R-1</P>

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<P align="left">
amounts of &#36;1,000 or integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to 100% of the principal amount the Holder elects to require the Company to repurchase, together with accrued and unpaid interest to but
excluding the Fundamental Change Repurchase Date. The Company shall mail to the Holder a notice of the occurrence of a Fundamental Change and of the repurchase right arising as a result thereof on or before the fifth Business Day after the
occurrence of such Fundamental Change.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon due presentment for registration of transfer of this Note to the Company, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange
thereof, without charge except for any tax, assessments or other governmental charge imposed in connection therewith.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may deem and treat the registered holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment hereof, or on account hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No recourse for the payment of the principal of or any premium or accrued and unpaid interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation,
covenant or agreement of the Company, or because of the creation of any indebtedness represented hereby, shall be had against any incorporator, stockholder, employee, agent, officer, director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation or other entity, either directly or through the Company or any successor corporation or other entity, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.</P>
<P align="center">
R-2</P>

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<P align="center">
ANNEX OF TERMS</P>
<P align="center">
ARTICLE 1<BR>
  D<font size="1">EFINITIONS</font></P>
<P align="left">
&#147;<B>Business Day</B>&#148; means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which the banking institutions in The City of New York are authorized or obligated by law or executive order to close or be closed.</P>
<P align="left">
&#147;<B>Capital Stock</B>&#148; means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.</P>
<P align="left">
&#147;<B>close of business</B>&#148; means 5:00 p.m. (New York City time).</P>
<P align="left">
&#147;<B>Common Equity</B>&#148; of any Person means Capital Stock of such Person that is generally entitled to (1) vote in the election of directors of such Person or (2) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control the management or policies of such Person.</P>
<P align="left">
&#147;<B>Common Stock </B>&#148; means shares of Class A common stock of the Company, par value &#36;0.001 per share, at the date of the Notes or shares of any class or classes resulting from any reclassification or reclassifications thereof and
that have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and that are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion that the total number of shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such reclassifications.</P>
<P align="left">
&#147;<B>Default</B>&#148; means any event that is, or after notice or passage of time, or both, would be, an Event of Default.</P>
<P align="left">
&#147;<B>Event of Default</B>&#148; shall have the meaning specified in Section 3.01.</P>
<P align="left">
&#147;<B>Exchange Act</B>&#148; means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.</P>
<P align="left">
&#147;<B>Fundamental Change</B>&#148; means the occurrence after the original issuance of the Notes of any of the following events:</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any &#147;<B>person</B>&#148;
    or &#147;<B>group</B>&#148; (within the meaning of Section 13(d) of the Exchange
    Act) other than a Standish Holder, the Company, its Subsidiaries or the employee
    benefit plans of the Company or any such Subsidiary, files a Schedule TO or
    any schedule, form or report under the Exchange Act disclosing that such person
    or group has become the direct or indirect &#147;<B>beneficial owner</B>,&#148;
    as defined in Rule 13d-3 under the</p>
</blockquote>
<P align="center">
A-1</P>

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<blockquote>
  <p align="left"> Exchange Act, of the Company&#146;s Common Equity representing
    more than 50% of the voting power of the Company&#146;s Common Equity;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) consummation of any share
    exchange, exchange offer, tender offer, consolidation, merger or binding share
    exchange of the Company pursuant to which the Common Equity will be converted
    into cash, securities or other property or any sale, lease or other transfer
    in one transaction or a series of transactions of all or substantially all
    of the consolidated assets of the Company and its Subsidiaries, taken as a
    whole, to any Person other than one of the Company&#146;s Subsidiaries; <I>provided,
    however, </I>that (A) a transaction where the holders of more than 50% of
    all classes of the Company&#146;s Common Equity immediately prior to such
    transaction own, directly or indirectly, more than 50% of all classes of Common
    Equity of the continuing or surviving corporation or transferee immediately
    after such event shall not be a Fundamental Change, or (B) if at least 90%
    of the consideration, excluding cash payments for fractional shares, in the
    share exchange, exchange offer, tender offer, consolidation, merger, binding
    share exchange, sale, lease or other transfer consists of shares of Publicly
    Traded Securities, and as a result of such share exchange, exchange offer,
    tender offer, consolidation, merger, binding share exchange sale, lease or
    other transfer, the Notes become convertible into such Publicly Traded Securities,
    excluding cash payments for fractional shares, such event shall not be a Fundamental
    Change;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the stockholders of the
    Company approve any plan or proposal for the liquidation or dissolution of
    the Company;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) (A) the Common Stock ceases
    to be listed on a national securities exchange or quoted on the Nasdaq National
    Market (at a time when the Nasdaq National Market is not a U.S. national securities
    exchange) other than in connection with a transaction or series of transactions
    described in clause (iv)(B) of this definition; or (B) the Common Stock ceases
    to be listed on a national securities exchange or quoted on the Nasdaq National
    Market (at a time when the Nasdaq National Market is not a U.S. national securities
    exchange) in connection with any transaction or series of transactions in
    which one or more Standish Holders acquires all or substantially all of the
    shares of Common Stock.</p>
</blockquote>
<P align="left">
For purposes of this definition, whether a &#147;<B>person</B>&#148; is a &#147;<B>beneficial owner</B>&#148; shall be determined in accordance with Rule 13d-3 under the Exchange Act and &#147;<B>person</B>&#148; includes any syndicate or group that
would be deemed to be a &#147;<B>person</B>&#148; under Section 13(d)(3) of the Exchange Act.</P>
<P align="left">
&#147;<B>Fundamental Change Company Notice</B>&#148; shall have the meaning specified in Section 4.02(b).</P>
<P align="left">
&#147;<B>Fundamental Change Expiration Time</B>&#148; shall have the meaning specified in Section 4.02(b)(vi).</P>
<P align="left">
&#147;<B>Fundamental Change Repurchase Date</B>&#148; shall have the meaning specified in Section 4.02.</P>
<P align="center"> A-2</P>

