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<SEC-DOCUMENT>0000891092-10-001905.txt : 20100510
<SEC-HEADER>0000891092-10-001905.hdr.sgml : 20100510
<ACCEPTANCE-DATETIME>20100510122617
ACCESSION NUMBER:		0000891092-10-001905
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20100331
FILED AS OF DATE:		20100510
DATE AS OF CHANGE:		20100510

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:		10815104

	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>e38696_10q.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
   <TITLE> </TITLE>
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<BODY bgcolor="#ffffff" style="font-family: 'Arial';font-size: 10pt;">


<P style="text-align: center;"> <B>UNITED STATES</B><BR>
<B>SECURITIES AND EXCHANGE COMMISSION</B><BR>
<B>Washington, D.C. 20549</B></P>
<P style="text-align: center;"> <B>Form 10-Q</B></P>
<P> <B>(</B><b>&radic;</b><B>) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></P>
<P style="text-align: center;"> For the quarterly period ended: <U>March 31, 2010</U></P>
<P style="text-align: center;"> OR</P>
<P> <B>( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></P>
<P style="text-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>
<TABLE border=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;" width=100% cellpadding="0">

  <TR>

    <TD width=40%> </td>
    <TD width=20%> </td>
    <TD width=40%> </td>
  </TR>

  <TR valign="bottom" align="center">

    <TD width="40%"> <FONT size=2>Delaware</FONT>  <br>


    </td>
    <TD width="20%">&nbsp;&nbsp;  </td>
    <TD width="40%"> <FONT size=2>14-0462060</FONT>  </td>
  </TR>
  <TR valign="bottom" align="center">
    <TD width="40%">
      <hr noshade size=1>
    </td>
    <TD width="20%">&nbsp;</td>
    <TD width="40%">
      <hr noshade size=1>
    </td>
  </TR>
  <TR valign="bottom" align="center">
    <TD width="40%"><font size=2>(State or other jurisdiction of</font>  <br>
      <font size=2>incorporation or organization)</font> </td>
    <TD width="20%">&nbsp;</td>
    <TD width="40%" valign="top"><font size=2>(IRS Employer Identification No.)</font> </td>
  </TR>
  <TR valign="bottom" align="center">
    <TD width="40%">&nbsp;</td>
    <TD width="20%">&nbsp;</td>
    <TD width="40%">&nbsp;</td>
  </TR>











  <TR valign="bottom" align="center">

    <TD width="40%"> <FONT size=2>1373 Broadway, Albany, New York</FONT>  <br>


    </td>
    <TD width="20%"> <FONT size=2> </FONT></td>
    <TD width="40%"> <FONT size=2>12204</FONT>   </td>
  </TR>
  <TR valign="bottom" align="center">
    <TD width="40%">
      <hr noshade size=1>
    </td>
    <TD width="20%">&nbsp;</td>
    <TD width="40%">
      <hr noshade size=1>
    </td>
  </TR>
  <TR valign="bottom" align="center">
    <TD width="40%"><font size=2>(Address of principal executive offices)</font> </td>
    <TD width="20%">&nbsp;</td>
    <TD width="40%"><font size=2>(Zip Code)</font> </td>
  </TR>





</TABLE>

<P> Registrant&#146;s telephone number, including area code&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u></u> <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 [&nbsp;&radic;&nbsp;] No [ &nbsp;&nbsp;&nbsp;]</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 [&nbsp;&radic;&nbsp;] No [ &nbsp;&nbsp;&nbsp;]</P>
<P> Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.</P>
<TABLE border=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;" width=100% cellpadding="0">

<TR>

    <TD width=11%> </td>

    <TD width=16%> </td>

    <TD width=14%> </td>

    <TD width=59%> </td>
  </TR>
<TR valign="bottom">

    <TD align=left nowrap width="11%"> <FONT size=2>Large accelerated filer</FONT> </td>

    <TD align=left width="16%"> <FONT size=2>[ &nbsp;&nbsp;&nbsp;]</FONT> </td>

    <TD align=left width="14%" nowrap> <FONT size=2>Accelerated filer</FONT> </td>

    <TD align=left width="59%"> <FONT size=2>[</FONT><FONT size=2>&nbsp;&radic;&nbsp;]</FONT> </td>
  </TR>
<TR valign="bottom">

    <TD align=left nowrap width="11%"> <FONT size=2>Non-accelerated filer</FONT> </td>

    <TD align=left width="16%"> <FONT size=2>[ &nbsp;&nbsp;&nbsp;]</FONT> </td>

    <TD align=left width="14%" nowrap> <FONT size=2>Smaller reporting company</FONT> </td>

    <TD align=left width="59%"> <FONT size=2>[ &nbsp;&nbsp;&nbsp;]</FONT> </td>
  </TR> </TABLE>

<P> Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ &nbsp;&nbsp;&nbsp;] No [&nbsp;&radic;&nbsp;]</P>
<P> The registrant had 27,800,794 shares of Class A Common Stock and 3,236,098 shares of Class B Common Stock outstanding as of March 31, 2010.</P>
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<BR>







<P style="text-align: center;">ALBANY INTERNATIONAL CORP.</P>
<P style="text-align: center;"> TABLE OF CONTENTS</P>
<table border=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;" width=100% cellpadding="4">


  <tr valign="bottom">

    <td align=left>&nbsp; </td>
    <td align=right> <u>Page No.</u></td>
  </tr>

  <tr>

    <td colspan=2>&nbsp; </td>
  </tr>

  <tr valign="bottom">

    <td align=left> Part I Financial information</td>
    <td align=right>&nbsp; </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page1">Item 1. Financial Statements</a></td>
    <td align=right>1 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page1">Consolidated statements of operations - three months ended March 31, 2010 and 2009</a></td>
    <td align=right>1 </td>
  </tr>

  <tr valign="bottom">

    <td align=left height="28"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page2">Consolidated balance sheets - March 31, 2010 and December 31, 2009</a></td>
    <td align=right height="28">2 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page3">Consolidated statements of cash flows - three months ended March 31, 2010 and 2009</a></td>
    <td align=right>3 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page4">Notes to consolidated financial statements</a></td>
    <td align=right>4 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page28">Item 2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</a></td>
    <td align=right>28 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page42">Item 3. Quantitative and Qualitative Disclosures about Market Risk</a></td>
    <td align=right>42 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page42a">Item 4. Controls and Procedures</a></td>
    <td align=right>42 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> Part II Other Information</td>
    <td align=right>&nbsp;</td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page43">Item 1. Legal Proceedings</a></td>
    <td align=right>43 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page47">Item 1A. Risk Factors</a></td>
    <td align=right>47 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page47a">Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</a></td>
    <td align=right>47 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page47b">Item 3. Defaults upon Senior Securities</a></td>
    <td align=right>47 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page47c">Item 4. (Removed and Reserved)</a></td>
    <td align=right>47 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page47d">Item 5. Other Information</a></td>
    <td align=right>47 </td>
  </tr>

  <tr valign="bottom">

    <td align=left> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="#page47e">Item 6. Exhibits</a></td>
    <td align=right>47 </td>
  </tr>

</table>
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<BR>




<P style="TEXT-ALIGN: center"><a name="page1"></a>ALBANY INTERNATIONAL CORP.<BR>

CONSOLIDATED STATEMENTS OF<BR>

OPERATIONS<BR>

<BR>

(in thousands, except per share data)<BR>

(unaudited)</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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 align=center>&nbsp;</TD>
    <TD align=center rowspan="2" colspan="5"><FONT size=2>Three Months</FONT>

<FONT size=2>Ended</FONT><BR>

<FONT size=2>March 31,</FONT></TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=center>&nbsp;</TD>
  </TR>

  <TR>

    <TD align=center colSpan=6>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=center>&nbsp;</TD>
    <TD align=center width="10%">
      <div align="center"><FONT size=2>2010</FONT>
        </div>
      <hr noshade size="1" align="center">
      </TD>
    <TD align=center width="1%">
      <div align="center"></div>
    </TD>
    <TD align=center>
      <div align="center">&nbsp;&nbsp;&nbsp;&nbsp;</div>
    </TD>
    <TD align=center width="10%">
      <div align="center"><FONT size=2>2009</FONT>
      </div>
      <hr noshade size="1" align="center">
    </TD>
    <TD align=center width="1%">&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>Net sales</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$213,873</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$209,205</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Cost of goods sold</FONT></TD>
    <TD align=right><FONT size=2>136,644</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>139,174</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>

  <TR>

    <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>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>Gross profit</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>77,229</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>70,031</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp;Selling, technical, general and research expenses</FONT></TD>
    <TD align=right><FONT size=2>66,076</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>67,619</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp; &nbsp;Restructuring and other, net</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>3,113</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>17,179</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
  </TR>
  <tr>

    <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>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Operating income/(loss)</FONT></TD>
    <TD align=right><FONT size=2>8,040</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>(14,767</FONT></TD>
    <TD align=left><FONT size=2>)</FONT></TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp; &nbsp;Interest expense, net</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>3,825</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>5,834</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp;Other (income)/expense, net</FONT></TD>
    <TD align=right><FONT size=2>(2,281</FONT></TD>
    <TD align=left><FONT size=2>)</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>181</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <tr>

    <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>
  </tr>



  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>Income/(loss) before income taxes</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>6,496</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>(20,782</FONT></TD>
    <TD align=left bgColor=#c0c0c0><FONT size=2>)</FONT></TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp;Income tax expense/(benefit)</FONT></TD>
    <TD align=right><FONT size=2>2,239</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>(1,605</FONT></TD>
    <TD align=left><FONT size=2>)</FONT></TD>
  </TR>
  <tr>

    <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>
  </tr>



  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>Income/(loss) before associated companies</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>4,257</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>(19,177</FONT></TD>
    <TD align=left bgColor=#c0c0c0><FONT size=2>)</FONT></TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2> &nbsp; &nbsp;Equity in income of associated companies</FONT></TD>
    <TD align=right><FONT size=2>8</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>280</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
  <tr>

    <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>
  </tr>



  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>Net income/(loss)</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$4,265</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>($18,897</FONT></TD>
    <TD align=left bgColor=#c0c0c0><FONT size=2>)</FONT></TD>
  </TR>
  <tr>

    <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>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net income/(loss) per share:</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> &nbsp; &nbsp;Basic</FONT></TD>
    <TD align=right><FONT size=2>$0.14</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>($0.63</FONT></TD>
    <TD align=left><FONT size=2>)</FONT></TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2> &nbsp; &nbsp;Diluted</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$0.14</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>($0.63</FONT></TD>
    <TD align=left bgColor=#c0c0c0><FONT size=2>)</FONT></TD>
  </TR>

  <TR>

    <TD colSpan=6>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <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>
    <TD align=left>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2> &nbsp; &nbsp;Basic</FONT></TD>
    <TD align=right><FONT size=2>30,943</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>30,046</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2> &nbsp; &nbsp;Diluted</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>31,033</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>30,046</FONT></TD>
    <TD align=left bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR>

    <TD colSpan=6>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Dividends per share</FONT></TD>
    <TD align=right><FONT size=2>$0.12</FONT></TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD align=right><FONT size=2>$0.12</FONT></TD>
    <TD align=left>&nbsp;</TD>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: center">The accompanying notes are an integral part of the financial statements</P>
<P style="TEXT-ALIGN: center">1</P>
<HR align=center width="100%" noshade SIZE=5>
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<BR>

<P style="TEXT-ALIGN: center"><a name="page2"></a>ALBANY INTERNATIONAL CORP.<BR>

CONSOLIDATED BALANCE SHEETS<BR>

(in thousands, except share and per share data)</P>
<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>
  </TR>





  <TR vAlign=bottom>

    <TD align=center>&nbsp;</TD>
    <TD align=center width="10%">
      <div align="center"><FONT size=2>(unaudited)</FONT><BR>

<FONT size=2>March 31,</FONT><BR>

<FONT size=2>2010</FONT>
      </div>
      <hr noshade size="1" align="center">
    </TD>
    <TD align=center>
      <div align="center"></div>
    </TD>
    <TD align=center>
      <div align="center">&nbsp;&nbsp;</div>
    </TD>
    <TD align=center width="10%">
      <div align="center"><FONT size=2>December 31,</FONT><BR>

<FONT size=2>2009</FONT>
      </div>
      <hr noshade size="1" align="center">
    </TD>
    <TD align=center>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>ASSETS</FONT></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>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Cash and cash equivalents</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$101,758</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$97,466</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Accounts receivable, net</FONT></TD>
    <TD align=right><FONT size=2>156,593</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>168,820</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Inventories</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>167,718</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>172,433</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Income taxes receivable and deferred</FONT></TD>
    <TD align=right><FONT size=2>40,241</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>42,613</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Prepaid expenses and other current assets</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>12,424</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>9,712</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>
  <TR vAlign=bottom>
    <TD align=left>&nbsp;</TD>
    <TD align=right>
      <hr noshade size="1" align="center">
    </TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>
      <hr noshade size="1" align="center">
    </TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2></font>Total current assets</FONT></TD>
    <TD align=right><FONT size=2>478,734</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>491,044</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR>

    <TD colSpan=6>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Property, plant and equipment, net</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>502,197</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>514,475</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Investments in associated companies</FONT></TD>
    <TD align=right><FONT size=2>2,860</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>3,001</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Intangibles</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>6,300</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>5,216</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Goodwill</FONT></TD>
    <TD align=right><FONT size=2>115,382</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>120,037</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Deferred taxes</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>142,574</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>143,085</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Cash surrender value of life insurance policies</FONT></TD>
    <TD align=right><FONT size=2>49,982</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>49,135</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Other assets</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>18,192</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>18,264</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2></font>Total assets</FONT></TD>
    <TD align=right><FONT size=2>$1,316,221</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>$1,344,257</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>
      <hr noshade size="2" align="center">
    </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="2" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</FONT></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>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Notes and loans payable</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$16,434</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>$15,296</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Accounts payable</FONT></TD>
    <TD align=right><FONT size=2>49,555</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>52,618</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Accrued liabilities</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>101,046</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>113,323</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Current maturities of long-term debt</FONT></TD>
    <TD align=right><FONT size=2>11</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>11</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Income taxes payable and deferred</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>2,323</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>3,639</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2></font>Total current liabilities</FONT></TD>
    <TD align=right><FONT size=2>169,369</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>184,887</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR>

    <TD colSpan=6>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Long-term debt</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>489,106</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>483,922</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Other noncurrent liabilities</FONT></TD>
    <TD align=right><FONT size=2>184,171</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>185,067</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;Deferred taxes and other credits</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>66,720</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>65,383</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2></font>Total liabilities</FONT></TD>
    <TD align=right><FONT size=2>909,366</FONT></TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right><FONT size=2>919,259</FONT></TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>

  <TR>

    <TD colSpan=6>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left bgColor=#c0c0c0><FONT size=2>Commitments and Contingencies</FONT></TD>
    <TD align=right bgColor=#c0c0c0><FONT size=2>&#150;</FONT></TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
    <TD align=right bgColor=#c0c0c0>&#150;</TD>
    <TD align=right bgColor=#c0c0c0>&nbsp;</TD>
  </TR>

  <TR>

    <TD colSpan=6>&nbsp;</TD>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>SHAREHOLDERS&#146; EQUITY</FONT></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>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;Preferred stock, par value $5.00 per share;</FONT></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>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized 2,000,000 shares; none issued</FONT></TD>
    <TD align=right>&#150;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD align=right>&#150;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>

  <tr valign="bottom">

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

    <td bgcolor="#c0c0c0" align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized 100,000,000 shares; issued</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=left>&nbsp;</td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td bgcolor="#c0c0c0" align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36,297,533 in 2010 and 36,149,115 in 2009</font></td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>36</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp;</td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>36</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left height="17"> <font size=2>&nbsp;&nbsp;Class B Common Stock, par value &#36;.001 per share;</font></td>
    <td align=left height="17">&nbsp; </td>
    <td align=left height="17">&nbsp; </td>
    <td align=left height="17">&nbsp;</td>
    <td align=left height="17">&nbsp; </td>
    <td align=left height="17">&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized 25,000,000 shares; issued and</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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding 3,236,098 in 2010 and 2009</font></td>
    <td align=right> <font size=2>3</font></td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp;</td>
    <td align=right> <font size=2>3</font></td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td bgcolor="#c0c0c0" align=left> <font size=2>&nbsp;&nbsp;Additional paid in capital</font></td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>383,715</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp;</td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>382,674</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;Retained earnings</font></td>
    <td align=right> <font size=2>383,271</font></td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp;</td>
    <td align=right> <font size=2>382,720</font></td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;Accumulated items of other comprehensive income:</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 bgcolor="#c0c0c0" align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Translation adjustments</font></td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>(15,394</font></td>
    <td bgcolor="#c0c0c0" align=left> <font size=2>)</font></td>
    <td bgcolor="#c0c0c0" align=right>&nbsp;</td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>4,167</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pension and post retirement liability adjustments</font></td>
    <td align=right> <font size=2>(86,477</font></td>
    <td align=left> <font size=2>)</font></td>
    <td align=right>&nbsp;</td>
    <td align=right> <font size=2>(86,303</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=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">

    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>665,154</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp;</td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>683,297</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;Less treasury stock (Class A), at cost 8,496,739 shares</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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in 2010 and 2009</font></td>
    <td align=right> <font size=2>258,299</font></td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp;</td>
    <td align=right> <font size=2>258,299</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=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">

    <td bgcolor="#c0c0c0" align=left> <font size=2>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2></font>Total shareholders&#146; equity</font></td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>406,855</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp;</td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>424,998</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=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="1" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp; &nbsp; &nbsp; &nbsp;<font size=2></font>Total liabilities and shareholders&#146; equity</font></td>
    <td align=right> <font size=2>$1,316,221</font></td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp;</td>
    <td align=right> <font size=2>$1,344,257</font></td>
    <td 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=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>
      <hr noshade size="2" align="center">
    </td>
    <td align=right>&nbsp;</td>
  </tr>

</TABLE>


<P align=center>The accompanying notes are an integral part of the financial statements<br>
</P>
<P align=center>
  2</P>
<HR align=center width="100%" noshade SIZE=5>


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<BR>

<P style="TEXT-ALIGN: center"><a name="page3"></a>ALBANY INTERNATIONAL CORP.<BR>

CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>

(in thousands)<BR>

(unaudited)</P>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 cellpadding=0 border=0 width="100%">

  <tr>

    <td align=center width="81%"></td>
    <td align=center width="6%"></td>
    <td align=center width="1%"></td>
    <td align=center width="2%"></td>
    <td align=center width="7%"></td>
    <td align=center width="2%"></td>
  </tr>



  <tr valign=bottom>

    <td align=center width="81%">&nbsp;</td>
    <td align=center colspan="5"><font size=2>Three Months Ended</font><br>