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<P align="left">
&#147;<B>Fundamental Change Repurchase Notice</B>&#148; shall have the meaning specified in Section 4.02(a)(i).</P>
<P align="left">
&#147;<B>Fundamental Change Repurchase Price</B>&#148; shall have the meaning specified in Section 4.02.</P>
<P align="left">
&#147;<B>Holder&#148; </B>means any person in whose name a particular Note is registered on the Note Register.</P>
<P align="left">
&#147;<B>Interest Payment Date</B>&#148; means each March 15 and September 15 of each year, beginning on September 15, 2009.</P>
<P align="left">
&#147;<B>Maturity Date</B>&#148; means March 15, 2026.</P>
<P align="left">
&#147;<B>Note Register&#148; </B>means the register of Notes maintained by the Company.</P>
<P align="left">
&#147;<B>Permitted Beneficiary</B>&#148; means, as to any natural person, such person&#146;s spouse, such person&#146;s issue, a spouse of such person&#146;s issue, a whole or half brother or sister of such person and/or a cousin of such person.</P>
<P align="left">
&#147;<B>Permitted Transfer</B>&#148; means (1) a transfer of Class B common stock of the Company by the holder thereof to another holder of Class B common stock of the Company; (2) a transfer of Class B common stock of the Company resulting from
the death of the holder thereof to another holder of Class B common stock of the Company; (3) if Class B common stock of the Company is held by a trust, (i) a transfer pursuant to the terms of the governing trust instrument as in effect when the
transferred Class B common stock of the Company was acquired by that trust or (ii) a transfer to another trust that was established by the same settlor or by a parent, grandparent or Permitted Beneficiary of said settlor and that has as its Primary
Beneficiaries the settlor and/or one or more of the parents, grandparents or Permitted Beneficiaries of the settlor; (4) a bona fide pledge of Class B common stock of the Company; <I>provided </I>that any action by the pledgee (other than a Person
described in clause (1) or clause (2) of the definition of Standish Holder or in clause (1), (2), (3), (5), (6) or (7) of this definition) in the nature of a foreclosure or other transfer shall not constitute a Permitted Transfer; (5) a transfer of
Class B common stock of the Company by a holder who is a natural person to a Permitted Beneficiary of such holder or to a trust that has as its Primary Beneficiaries such holder and/or one or more Permitted Beneficiaries of such holder or to a trust
having one or more organizations described in Section 170(2) of the Internal Revenue Code of 1986 (or any successor provision thereto) as an income beneficiary for a fixed period of years and having as its other Primary Beneficiaries such holder
and/or one or more Permitted Beneficiaries of such holder; (6) a transfer of Class B common stock of the Company by the holder thereof to a nominee for such holder, or by a nominee for a holder of such shares to such holder or to another nominee for
such holder; or (7) a transfer of Class B common stock of the Company by the corporation which is the holder thereof to another corporation (i) which owns all of the capital stock of such holder or all of the capital stock of a corporation which
owns all of the capital stock of such holder, (ii) all of the capital stock of which is owned by such holder or by a corporation all of the capital stock of which is owned by such holder, or (iii) all of the capital stock of which is owned by a
corporation which owns all of the capital stock of such holder or all of the capital stock of a corporation which owns all of the capital stock of such holder.</P>
<P align="center">
A-3</P>

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<P align="left">
&#147;<B>Person</B>&#148; means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political
subdivision thereof.</P>
<P align="left">
&#147;<B>Primary Beneficiaries</B>&#148; shall mean beneficiaries of a trust, other than contingent remaindermen, who have, in the aggregate, a beneficial interest in at least 85% of the income and principal of the trust.</P>
<P align="left">
&#147;<B>Publicly Traded Securities</B>&#148; means shares of common stock traded on a national securities exchange or quoted on the Nasdaq National Market (at a time when the Nasdaq National Market is not a U.S. national securities exchange) or
that will be so traded or quoted when issued or exchanged in connection with a Fundamental Change described in clause (ii) of the definition thereof.</P>
<P align="left">
&#147;<B>Record Date</B>&#148; in respect of any payment pursuant to the terms of the Notes means the date that is fifteen (15) days prior to the date of the applicable payment.</P>
<P align="left">
&#147;<B>Redemption Date</B>&#148; means the date specified for redemption of the Notes in accordance with the terms of the Notes.</P>
<P align="left">
&#147;<B>Redemption Price</B>&#148; shall have the meaning set forth in Section 2.01.</P>
<P align="left">
&#147;<B>Standish Holder</B>&#148; means (1) any of the five Persons who were listed as &#147;Reporting Persons&#148; on the Schedule 13D/A (with respect to which the Company was the issuer) filed with the Commission on December 3, 2004, namely:
J.S. Standish Company (a Delaware corporation), J. Spencer Standish, Thomas R. Beecher Jr. as sole trustee of trusts for the benefit of John C. Standish and Christine L. Standish, and of the Standish Delta Trust, John C. Standish or Christine L.
Standish (all individuals); (2) any of the trusts identified in Item 5 of such Schedule 13D/A as holding shares of common stock of the Company that are deemed for the purposes of such Schedule to be beneficially owned by such Reporting Persons; and
(3) any Person to whom one of the five Persons or trusts described above transfers any of his, her or its shares of Class B common stock of the Company, so long as such transfer is a Permitted Transfer.</P>
<P align="left">
&#147;<B>Subsidiary</B>&#148; of the Company means (i) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by the Company, by the Company
and one or more Subsidiaries of the Company or by one or more Subsidiaries of the Company or (ii) any other Person (other than a corporation) in which the Company, one or more Subsidiaries of the Company or the Company and one or more Subsidiaries
of the Company, directly or indirectly, at the date of determination thereof, has greater than a 50% ownership interest.</P>
<P align="center">&nbsp;
</P>
<P align="center"> A-4</P>