<font size=2>March 31,</font></td>
  </tr>
  <tr valign=bottom>
    <td align=center width="81%">&nbsp;</td>
    <td align=center width="6%">&nbsp;</td>
    <td align=center width="1%">&nbsp;</td>
    <td align=center width="2%">&nbsp;</td>
    <td align=center width="7%">&nbsp;&nbsp;</td>
    <td align=center width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=center width="81%">&nbsp;</td>
    <td align=center width="6%"><font size=2>2010</font>
      <hr noshade size="1" align="center">
    </td>
    <td align=center width="1%">&nbsp;</td>
    <td align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center width="7%"><font size=2>2009</font>
      <hr noshade size="1" align="center">
    </td>
    <td align=center width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>OPERATING ACTIVITIES</font></td>
    <td align=left width="6%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=left width="7%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>Net income/(loss)</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>$4,265</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>($18,897</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:</font></td>
    <td align=left width="6%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=left width="7%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Equity in earnings of associated companies</font></td>
    <td align=right width="6%"><font size=2>(8</font></td>
    <td align=left width="1%"><font size=2>)</font></td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(280</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>13,941</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>14,573</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization</font></td>
    <td align=right width="6%"><font size=2>1,954</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>2,138</font></td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Noncash interest expense</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>188</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>1,187</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Gain on early retirement of debt</font></td>
    <td align=right width="6%">&#150;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(2,800</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Settlement of accreted debt discount</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%">&#150;</td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>(522</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for deferred income taxes, other credits and long-term liabilities</font></td>
    <td align=right width="6%"><font size=2>1,118</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(4,635</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for write-off of property, plant and equipment</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>1,467</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>1,076</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Increase in cash surrender value of life insurance</font></td>
    <td align=right width="6%"><font size=2>(847</font></td>
    <td align=left width="1%"><font size=2>)</font></td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(1,019</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Stock option expense</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%">&#150;</td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>42</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Compensation and benefits paid or payable in Class A Common Stock</font></td>
    <td align=right width="6%"><font size=2>955</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>1,039</font></td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr>

    <td colspan=6>&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>Changes in operating assets and liabilities, net of business acquisitions and divestitures:</font></td>
    <td align=left width="6%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=left width="7%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>8,396</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%">&nbsp;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>23,445</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></td>
    <td align=right width="6%"><font size=2>2,270</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(6,214</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>(2,769</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%"><font size=2>)</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>(1,161</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</font></td>
    <td align=right width="6%"><font size=2>(2,075</font></td>
    <td align=left width="1%"><font size=2>)</font></td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(24,450</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>(10,401</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%"><font size=2>)</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>9,096</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable</font></td>
    <td align=right width="6%"><font size=2>(1,437</font></td>
    <td align=left width="1%"><font size=2>)</font></td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(2,455</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Other, net</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>(117</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%"><font size=2>)</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>(1,631</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%"><font size=2>)</font></td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by/(used in) operating activities</font></td>
    <td align=right width="6%"><font size=2>16,900</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(11,468</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>



  <tr>

    <td colspan=6>&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>INVESTING ACTIVITIES</font></td>
    <td align=left width="6%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=left width="7%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>(6,821</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%"><font size=2>)</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>(15,721</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Purchased software</font></td>
    <td align=right width="6%"><font size=2>(1,073</font></td>
    <td align=left width="1%"><font size=2>)</font></td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(1,145</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Acquisitions, net of cash acquired</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>(1,902</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%"><font size=2>)</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%">&#150;</td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities</font></td>
    <td align=right width="6%"><font size=2>(9,796</font></td>
    <td align=left width="1%"><font size=2>)</font></td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>(16,866</font></td>
    <td align=left width="2%"><font size=2>)</font></td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>



  <tr valign=bottom>

    <td align=left width="81%"><font size=2>FINANCING ACTIVITIES</font></td>
    <td align=left width="6%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=left width="7%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings</font></td>
    <td align=right width="6%"><font size=2>6,152</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%"><font size=2>40,583</font></td>
    <td align=left width="2%">&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left bgcolor=#c0c0c0 width="81%"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Principal payments on debt</font></td>
    <td align=right bgcolor=#c0c0c0 width="6%"><font size=2>(17</font></td>
    <td align=left bgcolor=#c0c0c0 width="1%"><font size=2>)</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%">&nbsp;</td>
    <td align=right bgcolor=#c0c0c0 width="7%"><font size=2>(3,585</font></td>
    <td align=left bgcolor=#c0c0c0 width="2%"><font size=2>)</font></td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Early retirement of debt</font></td>
    <td align=right> &#150;</td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right> <font size=2>(3,360</font></td>
    <td align=left> <font size=2>)</font></td>
  </tr>
  <tr valign="bottom">

    <td bgcolor="#c0c0c0" align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from options exercised</font></td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>87</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right> &#150;</td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign="bottom">

    <td align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid</font></td>
    <td align=right> <font size=2>(3,705</font></td>
    <td align=left> <font size=2>)</font></td>
    <td align=right>&nbsp; </td>
    <td align=right> <font size=2>(3,628</font></td>
    <td align=left> <font size=2>)</font></td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>
  <tr valign="bottom">

    <td bgcolor="#c0c0c0" align=left> <font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities</font></td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>2,517</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>30,010</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>
  <tr>

    <td colspan=6>&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>(5,329</font></td>
    <td align=left> <font size=2>)</font></td>
    <td align=right>&nbsp; </td>
    <td align=right> <font size=2>(4,209</font></td>
    <td align=left> <font size=2>)</font></td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>
  <tr>

    <td colspan=6>&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>4,292</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>(2,533</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>97,466</font></td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right> <font size=2>106,571</font></td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="1" align="center">
    </td>
    <td align=left width="2%">&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;101,758</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right>&nbsp; </td>
    <td bgcolor="#c0c0c0" align=right> <font size=2>&#36;104,038</font></td>
    <td bgcolor="#c0c0c0" align=left>&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td align=left width="81%">&nbsp;</td>
    <td align=right width="6%">
      <hr noshade size="2" align="center">
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="2%">&nbsp;</td>
    <td align=right width="7%">
      <hr noshade size="2" align="center">
    </td>
    <td align=left width="2%">&nbsp;</td>
  </tr>


</table>


<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 style="text-align: center;"> <a name="page4"></a>ALBANY INTERNATIONAL CORP.<BR>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>

(unaudited)</P>
<P> <B>1. Basis of Presentation</B></P>
<P> In our opinion, 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 our Annual Report on Form 10-K as filed with the SEC for the year ended December 31, 2009.</P>
<P align="center">4</P>
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<P style="TEXT-ALIGN: left"><B>2. Reportable Segment Data</B></P>
<P style="TEXT-ALIGN: left">The following table shows data by reportable segment, reconciled to consolidated totals included in the financial statements:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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>

    <td colspan="7">




      <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><BR>

<FONT size=2>March 31,</FONT>  </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="15%"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3" width="15%"> <FONT size=2>2009</FONT>  </td>
  </TR>

  <TR>

    <TD colspan="7">




      <HR noshade SIZE=1>

  </td>
  </TR>



  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Net Sales</FONT></B> </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>&nbsp;&nbsp;&nbsp;Paper Machine Clothing</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>144,408</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>139,074</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Albany Door Systems</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>33,755</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>34,326</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Engineered Fabrics</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>21,441</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>21,570</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Engineered Composites</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>8,641</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>9,085</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;PrimaLoft</FONT><font size="1"><sup>&#174;</sup></font><FONT size=2> Products</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>5,628</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>5,150</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">




      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Consolidated total</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>213,873</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>209,205</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">




      <hr noshade size=1>

  </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Operating income/(loss)</FONT></B> </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>&nbsp;&nbsp;&nbsp;Paper Machine Clothing</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>25,076</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>7,261</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Albany Door Systems</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,884</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>228</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Engineered Fabrics</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,521</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>3,655</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Engineered Composites</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(2,229</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(2,508</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;PrimaLoft</FONT><font size="1"><sup>&#174;</sup></font><FONT size=2> Products</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,069</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,089</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Research expense</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(5,811</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(5,610</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Unallocated expenses</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(16,470</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(18,882</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">




      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Operating income/(loss) before reconciling items</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>8,040</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(14,767</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Reconciling items:</FONT></B> </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>&nbsp;&nbsp;&nbsp;Interest expense, net</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>3,825</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>5,834</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Other (income)/expense, net</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(2,281</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>181</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">




      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Income/(loss) before income taxes</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>6,496</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>($</FONT> </td>
    <TD align=right><FONT size=2>20,782</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">




      <hr noshade size=1>

  </td>
  </tr>


</TABLE>

<P style="TEXT-ALIGN: left">During 2006, we began a three-year restructuring and performance improvement plan that resulted in significant restructuring costs. The table below presents first quarter restructuring costs by reportable segment:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
  </TR>
  <tr>

    <td colspan="6">




      <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>March 31,</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="10%"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="2" width="10%"> <FONT size=2>2009</FONT> </td>
  </TR>

  <TR>

    <TD colspan="6">




      <HR noshade SIZE=1>

 </td>
  </TR>



  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Restructuring expense</FONT></B> </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>&nbsp;&nbsp;&nbsp;Paper Machine Clothing</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,007</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>15,609</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Albany Door Systems</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>28</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>148</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;PrimaLoft<font size="1"><sup>&#174;</sup></font> Products</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>42</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Unallocated</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(922</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,380</FONT> </td>
  </TR>
  <tr>

    <td colspan="6">




      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Consolidated total</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>3,113</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>17,179</FONT> </td>
  </TR>
  <tr>

    <td colspan="6">




      <hr noshade size=1>

 </td>
  </tr>


</TABLE>

<P style="TEXT-ALIGN: left">There were no material changes in the total assets of the reportable segments during the three months ended March 31, 2010.</P>
<P align=center>5</P>
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<P style="TEXT-ALIGN: left"><B>3. Pensions and Other Benefits</B></P>
<P style="TEXT-ALIGN: left">We sponsor defined benefit pension plans in various countries. The amount of contributions to the plans are based on several factors including the funding rules in each country. We expect to contribute approximately $12.3 million to our pension plans in 2010, compared to $28.7 million in 2009, which included a voluntary contribution of $20 million. We also provide certain medical, dental and life insurance benefits (&#147;Other Postretirement Benefits&#148;) for retired United States employees that meet program qualifications. We currently fund this plan as claims are paid.</P>
<P style="TEXT-ALIGN: left">The components of net periodic benefit cost for the three months ended March 31, 2010 and 2009 are, as follows:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
    <TD align=center> </td>
  </TR>
  <tr>

    <td colspan="13">








      <hr noshade size=1>

  </td>
  </tr>


  <TR vAlign=bottom>

    <TD align=center>&nbsp; </td>
    <TD align=center colspan="6"><font size=2>Pension Plans</font>       </td>
    <TD align=center colspan="6"><font size=2>Other Postretirement</font>  <font size=2>Benefits</font>   </td>
  </TR>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3"> <FONT size=2>2009</FONT>  </td>
    <TD align=center colspan="3"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3"> <FONT size=2>2009</FONT>  </td>
  </TR>
  <tr>

    <td colspan="13">








      <hr noshade size=1>

  </td>
  </tr>



  <TR>

    <TD colSpan=13>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Service cost</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>623</FONT></B> </td>
    <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>1,439</FONT> </td>
    <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>209</FONT></B> </td>
    <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>281</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Interest cost</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>5,028</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>4,669</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>1,024</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>955</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>&nbsp; </td>
    <TD align=right><B><FONT size=2>(3,791</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(5,087</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=13>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Amortization:</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=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>&nbsp;&nbsp;&nbsp;Transition obligation</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>25</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>23</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Prior service cost/(credit)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>4</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>26</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(873</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(1,082</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Net actuarial loss</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>1,187</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>498</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>710</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>695</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=13>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Curtailment loss/(gain)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>1,720</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(922</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="13">








      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net periodic benefit costs</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,796</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>1,568</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>148</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>849</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR>

    <TD colspan="13">








      <HR noshade SIZE=1>

  </td>
  </TR>
</TABLE>
<P style="TEXT-ALIGN: left">The $1.7 million pension plan curtailment loss in Q1 2010 was included as part of the restructuring line in our Statement of Operations. We recorded the $1.7 million reduction to a pension curtailment gain, which was originally recorded during the fourth quarter of 2009, in order to correct an error in the actuarial calculation. We assessed the impact of this adjustment on the current and prior year and determined that the effect of this adjustment was not material to either period.</P>
<P style="TEXT-ALIGN: left">In addition, in the first quarter of 2010 a benefit curtailment gain of $0.9 million was recorded related to previously announced reductions in manufacturing capacity.</P>
<P align=center>6</P>
<HR align=center width="100%" noshade SIZE=5>
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<BR>
<P style="TEXT-ALIGN: left"><B>4. Restructuring</B></P>
<P style="TEXT-ALIGN: left">The three-year Company-wide restructuring and performance improvement plan that began in 2006 and included the reduction of manufacturing capacity, reduction of administrative personnel, and curtailment of benefits under pension and postretirement plans, is now largely complete. The actions taken were driven by the need to adjust our manufacturing footprint to align with regional markets, and to improve our cost structure.</P>
<P style="TEXT-ALIGN: left">The following tables summarize charges reported in the Statement of Operations under &#147;Restructuring and other, net&#148; for the first three months of 2010 and 2009:</P>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 border=0 cellpadding="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>
  </tr>
  <tr>

    <td colspan="11">








      <hr noshade size=1>

  </td>
  </tr>

  <tr valign=bottom>

    <td align=center>&nbsp; </td>
    <td align=center colspan="10">    <font size=2>Three months ending March 31, 2010</font>    </td>
  </tr>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>






  <tr valign=bottom>
    <td align=left><font size=2>(in thousands)</font> </td>
    <td align=right>&nbsp;</td>
    <td align=right><font size=2>Total restructuring</font><br>

<font size=2>costs incurred</font> </td>
    <td align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right><font size=2>Termination and</font><br>

<font size=2>other costs</font> </td>
    <td align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=right><font size=2>Writedown of plant</font><br>

<font size=2>and equipment</font> </td>
    <td align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=right><font size=2>Benefit plan</font><br>

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

    <td colspan="11">








      <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>$</font> </td>
    <td align=right><font size=2>4,007</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>1,044</font> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>1,243</font> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>1,720</font> </td>
    <td align=left>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Albany Door Systems</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>28</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>28</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Unallocated</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(922</font> </td>
    <td align=left><font size=2>)</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(922</font> </td>
    <td align=left><font size=2>)</font> </td>
  </tr>
  <tr>

    <td 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>$</font> </td>
    <td align=right><font size=2>3,113</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>1,072</font> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>1,243</font> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>798</font> </td>
    <td align=left>&nbsp; </td>
  </tr>

  <tr>

    <td colspan="11">








      <hr noshade size=1>

  </td>
  </tr>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right colspan=6>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr>

    <td colspan="11">








      <hr noshade size=1>

  </td>
  </tr>





  <tr valign=bottom>

    <td align=left>&nbsp; </td>
    <td align=center colspan="10"> <font size=2>Three months ending March 31, 2009</font>    </td>
  </tr>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp;</td>
    <td align=center>&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>(in thousands)</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>Total restructuring</font>  <font size=2><br>
      costs incurred</font>  </td>
    <td align=right>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>Termination and</font>  <font size=2><br>
      other costs</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>Writedown of plant and</font>  <font size=2><br>
      equipment</font>  </td>
    <td align=right>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr>

    <td colspan="11">








      <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>$</font> </td>
    <td align=right><font size=2>15,609</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>15,321</font> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>288</font> </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>Albany Door Systems</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>148</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>148</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </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>PrimaLoft</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>42</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>42</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </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>Unallocated</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>1,380</font> </td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>1,380</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td align=left colspan="11">
      <hr noshade size=1>


    </td>
  </tr>
  <tr valign=bottom>
    <td align=left>&nbsp;</td>
    <td align=right>$ </td>
    <td align=right>17,179 </td>
    <td align=left>&nbsp;</td>
    <td align=right>$ </td>
    <td align=right>16,891 </td>
    <td align=right>$ </td>
    <td align=right>288 </td>
    <td align=right>&nbsp;</td>
    <td align=left>&nbsp;</td>
    <td align=left>&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td align=left colspan="11">
      <hr noshade size=1>


    </td>
  </tr>



</table>
<P style="TEXT-ALIGN: left">The tables below present year-to-date summaries of changes in restructuring liabilities for 2010 and 2009:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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>
  </TR>





  <TR vAlign=bottom align="left">

    <TD><FONT size=2>(in thousands)</FONT> </td>
    <TD colspan="2" align=right width="15%"> <FONT size=2>Restructuring</FONT><BR>

<FONT size=2>charges accrued</FONT><BR>

<FONT size=2>December 31, 2009</FONT> </td>
    <TD colspan="2" align=right width="15%"> <FONT size=2>Restructuring</FONT><BR>

<FONT size=2>accruals in 2010</FONT> </td>
    <TD colspan="3" align=right width="15%"> <FONT size=2>Payments</FONT>  </td>
    <TD colspan="3" align=right width="15%"> <FONT size=2>Currency</FONT><BR>

<FONT size=2>translation/ other</FONT>  </td>
    <TD colspan="2" align=right width="15%"> <FONT size=2>Restructuring</FONT><BR>

<FONT size=2>charges accrued</FONT><BR>

<FONT size=2>March 31, 2010</FONT> </td>
  </TR>
  <tr>

    <td colspan="13">
      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Termination costs</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>20,511</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>713</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(9,744</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(510</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>10,970</FONT> </td>
  </TR>

  <TR>

    <TD colspan="13">
      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">We expect that substantially all accruals for restructuring liabilities during 2010 will be paid within one year.</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=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>
    <TD align=center> </td>
  </TR>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=right colspan="2" width="15%"> <FONT size=2>Restructuring</FONT><BR>

<FONT size=2>charges accrued</FONT><BR>

<FONT size=2>December 31, 2008</FONT> </td>
    <TD align=right colspan="2" width="15%"> <FONT size=2>Restructuring</FONT><BR>

<FONT size=2>accruals in</FONT><BR>

<FONT size=2>2009</FONT> </td>
    <TD align=right colspan="3" width="15%"> <FONT size=2>Payments</FONT>  </td>
    <TD align=right colspan="3" width="15%"> <FONT size=2>Currency</FONT><BR>

<FONT size=2>translation/other</FONT>  </td>
    <TD align=right colspan="2" width="15%"> <FONT size=2>Restructuring</FONT><BR>

<FONT size=2>charges accrued</FONT><BR>

<FONT size=2>March 31, 2009</FONT> </td>
  </TR>
  <tr>

    <td colspan="13">










      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Termination costs</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>21,284</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>16,651</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(7,976</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(328</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>29,631</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Other restructuring costs</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>624</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>119</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(387</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(19</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>337</FONT> </td>
  </TR>
  <tr>

    <td colspan="13">










      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>21,908</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>16,770</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(8,363</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(347</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>29,968</FONT> </td>
  </TR>

  <TR>

    <TD colspan="13">










      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>

<P align=center>7</P>
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<P style="TEXT-ALIGN: left"><B>5. Other (Income)/Expense, net</B></P>
<P style="TEXT-ALIGN: left">Other (income)/expense, net consists of the following:</P>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 border=0 cellpadding="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>
  </tr>
  <tr>

    <td colspan="7">
      <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><br>