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<p align="center">ARTICLE 2<br>
  R<font size="1">EDEMPTION OF</font> N<font size="1">OTES</font></p>
<p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 2.01. <i>Company&#146;s
  Right to Redeem.</i></p>





<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to March 15, 2013, the Notes will not be redeemable at the Company&#146;s option. On or after March 15, 2013, the Company, at its option, may redeem the Notes for cash at any time as a whole, or from time to time
in part, at a price (the &#147;<B>Redemption Price</B>&#148;) equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest on the Notes to be redeemed to (but excluding) the Redemption Date; <I>provided</I>,
<I>however</I>, that, if the Redemption Date falls after a Record Date and on or prior to the succeeding Interest Payment Date, the Redemption Price shall be equal to 100% of the principal amount of the Notes to be redeemed and the full amount of
interest due on such Interest Payment Date shall be payable on such Interest Payment Date to the Holder of the Notes on the Record Date relating to such Interest Payment Date. No sinking fund is provided for the Notes. Provisions of this Annex that
apply to redemption also apply to portions of the Notes called for redemption.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 2.02. <I>Notice of Redemption.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At least 45 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to the Holder.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notice shall identify the Notes
  to be redeemed and shall state:</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Redemption Date;</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Redemption Price;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) that the Notes called for redemption must be surrendered to the Company to collect the Redemption Price;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) on and after the Redemption Date (i) the Notes will cease to be outstanding, (ii) interest will cease to accrue on the Notes, and (iii) all other rights of the Holder of the Notes will terminate other than the right
to receive the Redemption Price upon delivery of the Notes; and</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) if fewer than all of the outstanding Notes are to be redeemed, the certificate numbers, if any, and principal amounts of the particular Notes to be redeemed.</P>
<P align="left">
Section 2.03. <I>Effect of Notice of Redemption.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Once notice of redemption is mailed, the Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price stated in the notice. Upon surrender to the Company, the Notes shall be paid
at the Redemption Price stated in the notice.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 2.04. <I>Payment of Redemption
  Price.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment for the Notes surrendered for redemption will be made promptly after the later of (x) the Redemption Date with respect to such Notes and (y) the time of delivery of such Notes to the Company by the Holder, by
wire transfer of immediately available funds to the account of the Holder.</P>
<P align="center"> A-5</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On and after the Redemption Date (i) the Notes will cease to be outstanding, (ii) interest will cease to accrue on the Notes, and (iii) all other rights of the Holder will terminate other than the right to receive the
Redemption Price upon delivery of the Notes.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 2.05. <I>Notes Redeemed
  in Part.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon surrender of a Note that is redeemed in part, the Company shall execute and deliver to the holder a new Note in an authorized denomination equal in principal amount to the unredeemed portion of the Note
surrendered. In the event of any redemption in part, the Company will not be required to (i) issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before any notice of redemption is given
to the Holder of any Note to be redeemed, or (ii) register the transfer of or exchange any Note so selected for redemption, in whole or in part, except the unredeemed portion of any Note being redeemed in part.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 2.06. <I>No Redemption
  Upon Acceleration.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, the Company may not redeem the Notes if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such Redemption Date (except in
the case of an acceleration resulting from a default by the Company in the payment of the Redemption Price with respect to the Notes).</P>
<P align="center">
ARTICLE 3<BR>
  D<font size="1">EFAULTS</font></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 3.01. <I>Events of Default.</I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following events shall be &#147;<B>Events
  of Default</B>&#148; with respect to the Notes:</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) default in any payment of interest on any Note when due and payable and the default continues for a period of thirty days;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) default in the payment of principal of any Note when due and payable at its Maturity Date, upon redemption, upon required repurchase, upon declaration of acceleration or otherwise;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) failure by the Company to issue a Fundamental Change Company Notice in accordance with Section 4.02 when due;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) failure by the Company for 60 days after written notice from the Holder has been received by the Company to comply with any of its other agreements contained in the Note or this Annex, which notice shall state that
it is a &#147;Notice of Default&#148; hereunder;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) default by the Company or any Subsidiary of the Company in the payment of the principal or interest on any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be
secured or evidenced, any debt for money borrowed in</P>
<P align="center"> A-6</P>