<font size=2>March 31,</font>  </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>(in thousands)</font> </td>
    <td align=center colspan="3"> <b><font size=2>2010</font></b>  </td>
    <td align=center colspan="3"> <font size=2>2009</font>  </td>
  </tr>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <tr>

    <td colspan=7>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Currency transactions</font> </td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>(2,793</font></b> </td>
    <td align=left><b><font size=2>)&nbsp;&nbsp;&nbsp;</font></b></td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>1,463</font> </td>
    <td align=left>&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=left>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>&nbsp;&nbsp;&nbsp;origination fees</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><b><font size=2>519</font></b> </td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>883</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><b>&#150;</b> </td>
    <td align=left>&nbsp; </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(2,800</font> </td>
    <td align=left><font size=2>)</font> </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Other miscellaneous (income)/expense</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><b><font size=2>(7</font></b> </td>
    <td align=left><b><font size=2>)</font></b> </td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>635</font> </td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <tr valign=bottom>

    <td align=left><font size=2>Total</font> </td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>(2,281</font></b> </td>
    <td align=left><b><font size=2>)</font></b> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>181</font> </td>
    <td align=left>&nbsp; </td>
  </tr>

  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>
</table>
<P align=center>8</P>
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<P style="TEXT-ALIGN: left"><B>6. Income Taxes</B></P>
<P style="TEXT-ALIGN: left">The following table presents components of income tax expense/(benefit) for the three month period ending March 31, 2010 and 2009:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
  </TR>
  <tr>

    <td colspan="7">
      <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><BR>

<FONT size=2>March 31,</FONT>  </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="12%"> <B><FONT size=2>2010</FONT></B> </td>
    <TD align=center colspan="3" width="12%"> <FONT size=2>2009</FONT>  </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Income tax expense/(benefit) based on income from continuing operations, at estimated</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=left>&nbsp; </td>
    <TD align=left><b><font size=2>&nbsp;&nbsp;</font></b><b><font size=2>&nbsp;&nbsp;</font></b></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>tax rates of 34.5% in 2010 and 11.4% in 2009, respectively</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>2,239</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(2,697</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Provision for gain on extinguishment of debt</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,101</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Income tax/(benefit) from continuing operations before discrete items</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,239</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(1,596</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Discrete tax expense/(benefit):</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for/resolution of tax audits and contingencies</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(9</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total income tax expense/(benefit) from continuing operations</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>2,239</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(1,605</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR>

    <TD colspan="7">
      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>


<P style="TEXT-ALIGN: left">The first-quarter estimated income tax rate on continuing operations was 34.5% in 2010, as
compared to 11.4% in 2009. The higher tax rate was primarily due to a shift in
the distribution of income toward higher-tax jurisdictions; our current year
inability under U.S. GAAP to recognize certain tax benefits from current losses
in certain high-tax jurisdictions; and the recent expiration of certain
provisions in the U.S. tax code relating to R&amp;D credits and the deferred
taxation of income generated by controlled foreign subsidiaries. </P>


<P style="TEXT-ALIGN: left">We are currently under audit in U.S. and non-U.S. taxing jurisdictions.</P>


<P style="TEXT-ALIGN: left">In our Annual Report on Form 10-K for the period
ending December 31, 2009, it was disclosed that tax benefits of approximately
$24.3 million claimed in Germany related to a 1999 reorganization were under
challenge. In 2008 the German Federal Tax Court denied benefits to other
taxpayers in a case involving German tax laws relevant to our reorganization.
The determination of the German Federal Tax Court on this matter was appealed to
the European Court of Justice (&#147;ECJ&#148;) to determine if the underlying
German tax law is violative of European Union (EU) principles. In September of
2009 the ECJ issued an opinion in this case that is generally favorable to the
other taxpayer and referred the case back to the German Federal Tax Court for
further consideration. The Annual Report also disclosed that a reassessment
notice in the amount of $54.8 million had been issued by the Canada Revenue
Agency. There was no change with regard to either of these matters during
the first quarter of 2010.</P>


<P style="TEXT-ALIGN: left">We record reserves for the outcome of these uncertainties in accordance with applicable guidance for accounting for uncertainty in income taxes. It is reasonably possible that an increase or decrease in the unrecognized tax benefits may occur in the next twelve months related to one of these audits or other changes. However, it is not possible to estimate a range at this time.</P>
<P align=center>9</P>
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<P style="TEXT-ALIGN: left"><B>7. Earnings Per Share</B></P>
<P style="TEXT-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 style="TEXT-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>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
  </TR>
  <tr>

    <td colspan="7">
      <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>  <br>
      <font size=2>March 31,</font>
     </td>
  </TR>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands, except market price data)</FONT> </td>
    <TD align=center colspan="3" width="13%">

<B><FONT size=2>2010</FONT></B> </td>
    <TD align=center colspan="3" width="13%"> <FONT size=2>2009</FONT>  </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net income/(loss)</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,265</FONT></B> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(18,897</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Weighted average number of shares:</FONT></B> </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>&nbsp;&nbsp;&nbsp;&nbsp;Weighted average number of shares used in</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;calculating basic earnings per share</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>30,943</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>30,046</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Effect of dilutive stock-based compensation</FONT></B> </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><B><FONT size=2>awards:</FONT></B> </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>&nbsp;&nbsp;&nbsp;&nbsp;Stock options</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>56</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Long-term incentive awards</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>34</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Weighted average number of shares used in</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>calculating diluted earnings per share</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>31,033</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>30,046</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=7>&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=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>included in the computation of diluted earnings per share</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=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>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=center>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>146</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Average market price of common stock used</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>for calculation of dilutive shares</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>21.04</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>9.46</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Net income/(loss) per share:</FONT></B> </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>&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>0.14</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(0.63</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Diluted</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>0.14</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(0.63</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR>

    <TD colspan="7">
      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>
<P style="TEXT-ALIGN: left">There was no dilution resulting from the convertible debt instrument, purchased call option, and warrant that are described in Note 10 as of March 31, 2010 and 2009.</P>
<P style="TEXT-ALIGN: left">The following table presents the number of shares issued and outstanding:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <TR>

    <TD align=center> </td>
    <TD align=center> </td>
    <TD align=center> </td>
    <TD align=center> </td>
    <TD align=center> </td>
  </TR>
  <tr>

    <td colspan="5">



      <hr noshade size=1>

 </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=center>&nbsp; </td>
    <TD align=center><FONT size=2>Class A</FONT> </td>
    <TD align=center><FONT size=2>Class B</FONT> </td>
    <TD align=center><FONT size=2>Less: Treasury</FONT> </td>
    <TD align=center><FONT size=2>Net shares</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left>&nbsp; </td>
    <TD align=center><FONT size=2>Shares</FONT> </td>
    <TD align=center><FONT size=2>Shares</FONT> </td>
    <TD align=center><FONT size=2>Shares</FONT> </td>
    <TD align=center><FONT size=2>Outstanding</FONT> </td>
  </TR>

  <TR>

    <TD colspan="5">



      <hr noshade size=1>

 </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>December 31, 2009</FONT> </td>
    <TD align=center><FONT size=2>36,149,115</FONT> </td>
    <TD align=center><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><FONT size=2>30,888,474</FONT> </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left>&nbsp;</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 align=left><B><FONT size=2>March 31, 2010</FONT></B> </td>
    <TD align=center><B><FONT size=2>36,297,533</FONT></B> </td>
    <TD align=center><B><FONT size=2>3,236,098</FONT></B> </td>
    <TD align=center><B><FONT size=2>(8,496,739</FONT></B><b><font size=2>)</font></b></td>
    <TD align=center><B><FONT size=2>31,036,892</FONT></B> </td>
  </TR>
  <tr>

    <td colspan="5">



      <hr noshade size=1>

 </td>
  </tr>

</TABLE>
<P align=center>10</P>
<HR align=center width="100%" noshade SIZE=5>
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<P style="TEXT-ALIGN: left"><B>8. Inventories</B></P>
<P style="TEXT-ALIGN: left">Inventories consist of the following:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="13%"> <B><FONT size=2>March 31,</FONT></B><BR>

<B><FONT size=2>2010</FONT></B> </td>
    <TD align=center colspan="3" width="13%"> <FONT size=2>December 31,</FONT><BR>

<FONT size=2>2009</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Finished goods</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>79,675</FONT></B> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>80,885</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Work in process</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>48,361</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>49,420</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Raw material and supplies</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>39,682</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>42,128</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total inventories</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>167,718</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>172,433</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR>

    <TD colspan="7">
      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>
<P style="TEXT-ALIGN: left">Inventories are stated at the lower of cost or market and are valued at average cost, net of reserves. We record a provision for obsolete inventory based on the age and category of the inventories.</P>
<P align=center>11</P>
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<P style="TEXT-ALIGN: left"><B>9. Goodwill and Other Intangible Assets</B></P>
<P style="TEXT-ALIGN: left">Goodwill and intangible assets with indefinite useful lives are not amortized, but are 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. Our reporting units are consistent with our operating segments.</P>
<P style="TEXT-ALIGN: left">Determining the fair value of a reporting unit 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 style="TEXT-ALIGN: left">To determine fair value, we utilized two market-based approaches and an income approach. Under the market-based approaches, we utilized information regarding the Company as well as publicly available industry information to determine earnings multiples and sales multiples. Under the income approach, we 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 style="TEXT-ALIGN: left">We completed an annual evaluation of goodwill for our Paper Machine Clothing reporting unit and Albany Door System reporting unit as of June 30, 2009. Our assessment of goodwill impairment indicated that the fair value of each reporting unit exceeded its carrying value and therefore goodwill in each of the reporting units was not impaired.</P>
<P style="TEXT-ALIGN: left">We are 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, 2010 to March 31, 2010, were as follows:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
    <TD align=center></td>
    <TD align=center> </td>
    <TD align=center> </td>
    <TD align=center></td>
  </TR>
  <tr>

    <td colspan="16">
      <hr noshade size=1>

 </td>
  </tr>






  <TR vAlign=bottom>
    <TD align=left><font size=2>(in thousands)</font> </td>
    <TD align=right colspan="3" width="13%"><font size=2>Balance at</font><br>

<font size=2>January 1, 2010</font> </td>
    <TD align=right colspan="3" width="13%"><font size=2>Amortization</font> </td>
    <TD align=right colspan="3" width="13%"><font size=2>Currency</font><br>

<font size=2>translation</font> </td>
    <TD align=right colspan="3" width="13%"><font size=2>Other changes</font></td>
    <TD align=right colspan="3" width="13%"><b><font size=2>Balance at</font></b>  <b><font size=2><br>
      March 31, 2010</font></b> </td>
  </TR>
  <tr>

    <td colspan="16">
      <hr noshade size=1>

 </td>
  </tr>




  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Amortized intangible assets:</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=left>&nbsp; </td>
    <TD align=left>&nbsp;&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;&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=left>&nbsp; </td>
    <TD align=left>&nbsp;&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Patents</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>605</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(87</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(35</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right>&#150; </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>483</FONT></B> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Trade names</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>91</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </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>&#150; </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>80</FONT></B> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Customer contracts</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>4,216</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(326</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(34</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>3,856</FONT></B> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Technology</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>304</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(45</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>14</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,608</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>1,881</FONT></B> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr>

    <td colspan="16">
      <hr noshade size=1>

 </td>
  </tr>



  <TR>

    <TD colSpan=16>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total amortized intangible assets</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>5,216</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(469</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(55</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>1,608</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>6,300</FONT></B> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr>

    <td colspan="16">
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>Unamortized intangible assets:</FONT></B> </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>&nbsp;&nbsp;&nbsp;Goodwill</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>120,037</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(4,655</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right>&#150; </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>115,382</FONT></B> </td>
    <TD align=center>&nbsp;</td>
  </TR>

  <TR>

    <TD colspan="16">
      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>
<P style="TEXT-ALIGN: left">The $1.6 million other change in amortized intangible assets is related to the acquisition of Envico Ltd. on March 9, 2010. Envico Ltd. is a New Zealand based manufacturer and distributor of high performance doors and has been integrated into the Albany Door Systems segment of the Company. We have not completed the purchase price allocation related to this acquisition.</P>
<P style="TEXT-ALIGN: left">As of March 31, 2010, the balance of goodwill was $77.6 million in the Paper Machine Clothing reporting unit and $37.8 million in the Albany Door Systems reporting unit.</P>
<P align=center>12</P>
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<P style="TEXT-ALIGN: left">Estimated amortization expense of intangibles for the years ending December 31, 2010 through 2014 is as follows:</P>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 border=0 cellpadding="0" align="center" width="300">

  <tr>

    <td align=center> </td>
    <td align=center> </td>
  </tr>
  <tr align="right">

    <td colspan="2">
      <hr noshade size=1>

 </td>
  </tr>



  <tr valign=bottom align="right">

    <td><font size=2>Year</font> </td>
    <td><font size=2>Annual amortization</font><br>

<font size=2>(in thousands)</font> </td>
  </tr>

  <tr align="right">

    <td colspan="2">
      <hr noshade size=1>

 </td>
  </tr>

  <tr align="right">

    <td colspan=2>&nbsp; </td>
  </tr>

  <tr valign=bottom align="right">

    <td><font size=2>2010</font> </td>
    <td><font size=2>$2,200</font> </td>
  </tr>

  <tr valign=bottom align="right">

    <td><font size=2>2011</font> </td>
    <td><font size=2>1,700</font> </td>
  </tr>

  <tr valign=bottom align="right">

    <td><font size=2>2012</font> </td>
    <td><font size=2>1,200</font> </td>
  </tr>

  <tr valign=bottom align="right">

    <td><font size=2>2013</font> </td>
    <td><font size=2>800</font> </td>
  </tr>

  <tr valign=bottom align="right">

    <td><font size=2>2014</font> </td>
    <td><font size=2>500</font> </td>
  </tr>
  <tr align="right">

    <td colspan="2">
      <hr noshade size=1>

 </td>
  </tr>


</table>
<P align=center>13</P>
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<P style="TEXT-ALIGN: left"><B>10. Financial Instruments</B></P>
<P style="TEXT-ALIGN: left">Long-term debt consists of:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <TR>

    <TD align=center width="70%"> </td>
    <TD align=center width="4%"> </td>
    <TD align=center width="8%"> </td>
    <TD align=center width="3%"> </td>
    <TD align=center width="2%"> </td>
    <TD align=center width="10%"> </td>
    <TD align=center width="3%"> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3"> <B><FONT size=2>March 31,</FONT></B><BR>

<B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3"> <FONT size=2>December 31,</FONT><BR>

<FONT size=2>2009</FONT>  </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>Convertible notes, par value $28,437, issued in</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>March 2006 with fixed contractual interest rates</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>of 2.25%, due in 2026</FONT> </td>
    <TD align=right width="4%"><B><FONT size=2>$</FONT></B> </td>
    <TD align=right width="8%"><B><FONT size=2>25,910</FONT></B> </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%"><FONT size=2>$</FONT> </td>
    <TD align=right width="10%"><FONT size=2>25,721</FONT> </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left width="70%">&nbsp;</td>
    <TD align=right width="4%">&nbsp;</td>
    <TD align=left width="8%">&nbsp;</td>
    <TD align=left width="3%">&nbsp;</td>
    <TD align=right width="2%">&nbsp;</td>
    <TD align=left width="10%">&nbsp;</td>
    <TD align=left width="3%">&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>Private placement with a fixed interest rate of</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>6.84%, due in 2013 through 2017</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=right width="8%"><B><FONT size=2>150,000</FONT></B> </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=right width="10%"><FONT size=2>150,000</FONT> </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>April 2006 credit agreement with borrowings</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>outstanding at an end of period  interest rate of </FONT></td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>1.10%</FONT>  <FONT size=2>in 2010 and 1.35% in 2009, due in 2011.</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=right width="8%"><B><FONT size=2>313,000</FONT></B> </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=right width="10%"><FONT size=2>308,000</FONT> </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>Various notes and mortgages relative</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>to operations principally outside the United</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>States, at an average end of period rate of 5.39% </FONT></td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>in 2010 and</FONT>  <FONT size=2>5.40% in 2009 due in varying amounts </FONT></td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=left width="8%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=left width="10%">&nbsp; </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>through</FONT>  <FONT size=2>2021</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=right width="8%"><B><FONT size=2>207</FONT></B> </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=right width="10%"><FONT size=2>212</FONT> </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>Long-term debt</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=right width="8%"><B><FONT size=2>489,117</FONT></B> </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=right width="10%"><FONT size=2>483,933</FONT> </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>Less: current portion</FONT> </td>
    <TD align=right width="4%">&nbsp; </td>
    <TD align=right width="8%"><B><FONT size=2>(11</FONT></B> </td>
    <TD align=left width="3%"><B><FONT size=2>)</FONT></B> </td>
    <TD align=right width="2%">&nbsp; </td>
    <TD align=right width="10%"><FONT size=2>(11</FONT> </td>
    <TD align=left width="3%"><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left width="70%"><FONT size=2>Long-term debt, net of current portion</FONT> </td>
    <TD align=right width="4%"><B><FONT size=2>$</FONT></B> </td>
    <TD align=right width="8%"><B><FONT size=2>489,106</FONT></B> </td>
    <TD align=left width="3%">&nbsp; </td>
    <TD align=right width="2%"><FONT size=2>$</FONT> </td>
    <TD align=right width="10%"><FONT size=2>483,922</FONT> </td>
    <TD align=left width="3%">&nbsp; </td>
  </TR>

  <TR>

    <TD colspan="7">
      <HR noshade SIZE=1>

  </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">In October 2005, we 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 million, with interest at 6.84% and a maturity date of
October 25, 2017. There are mandatory prepayments of $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 our current principal credit facility. For disclosure purposes, we are
required to measure the fair value of outstanding debt on a recurring basis. The
fair value of the note agreement was approximately $165.4 million, which was
measured using active market interest rates.</P>


<P style="TEXT-ALIGN: left">On April 14, 2006, we entered into a $460 million five-year credit agreement (the &#147;credit agreement&#148;), under which $313 million of borrowings was outstanding as of March 31, 2010. The applicable interest rate for</P>
<P align=center>14</P>
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<P style="TEXT-ALIGN: left">borrowings under the agreement is LIBOR plus a spread, based on our leverage ratio at the time of borrowing. The agreement includes covenants that could limit our ability to purchase Common Stock, pay dividends, acquire other companies or dispose of assets.</P>


<P style="TEXT-ALIGN: left">Reflecting, in each case, the effect of subsequent
amendments to each agreement, we are required to maintain a leverage ratio of
not greater than 3.50 to 1.00 under the credit agreement and under the
Prudential agreement. We are also required to maintain minimum interest coverage
of 3.00 to 1.00 under each agreement. As of March 31, 2010, our leverage ratio
under the agreement was 2.00 to 1.00 and the interest coverage ratio was 9.22 to
1.00. We may purchase our Common Stock or pay dividends to the extent our
leverage ratio remains at or below 3.50 to 1.00, and may make acquisitions for
cash provided our leverage ratio would not exceed 3.00 to 1.00 after giving pro
forma effect to the acquisition. Our 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 our maximum leverage ratio
and consolidated EBITDA (as defined in the agreement), and without modification
to any other credit agreements as of March 31, 2010, we would have been able to
borrow an additional $133.0 million under our credit agreements.</P>


<P style="TEXT-ALIGN: left">In March 2006, we issued $180 million 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 our Class A common stock with respect to the remainder, if any, of our conversion obligation at a conversion rate of 22.7633 shares per $1,000 principal amount of notes (equivalent to a conversion price of $43.93 per share of Class A common stock). As of March 31, 2010, $28.4 million principal amount of convertible notes were outstanding, with a fair value of approximately $21.6 million, which was measured using quoted prices in active markets. These amounts reflect the reduction in principal amount and fair value as a result of purchases made in 2009, as described below.</P>
<P style="TEXT-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 our Class A common stock and the conversion rate on such day. Additionally, holders may convert prior to February 15, 2013 if we elect to distribute to all or substantially all of our 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 style="TEXT-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 our 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 $1,000 principal amount of notes (equivalent to a conversion price of $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 our Class A common stock for each day during a twenty-five day period relating to the conversion.</P>
<P style="TEXT-ALIGN: left">The notes are not redeemable before March 15, 2013. On or after March 15, 2013, we may, at our 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 style="TEXT-ALIGN: left">On each of March 15, 2013, and March 15, 2021, holders may require that we 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</P>
<P align=center>15</P>
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<P style="TEXT-ALIGN: left">accrued and unpaid interest, including any additional interest, up to but excluding the purchase date. Holders also have the right to require that we 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 style="TEXT-ALIGN: left">In connection with the sale of the notes, we entered into hedge and warrant transactions with respect to our Class A common stock. These transactions are intended to reduce the potential dilution upon conversion of the notes by providing us with the option, subject to certain exceptions, to acquire shares in an amount equal to the number of shares that we 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 style="TEXT-ALIGN: left">Pursuant to the hedge transactions, if we deliver 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 we are 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 $14.7 million.</P>


<P style="TEXT-ALIGN: left">Pursuant to the warrant transactions, we sold a
total of 4.1 million 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, we may choose either net cash or net share
settlement. If the warrants are exercised before they expire, they must be net
share settled. If we elect to net cash settle the warrants, we 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 our Class A common stock on the expiration date of such warrants (the
&#147;settlement price&#148;) over the strike price. Under net share settlement,
we will deliver to the warrant holders a number of shares of our 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 style="TEXT-ALIGN: left">During 2009 we entered into several agreements to
exchange our 2.25% convertible senior notes due 2026 for cash plus an equivalent
amount of our 2.25% senior notes due 2026 (the &#147;new notes&#148;). In each
case, we simultaneously entered into additional agreements to purchase the new
notes. Information pertinent to these transactions is noted below:</P>


<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
  </TR>

  <TR vAlign=bottom>

    <TD align=left colspan="11"><FONT size=2>(in thousands)</FONT>        </td>
  </TR>
  <tr>

    <td colspan=11>
      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left width="20%"><B><FONT size=2>Month of agreement</FONT></B> </td>
    <TD align=center width="20%"><B><FONT size=2>Month of settlement</FONT></B> </td>
    <TD align=center colspan="3" width="20%"> <B><FONT size=2>Par value</FONT></B> </td>
    <TD align=center colspan="3" width="20%"> <B><FONT size=2>Aggregate cost</FONT></B> </td>
    <TD align=center colspan="3" width="20%"> <B><FONT size=2>Pretax gain on early</FONT></B><BR>

<B><FONT size=2>retirement of debt</FONT></B> </td>
  </TR>

  <TR>

    <TD colSpan=11>
      <HR noshade SIZE=1>

 </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=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>7,074</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>3,360</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>2,800</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</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=right>&nbsp; </td>
    <TD align=right><FONT size=2>93,989</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>53,515</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>36,631</FONT> </td>
    <TD align=right>&nbsp;</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=right>&nbsp; </td>
    <TD align=right><FONT size=2>30,500</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>18,887</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>7,906</FONT> </td>
    <TD align=right>&nbsp;</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=right>&nbsp; </td>
    <TD align=right><FONT size=2>20,000</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>13,100</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>4,622</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr>

    <td colspan=11>
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Totals</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>151,563</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>88,862</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>51,959</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr>

    <td colspan=11>
      <hr noshade size=1>

 </td>
  </tr>


</TABLE>

<P align=center>16</P>
<HR align=center width="100%" noshade SIZE=5>
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<P style="TEXT-ALIGN: left">Accounting guidance for convertible debt instruments that may be settled in cash upon conversion 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. We implemented this guidance during the first quarter of 2009 and filed a Form 8-K on May 1, 2009, with retrospectively revised income statement and balance sheet items for quarterly periods in 2008, as well as annual data for 2006, 2007, and 2008.</P>
<P style="TEXT-ALIGN: left">As of March 31, 2010, the carrying amounts of the debt and equity components of our bifurcated convertible debt instrument were $25.9 million and $25.5 million, respectively. The carrying values of the debt and equity components include reductions of $134.6 million and $5.2 million, respectively, related to our convertible note purchases in 2009. The equity component is included in additional paid-in capital in the equity section of the balance sheet.</P>
<P style="TEXT-ALIGN: left">Adopting this guidance had the impact of increasing interest expense by approximately $0.2 million and $1.2 million for the quarters ended March 31, 2010 and 2009, respectively. The additional interest is noncash and represents the difference between the stated rate of the notes (2.25%) and our nonconvertible debt borrowing rate at the time of the offering (5.59%). The noncash 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. We concluded that the amortization period of seven 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 style="TEXT-ALIGN: left">Including amortization of noncash interest, the effective interest rate on the convertible notes for 2010 and 2009 was 5.59%. Unamortized noncash interest was $2.6 million at March 31, 2010, with a remaining amortization period of approximately three years.</P>
<P style="TEXT-ALIGN: left">The following table details interest expense on convertible debt:</P>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 border=0 cellpadding="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>
  </tr>
  <tr>

    <td colspan="7">
      <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><br>

<font size=2>March 31,</font> </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>(in thousands)</font> </td>
    <td align=center colspan="3" width="13%"> <b><font size=2>2010</font></b></td>
    <td align=center colspan="3" width="13%"> <font size=2>2009</font> </td>
  </tr>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <tr valign=bottom>

    <td align=left><font size=2>Contractual interest (2.25%)</font> </td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>158</font></b> </td>
    <td align=right>&nbsp;&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>992</font> </td>
    <td align=right>&nbsp;&nbsp;</td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Non-cash interest (3.34%)</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right><b><font size=2>188</font></b> </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>1,187</font> </td>
    <td align=right>&nbsp;</td>
  </tr>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>



  <tr valign=bottom>

    <td align=left><font size=2>Total (5.59%)</font> </td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>346</font></b> </td>
    <td align=right>&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>2,179</font> </td>
    <td align=right>&nbsp;</td>
  </tr>

  <tr>

    <td colspan="7">
      <hr noshade size=1>

 </td>
  </tr>
</table>

<P style="TEXT-ALIGN: left">The convertible feature of the notes, the convertible note hedge, and the warrant transactions each meet the requirements of the applicable accounting guidance to be accounted for as equity instruments. As such, the convertible feature of the notes has not been accounted for as a derivative (which would be marked to market each reporting period) and in the event the debt is converted, no gain or loss is recognized, as the cash payment of principal reduces the recorded liability and the issuance of common shares would be recorded in stockholders&#146; equity.</P>
<P style="TEXT-ALIGN: left">In addition, the amount paid for the call option and the premium received for the warrant were recorded as additional paid-in capital in the accompanying consolidated balance sheet and are not accounted for as derivatives (which would be marked to market each reporting period). Incremental net shares for the convertible note feature and the warrant agreement will be included in future diluted earnings per share calculations for those periods in which our average common stock price exceeds $43.93 per share in the case of the Senior Notes and $51.91 per share in the case of the warrants. The purchased call option is antidilutive and is excluded from the diluted earnings per share calculation.</P>
<P align=center>17</P>
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<P style="TEXT-ALIGN: left">Indebtedness under the note and guaranty agreement, the convertible notes, and the credit agreement is ranked equally in right of payment to all unsecured senior debt.</P>
<P style="TEXT-ALIGN: left">We were in compliance with all debt covenants as of March 31, 2010.</P>
<P align=center>18</P>
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<P style="TEXT-ALIGN: left"><B>11. Fair Value Measurements</B></P>


<P style="TEXT-ALIGN: left">Accounting principles generally accepted in the
United States define fair value as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction
between market participants at the measurement date. Accounting principles
establish 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 style="TEXT-ALIGN: left">The following table presents the fair-value
hierarchy for our financial assets and liabilities measured at fair value on a
recurring basis:</P>


<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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>

    <td colspan="9">
      <hr noshade size=1>

 </td>
  </tr>





  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=right colspan="3" width="15%"> <FONT size=2>Total fair</FONT><BR>

<FONT size=2>value at</FONT><BR>

<FONT size=2>March 31, 2010</FONT> </td>
    <TD align=right colspan="3" width="15%"> <FONT size=2>Quoted prices</FONT><BR>

<FONT size=2>in active markets</FONT><BR>

<FONT size=2>(Level 1)</FONT> </td>
    <TD align=right width="15%"><FONT size=2>Significant other</FONT><BR>

<FONT size=2>observable inputs</FONT><BR>

<FONT size=2>(Level 2)</FONT> </td>
    <TD align=right width="15%"><FONT size=2>Significant</FONT><BR>

<FONT size=2>unobservable inputs</FONT><BR>

<FONT size=2>(Level 3)</FONT> </td>
  </TR>
  <tr>

    <td colspan="9">
      <hr noshade size=1>

 </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>Assets:</FONT></I> </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=left>&nbsp; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Cash equivalents</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>30,123</FONT> </td>
    <TD align=left>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>30,123</FONT> </td>
    <TD align=left>&nbsp;&nbsp;</td>
    <TD align=center>&#150; </td>
    <TD align=center>&#150; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Available for sale securities</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>568</FONT> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>568</FONT> </td>
    <TD align=left>&nbsp;</td>
    <TD align=center>&#150; </td>
    <TD align=center>&#150; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;Foreign exchange options</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>541</FONT> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>541</FONT> </td>
    <TD align=left>&nbsp;</td>
    <TD align=center>&#150; </td>
    <TD align=center>&#150; </td>
  </TR>

  <TR>

    <TD colspan="9">
      <HR noshade SIZE=1>

 </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">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.</P>
<P style="TEXT-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 Consolidated Balance Sheets, rather than to the Consolidated Statements of Operations. When the security is sold or impaired, gains and losses are reported on the Consolidated Statements of Operations. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary.</P>


<P style="TEXT-ALIGN: left">Foreign currency instruments are entered into
periodically, and consist of foreign currency option contracts or forward
contracts that are valued using quoted prices in active markets obtained from
independent pricing sources. During 2010, we have entered into foreign currency
options (options) only, which are measured using market foreign exchange prices
and are recorded in the Consolidated Balance Sheets as Other current assets.
Changes in fair value of the options are recorded as gains or losses within
Other (income)/expense, net. Losses on the options totaled $0.1 million at March
31, 2010. When exercised, the options are net settled with the same financial
institution that bought or sold the options. For all positions, whether options
or forward contracts, there is risk from the possible inability of the financial
institution to meet the terms of the contracts and the risk of unfavorable
changes in interest and currency rates, which may reduce the value of the
instruments. We seek to control risk by evaluating the creditworthiness of
counterparties and by monitoring the</P>


<P align=center>19</P>
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<P style="TEXT-ALIGN: left">currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies.</P>


<P style="TEXT-ALIGN: left">We operate in many regions of the world, and
currency rate movements can have a significant effect on our operating results.
Changes in exchange rates can result in revaluation gains and losses that could
flow through Selling, technical, general and research expenses or Other
(income)/expense, net. Operating margins can also be affected by the translation
of sales and costs, for each non-U.S. subsidiary, from the local functional
currency to the U.S. dollar. A strengthening of the local functional currency
against the U.S. dollar has a negative effect on operating margins in situations
where the local manufacturing costs, which are based in the local functional
currency, exceed the amount of local-currency-based sales in that same currency.
This situation arises most often when a non-U.S. subsidiary has a significant
amount of its sales denominated, or pegged to, the U.S. dollar. A strengthening
of the local functional currency against the U.S. dollar has a positive effect
on operating margins when local-functional currency-based sales exceed the
functional currency based costs in any given country. In order to mitigate
foreign exchange volatility in our financial statements, we enter into foreign
currency financial instruments from time to time. There were no foreign currency
financial instruments designated as hedging instruments at March 31, 2010.</P>


<P align=center>20</P>
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<P style="TEXT-ALIGN: left"><B>12. Contingencies</B></P>
<P style="TEXT-ALIGN: left">Albany International Corp. 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 that we previously manufactured. We 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 style="TEXT-ALIGN: left">We were defending against 7,464 claims as of April
29, 2010. This compares with 7,809 such claims as of February 16, 2010, 8,945
claims as of October 30, 2009,16,060 claims as of July 23, 2009, 16,818 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 that we previously
manufactured.</P>


<P style="TEXT-ALIGN: left">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>


<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=1 width="100%" cellpadding="2">




  <TR vAlign=bottom>
    <TD align=left width="10%"><I><FONT size=2>Year</FONT></I>

<I><FONT size=2>ended</FONT></I><BR>

<I><FONT size=2>December 31,</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Opening</FONT></I><BR>

<I><FONT size=2>Number  of</FONT></I><BR>

<I><FONT size=2>claims</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Claims</FONT></I><BR>

<I><FONT size=2>Dismissed, <br>
       Settled</FONT></I>

<I><FONT size=2>or</FONT></I><BR>

<I><FONT size=2>Resolved</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>New</FONT></I><BR>

<I><FONT size=2>Claims</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Closing</FONT></I><BR>

<I><FONT size=2>Number of</FONT></I><BR>

<I><FONT size=2>Claim</FONT></I><I><FONT size=2>s</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Amounts Paid</FONT></I><BR>

<I><FONT size=2>(thousand</FONT></I><I><FONT size=2>s) to Settle</FONT></I><BR>

<I><FONT size=2>or Resolve</FONT></I><BR>

<I><FONT size=2>($)</FONT></I> </td>
  </TR>





  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2005</FONT></I> </td>
    <TD align=center><I><FONT color=#1f497d size=2>29,411</FONT></I></td>
    <TD align=center><I><FONT color=#1f497d size=2>6,257</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>&nbsp; &nbsp; 504</FONT></I></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2006</FONT></I> </td>
    <TD align=center><I><FONT size=2>24,451</FONT></I></td>
    <TD align=center><I><FONT size=2>6,841</FONT></I></td>
    <TD align=center><I><FONT size=2>1,806</FONT></I></td>
    <TD align=center><I><FONT size=2>19,416</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>19,416</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;808</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; 190</FONT></I></td>
    <TD align=center><I><FONT size=2>18,798</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;  15</FONT></I></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2008</FONT></I> </td>
    <TD align=center><I><FONT size=2>18,798</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;523</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; 110</FONT></I></td>
    <TD align=center><I><FONT size=2>18,385</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;  52</FONT></I></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2009</FONT></I> </td>
    <TD align=center><I><FONT size=2>18,385</FONT></I></td>
    <TD align=center><I><FONT size=2>9,482</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;  42</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp;8,945</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;  88</FONT></I></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2010 to </FONT></I>  <i><font size=2>date</font></i> </td>
    <TD align=center><I><FONT size=2>&nbsp; 8,945</FONT></I></td>
    <TD align=center><I><FONT size=2>1,650</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; 169</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp;7,464</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;  99</FONT></I></td>
  </TR>


</TABLE>

<P style="TEXT-ALIGN: left">We anticipate that additional claims will be filed against the Company and related companies in the future, but are 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 our 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 the Company to date, and only a portion of those claimants have alleged time spent in a paper mill to which we are believed to have supplied asbestos-containing products.</P>
<P style="TEXT-ALIGN: left">The significant increase in the number of dismissed claims during 2009 and early 2010 is in large part the result of changes in the administration of claims assigned to the multidistrict litigation panel of the federal district courts (the &#147;MDL&#148;).</P>
<P align=center>21</P>
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<P style="TEXT-ALIGN: left">Since May 31, 2007 the MDL has issued a series of administrative orders to expedite the resolution of pending cases. While it is unclear how many may attempt to re-file their claims, this process has resulted in numerous claims being dismissed, either voluntarily or involuntarily. As of April 29, 2010, 3,044 claims were pending against the Company in the MDL. Of these MDL claims, 2,662 were originally filed in state courts in Mississippi.</P>


<P style="TEXT-ALIGN: left">With respect to the remaining MDL claims where
plaintiffs have complied with the administrative orders, 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 procedure will expedite the requests for settlement
conferences. At the time of these settlement conferences, we expect to be given
more relevant information regarding work histories and the basis, if any, for
the plaintiff&#146;s claim against the Company. We believe that the effects of
these administrative orders may not be fully known or realized for some time. We
do not believe a meaningful estimate can be made regarding the range of possible
loss with respect to the claims remaining at the MDL at this time.</P>


<P style="TEXT-ALIGN: left">As of April 29, 2010, the remaining 4,420 claims
pending against the Company were pending in a number of jurisdictions other than
the MDL. 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 we are believed to
have supplied asbestos-containing products. For these reasons, we expect the
percentage of these remaining claimants able to demonstrate time spent in a
paper mill to which we supplied asbestos-containing products during a period in
which our asbestos-containing products were in use to be considerably lower than
the total number of pending claims. In addition, over half of these remaining
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, we do not believe a meaningful estimate can be made
regarding the range of possible loss with respect to these remaining claims.</P>


<P style="TEXT-ALIGN: left">It is our position and the position of the other
paper machine clothing defendants that there was insufficient exposure to
asbestos from any paper machine clothing products to cause asbestos-related
injury to any plaintiff. Furthermore, asbestos contained in our synthetic
products was encapsulated in a resin-coated yarn woven into the interior of the
fabric, further reducing the likelihood of fiber release. While we believe we
have meritorious defenses to these claims, we have settled certain of these
cases for amounts we consider reasonable given the facts and circumstances of
each case. Our insurer, Liberty Mutual, has defended each case and funded
settlements under a standard reservation of rights. As of April 29, 2010, we
resolved, by means of settlement or dismissal, 33,178 claims. The total cost of
resolving all claims was $6.9 million. Of this amount, $6.9 million, or 99%, was
paid by our 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 we
should be able to access.</P>


<P style="TEXT-ALIGN: left"><B>Brandon Drying Fabrics, Inc.</B></P>
<P style="TEXT-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 7,907 claims as of April 29, 2010. This compares with 7,905 such claims as of February 16, 2010, 7,907 claims as of October 30, 2009, 8,139 claims as of July 23, 2009, 8,604 claims as of May 1, 2009, 8,607 claims as of February 6, 2009, 8,664 such claims as of October 27, 2008,</P>
<P align=center>22</P>
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<P style="TEXT-ALIGN: left">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.</P>
<P style="TEXT-ALIGN: left">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>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=1 width="100%" cellpadding="2">


  <TR vAlign=bottom>
    <TD align=left width="10%"><I><FONT size=2>Year ended</FONT></I><BR>