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<P align="left">
excess of &#36;25 million in the aggregate of the Company and/or any such Subsidiary, whether such debt now exists or shall hereafter be created, resulting in such debt becoming or being declared due and payable, and such acceleration shall not have
been rescinded or annulled within 30 days after written notice of such acceleration has been received by the Company or such Subsidiary;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) a final judgment for the payment of &#36;25 million or more rendered against the Company or any Subsidiary of the Company, which judgment is not fully covered by insurance or not discharged or stayed within 90 days
after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the Company or any Subsidiary of the Company that is a &#147;significant subsidiary&#148; (as defined in Regulation S-X under the Exchange Act) or any group of Subsidiaries of the Company that in the aggregate would
constitute a &#147;significant subsidiary&#148; shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or any such Subsidiary or group of Subsidiaries or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any such Subsidiary or group of Subsidiaries or any
substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become due; or</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) an involuntary case or other proceeding shall be commenced against the Company or any Subsidiary of the Company that is a &#147;significant subsidiary&#148; (as defined in Regulation S-X under the Exchange Act) or
any group of Subsidiaries of the Company that in the aggregate would constitute a &#147;significant subsidiary&#148; seeking liquidation, reorganization or other relief with respect to the Company or such Subsidiary or group of Subsidiaries or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Subsidiary or group of Subsidiaries or
any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of ninety consecutive days.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In case one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 3.01(g) or Section 3.01(h) with
respect to the Company), unless the principal of the Notes shall have already become due and payable, the Holder, by notice in writing to the Company may declare 100% of the principal of and premium, if any, and accrued and unpaid interest on the
Notes to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Annex or in the Notes contained to the contrary notwithstanding. If an Event of Default specified
in Section 3.01(g) or Section 3.01(h) occurs and is continuing with respect to the Company, the principal of the Notes and accrued and unpaid interest shall be</P>
<P align="center">
A-7</P>

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<P align="left">
immediately due and payable. This provision, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due
shall have been obtained or entered as hereinafter provided, the Company shall pay installments of accrued and unpaid interest upon the Notes and the principal of and premium, if any, on the Notes that shall have become due otherwise than by
acceleration (with interest on overdue installments of accrued and unpaid interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium, if any, at the rate borne by the Notes at such
time) and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all Events of Defaults under the Notes, other than the nonpayment of principal of and premium, if any, and accrued and
unpaid interest on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 3.03, then and in every such case the Holder by written notice to the Company may waive all Defaults or Events of
Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Notes; but no
such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 3.02. <I>Notice of Defaults.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall, within ninety (90) days after the occurrence and continuance of a Default, mail to the Holder at its address as shall appear on the Note Register, notice of all Defaults, unless such Defaults shall
have been cured or waived before the giving of such notice.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 3.03. <I>Waiver.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Holder may waive any past Default or Event of Default hereunder and its consequences. Upon any such waiver the Company and the Holder shall be restored to their former positions and rights hereunder; but no such
waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 3.03, said Default or Event of
Default shall for all purposes of the Notes be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.</P>
<P align="center">
ARTICLE 4<BR>
  R<font size="1">EPURCHASE OF</font> N<font size="1">OTES AT</font> O<font size="1">PTION
  OF</font> H<font size="1">OLDERS</font></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.01. <I>Repurchase at
  Option of Holders.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Note or portions thereof shall be purchased by the Company at the option of the Holder for cash on March 15, 2013 and March 15, 2021 (each, a &#147;<B>Repurchase Date</B>&#148;), at a purchase price (the
&#147;<B>Repurchase Price</B>&#148;) equal to 100% of the principal amount of the Notes to be repurchased. The Company shall pay any accrued and unpaid interest thereon to (but excluding) such Repurchase Date to the holders at the close of business
on the Record Date</P>
<P align="center"> A-8</P>

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<P align="left">
immediately preceding such Repurchase Date. Not later than 20 Business Days prior to any Repurchase Date, the Company shall mail a notice (the &#147;<B>Company Notice</B>&#148;) by first class mail to the Holder. The Company Notice shall include a
form of repurchase notice to be completed by a holder and shall state:</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the last date on which the
    Holder may exercise its repurchase right pursuant to this Section 4.01;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Repurchase Price;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) that the Notes must be
    surrendered to the Company to collect payment;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) that the Repurchase Price
    for the Notes as to which a Repurchase Notice has been given and not withdrawn
    will be paid promptly following the later of the Repurchase Date and the time
    of surrender of such Notes as described in (iii);</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the procedures the Holder
    must follow to exercise its repurchase rights and a brief description of those
    rights; and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the procedures for withdrawing
    a Repurchase Notice.</p>
</blockquote>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purchase of the Notes hereunder shall be made, at the option of the Holder, upon delivery to the Company by the Holder of a written notice of repurchase in the form set forth on the attached <U>Exhibit I </U>(a
&#147;<B>Repurchase Notice</B>&#148;) during the period beginning at any time from the opening of business on the date that is 20 Business Days prior to the relevant Repurchase Date until the close of business on the second Business Day prior to the
Repurchase Date stating:</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the certificate number of
    the Notes that the Holder will deliver to be purchased,</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the portion of the principal
    amount of the Notes to be purchased, which portion must be in principal amounts
    of &#36;1,000 or an integral multiple of &#36;1,000, and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) that such Notes shall be
    purchased by the Company as of the Repurchase Date pursuant to the terms and
    conditions specified in the Notes.</p>
</blockquote>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Repurchase Notice with respect to the Notes may be tendered by the Holder thereof if the Holder has also tendered a Fundamental Change Repurchase Notice and not validly withdrawn such Fundamental Change Repurchase
Notice in accordance with Section 4.03.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall purchase from the Holder, pursuant to this Section 4.01, a portion of a Notes if the principal amount of such portion is &#36;1,000 or an integral multiple of &#36;1,000. Provisions of this Annex that
apply to the purchase of all of the Notes also apply to the purchase of such portion of the Notes.</P>
<P align="center">
A-9</P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any purchase by the Company contemplated pursuant to the provisions of this Section 4.01 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the
Repurchase Date and the time of delivery of the Notes.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything herein to the contrary, the Holder shall have the right to withdraw, in whole or in part, its Repurchase Notice at any time prior to the close of business on the second Business Day prior to the
Repurchase Date by delivery of a written notice of withdrawal to the Company in accordance with Section 4.03 below.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding the foregoing, the Notes may not be repurchased by the Company at the option of the Holder if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on
or prior to the Repurchase Date (except in the case of an acceleration resulting from a default by the Company in the payment of the Repurchase Price with respect to the Notes).</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In connection with any purchase
  offer, the Company will (to the extent applicable):</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) comply with the provisions
    of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange
    Act,</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) file a Schedule TO or any
    successor or similar schedule, if required under the Exchange Act, and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) otherwise comply with all
    federal and state securities laws in connection with any offer by the Company
    to purchase the Notes.</p>
</blockquote>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.02. <I>Repurchase at
  Option of Holders Upon a Fundamental Change.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If there shall occur a Fundamental Change at any time prior to maturity of the Notes, then the Holder shall have the right, at its option, to require the Company to repurchase the Notes for cash, or any portion
thereof that is an integral multiple of &#36;1,000 principal amount, on the date (the &#147;<B>Fundamental Change Repurchase Date</B>&#148;) specified by the Company that is not less than twenty (20) Business Days and not more than thirty five (35)
Business Days after the date of the Fundamental Change Company Notice (as defined below) at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon to, but excluding, the Fundamental Change
Repurchase Date (the &#147;<B>Fundamental Change Repurchase Price</B>&#148;). If such Fundamental Change Repurchase Date falls after a Record Date for the payment of interest, and on or prior to the corresponding Interest Payment Date, the Company
shall instead pay the principal amount to the Holder surrendering the Notes for repurchase pursuant to this Section 4.02, and pay the full amount of accrued and unpaid interest payable on such Interest Payment Date to the Holder on the close of
business on the corresponding Record Date. Repurchases of Notes under this Section 4.02 shall be made, at the option of the holder thereof, upon:</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) delivery to the Company by
    the Holder of a duly completed notice in the form set forth on the attached
    <U>Exhibit II </U>(the &#147;<B>Fundamental Change Repurchase</B></p>
</blockquote>
<P align="center">
A-10</P>

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<!-- -->
<blockquote>
  <p align="left"> <B>Notice</B>&#148;) prior to the close of business on the
    second Business Day prior to the Fundamental Change Repurchase Date; and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) delivery of the Notes to
    the Company at any time after delivery of the Fundamental Change Repurchase
    Notice (together with all necessary endorsements), such delivery being a condition
    to receipt by the Holder of the Fundamental Change Repurchase Price therefore;
    <I>provided </I>that such Fundamental Change Repurchase Price shall be so
    paid pursuant to this Section 4.02 only if the Note so delivered to the Company
    shall conform in all respects to the description thereof in the related Fundamental
    Change Repurchase Notice.</p>
  <p align="left"> The Fundamental Change Repurchase Notice shall state:</p>
  <blockquote>
    <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the certificate numbers
      of Notes to be delivered for purchase;</p>
    <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) the portion of the principal
      amount of the Notes to be repurchased, which must be &#36;1,000 or an integral
      multiple thereof; and</p>
    <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) that the Notes are to be
      repurchased by the Company pursuant to the applicable provisions of the
      Notes;</p>
  </blockquote>
</blockquote>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any purchase by the Company contemplated pursuant to the provisions of this Section 4.02 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the
Fundamental Change Repurchase Date and the time of the delivery of the Notes.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything herein to the contrary, the Holder delivering the Fundamental Change Repurchase Notice contemplated by this Section 4.02 shall have the right to withdraw, in whole or in part, such Fundamental
Change Repurchase Notice at any time prior to the close of business on the second Business Day prior to the Fundamental Change Repurchase Date by delivery of a written notice of withdrawal to the Company in accordance with Section 4.03 below.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As promptly as practicable after the occurrence of the effective date for a Fundamental Change, and in no event more than five Business Days after the effective date of the Fundamental Change, the Company shall mail
to the Holder a notice (the &#147;<B>Fundamental Change Company Notice</B>&#148;) of the effective date of the Fundamental Change and of the repurchase right at the option of the Holder arising as a result thereof. Such mailing shall be by first
class mail.</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fundamental Change Company
  Notice shall specify: </P>
<blockquote>
  <p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the events causing the Fundamental
    Change; </p>
  <p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the effective date of the
    Fundamental Change;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the last date on which
    the Holder may exercise the repurchase right;</p>
</blockquote>
<P align="center">
A-11</P>