<I><FONT size=2>December</FONT></I>

<I><FONT size=2>31,</FONT></I>  </td>
    <TD align=center width="10%"><I><FONT size=2>Opening Number</FONT></I><BR>

<I><FONT size=2>of claims</FONT></I> </td>
    <TD align=center width="10%"><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 align=center width="10%"><I><FONT size=2>New Claims</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Closing</FONT></I><BR>

<I><FONT size=2>Number</FONT></I>

<I><FONT size=2>of</FONT></I><BR>

<I><FONT size=2>Claims</FONT></I> </td>
    <TD align=center width="10%"><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=center><I><FONT color=#1f497d size=2>9,985</FONT></I></td>
    <TD align=center><I><FONT color=#1f497d size=2>&nbsp; 642</FONT></I></td>
    <TD align=center><I><FONT color=#1f497d size=2>223</FONT></I></td>
    <TD align=center><I><FONT size=2>9,566</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>9,566</FONT></I></td>
    <TD align=center><I><FONT size=2>1182</FONT></I></td>
    <TD align=center><I><FONT size=2>730</FONT></I></td>
    <TD align=center><I><FONT size=2>9,114</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>9,114</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; 462</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp;88</FONT></I></td>
    <TD align=center><I><FONT size=2>8,740</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>8,740</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;86</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp;10</FONT></I></td>
    <TD align=center><I><FONT size=2>8,664</FONT></I></td>
    <TD align=center><I><FONT size=2>0</FONT></I> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2009</FONT></I> </td>
    <TD align=center><I><FONT size=2>8,664</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp;760</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp;3</FONT></I></td>
    <TD align=center><I><FONT size=2>7,907</FONT></I></td>
    <TD align=center><I><FONT size=2>0</FONT></I> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2010 to date</FONT></I> </td>
    <TD align=center><I><FONT size=2>7,907</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp; &nbsp; 6</FONT></I></td>
    <TD align=center><I><FONT size=2>&nbsp;  &nbsp;6</FONT></I></td>
    <TD align=center><I><FONT size=2>7,907</FONT></I></td>
    <TD align=center><I><FONT size=2>0</FONT></I> </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">We 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 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 April 29, 2010, Brandon has resolved, by means of
settlement or dismissal, 9,677 claims for a total of $0.2 million.
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 style="TEXT-ALIGN: left">As of April 29, 2010, 6,821 (or approximately 86%)
of the claims pending against Brandon were pending in Mississippi. For the same
reasons set forth above with respect to Albany&#146;s claims, as well as the
fact that no amounts have been paid to resolve any Brandon claims since 2001, we
do not believe a meaningful estimate can be made regarding the range of possible
loss with respect to these remaining claims.</P>

<P align=center>23</P>
<HR align=center width="100%" noshade SIZE=5>
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<BR>
<P style="TEXT-ALIGN: left"><B>Mount Vernon</B></P>
<P style="TEXT-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;). We 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. We deny 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, we have successfully moved for dismissal in a number of actions.</P>

<HR SIZE=1 noshade ALIGN=CENTER WIDTH=150>




<P style="TEXT-ALIGN: left">While we do 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 our understanding of the insurance policies available, how settlement
amounts have been allocated to various policies, our 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, we currently do not
anticipate any material liability relating to the resolution of the
aforementioned pending proceedings in excess of existing insurance limits.
Consequently, we currently do 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 we cannot predict the number and timing
of future claims, based on the foregoing factors and the trends in claims
against us to date, we do not anticipate that additional claims likely to be
filed against us in the future will have a material adverse effect on our
financial position, results of operations, or cash flows. We are aware that
litigation is inherently uncertain, especially when the outcome is dependent
primarily on determinations of factual matters to be made by juries. We are 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>24</P>
<HR align=center width="100%" noshade SIZE=5>
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<BR>
<P style="TEXT-ALIGN: left"><B>13. Changes in Stockholders&#146; Equity</B></P>
<P style="TEXT-ALIGN: left">The following table summarizes changes in Stockholders&#146; Equity:</P>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellspacing=0 border=0 cellpadding="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>
    <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>

    <td colspan="25">
      <hr noshade size=1>

  </td>
  </tr>






  <tr valign=bottom>

    <td align=left><font size=2>(in thousands)</font> </td>
    <td align=center colspan="2"> <font size=2>Class A  <br>
      Common <br>
      Stock </font>  </td>
    <td align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center colspan="2"> <font size=2>Class B  <br>
      Common <br>
      Stock </font>  </td>
    <td align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center colspan="2"> <font size=2>Additional</font><br>

<font size=2>paid in</font><br>

<font size=2>capital</font> </td>
    <td align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center colspan="3"> <font size=2>Retained</font><br>

<font size=2>earnings</font>  </td>
    <td align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center colspan="3"> <font size=2>Accumulated</font><br>

<font size=2>items of other</font>  <br>
      <font size=2>comprehensive</font><font size=2><br>
      income</font>   </td>
    <td align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center colspan="3"> <font size=2>Treasury  <br>
      stock</font>   </td>
    <td align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=center colspan="3"> <font size=2>Total</font>  <br>
      <font size=2>Shareholders&#146;</font><font size=2><br>
      Equity</font>   </td>
  </tr>

  <tr>

    <td colspan="25">
      <hr noshade size=1>

  </td>
  </tr>





  <tr valign=bottom>

    <td align=left><font size=2>December 31, 2009</font> </td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>36</font> </td>
    <td align=right>&nbsp;&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>3</font> </td>
    <td align=right>&nbsp;&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>382,674</font> </td>
    <td align=right>&nbsp;&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>382,720</font> </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>(82,136</font> </td>
    <td align=left><font size=2>)</font> </td>
    <td align=left>&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>(258,299</font> </td>
    <td align=left><font size=2>)</font> </td>
    <td align=left>&nbsp;</td>
    <td align=right><font size=2>$</font> </td>
    <td align=right><font size=2>424,998</font> </td>
    <td align=left>&nbsp; </td>
  </tr>



  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Net income</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>4,265</font> </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>4,265</font> </td>
    <td align=left>&nbsp; </td>
  </tr>



  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Dividends declared</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(3,714</font> </td>
    <td align=left><font size=2>)</font> </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(3,714</font> </td>
    <td align=left><font size=2>)</font> </td>
  </tr>

  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Compensation and</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=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=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>
    <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>benefits paid or payable in</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=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=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>
    <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>Class A Common Stock</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>955</font> </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>955</font> </td>
    <td align=left>&nbsp; </td>
  </tr>



  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Options exercised</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>87</font> </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>87</font> </td>
    <td align=left>&nbsp; </td>
  </tr>

  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Amortization and</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=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=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>
    <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 pension</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=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=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>
    <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>liability</font> </td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=right>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(174</font> </td>
    <td align=left><font size=2>)</font> </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right>&#150; </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right>&nbsp; </td>
    <td align=right><font size=2>(174</font> </td>
    <td align=left><font size=2>)</font> </td>
  </tr>

  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><font size=2>Cumulative translation</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=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=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>
    <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 height="12"><font size=2>adjustment/other</font> </td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12">&#150; </td>
    <td align=right height="12">&nbsp;</td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12">&#150; </td>
    <td align=right height="12">&nbsp;</td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12"><font size="2">(1 </font></td>
    <td align=left height="12"><font size="2">)</font></td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12">&#150; </td>
    <td align=left height="12">&nbsp; </td>
    <td align=left height="12">&nbsp;</td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12"><font size=2>(19,561</font> </td>
    <td align=left height="12"><font size=2>)</font> </td>
    <td align=left height="12">&nbsp;</td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12">&#150; </td>
    <td align=left height="12">&nbsp; </td>
    <td align=left height="12">&nbsp;</td>
    <td align=right height="12">&nbsp; </td>
    <td align=right height="12"><font size=2>(19,562</font> </td>
    <td align=left height="12"><font size=2>)</font> </td>
  </tr>
  <tr>

    <td colspan="25">
      <hr noshade size=1>

  </td>
  </tr>



  <tr>

    <td colspan=25>&nbsp; </td>
  </tr>

  <tr valign=bottom>

    <td align=left><b><font size=2>March 31, 2010</font></b> </td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>36</font></b> </td>
    <td align=right>&nbsp;</td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>3</font></b> </td>
    <td align=right>&nbsp;</td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>383,715</font></b> </td>
    <td align=right>&nbsp;</td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>383,271</font></b> </td>
    <td align=left>&nbsp; </td>
    <td align=left>&nbsp;</td>
    <td align=right><b><font size=2>($</font></b> </td>
    <td align=right><b><font size=2>101,871</font></b> </td>
    <td align=left><b><font size=2>)</font></b> </td>
    <td align=left>&nbsp;</td>
    <td align=right><b><font size=2>($</font></b> </td>
    <td align=right><b><font size=2>258,299</font></b> </td>
    <td align=left><b><font size=2>)</font></b> </td>
    <td align=left>&nbsp;</td>
    <td align=right><b><font size=2>$</font></b> </td>
    <td align=right><b><font size=2>406,855</font></b> </td>
    <td align=left>&nbsp; </td>
  </tr>
  <tr>

    <td colspan="25">
      <hr noshade size=1>

  </td>
  </tr>


</table>
<P align=center>25</P>
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<P style="TEXT-ALIGN: left"><B>14. Comprehensive Income/(Loss)</B></P>
<P style="TEXT-ALIGN: left">Comprehensive income/(loss) consists of the following:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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>

    <td colspan="7">
      <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><BR>

<FONT size=2>March 31,</FONT>  </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="13%"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3" width="13%"> <FONT size=2>2009</FONT>  </td>
  </TR>

  <TR>

    <TD colspan="7">
      <HR noshade SIZE=1>

  </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net income/(loss)</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,265</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(18,897</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Other comprehensive (loss)/income, before tax:</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustments</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(19,561</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(28,790</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization of pension liability adjustment</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>1,053</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Pension and postretirement liability adjustments</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(1,337</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Income taxes related to items of other comprehensive</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(loss)/income:</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=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization of pension liability adjustment</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(411</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Pension and postretirement liability adjustments</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>521</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Other comprehensive (loss), net of tax</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(19,735</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(28,790</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>



  <TR>

    <TD colSpan=7>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Comprehensive (loss)</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>(15,470</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(47,687</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr>

    <td colspan="7">
      <hr noshade size=1>

  </td>
  </tr>


</TABLE>

<P align=center>26</P>
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<P style="TEXT-ALIGN: left"><B>15. Recent Accounting Pronouncements</B></P>
<P style="TEXT-ALIGN: left">In October 2009, the Financial Accounting Standards Board (FASB) amended authoritative guidance related to accounting and disclosure of revenue recognition for multiple-element arrangements. This guidance provides principles for allocation of consideration among multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. This guidance introduces an estimated selling price method for allocating revenue to the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available, and significantly expands related disclosure requirements. This is effective on a prospective basis for revenue arrangements entered into or materially modified in the fiscal year beginning January 1, 2011, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance.</P>
<P style="TEXT-ALIGN: left">In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements, including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. The guidance is effective for reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are effective for periods beginning after December 15, 2010. Our adoption of this guidance did not have a material effect on the financial statements.</P>


<P style="TEXT-ALIGN: left">In April 2010, the FASB issued guidance on the
criteria that should be met for determining whether the milestone method of
revenue recognition is appropriate, with regard to research and development
transactions. The guidance allows the milestone method as an acceptable revenue
recognition methodology when an arrangement includes substantive milestones. The
guidance provides a definition of substantive milestone and should be applied
regardless of whether the arrangement includes single or multiple deliverables
or units of accounting. The guidance includes enhanced disclosure requirements
about each arrangement, individual milestones and related contingent
consideration, information about substantive milestones and factors considered
in the determination. This is effective prospectively to milestones achieved in
fiscal years, and interim periods within those years, after June 15, 2010. Early
application and retrospective application are permitted. We are currently
evaluating the impact of adopting this guidance.</P>


<P align=center>27</P>
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<P style="TEXT-ALIGN: left"><B><a name="page28"></a>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>
<P style="TEXT-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, our Consolidated Financial Statements and the accompanying Notes.</P>
<P style="TEXT-ALIGN: left"><B><I>Overview</I></B></P>
<P style="TEXT-ALIGN: left">Albany International Corp. (the Registrant, the Company, Management, or We) and its subsidiaries are engaged in five business segments.</P>


<P style="TEXT-ALIGN: left">The Paper Machine Clothing segment includes fabrics
and belts used in the manufacture of paper and paperboard (PMC or paper machine
clothing). We design, manufacture, and market paper machine clothing for each
section of the paper machine. We manufacture and sell 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 wet
sheet (over 75% water) through the forming section. Press fabrics are designed
to carry the sheet through the press section, where water is pressed from the
sheet as it passes through the press nip. 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. We sell PMC products directly to
customer end-users, which are paper industry companies, some of which operate in
multiple regions of the world. Our products, manufacturing processes, and
distribution channels for PMC are substantially the same in each region of the
world in which we operate. The sales of forming, pressing, and dryer fabrics,
individually and in aggregate, accounted for more than 10% of our consolidated
net sales during one year or more of the last three years.</P>


<P style="TEXT-ALIGN: left">Our other reportable segments apply our core competencies in advanced textiles and materials to other industries:</P>
<P style="TEXT-ALIGN: left">Our Albany Door Systems (ADS) segment 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. ADS sells directly to customer end-users in certain markets, such as Sweden and Germany, while in other markets, such as the United States, it sells primarily through distributors and dealers.</P>
<P style="TEXT-ALIGN: left">Our Engineered Fabrics (EF) segment derives its revenue from various industries that use fabrics and belts for industrial applications other than the manufacture of paper and paperboard. Revenue in this segment is derived from sales to the nonwovens industry, which include the manufacture of diapers, personal care and household wipes; and to building products markets, which includes the manufacture of fiberglass-reinforced roofing shingles. Other segment revenue includes sales to markets adjacent to the </P>
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<P style="TEXT-ALIGN: left">paper industry, and to the tannery and textile industries. Segment sales in the European and Pacific regions combined are almost at the same level as sales within the Americas. We generally market EF products directly to our customers.</P>
<P style="TEXT-ALIGN: left">Our Engineered Composites segment (AEC) provides custom-designed advanced composite structures and textile preforms to our customers in aerospace and other high-tech industries.</P>
<P> Our PrimaLoft<SUP>&#174; </SUP>Products segment includes sales of insulation for outdoor clothing, gloves, footwear, sleeping bags, and home furnishings. This segment has sales operations in the United States, Europe, and Asia, through which we sell products produced by third-parties according to our proprietary specifications. This segment also generates a significant portion of its income as royalties from the licensing of its intellectual property.</P>
<P> <B><I>Trends</I></B></P>
<P> Our primary segment, Paper Machine Clothing, accounted for approximately 69% of consolidated revenues during 2009. 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 1998 and 2009. Paper and paperboard production decreased 6.6% during 2009 due to the global recession, but is expected to grow slightly in future years as demand increases in the emerging markets of Asia and South America while demand stabilizes in the mature markets of Europe and North America.</P>
<P> 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, we do 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, we expect that demand for paper machine clothing will continue into the foreseeable future.</P>
<P> The world paper and paperboard industry has experienced a significant period of consolidation and rationalization since 2000. During this period a number of older and less efficient machines in areas where significant established capacity existed were closed, primarily in Europe and North America. At the same time a number of newer, faster, and more efficient machines began production or plans for the installation of such newer machines in areas of growing demand for paper and paperboard. We anticipate that new machines will be added in Asia and South America as demand for paper and paperboard products increase in those regions.</P>
<P> 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 our products and reduced the number of pieces required to produce the same volume of paper. As we introduce new value-creating products and services, we are often able to charge higher prices or increase market share in certain areas as a result of these improvements. However, increased prices and market share have not always been sufficient to offset completely a decrease in the number of fabrics sold.</P>
<P> 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. Due to the global recession, global PMC volume decreased significantly in 2009, resulting in a decline in segment revenue. Going forward, we expect significant volume growth in Asia and South America, while flat or slightly lower volume is expected in Europe and North America.</P>
<P align="center">29</P>
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<P> During 2006, we initiated a deliberate, intensive three-year process of restructuring and performance improvement initiatives. In PMC, our strategy has been to offset the impacts of the maturation of the North American and Western European markets by (a) growing volume and market share 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> During the past three years, we have adjusted our manufacturing footprint to align with these regional markets and have incurred significant 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. While the major activities associated with our three-year plan of restructuring and performance improvement initiatives came to a conclusion in 2009, we have incurred and will continue to have some residual expenses during 2010 related to restructuring plans announced during 2009. Those expenses include items that will be reported as restructuring, and costs of goods sold for equipment relocation.</P>
<P> In 2006, we announced a plan to migrate our global enterprise resource planning system to SAP. Expenses incurred in connection with these actions are included in Selling, Technical, General and Research (STG&amp;R) expenses. The conversion of our North American divisions was completed during 2009. Remaining SAP implementation costs will continue through 2010 and into 2011 with the conversion of our Eurasia operations.</P>
<P> Recent economic conditions have affected, and could further impact competition in our PMC segment. Some of our competitors in the PMC segment also have the ability to make and sell paper machines, which could be perceived as providing a competitive advantage. While we are unable to predict how competition will be affected by further transactions or future economic events, we continue to drive for technical competitiveness and value of our products.</P>
<P> Our 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 our customers and, as such, market opportunities tend to fluctuate with industrial capital spending. If economic conditions weaken, our customers may reduce levels of capital expenditures, which could have a negative effect on sales and earnings in our ADS segment. New product and aftermarket sales were significantly lower in 2009 due to the effects of the recession. Accordingly, we took steps across the business to reduce operating costs as well as to focus expansion of our aftermarket business, which tends to carry a higher margin of profit than sales of new products. We expect recovery in this segment to track recovery in the overall economy.</P>
<P> Our 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 60% of revenue in this segment is derived from sales to the nonwovens industry and building products markets, which include the manufacture of diapers, personal care and household wipes, and fiberglass-reinforced roofing shingles. Approximately 40% of segment revenue is derived from sales to markets that are adjacent to the paper industry. Segment sales in the European and Pacific regions combined are almost at the same level as sales within the Americas. Sales in 2009 were 11% lower than in 2008, reflecting the effects of the global recession. We expect any economic recovery will contribute to stronger sales in this segment.</P>
<P> Our Engineered Composites segment serves primarily the aerospace industry, with custom-designed composite and advanced composite parts for static and dynamic applications. While sales declined in 2009, we view AEC as a future core business with significant growth potential. We expect this growth to be fueled by a combination of increased sales from existing growth programs and the commercial introduction of new products that are currently under development.</P>
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<P style="TEXT-ALIGN: left">Our PrimaLoft<SUP>&#174; </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 2009 were 10% lower than the same period of 2008. Top line growth in this segment is affected by the health of consumer apparel markets in North America and Europe, and the severity and harshness of the winter weather in those markets.</P>
<P style="TEXT-ALIGN: left"><B>Foreign Currency</B></P>