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<!-- -->
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the Fundamental Change Repurchase
    Price;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the Fundamental Change Repurchase
    Date;</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) that the Holder must exercise
    the repurchase right on or prior to the close of business on the Fundamental
    Change Repurchase Date (the &#147;<B>Fundamental Change Expiration Time</B>&#148;);</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) that the Holder shall have
    the right to withdraw the Notes surrendered prior to the Fundamental Change
    Expiration Time; and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) the procedures that the
    Holder must follow to require the Company to repurchase its Notes.</p>
</blockquote>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No failure of the Company to give the foregoing notices and no defect therein shall limit the Holder&#146;s repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this
Section 4.02.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing, the Notes may not be repurchased by the Company at the option of the Holder upon a Fundamental Change if the principal amount of the Notes has been accelerated, and such acceleration
has not been rescinded, on or prior to the Fundamental Change Repurchase Date (except in the case of an acceleration resulting from a default by the Company in the payment of the Fundamental Change Repurchase Price with respect to the Notes).</P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In connection with any purchase
  offer, the Company will (to the extent applicable):</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) comply with the provisions
    of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange
    Act,</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) file a Schedule TO or any
    successor or similar schedule, if required under the Exchange Act, and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) otherwise comply with all
    federal and state securities laws in connection with any offer by the Company
    to purchase the Notes.</p>
</blockquote>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.03. <I>Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the Company at any time prior to the close of business on the
second Business Day prior to the Repurchase Date or prior to the close of business on the second Business Day prior to the Fundamental Change Repurchase Date, as the case may be, specifying:</P>
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the certificate number of
    the Notes in respect of which such notice of withdrawal is being submitted,</p>
</blockquote>
<P align="center">
A-12</P>

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<!-- -->
<blockquote>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the principal amount of
    the Notes with respect to which such notice of withdrawal is being submitted,
    and</p>
  <p align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the principal amount, if
    any, of such Notes that remains subject to the original Repurchase Notice
    or Fundamental Change Repurchase Notice, as the case may be, which portion
    must be in principal amounts of &#36;1,000 or an integral multiple of &#36;1,000.</p>
</blockquote>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.04. <I>Payment of Repurchase
  Price or Fundamental Change Repurchase Price.</I></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment for the Notes surrendered for repurchase (and not withdrawn) prior to the Repurchase Date or Fundamental Change Expiration Time will be made promptly after the later of (x) the Repurchase Date or Fundamental
Change Repurchase Date, as the case may be, with respect to such Notes (provided the Holder has satisfied the conditions in Sections 4.01 and 4.02, as applicable) and (y) the time of the delivery of such Notes to the Company by the Holder in the
manner required by Section 4.01 or Section 4.02, as applicable, by wire transfer of immediately available funds to the account of the Holder.</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Following the Repurchase Date or Fundamental Change Repurchase Date, as the case may be, (i) the Notes will cease to be outstanding, (ii) interest will cease to accrue on the Notes, and (iii) all other rights of the
Holder will terminate (other than the right to receive the Repurchase Price or Fundamental Change Repurchase Price, as the case may be, and previously accrued but unpaid interest upon delivery of the Notes).</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon surrender of a Note that is to be repurchased in part pursuant to Section 4.01 or 4.02, the Company shall execute and deliver to the Holder a new Note in an authorized denomination equal in principal amount to
the unrepurchased portion of the Note surrendered.</P>
<P align="center"> A-13</P>

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<P align="right">
<B>EXHIBIT I</B></P>
<P align="center">
[FORM OF REPURCHASE NOTICE]</P>
<P align="left">
To: Albany International Corp.</P>
<P align="left">
The undersigned registered owner of this Note hereby requests and instructs Albany International Corp. to repay the entire principal amount of this Note, or the portion thereof (that is &#36;1,000 principal amount or an integral multiple thereof)
below designated, in accordance with the terms and conditions of the Annex referred to in this Note at the Repurchase Price to the registered holder hereof.</P>
<P align="left">
The certificate numbers of the Notes to be repurchased are as set forth below:</P>
<TABLE border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <TR>

    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="top">

    <TD align=left width="50%"> Dated: _____________________________________________ </TD>
    <TD align=left>_____________________________________________ </TD>
  </TR>
  <TR valign="top">

    <TD align=left>&nbsp;

        </TD>
    <TD align=left>&nbsp; </TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>_____________________________________________ </TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>Signature(s) </TD>
  </TR>
  <TR valign="top">

    <TD>&nbsp;

        </TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">

    <TD>&nbsp;
        </TD>
    <TD colspan=1>
      <p>_________________________ <br>
        Social Security or Other Taxpayer Identification Number </p>
      <p>Principal amount to be repaid (if less than all): &#36;______,000 </p>
      <p>NOTICE: The above signature(s) of the holder(s) hereof must correspond
        with the name as written upon the face of the Note in every particular
        without alteration or enlargement or any change whatever.</p>
    </TD>
  </TR>
</TABLE>
<BR>
<P align="center"> A-14</P>

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<P align="right">
<B>EXHIBIT II</B></P>
<P align="center">
[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]</P>
<P align="left">
To: Albany International Corp.</P>
<P align="left">
The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Albany International Corp. (the &#147;<B>Company</B>&#148;) as to the occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the portion thereof (that is &#36;1,000 principal amount or an integral multiple thereof) below designated, in accordance with the applicable provisions of the Annex
referred to in this Note, together with accrued and unpaid interest, to, but excluding, such date, to the registered holder hereof.</P>
<P align="left">
The certificate numbers of the Notes to be repurchased are as set forth below:</P>
<TABLE border=0 cellpadding=0 cellspacing=0 style="font-family: 'Times New Roman';font-size: 10pt;" width=100%>
  <TR>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="top">
    <TD align=left width="50%"> Dated: _____________________________________________
    </TD>
    <TD align=left>_____________________________________________ </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp;</TD>
    <TD align=left>_____________________________________________ </TD>
  </TR>
  <TR valign="top">
    <TD align=left>&nbsp; </TD>
    <TD align=left> Signature(s) </TD>
  </TR>
  <TR valign="top">
    <TD colspan=2>&nbsp; </TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp; </TD>
    <TD colspan=1>
      <p>_________________________ <br>
        Social Security or Other Taxpayer Identification Number</p>
      <p>Principal amount to be repaid (if less than all):&#36;______,000 </p>
      <p>NOTICE: The above signature(s) of the holder(s) hereof must correspond
        with the name as written upon the face of the Note in every particular
        without alteration or enlargement or any change whatever.</p>
    </TD>
  </TR>
</TABLE>
<BR>
<P align="center"> A-15</P>