<P style="TEXT-ALIGN: left">We operate our business in many regions of the
world, and currency rate movements can have a significant effect on operating
results. Changes in exchange rates can result in revaluation gains and losses
that are recorded in Selling, Technical, General and Research expenses or Other
income/expense, net. Operating margins can also be affected by the translation
of sales and costs, for each non-U.S. subsidiary, from the local functional
currency to the U.S. dollar. A strengthening of the local functional currency
against the U.S. dollar has a negative effect on operating margins in situations
where the local manufacturing costs, which are based in the local functional
currency, exceed the amount of local-currency-based sales in that same currency.
This situation arises most often when a non-U.S. subsidiary has a significant
amount of its sales denominated, or pegged to, the U.S. dollar. A strengthening
of the local functional currency against the U.S. dollar has a positive effect
on operating margins when local functional currency based sales exceed the
functional currency based costs in any given country. In order to mitigate
foreign exchange volatility in the financial statements, we enter into foreign
currency financial instruments from time to time. There were no foreign currency
financial instruments designated as hedging instruments at March 31, 2010.</P>


<P style="TEXT-ALIGN: left"><B><I>Review of Operations</I></B></P>
<P style="TEXT-ALIGN: left"><I>Total Company &#150; three months ended March 31, 2010 compared to the same period of 2009, unless noted differently</I></P>
<P style="TEXT-ALIGN: left">Net sales increased to $213.9 million in 2010, as compared to $209.2 million for 2009. Changes in currency translation rates had the effect of increasing net sales by $9.3 million. Excluding the effect of changes in currency translation rates, 2010 net sales decreased 2.2% as compared to 2009.</P>
<P style="TEXT-ALIGN: left">Following is a table of net sales for each business segment and the effect of changes in currency translation rates:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="14">
      <hr size="1" noshade>
    </td>
  </tr>
  <TR vAlign=bottom>
    <TD align=center>&nbsp;</td>
    <TD align=center colspan="6">&nbsp;</td>
    <TD align=center colspan="2" rowspan="3"> <font size=2>Percent</font><br>

<font size=2>change</font> </td>
    <TD align=center colspan="3" rowspan="3"> <font size=2>Impact of changes</font><br>

<font size=2>in currency</font><br>

<font size=2>translation rates</font> </td>
    <TD align=center colspan="2" rowspan="3"> <font size=2>Percent change</font><br>

<font size=2>excluding</font><br>

<font size=2>currency translation</font><br>

<font size=2>rate effects</font> </td>
  </TR>






  <TR vAlign=bottom>

    <TD align=center>&nbsp;</td>
    <TD align=center colspan="6"><font size=2>Net sales as reported</font> <br>
      <font size=2>March 31,</font>  </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left><font size=2>(in thousands)</font> </td>
    <TD align=center colspan="3" width="15%"><b><font size=2>2010</font></b> </td>
    <TD align=center colspan="3" width="15%"><font size=2>2009</font> &nbsp;&nbsp;</td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="14">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>144,408</FONT></B> </td>
    <TD align=left>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>139,074</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>3.8</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>5,291</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>0.0</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Albany Door Systems</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>33,755</FONT></B> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>34,326</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-1.7</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>2,683</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-9.5</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Engineered Fabrics</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>21,441</FONT></B> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>21,570</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-0.6</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,223</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-6.3</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Engineered Composites</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>8,641</FONT></B> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>9,085</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-4.9</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right>&#150; </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-4.9</FONT> </td>
    <TD align=left><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>&nbsp; </td>
    <TD align=right><B><FONT size=2>5,628</FONT></B> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>5,150</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>9.3</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>78</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>7.8</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="14">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>213,873</FONT></B> </td>
    <TD align=left>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>209,205</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>2.2</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>9,275</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>-2.2</FONT> </td>
    <TD align=left><FONT size=2>%</FONT> </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="14">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">Gross profit was 36.1% in 2010, compared to 33.5% in 2009. The higher percentage in 2010 reflects lower costs of sales that are the result of our restructuring and cost reduction activities. Those cost savings were partially offset by higher production costs as a result of the effects of inflation on labor and material costs.</P>
<P align=center>31</P>
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<P style="TEXT-ALIGN: left">Selling, general, technical and research (SGT&amp;R) expenses decreased to $66.1 million or 31% of net sales in 2010, as compared to $67.6 million or 32% of net sales in 2009. Changes in foreign currency rates had the effect of increasing SGT&amp;R by $4.1 million as compared with 2009. SGT&amp;R included SAP implementation expenses of $1.1 million in 2010 and $2.2 million in 2009. Costs related to the U.S. pension and postretirement plans were $1.9 million higher in 2010, as compared to 2009. SGT&amp;R in 2009 included income of $1.9 million related to the revaluation of non-functional currency assets and liabilities.</P>
<P style="TEXT-ALIGN: left">Operating income/(loss) was income of $8.0 million during 2010 compared with a loss of $14.8 million in 2009. The following table presents segment operating income:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=center>&nbsp; </td>
    <TD align=center colspan="6"> <FONT size=2>Operating income/(loss)</FONT> <br>
      <font size=2>March 31,</font>
       </td>
  </TR>


  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="15%"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3" width="15%"><FONT size=2>2009</FONT>  </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>25,076</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>7,261</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Albany Door Systems</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,884</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>228</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Engineered Fabrics</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,521</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>3,655</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Engineered Composites</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(2,229</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(2,508</FONT> </td>
    <TD align=left><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>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,069</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,089</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Research expense</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(5,811</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(5,610</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Unallocated expenses</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(16,470</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(18,882</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>8,040</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(14,767</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">The increase in operating income was principally due to a decrease of $14.1 million for restructuring costs and a decrease in cost of goods sold as result of those restructuring and cost reduction activities during 2010, as compared to 2009.</P>
<P style="TEXT-ALIGN: left">Operating income included the following expenses associated with restructuring activities by reportable segment:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=center>&nbsp; </td>
    <TD align=center colspan="6"> <FONT size=2>Restructuring and other, net</FONT> <br>
      <font size=2>March 31,</font>
    </td>
  </TR>


  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="15%"> <B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3" width="15%"><FONT size=2>2009</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Paper Machine Clothing</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,007</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>15,609</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Albany Door Systems</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>28</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>148</FONT> </td>
    <TD align=right>&nbsp;</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>&nbsp; </td>
    <TD align=right><B>&#150;</B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>42</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Unallocated expenses</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(922</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>1,380</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>3,113</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>17,179</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>
<P style="TEXT-ALIGN: left">Restructuring charges in 2010 were $3.1 million, which were attributable to restructuring actions initiated in 2009. Included in 2010 restructuring, was a $1.7 million charge to correct an error in the actuarial calculation of a pension curtailment gain that had been reported in Q4 2009. The Company assessed the impact of this adjustment on 2010 and 2009 and determined that the effect of this adjustment was not material to either period. The 2010 restructuring charge also included a post-retirement benefit plan curtailment gain of $0.9 million, and a non-cash charge of $1.2 million to write down property, plant, and equipment related to previously announced reductions in manufacturing capacity.</P>
<P align=center>32</P>
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<P style="TEXT-ALIGN: left">Research expense increased $0.2 million as compared to 2009, principally due to the effect of changes in currency rates totaling $0.1 million.</P>
<P style="TEXT-ALIGN: left">Interest expense, net of interest income, decreased to $3.8 million for 2010, compared to $5.8 million for 2009. The decrease reflects lower average levels of debt outstanding during 2010 at lower average interest rates. See Capital Resources section below for further discussion of borrowings and interest rates.</P>
<P style="TEXT-ALIGN: left">Other income/expense, net, was income of $2.3 million for 2010 compared to expense of $0.2 million for 2009. Remeasurements of short-term intercompany balances at operations that held amounts denominated in currencies other than their local currencies resulted in a gain of $2.8 million during 2010 and a loss of $1.5 million in 2009. Other income/expense also included expense for line of credit fees in Canada totaling $0.4 million in 2010 and $0.3 million in 2009. Included in 2009 was income of $2.8 million for a gain on extinguishment of debt.</P>


<P style="TEXT-ALIGN: left">Income tax expense/benefit was expense of $2.2
million in 2010 compared to a benefit of $1.6 million in 2009. 2009 included a
tax charge of $1.1 million related to the gain on extinguishment of debt. The
first-quarter estimated tax rate on continuing operations was 34.5% in 2010 as compared to 11.4% in  2009. The
higher tax rate was primarily due to a shift in the distribution of income
toward higher-tax jurisdictions; our current year inability under U.S. GAAP to
recognize certain tax benefits from current losses in certain high-tax
jurisdictions; and the recent expiration of certain provisions in the U.S. tax
code relating to R&amp;D credits and the deferred taxation of income generated
by controlled foreign subsidiaries. These matters are not expected to have a
material effect on cash taxes at any time during 2010. While we are planning for
the effective tax rate to remain at approximately 30% for the rest of the year,
we are actively working toward a resolution of tax contingencies in certain
jurisdictions that could lower the effective rate. In addition, the U.S.
Congress may pass legislation to restore the provisions noted above, which would
have a beneficial impact on our effective rate going forward.</P>


<P style="TEXT-ALIGN: left">Net income/loss was income of $4.3 million for 2010, compared to a loss of $18.9 million for 2009. For reasons already described in the above paragraphs, improvements in 2010 net income was principally due to reductions in production costs, restructuring costs, and SGT&amp;R.</P>
<P style="TEXT-ALIGN: left"><B>Paper Machine Clothing Segment</B></P>
<P style="TEXT-ALIGN: left">Net sales in the Paper Machine Clothing segment increased to $144.4 million for 2010 as compared to $139.1 million for 2009. Changes in currency translation rates had the effect of increasing 2010 net sales by $5.3 million. Excluding the effect of changes in currency translation rates, 2010 net sales were flat as compared to 2009 principally due lower prices offset completely by higher volume.</P>
<P style="TEXT-ALIGN: left">Gross profit as a percentage of net sales was 39.6% for 2010 compared to 37.4% for 2009. The increase in 2010 was principally due to lower production costs as a result of restructuring and cost reduction activities.</P>
<P style="TEXT-ALIGN: left">Operating income was $25.1 million during 2010 and $7.3 million in 2009. The increase in 2010 is principally due to lower restructuring costs and higher profitability reflecting lower costs of production.</P>
<P style="TEXT-ALIGN: left"><B>Albany Door Systems Segment</B></P>
<P style="TEXT-ALIGN: left">Net sales in the Albany Door Systems segment decreased to $33.8 million in 2010, compared to $34.3 million in 2009. Changes in currency translation rates had the effect of increasing net sales by $2.7 million. Excluding the effect of changes in currency translation rates, 2010 net sales decreased 9.5% as compared to 2009. The 2010 decrease is principally the result of lower product sales in Europe, offset in-part by higher after-market service sales across all regions.</P>
<P align=center>33</P>
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<P style="TEXT-ALIGN: left">Gross profit as a percentage of net sales was 34.9% in 2010 and 29.1% in 2009. The increase in 2010 is principally related to higher after-market service sales, which carry a higher level of profitability.</P>
<P style="TEXT-ALIGN: left">Operating income increased to $2.9 million in 2010 compared with $0.2 million in 2009 principally due to the effects of stronger gross profit.</P>
<P style="TEXT-ALIGN: left"><B>Engineered Fabrics Segment</B></P>
<P style="TEXT-ALIGN: left">Net sales in the Engineered Fabrics segment decreased to $21.4 million in 2010, compared to $21.6 million in 2009. Changes in currency translation rates had the effect of increasing net sales by $1.2 million. Excluding the effect of changes in currency translation rates, 2010 net sales decreased 6.3% as compared to 2009. The decrease in 2010 is principally due to weaker non-woven product sales to North America and Asia, as compared with 2009.</P>
<P style="TEXT-ALIGN: left">Gross profit as a percentage of net sales was 31.3% in 2010 compared to 36.6% in 2009. The decrease was principally due to lower sales in non-woven products, which carry higher profit margins as compared to other EF products.</P>
<P style="TEXT-ALIGN: left">Operating income was $2.5 million in 2010 compared with $3.7 million in 2009. The decrease in 2010 reflects lower sales and profitability, as compared with 2009.</P>
<P style="TEXT-ALIGN: left"><B>Engineered Composites Segment</B></P>
<P style="TEXT-ALIGN: left">Net sales in the Engineered Composites segment decreased to $8.6 million in 2010, compared to $9.1 million in 2009.</P>
<P style="TEXT-ALIGN: left">Gross profit was a loss of $1.0 million in 2010 compared with a loss of $1.6 million in 2009, which reflects slightly lower sales and higher fixed costs associated with higher depreciation expense.</P>
<P style="TEXT-ALIGN: left">The segment operating loss was $2.2 million in 2010 compared with a loss of $2.5 million in 2009.</P>
<P style="TEXT-ALIGN: left"><B>PrimaLoft</B><B><SUP>&#174; </SUP></B><B>Products Segment</B></P>
<P style="TEXT-ALIGN: left">Net sales in the PrimaLoft<SUP>&#174; </SUP>Products segment increased to $5.6 million in 2010, compared to $5.1 million in 2009. Changes in currency translation rates had the effect of increasing net sales by $0.1 million. Excluding the effect of changes in currency translation rates, 2010 net sales increased 7.8% as compared to 2009.</P>
<P style="TEXT-ALIGN: left">Gross profit as a percentage of net sales was 63.9% in 2010 compared to 48.1% in 2009 reflecting the effect of outsourcing certain production activities to third-party manufacturers.</P>
<P style="TEXT-ALIGN: left">Operating income increased to $2.1 million in 2010 from $1.1 million in 2009, which reflects higher sales and gross profit in 2010.</P>
<P style="TEXT-ALIGN: left"><B>International Activities</B></P>
<P style="TEXT-ALIGN: left">We conduct more than half of our business operations in countries outside of the United States. As a result, we experience transaction and translation gains and losses because of currency fluctuations. We periodically enter into foreign currency contracts to hedge this exposure (see Notes 5, and 11 of Notes to Consolidated Financial Statements). We believe 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=center>34</P>
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<P style="TEXT-ALIGN: left"><B>Backlog</B></P>
<P style="TEXT-ALIGN: left">Our order backlog at March 31, 2010, was $406.2 million, an increase of 11.3% from the prior year-end. The March 31, 2010, backlog by segment was $347.1 million in PMC, $11.8 million in Albany Doors, $15.7 million in Engineered Fabrics, $25.7 million in Engineered Composites, and $5.7 million in PrimaLoft. The backlog is generally expected to be invoiced during the next 12 months.</P>
<P style="TEXT-ALIGN: left"><B>Liquidity and Capital Resources</B><BR>
<BR>
<B>Cash Flow Summary</B></P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=center>&nbsp; </td>
    <TD align=center colspan="6"> <FONT size=2>Three Months Ended</FONT> <br>
      <font size=2>March 31,</font>
       </td>
  </TR>


  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="15%"><B><FONT size=2>2010</FONT></B>  </td>
    <TD align=center colspan="3" width="15%"><FONT size=2>2009</FONT>  </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net income/(loss)</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,265</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(18,897</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Changes in working capital</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(6,133</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(3,370</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;Other operating items</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>18,768</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>10,799</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net cash provided by/(used in) operating activities</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>16,900</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(11,468</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net cash used in investing activities</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>(9,796</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(16,866</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net cash provided by financing activities</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,517</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>30,010</FONT> </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>&nbsp; </td>
    <TD align=right><B><FONT size=2>(5,329</FONT></B> </td>
    <TD align=left><B><FONT size=2>)</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(4,209</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Increase/(decrease) in cash and cash equivalents</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>4,292</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(2,533</FONT> </td>
    <TD 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>&nbsp; </td>
    <TD align=right><B><FONT size=2>97,466</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>106,571</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Cash and cash equivalents at end of period</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>101,758</FONT></B> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>104,038</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">Below is our discussion of cash flow activities comparing the three-months ending March 31, 2010 to the same period of 2009:</P>
<P style="TEXT-ALIGN: left"><B>Operating activities</B></P>
<P style="TEXT-ALIGN: left">Operating activities provided net cash of $16.9 million in 2010, compared to net uses of cash of $11.5 million in 2009.</P>
<P style="TEXT-ALIGN: left">Depreciation and amortization expense totaled $15.9 million in 2010 and $16.7 million in 2009. The Company expects depreciation and amortization to be a total of $66.0 million for the full year of 2010.</P>
<P style="TEXT-ALIGN: left">Changes in working capital include changes in inventories and accounts receivable. Inventories decreased $2.3 million in 2010 and increased $6.2 million in 2009. Accounts receivable decreased $8.4 million in 2010 and decreased $23.4 million in 2009. The decreases in inventory and accounts receivable during 2010 were due in the part to our company-wide initiatives to reduce working capital. Lower sales 2009 contributed to the increase in inventory levels and decrease in accounts receivable during 2009.</P>
<P style="TEXT-ALIGN: left">Cash payments made in connection with restructuring activities, primarily employee severance payments, were $9.7 million in 2010 and $8.4 million in 2009. We expect to pay approximately $11.0 million of our March 31, 2010, restructuring accrual before the end of the year.</P>
<P style="TEXT-ALIGN: left">During 2010 we purchased foreign currency options for $0.6 million. The options serve as part of our strategy to mitigate quarterly and annual volatility in operating cash flows and EBITDA caused by the effect of changes in foreign currency rates on sales and costs denominated in currencies other than the U.S. dollar.</P>
<P align=center>35</P>
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<P style="TEXT-ALIGN: left"><B>Investing Activities</B></P>
<P style="TEXT-ALIGN: left">Capital expenditures were $6.8 million in 2010 and $15.7 million in 2009. Capital expenditures in our PMC segment amounted to $4.8 million in 2010 and $10.4 million in 2009. We estimate capital spending for 2010 to range from $50.0 million to $60.0 million, which includes carryover effects of delayed capital spending from 2009 as well as new capital investments for the planned accelerated growth in our AEC business segment.</P>
<P style="TEXT-ALIGN: left">During 2010, we acquired certain assets and liabilities of Envico Ltd., a New Zealand based manufacturer and distributor of high performance doors for approximately $1.9 million. Assets acquired included inventory, fixed assets, and intangible assets. We expect to finalize the purchase price allocation in the second quarter of 2010.</P>
<P style="TEXT-ALIGN: left"><B>Financing Activities</B></P>
<P style="TEXT-ALIGN: left">Cash dividends per share were $0.12 in 2010 and 2009 and accrued dividends were $3.7 million and $3.6 million in 2010 and 2009, respectively. Dividends have been declared each quarter since the fourth quarter of 2001. 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, we would expect to pay such dividends out of operating cash flow. Future cash dividends will depend on debt covenants and on the Board&#146;s assessment of our ability to generate sufficient cash flows.</P>
<P style="TEXT-ALIGN: left">As described below in the Capital Resources section, in 2009 we entered into several agreements to purchase and retire our previously issued 2.25% convertible notes. The cost of the transaction in the first quarter of 2009 was $3.4 million and resulted in a gain of $2.8 million on extinguishment debt and a reduction to Long-term debt of $2.9 million.</P>
<P style="TEXT-ALIGN: left">Under &#147;Trends,&#148; we discussed certain recent trends in our paper machine clothing segment that have had a negative impact on demand for our products within that segment, as well as its strategy for addressing these trends. We 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 our strategy for addressing them should prove inadequate, our 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, we expect to continue to be able to generate substantial cash from sales of its products and services in future periods.</P>
<P style="TEXT-ALIGN: left"><B>Capital Resources</B></P>
<P style="TEXT-ALIGN: left">We finance our business activities primarily with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below. Our 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 style="TEXT-ALIGN: left">We have a $460 million five-year revolving credit agreement (the &#147;Credit Agreement&#148;) that was executed on April 14, 2006, under which $313.0 million was outstanding as of March 31, 2010. In addition, $14.0 million in letters of credit were outstanding under the credit agreement. The applicable interest rate for borrowings under the agreement is LIBOR plus a spread (all-in), based on the Company&#146;s leverage ratio at the time of borrowing. The all-in average interest rate was 1.27% in Q1 2010 and 2.56% in Q1 2009. The existing terms of the Company&#146;s credit agreement expire in April 2011.</P>
<P style="TEXT-ALIGN: left">We also have a $150 million borrowing from Prudential Capital Group. The principal is due in three installments of $50 million each in 2013, 2015, and 2017, and the interest rate is fixed at 6.84%.</P>
<P align=center>36</P>
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<P style="TEXT-ALIGN: left">Reflecting, in each case, the effect of subsequent
amendments to each agreement, we are currently required to maintain a leverage
ratio of not greater than 3.50 to 1.00 under the Credit Agreement and under the
Prudential Agreement. Under the Prudential Agreement, the maximum permitted
leverage ratio will be reduced to 3.00 to 1.00 on January 1, 2011. We are also
required to maintain minimum interest coverage of 3.00 to 1.00 under each
agreement. As of March 31, 2010, our leverage ratio under the agreement was 2.00
to 1.00, and our interest coverage ratio was 9.22 to 1.00. We may purchase our
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 our leverage
ratio would not exceed 3.00 to 1.00 after giving pro forma effect to the
acquisition. Our 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 our
consolidated EBITDA (as defined in the agreement), and without modification to
any other credit agreements as of March 31, 2010, we would have been able to
borrow an additional $133.0 million under our credit agreements.</P>


<P style="TEXT-ALIGN: left">If our earnings were to decline as a result of continued difficult market conditions or for other reasons, it may impact our ability to maintain compliance with these covenants. If we determined that our compliance with these covenants may be under pressure, we 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 our debt would likely result in additional fees or interest payments.</P>
<P style="TEXT-ALIGN: left">Prior to 2009, we had $180 million principal amount of 2.25% convertible notes that were issued in March 2006. During 2009 we entered into several agreements to exchange our 2.25% convertible senior notes due 2026 for cash plus an equivalent amount of our 2.25% senior notes due 2026 (the &#147;new notes&#148;), resulting in gains for the extinguishment of debt. In each case, we simultaneously entered into additional agreements to purchase the new notes. Information pertinent to these transactions is noted below:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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 valign=bottom>
    <td align=left colspan="10">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left colspan="10"><FONT size=2>(in thousands)</FONT>      </td>
  </TR>

  <TR>

    <TD align=center colSpan=10>&nbsp; </td>
  </TR>



  <TR vAlign=bottom>
    <TD align=center width="10%"><FONT size=2>Month of</FONT><BR>

<FONT size=2>agreement</FONT> </td>
    <TD align=center width="10%"><FONT size=2>Month of</FONT><BR>

<FONT size=2>settlement</FONT> </td>
    <TD align=center colspan="2" width="10%"><FONT size=2>Par value</FONT> </td>
    <TD align=center colspan="2" width="10%"><FONT size=2>Book value</FONT> </td>
    <TD align=center colspan="2" width="10%"><FONT size=2>Aggregate</FONT><BR>

<FONT size=2>cost</FONT> </td>
    <TD align=center colspan="2" width="10%"><FONT size=2>Pretax gain on</FONT><BR>

<FONT size=2>extinguishment of debt</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="10">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=center><FONT size=2>March 2009</FONT> </td>
    <TD align=center><FONT size=2>March 2009</FONT> </td>
    <TD align=right><FONT size=2>$7,074</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$6,248</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$3,360</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$2,800</FONT> </td>
    <TD align=right>&nbsp;&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=center><FONT size=2>April 2009</FONT> </td>
    <TD align=center><FONT size=2>April 2009</FONT> </td>
    <TD align=right><FONT size=2>93,989</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>83,182</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>53,515</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>36,631</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=center><FONT size=2>May 2009</FONT> </td>
    <TD align=center><FONT size=2>July 2009</FONT> </td>
    <TD align=right><FONT size=2>30,500</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>27,183</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>18,887</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>7,906</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>

  <TR vAlign=bottom>

    <TD align=center><FONT size=2>May 2009</FONT> </td>
    <TD align=center><FONT size=2>October 2009</FONT> </td>
    <TD align=right><FONT size=2>20,000</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>17,958</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>13,100</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>4,622</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="10">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Total</FONT> </td>
    <TD align=left>&nbsp; </td>
    <TD align=right><FONT size=2>$151,563</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$134,571</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$88,862</FONT> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$51,959</FONT> </td>
    <TD align=right>&nbsp;</td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="10">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">The cash used to buy the new notes was provided by our credit agreement. Long-term debt was reduced by $45.7 million (book value less aggregate cost) as a result of these transactions. As of March 31, 2010, $28.4 million principal amount of convertible notes were outstanding, which reflects the reduction in principal amount as a result of the purchases made in March, April, July, and October 2009.</P>
<P style="TEXT-ALIGN: left">We issued letters of credit totaling $47.4 million in respect of preliminary assessments for income tax contingencies, of which $14.0 million was drawn from our credit agreement. Income tax contingencies are more fully described in Note 6 of Notes to Consolidated Financial Statements.</P>
<P style="TEXT-ALIGN: left">As of March 31, 2010, we were in compliance with the covenants of debt and credit agreements. When considering debt covenants, we continue to have substantial borrowing capacity. A combination of our continued strong underlying operating performance, and a stabilization or improvement in the capital</P>
<P align=center>37</P>
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<P style="TEXT-ALIGN: left">markets, positions us well for obtaining favorable terms for a refinancing of the current credit agreement sometime in the second half of 2010, albeit likely at a higher cost of borrowing.</P>
<P style="TEXT-ALIGN: left"><B>Off-Balance Sheet Arrangements</B></P>
<P style="TEXT-ALIGN: left">We have no off-balance sheet arrangements required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K.</P>
<P style="TEXT-ALIGN: left"><B>Recent Accounting Pronouncements</B></P>
<P style="TEXT-ALIGN: left">In October 2009, the Financial Accounting Standards Board (FASB) amended authoritative guidance related to accounting and disclosure of revenue recognition for multiple-element arrangements. This guidance provides principles for allocation of consideration among multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. This guidance introduces an estimated selling price method for allocating revenue to the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available, and significantly expands related disclosure requirements. This is effective on a prospective basis for revenue arrangements entered into or materially modified in the fiscal year beginning January 1, 2011, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance.</P>
<P style="TEXT-ALIGN: left">In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements, including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. The guidance is effective for reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are effective for periods beginning after December 15, 2010. Our adoption of this guidance did not have a material effect on the financial statements.</P>

<P style="TEXT-ALIGN: left">In April 2010, the FASB issued guidance on the
criteria that should be met for determining whether the milestone method of
revenue recognition is appropriate, with regard to research and development
transactions. The guidance allows the milestone method as an acceptable revenue
recognition methodology when an arrangement includes substantive milestones. The
guidance provides a definition of substantive milestone and should be applied
regardless of whether the arrangement includes single or multiple deliverables
or units of accounting. The guidance includes enhanced disclosure requirements
about each arrangement, individual milestones and related contingent
consideration, information about substantive milestones and factors considered
in the determination. The guidance is effective prospectively to milestones
achieved in fiscal years, and interim periods within those years, after June 15,
2010. Early application and retrospective application are permitted. We are
currently evaluating the impact of adopting this guidance.</P>

<P style="TEXT-ALIGN: left"><B>Outlook</B></P>
<P style="TEXT-ALIGN: left">Some of the forgoing paragraphs make reference to EBITDA, which is a non-GAAP measure (see <B>Non-GAAP Measures </B>below).</P>
<P style="TEXT-ALIGN: left">As we discussed in our Q4 2009 earnings release, Q1 revenues are usually dampened by seasonal effects in PMC, most notably the weak inflow of sales into January due to slowing shipments at the end of December. The effect was particularly strong this year; January was the weakest PMC sales month in recent memory. As a result, Q1 2010 consolidated sales were comparable to sales in Q1 2009. But if aggregate sales levels were similar, the underlying sales and order trends were not. In Q1 2010, sales</P>
<P align=center>38</P>
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<P style="TEXT-ALIGN: left">strengthened sharply as the quarter progressed, orders were well ahead of sales and last year&#146;s pace, and business conditions in our end markets were clearly more favorable than a year ago. And despite the soft sales, profitability continued to show sustained strength, particularly in PMC, Doors and PrimaLoft.</P>
<P style="TEXT-ALIGN: left">In PMC, global sales were only 3.8 percent higher than Q1 2009; excluding exchange rate effects, sales were flat. The weakest spot for PMC in Q1 was Europe, where sales were down 9 percent compared to the previous year. This weakness was offset by quarter-to-quarter sales increases of 52 percent in Asia-Pacific and 2 percent in the Americas. Most of our other businesses followed a similar pattern. In Doors, sales lagged Q1 2009 by 2 percent; in EF, sales were down 1 percent for the same period; and in AEC, sales were down 5 percent against Q1 2009. PrimaLoft was the one exception with sales 9 percent ahead of last year.</P>
<P style="TEXT-ALIGN: left">In contrast to sales, orders in Q1 2010 were well ahead of Q1 2009. In PMC, orders can be an imprecise indicator of future sales, and in Q1 2010, they may have been inflated by inventory restocking by our customers. Nonetheless, Q1 2010 orders in PMC were 23 percent higher globally than in Q1 2009. Orders were especially strong in Asia-Pacific, increasing 64 percent above orders in Q1 2009, when that region hit bottom. In the Americas and Europe, orders were 18 percent and 22 percent higher, respectively. In Doors, EF and PrimaLoft, orders were 40 percent, 20 percent and 20 percent, respectively, ahead of Q1 2009. And at AEC, the one-year order backlog is almost double what it was at the end of Q1 2009, and the short-term outlook is for a sharp increase in sales.</P>
<P style="TEXT-ALIGN: left">Turning from sales and orders to profitability, now that the three year restructuring and performance improvement program is over, the impact of the costs associated with that program on the Company&#146;s EBITDA continues to decline. Excluding only U.S. GAAP restructuring charges, EBITDA in Q1 2010 was $29.3 million; this includes $4.8 million for equipment relocation, idle-capacity and SAP implementation costs. The comparable result for Q1 2009 was EBITDA of $19.2 million, which included $7.3 million for equipment relocation, idle-capacity and SAP implementation costs, and a gain of $2.8 million related to an extinguishment of debt.</P>
<P style="TEXT-ALIGN: left">These results are consistent with the conclusions that we reached in our Q4 2009 earnings release: (a) we are operating at fundamentally higher levels of profitability than we were before the recession, (b) these levels of profitability are proving to be sustainable, even with sales more than 20 percent below pre-recession levels, and (c) given this fundamentally lower cost structure, we would expect that incremental improvements in revenue will generate disproportionately larger improvements in EBITDA.</P>
<P style="TEXT-ALIGN: left">Given the seasonal effects, abnormally low January sales, and the strong order patterns, it is clear that Q1 sales do not provide a reliable indication of what levels of revenue should we should expect as our end-markets continue to recover from the recession. Historically, Q2 is generally free of negative seasonal effects, and it should also be free of any inventory effects that could have inflated Q1 order levels. In addition, a major contract negotiation in PMC will have been completed. Barring any unusual disruptions to economic activity, Q2 should provide a good indication of the post-recession, near-term revenue potential in PMC, Doors, EF and Primaloft.</P>
<P style="TEXT-ALIGN: left">Q2 will also be a good test of AEC&#146;s short term ability to ramp up sharply, as several key programs are simultaneously growing or transitioning to production. If AEC meets its internal production targets, we should see a sharp increase in sales and a swing to positive EBITDA. A key milestone with longer term implications will also likely have been passed by the time of the Q2 earnings release. Airbus is likely to have announced its decision on whether to re-engine the A320, and if so, with which engines.</P>
<P style="TEXT-ALIGN: left">In summary, while sales were weak in Q1, sales strengthened as the quarter progressed and orders were strong. Q1 profitability reinforces the conclusion that Albany International is a fundamentally more profitable company than it was before the recession, and that any incremental improvement in sales should generate a disproportionately larger increase in EBITDA.</P>
<P align=center>39</P>
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<P style="TEXT-ALIGN: left"><B>Non-GAAP Measures</B></P>


<P style="TEXT-ALIGN: left">This Form 10-Q contains certain items, such as
earnings before interest, taxes, depreciation, and amortization (EBITDA), EBITDA
excluding restructuring charges, costs associated with restructuring
initiatives, sales excluding currency effects, and certain income and expense
items on a per share basis, that could be considered non-GAAP financial
measures. Such items are provided because we believe that, when presented
together with the GAAP items to which they relate, they provide additional
useful information to investors regarding our operational performance.
Presenting increases or decreases in sales, after currency effects are excluded,
can give us and investors insight into underlying sales trends. An understanding
of the impact in a particular quarter of specific restructuring costs, or gains
and losses such as our 2009 gain on extinguishment of debt and EBITDA can give
us and investors additional insight into quarterly performance, especially when
compared to quarters in which such items had a greater or lesser effect, or no
effect.</P>


<P style="TEXT-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. We calculate EBITDA by
adding Interest expense net, Income taxes, Depreciation and Amortization to Net
income. We believe that EBITDA provides useful information to investors because
they provide an indication of the strength and performance of our ongoing
business operations. 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 we 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 our net income.
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 us, may not be similar to EBITDA measures of
other companies. EBITDA may not be considered a measurement under GAAP, and
should be considered in addition to, but not as a substitute for, the
information contained in our statements of operations.</P>


<P style="TEXT-ALIGN: left">The following table contains the calculation of EBITDA and EBITDA excluding restructuring charges:</P>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 width="100%" cellpadding="0">

  <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=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=center>&nbsp; </td>
    <TD align=center colspan="6"> <FONT size=2>Three Months ended</FONT> <br>
      <font size=2>March 31,</font>
       </td>
  </TR>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands)</FONT> </td>
    <TD align=center colspan="3" width="15%"><B><FONT size=2>2010</FONT></B> </td>
    <TD align=center colspan="3" width="15%"> <FONT size=2>2009</FONT>  </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Net income/(loss)</FONT> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>4,265</FONT></B> </td>
    <TD align=right>&nbsp;&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>(18,897</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Interest expense, net</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>3,825</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>5,834</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Income tax expense/(benefit)</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>2,239</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>(1,605</FONT> </td>
    <TD align=left><FONT size=2>)</FONT> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Depreciation</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>13,941</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>14,573</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Amortization</FONT> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>1,954</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>2,138</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>EBITDA</FONT></B> </td>
    <TD align=right>&nbsp; </td>
    <TD align=right><B><FONT size=2>26,224</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>2,043</FONT> </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>&nbsp; </td>
    <TD align=right><B><FONT size=2>3,113</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right>&nbsp; </td>
    <TD align=right><FONT size=2>17,179</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><B><FONT size=2>EBITDA excluding restructuring charges</FONT></B> </td>
    <TD align=right><B><FONT size=2>$</FONT></B> </td>
    <TD align=right><B><FONT size=2>29,337</FONT></B> </td>
    <TD align=right>&nbsp;</td>
    <TD align=right><FONT size=2>$</FONT> </td>
    <TD align=right><FONT size=2>19,222</FONT> </td>
    <TD align=left>&nbsp; </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="7">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">We disclose certain income and expense items on a per share basis. We believe that such disclosures provide important insight of the underlying quarterly earnings and are financial performance metrics commonly used by investors. We calculate 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.</P>
<P align=center>40</P>
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<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=0 cellpadding="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>
  </TR>
  <TR vAlign=bottom>
    <TD align=left><b><font size=2>Quarter ended March 31, 2010</font></b></td>
    <TD align=center>&nbsp;</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 align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </tr>




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

<FONT size=2>amounts)</FONT> </td>
    <TD align=center width="13%"><FONT size=2>Pre-tax</FONT><BR>

<FONT size=2>amounts</FONT> </td>
    <TD align=center width="13%"><FONT size=2>Tax Effect</FONT> </td>
    <TD align=center width="13%"><FONT size=2>After-tax</FONT><BR>

<FONT size=2>Effect</FONT> </td>
    <TD align=center width="13%"><FONT size=2>Shares</FONT><BR>

<FONT size=2>Outstanding</FONT> </td>
    <TD align=center width="13%"><FONT size=2>Per Share</FONT><BR>

<FONT size=2>Effect</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Restructuring and other, net</FONT> </td>
    <TD align=center><FONT size=2>&nbsp; $3,113</FONT> </td>
    <TD align=center><FONT size=2>$1,074</FONT> </td>
    <TD align=center><FONT size=2>&nbsp; $2,039</FONT> </td>
    <TD align=center><FONT size=2>30,943</FONT> </td>
    <TD align=center><B><FONT size=2>$0.07</FONT></B> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </tr>



  <TR>

    <TD colSpan=6>&nbsp; </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Quarter ended March 31, 2009</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>&nbsp; </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </tr>



  <TR vAlign=bottom>

    <TD align=left><FONT size=2>(in thousands, except per share</FONT>  <FONT size=2>
      amounts)</FONT>  </td>
    <TD align=center><FONT size=2>Pre-tax</FONT>   <FONT size=2><br>
      amounts</FONT>  </td>
    <TD align=center><FONT size=2>Tax Effect</FONT> </td>
    <TD align=center><FONT size=2>After-tax</FONT>  <FONT size=2><br>
      Effect</FONT>  </td>
    <TD align=center><FONT size=2>Shares</FONT>   <FONT size=2><br>
      Outstanding</FONT>  </td>
    <TD align=center><FONT size=2>Per Share</FONT>   <FONT size=2><br>
      Effect</FONT>  </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Restructuring and other, net</FONT> </td>
    <TD align=center><FONT size=2>$17,179</FONT> </td>
    <TD align=center><FONT size=2>$1,958</FONT> </td>
    <TD align=center><FONT size=2>$15,221</FONT> </td>
    <TD align=center><FONT size=2>30,046</FONT> </td>
    <TD align=center><FONT size=2>$0.51</FONT> </td>
  </TR>
  <tr valign=bottom>
    <td align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR vAlign=bottom>

    <TD align=left><FONT size=2>Gain on extinguishment of debt</FONT> </td>
    <TD align=center><FONT size=2>&nbsp;  &nbsp;2,800</FONT> </td>
    <TD align=center><FONT size=2>&nbsp; 1,092</FONT> </td>
    <TD align=center><FONT size=2>&nbsp; &nbsp;1,708</FONT> </td>
    <TD align=center><FONT size=2>30,046</FONT> </td>
    <TD align=center><FONT size=2>&nbsp;  0.06</FONT> </td>
  </TR>
  <TR vAlign=bottom>
    <TD align=left colspan="6">
      <hr size="1" noshade>
    </td>
  </TR>
</TABLE>