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<P align="center">
<B><U>ANNEX B</U></B></P>
<P align="center"> <I>[Form of Securities Purchase Agreement]</I></P>
<P align="center"> B-1</P>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>6
<FILENAME>e36147ex31-1.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
<HTML>
<HEAD>
   <TITLE></TITLE>
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<p align="center">
<b>EXHIBIT (31.1)</b><br>
  <b>CERTIFICATION PURSUANT TO</b><br>
  <b>RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,</b><br>
  <b>AS ADOPTED PURSUANT TO</b><br>
  <b>SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</b></p>
<p align="left">
I, Joseph G. Morone, certify that:</p>
<table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;">
  <tr>

    <td nowrap valign=top>
1.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
I have reviewed this quarterly report on Form 10-Q of Albany International Corp.;       </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
2.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report; </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
3.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
Based upon my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report;    </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
4.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
The registrant&#146;s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:  </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
a)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;      </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
b)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
c)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report, based on such evaluation; and   </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
d)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect,
the registrant&#146;s internal control over financial reporting, and    </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
5.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of registrant&#146;s board of
directors:      </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
a)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize, and report
financial data and      </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
b)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Any fraud, whether or not material, that involves management or other employees who have significant role in the registrant&#146;s internal control over financial reporting.   </td>
  </tr>

</table>
<br>
<br>
<table width=100% border=0 cellpadding=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;">
  <tr>

    <td></td>
    <td colspan="2"></td>
  </tr>
  <tr valign="top">

    <td width="70%" align=left>
<font size=2>Date: August 6, 2009</font>
        </td>
    <td colspan="2" align=left>&nbsp;

        </td>
  </tr>
  <tr valign="top">

    <td align=left>&nbsp;

        </td>
    <td width="3%" align=center>
      <div align="left"><font size=2>By </font> </div>
    </td>
    <td width="27%" align=center>
      <div align="left"><font size=2>/s/ Joseph G. Morone</font>
        <hr noshade size="1" width="125" align="left">
      </div>
    </td>
  </tr>
  <tr valign="top">

    <td align=left>&nbsp;

        </td>
    <td align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;    </td>
    <td align=left><font size=2>Joseph G. Morone</font>
</td>
  </tr>
  <tr valign="top">

    <td align=left>&nbsp;

        </td>
    <td align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;    </td>
    <td align=left><font size=2>President and Chief Executive Officer</font>
</td>
  </tr>
  <tr valign="top">

    <td align=left>&nbsp;

        </td>
    <td align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;    </td>
    <td align=left><font size=2>(Principal Executive Officer)</font>
</td>
  </tr>
</table>
<br>

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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>7
<FILENAME>e36147ex31-2.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
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<p align="center">
<b>EXHIBIT (31.2)</b><br>
  <b>CERTIFICATION PURSUANT TO</b><br>
  <b>RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,</b><br>
  <b>AS ADOPTED PURSUANT TO</b><br>
  <b>SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</b></p>
<p align="left">
I, Michael C. Nahl, certify that:</p>
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    <td nowrap valign=top>
1.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
I have reviewed this quarterly report on Form 10-Q of Albany International Corp.;       </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
2.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report; </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
3.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
Based upon my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report;    </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
4.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
The registrant&#146;s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:  </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
a)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;      </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
b)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
c)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report, based on such evaluation; and   </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
d)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect,
the registrant&#146;s internal control over financial reporting, and    </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
5.&nbsp; &nbsp; &nbsp;  </td>
    <td width=100% colspan=2>
The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of registrant&#146;s board of
directors:      </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
a)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize, and report
financial data and      </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td nowrap valign=top>
b)&nbsp; &nbsp; &nbsp;  </td>
    <td width=100%>
Any fraud, whether or not material, that involves management or other employees who have significant role in the registrant&#146;s internal control over financial reporting.   </td>
  </tr>

</table>
<br>
<table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
  <tr>

    <td width=50%></td>
    <td width=4%></td>
    <td width=46%></td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>
<font size=2>Date: August 6, 2009</font>
        </td>
    <td width="4%" align=left>&nbsp;

        </td>
    <td width="46%" align=left>&nbsp;</td>
  </tr>
  <tr valign="top">

    <td width="50%" height="15" align=left>&nbsp;

        </td>
    <td width="4%" height="15" align=center>
      <div align="left"><font size=2>By </font>
        </div>
    </td>
    <td width="46%" height="15" align=center>
      <div align="left"><font size=2></font><font size=2>s/ Michael
        C. Nahl</font>
        <hr noshade size="1" width="110" align="left">
      </div>
    </td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>
      <div align="left">&nbsp; &nbsp; &nbsp; &nbsp;     </div>
    </td>
    <td width="46%" align=left><font size=2>Michael C. Nahl</font>
</td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>
      <div align="left">&nbsp; &nbsp; &nbsp; &nbsp;     </div>
    </td>
    <td width="46%" align=left><font size=2>Executive Vice President and Chief Financial Officer</font>
</td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>
      <div align="left">&nbsp; &nbsp; &nbsp; &nbsp;     </div>
    </td>
    <td width="46%" align=left><font size=2>(Principal Financial Officer)</font>
</td>
  </tr>
</table>
<br>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>8
<FILENAME>e36147ex32-1.htm
<DESCRIPTION>CERTIFICATION
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<p align="center">
<b>EXHIBIT (32.1)</b><br>
  <b>CERTIFICATION PURSUANT TO</b><br>
  <b>18 U.S.C. SECTION 1350,</b><br>
  <b>AS ADOPTED PURSUANT TO</b><br>
  <b>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p>
<p align="left">
In connection with the Quarterly Report of Albany International Corp. (the Company) on Form 10-Q for the period ending June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the Report), Joseph G. Morone, President
and Chief Executive Officer, and Michael C. Nahl, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. &#167; 1350, as adopted pursuant to &#167; 906 of the Sarbanes-Oxley Act of 2002, that:</p>
<table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;">
  <tr>

    <td nowrap valign=top>
(1)&nbsp; &nbsp; &nbsp;         </td>
    <td width=100%>
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and       </td>
  </tr>
  <tr>
    <td colspan=2>&nbsp;</td>
  </tr>
  <tr>

    <td nowrap valign=top>
(2)&nbsp; &nbsp; &nbsp;         </td>
    <td width=100%>
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.    </td>
  </tr>
  <tr>
    <td colspan=2>&nbsp;</td>
  </tr>
</table>
<table border=0 cellspacing=0 cellpadding=0 style="font-family: 'Arial';font-size: 10pt;" width=100%>
  <tr>

    <td width=50%></td>
    <td width=4%></td>
    <td width=46%></td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>
<font size=2>Dated: August 6, 2009</font>
        </td>
    <td width="4%" align=left>&nbsp;

        </td>
    <td width="46%" align=left>&nbsp;</td>
  </tr>
  <tr valign="top">

    <td colspan=3>&nbsp;

        </td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>
<font size=2>By </font> </td>
    <td width="46%" align=left><font size=2>/s/ Joseph G. Morone</font>
      <hr noshade size="1" width="125" align="left"> </td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>&nbsp;
        </td>
    <td width="46%" align=left><font size=2>Joseph G. Morone</font>
</td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>&nbsp;
        </td>
    <td width="46%" align=left><font size=2>President and Chief Executive Officer</font>
</td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>&nbsp;
        </td>
    <td width="46%" align=left><font size=2>(Principal Executive Officer)</font>
</td>
  </tr>
  <tr valign="top">

    <td colspan=3>&nbsp;

        </td>
  </tr>
  <tr valign="top">

    <td colspan=3>&nbsp;

        </td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>
<font size=2>By </font> </td>
    <td width="46%" align=left><font size=2>/s/ Michael C. Nahl</font>
      <hr noshade size="1" width="115" align="left"></td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>&nbsp;
        </td>
    <td width="46%" align=left><font size=2>Michael C. Nahl</font>
</td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>&nbsp;
        </td>
    <td width="46%" align=left><font size=2>Executive Vice President and Chief Financial Officer</font>
</td>
  </tr>
  <tr valign="top">

    <td width="50%" align=left>&nbsp;

        </td>
    <td width="4%" align=left>&nbsp;
        </td>
    <td width="46%" align=left><font size=2>(Principal Financial Officer)</font>
</td>
  </tr>
</table>
<br>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>9
<FILENAME>e36147ex99-1.htm
<DESCRIPTION>QUANTITATIVE AND QUALITATIVE DISCLOSURES
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<p align="center">
<b>EXHIBIT (99.1)</b><br>
  <b>MARKET RISK SENSITIVITY &#150; AS OF DECEMBER 31, 2008</b></p>
<p align="left">
The Company has market risk with respect to foreign currency exchange rates and interest rates. The market risk is the potential loss arising from adverse changes in these rates as discussed below.</p>
<p align="left">
The Company has manufacturing plants and sales transactions worldwide and therefore is subject to foreign currency risk. This risk is composed of both potential losses from the translation of foreign currency financial statements and the
remeasurement of foreign currency transactions. To manage this risk, the Company periodically enters into forward exchange contracts either to hedge the net assets of a foreign investment or to provide an economic hedge against future cash flows.
The total net assets of non-U.S. operations and long-term intercompany loans denominated in non-functional currencies subject to potential loss amount to approximately &#36;755 million. The potential loss in fair value resulting from a hypothetical
10% adverse change in quoted foreign currency exchange rates amounts to &#36;75.5 million. Furthermore, related to foreign currency transactions, the Company has exposure to non-functional currency balances totaling &#36;116.6 million. This amount
includes, on an absolute basis, exposures to foreign currency assets and liabilities. On a net basis, the Company had approximately &#36;27.9 million of foreign currency liabilities as of December 31, 2008. As currency rates change, these
non-functional currency balances are revalued, and the corresponding adjustment is recorded in the income statement. A hypothetical change of 10% in currency rates could result in an adjustment to the income statement of approximately &#36;2.8
million. Actual results may differ.</p>
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