<P align=center>41</P>
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<P style="TEXT-ALIGN: left"><B><a name="page42"></a>Item 3. Quantitative and Qualitative Disclosures about Market Risk</B></P>
<P style="TEXT-ALIGN: left">For discussion of our 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 style="TEXT-ALIGN: left"><B><a name="page42a"></a>Item 4. Controls and Procedures</B></P>
<P style="TEXT-ALIGN: left">(a) Disclosure controls and procedures.</P>


<P style="TEXT-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 style="TEXT-ALIGN: left">(b) Changes in internal control over financial reporting.</P>
<P style="TEXT-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>42</P>
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<P style="TEXT-ALIGN: center"><B>PART II &#150; OTHER INFORMATION</B></P>
<P style="TEXT-ALIGN: left"><B><a name="page43"></a>Item 1. LEGAL PROCEEDINGS</B></P>
<P style="TEXT-ALIGN: left">Albany International Corp. 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 that we previously manufactured. We 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 style="TEXT-ALIGN: left">We were defending against 7,464 claims as of April
29, 2010. This compares with 7,809 such claims as of February 16, 2010, 8,945
claims as of October 30, 2009,16,060 claims as of July 23, 2009, 16,818 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 that we previously
manufactured.</P>


<P style="TEXT-ALIGN: left">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>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=1 width="100%" cellpadding="2">

  <TR vAlign=bottom>
    <TD align=left width="10%"><I><FONT size=2>Year</FONT></I>

<I><FONT size=2>ended</FONT></I><BR>

<I><FONT size=2>December 31,</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Opening</FONT></I><BR>

<I><FONT size=2>Number of</FONT></I><BR>

<I><FONT size=2>claims</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Claims</FONT></I><BR>

<I><FONT size=2>Dismissed, <br>
      Settled</FONT></I>

<I><FONT size=2>or</FONT></I><BR>

<I><FONT size=2>Resolved</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>New</FONT></I><BR>

<I><FONT size=2>Claims</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Closing</FONT></I><BR>

<I><FONT size=2>Number of</FONT></I><BR>

<I><FONT size=2>Claims</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Amounts Paid</FONT></I><BR>

<I><FONT size=2>(thousands) to Settle</FONT></I><BR>

<I><FONT size=2>or Resolve</FONT></I><BR>

<I><FONT size=2>($)</FONT></I> </td>
  </TR>




  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2005</FONT></I> </td>
    <TD align=center><i><FONT color=#1f497d size=2>29,411</FONT></i></td>
    <TD align=center><i><FONT color=#1f497d size=2>6,257</FONT></i></td>
    <TD align=center><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=center><i><FONT size=2>&nbsp; &nbsp;504</FONT></i></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2006</FONT></I> </td>
    <TD align=center><i><FONT size=2>24,451</FONT></i></td>
    <TD align=center><i><FONT size=2>6,841</FONT></i></td>
    <TD align=center><i><FONT size=2>1,806</FONT></i></td>
    <TD align=center><i><FONT size=2>19,416</FONT></i></td>
    <TD align=center><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=center><i><FONT size=2>19,416</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp;808</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; 190</FONT></i></td>
    <TD align=center><i><FONT size=2>18,798</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; 15</FONT></i></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2008</FONT></I> </td>
    <TD align=center><i><FONT size=2>18,798</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp;523</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; 110</FONT></i></td>
    <TD align=center><i><FONT size=2>18,385</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; 52</FONT></i></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2009</FONT></I> </td>
    <TD align=center><i><FONT size=2>18,385</FONT></i></td>
    <TD align=center><i><FONT size=2>9,482</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; 42</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; 8,945</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; 88</FONT></i></td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2010</FONT></I> <i><font size=2>to</font></i> <i><font size=2>date</font></i> </td>
    <TD align=center><i>&nbsp; <FONT size=2>8,945</FONT></i></td>
    <TD align=center><i><FONT size=2>1,650</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; 169</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; 7,464</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; 99</FONT></i></td>
  </TR>


</TABLE>

<P style="TEXT-ALIGN: left">We anticipate that additional claims will be filed against the Company and related companies in the future, but are 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 our 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 the Company to date, and only a portion of those claimants have alleged time spent in a paper mill to which we are believed to have supplied asbestos-containing products.</P>
<P style="TEXT-ALIGN: left">The significant increase in the number of dismissed claims during 2009 and early 2010 is in large part the result of changes in the administration of claims assigned to the multidistrict litigation panel of the federal district courts (the &#147;MDL&#148;).</P>
<P align=center>43</P>
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<P style="TEXT-ALIGN: left">Since May 31, 2007 the MDL has issued a series of administrative orders to expedite the resolution of pending cases. While it is unclear how many may attempt to re-file their claims, this process has resulted in numerous claims being dismissed, either voluntarily or involuntarily. As of April 29, 2010, 3,044 claims were pending against the Company in the MDL. Of these MDL claims, 2,662 were originally filed in state courts in Mississippi.</P>


<P style="TEXT-ALIGN: left">With respect to the remaining MDL claims where
plaintiffs have complied with the administrative orders, 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 procedure will expedite the requests for settlement
conferences. At the time of these settlement conferences, we expect to be given
more relevant information regarding work histories and the basis, if any, for
the plaintiff&#146;s claim against the Company. We believe that the effects of
these administrative orders may not be fully known or realized for some time. We
do not believe a meaningful estimate can be made regarding the range of possible
loss with respect to the claims remaining at the MDL at this time.</P>


<P style="TEXT-ALIGN: left">As of April 29, 2010, the remaining 4,420 claims
pending against the Company were pending in a number of jurisdictions other than
the MDL. 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 we are believed to
have supplied asbestos-containing products. For these reasons, we expect the
percentage of these remaining claimants able to demonstrate time spent in a
paper mill to which we supplied asbestos-containing products during a period in
which our asbestos-containing products were in use to be considerably lower than
the total number of pending claims. In addition, over half of these remaining
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, we do not believe a meaningful estimate can be made
regarding the range of possible loss with respect to these remaining claims.</P>


<P style="TEXT-ALIGN: left">It is our position and the position of the other
paper machine clothing defendants that there was insufficient exposure to
asbestos from any paper machine clothing products to cause asbestos-related
injury to any plaintiff. Furthermore, asbestos contained in our synthetic
products was encapsulated in a resin-coated yarn woven into the interior of the
fabric, further reducing the likelihood of fiber release. While we believe we
have meritorious defenses to these claims, we have settled certain of these
cases for amounts we consider reasonable given the facts and circumstances of
each case. Our insurer, Liberty Mutual, has defended each case and funded
settlements under a standard reservation of rights. As of April 29, 2010, we
resolved, by means of settlement or dismissal, 33,178 claims. The total cost of
resolving all claims was $6.9 million. Of this amount, $6.9 million, or 99%, was
paid by our 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 we
should be able to access.</P>


<P style="TEXT-ALIGN: left"><B>Brandon Drying Fabrics, Inc.</B></P>
<P style="TEXT-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 7,907 claims as of April 29, 2010. This compares with 7,905 such claims as of February 16, 2010, 7,907 claims as of October 30, 2009, 8,139 claims as of July 23, 2009, 8,604 claims as of May 1, 2009, 8,607 claims as of February 6, 2009, 8,664 such claims as of October 27, 2008,</P>
<P align=center>44</P>
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<P style="TEXT-ALIGN: left">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.</P>
<P style="TEXT-ALIGN: left">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>
<TABLE style="FONT-SIZE: 10pt; FONT-FAMILY: 'Arial'" cellSpacing=0 border=1 width="100%" cellpadding="2">


  <TR vAlign=bottom>
    <TD align=left width="10%"><I><FONT size=2>Year ended</FONT></I><BR>

<I><FONT size=2>December</FONT></I>

<I><FONT size=2>31,</FONT></I> </td>
    <TD align=center width="10%"><I><FONT size=2>Opening Number</FONT></I><BR>

<I><FONT size=2>of claims</FONT></I> </td>
    <TD align=center width="10%"><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 align=center width="10%"><I><FONT size=2>New Claims</FONT></I> </td>
    <TD align=center width="10%"><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 align=center width="10%"><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=center><I><FONT color=#1f497d size=2>9,985</FONT></I></td>
    <TD align=center><i><FONT color=#1f497d size=2>&nbsp; 642</FONT></i></td>
    <TD align=center><i><FONT color=#1f497d size=2>223</FONT></i></td>
    <TD align=center><I><FONT size=2>9,566</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>9,566</FONT></I></td>
    <TD align=center><i><FONT size=2>1182</FONT></i></td>
    <TD align=center><i><FONT size=2>730</FONT></i></td>
    <TD align=center><I><FONT size=2>9,114</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>9,114</FONT></I></td>
    <TD align=center><i><FONT size=2>&nbsp; 462</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp;88</FONT></i></td>
    <TD align=center><I><FONT size=2>8,740</FONT></I></td>
    <TD align=center><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=center><I><FONT size=2>8,740</FONT></I></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; 86</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp;10</FONT></i></td>
    <TD align=center><I><FONT size=2>8,664</FONT></I></td>
    <TD align=center><I><FONT size=2>0</FONT></I> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2009</FONT></I> </td>
    <TD align=center><I><FONT size=2>8,664</FONT></I></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp;760</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp;3</FONT></i></td>
    <TD align=center><I><FONT size=2>7,907</FONT></I></td>
    <TD align=center><I><FONT size=2>0</FONT></I> </td>
  </TR>

  <TR vAlign=bottom>

    <TD align=left><I><FONT size=2>2010 to date</FONT></I> </td>
    <TD align=center><I><FONT size=2>7,907</FONT></I></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp; &nbsp; 6</FONT></i></td>
    <TD align=center><i><FONT size=2>&nbsp; &nbsp;6</FONT></i></td>
    <TD align=center><I><FONT size=2>7,907</FONT></I></td>
    <TD align=center><I><FONT size=2>0</FONT></I> </td>
  </TR>
</TABLE>

<P style="TEXT-ALIGN: left">We 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 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 April 29, 2010, Brandon has resolved, by means of
settlement or dismissal, 9,677 claims for a total of $0.2 million.
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 style="TEXT-ALIGN: left">As of April 29, 2010, 6,821 (or approximately 86%) of the claims pending against Brandon were pending in Mississippi. For the same reasons set forth above with respect to Albany&#146;s claims, as well as the fact that no amounts have been paid to resolve any Brandon claims since 2001, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to these remaining claims.</P>
<P align=center>45</P>
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<P style="TEXT-ALIGN: left"><B>Mount Vernon</B></P>
<P style="TEXT-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;). We 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. We deny 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, we have successfully moved for dismissal in a number of actions.</P>

<HR SIZE=1 noshade ALIGN=CENTER WIDTH=150>





<P style="TEXT-ALIGN: left">While we do 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 our understanding of the insurance policies available, how settlement
amounts have been allocated to various policies, our 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, we currently do not
anticipate any material liability relating to the resolution of the
aforementioned pending proceedings in excess of existing insurance limits.
Consequently, we currently do 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 we cannot predict the number and timing
of future claims, based on the foregoing factors and the trends in claims
against us to date, we do not anticipate that additional claims likely to be
filed against us in the future will have a material adverse effect on our
financial position, results of operations, or cash flows. We are aware that
litigation is inherently uncertain, especially when the outcome is dependent
primarily on determinations of factual matters to be made by juries. We are 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>46</P>
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<BR>

<P> <B><a name="page47"></a>Item 1A. Risk Factors</B>.</P>
<P> There have been no material changes in risks since December 31, 2009. For discussion of risk factors, refer to Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009.</P>
<P> <B><a name="page47a"></a>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</B></P>
<P> We made no share purchases during the first quarter of 2010. We remain authorized by the Board of Directors to purchase up to 2 million shares of our Class A Common Stock.</P>
<P> <B><a name="page47b"></a>Item 3. Defaults Upon Senior Securities</B><BR>

None.<BR>

<BR>

<B><a name="page47c"></a>Item 4. (Removed and Reserved)</B><BR>

<BR>

<B><a name="page47d"></a>Item 5. Other Information</B><BR>

None.<BR>

<BR>

<B><a name="page47e"></a>Item 6. Exhibits</B><BR>

<BR>

</P>
<TABLE border=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;" width="100%" cellpadding="0">
  <TR>
    <TD nowrap valign=top width="10%"><b>Exhibit No. </b></td>
    <TD colspan=2><b>Description</b></td>
  </TR>

  <TR>

    <TD nowrap valign=top width="5%"> 31.1&nbsp; &nbsp; &nbsp;   </td>
    <TD colspan=2>
      <P align="justify">Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>





  <TR>

    <TD nowrap valign=top> 31.2&nbsp; &nbsp; &nbsp;      </td>
    <TD colspan=2>
      <P align="justify">Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>





  <TR>

    <TD nowrap valign=top> 32.1&nbsp; &nbsp; &nbsp;      </td>
    <TD colspan=2>
      <P align="justify">Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b)&nbsp; of Section 1350, Chapter 63 of Title 18, United States Code)</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>





  <TR>

    <TD nowrap valign=top> 99.1&nbsp; &nbsp; &nbsp;      </td>
    <TD colspan=2>
      <P align="justify">Quantitative and qualitative disclosures about market risks as reported at December&nbsp;  31, 2009.</P>
    </td>
  </TR>





</TABLE>
<P align="center">47</P>
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<BR>
<P style="text-align: center;"> <B>SIGNATURES</B></P>
<P> 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>
<table width=100% border=0 cellpadding="0" cellspacing=0 style="font-family: 'Arial';font-size: 10pt;">
  <tr>
    <td width="54%"></td>
    <td width="5%"></td>
    <td width="41%"></td>
  </tr>
  <tr valign="bottom">
    <td width="54%" align=left>&nbsp; </td>
    <td colspan="2" align=left> <font size=2>ALBANY INTERNATIONAL CORP</font> <font size=2>.</font> </td>
  </tr>
  <tr>
    <td width="54%">&nbsp; </td>
    <td colspan="2">
      <hr noshade size=1 width="250" align="left">
       </td>
  </tr>
  <tr valign="bottom">
    <td width="54%" align=left>&nbsp; </td>
    <td colspan="2" align=left> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;<font size=2>(Registrant)</font></td>
  </tr>
  <tr>
    <td colspan=3>&nbsp; </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp; </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp; </td>
  </tr>
  <tr valign="bottom">
    <td align=left width="54%"> <font size=2>Date: May 7, 2010</font> </td>
    <td align=left width="5%">&nbsp;&nbsp;&nbsp;</td>
    <td align=left width="41%">&nbsp; </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp; </td>
  </tr>
  <tr>
    <td colspan=3>&nbsp; </td>
  </tr>
  <tr valign="bottom">
    <td align=left width="54%">&nbsp; </td>
    <td align=left width="5%"><font size=2>By</font> </td>
    <td align=left width="41%"> <font size=2>/s/ Michael K. Burke</font> </td>
  </tr>
  <tr>
    <td width="54%">&nbsp; </td>
    <td width="5%">&nbsp;</td>
    <td width="41%">
      <hr noshade size=1 width="240" align="left">
       </td>
  </tr>


  <tr valign="bottom">
    <td align=left width="54%">&nbsp; </td>
    <td align=left width="5%">&nbsp;</td>
    <td align=left width="41%"> <font size=2>Michael K. Burke</font>  <br>
      <font size=2>Senior Vice President and Chief Financial</font>  <br>
      <font size=2>Officer (Principal Financial Officer)</font> </td>
  </tr>
</table>

<P align="center">48</P>
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<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>e38696ex31_1.htm
<DESCRIPTION>CERTIFICATION
<TEXT>

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<P style="text-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> I, Joseph G. Morone, certify that:</P>
<TABLE border=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;" width="100%" cellpadding="0">

  <TR>

    <TD nowrap valign=top width="4%"> 1.&nbsp; &nbsp; &nbsp;     </td>
    <TD colspan=2>
      <P align="justify">I have reviewed this report on Form 10-Q of Albany International Corp.;</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>


  <TR>

    <TD nowrap valign=top> 2.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary&nbsp; 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 report;</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>









  <TR>

    <TD nowrap valign=top> 3.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">Based on my knowledge, the financial statements, and other financial information included in this 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 report;</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>








  <TR>

    <TD nowrap valign=top> 4.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">The registrant&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a&#150;15(e) and 15d&#150;15(e)) and internal control over financial reporting (as defined&nbsp;in Exchange Act Rules 13a&#150;15(f) and 15d&#150;15(f)) for the registrant and have:</P>
    </td>
  </TR>
  <TR>
    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>








  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top width="4%"> (a)&nbsp; &nbsp; &nbsp;    </td>
    <TD>
      <P align="justify">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 report is being prepared;</P>
    </td>
  </TR>
  <TR>
    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>


  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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;</P>
    </td>
  </TR>
  <TR>
    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>


  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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</P>
    </td>
  </TR>
  <TR>
    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>


  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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 (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and</P>
    </td>
  </TR>
  <TR>
    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
  </TR>


  <TR>

    <TD nowrap valign=top> 5.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">The registrant&#146;s other certifying officer(s) 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 the registrant&#146;s board of directors (or persons performing the equivalent functions):</P>
    </td>
  </TR>
  <TR>
    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>








  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top> (a)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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 information; and</P>
    </td>
  </TR>
  <TR>
    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>


  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</P>
    </td>
  </TR>


</TABLE>
<p>
  <font size=2>Date: May 7, 2010</font>
</p>
<table width=100% border=0 cellpadding="0" cellspacing=0
 style="font-family: 'Arial';font-size: 10pt;">
  <tr>
    <td width="57%"></td>
    <td width=3%></td>
    <td width=40%></td>
  </tr>
  <tr valign="bottom">
    <td width="57%" align=left>&nbsp;&nbsp;&nbsp;</td>
    <td align=left width="3%">By</td>
    <td align=left width="40%"> <font size=2>/s/ Joseph G. Morone</font> </td>
  </tr>
  <tr>
    <td width="57%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="40%">
      <hr noshade size=1 width="240" align="left">
       </td>
  </tr>


  <tr valign="bottom">
    <td width="57%" align=left>&nbsp;</td>
    <td align=left width="3%">&nbsp;</td>
    <td align=left width="40%"> <font size=2>Joseph G. Morone</font>  <br>
      <font size=2>President and Chief Executive Officer</font>  <br>
      <font size=2>(Principal Executive Officer)</font> </td>
  </tr>
</table>
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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>e38696ex31_2.htm
<DESCRIPTION>CERTIFICATION
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<P style="text-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> I, Michael K. Burke, certify that:</P>
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    <TD nowrap valign=top width="4%"> 1.&nbsp; &nbsp; &nbsp;     </td>
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      <P align="justify">I have reviewed this report on Form 10-Q of Albany International Corp.;</P>
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    <TD colspan=2>&nbsp;</td>
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    <TD nowrap valign=top> 2.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">Based on my knowledge, this 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 report;</P>
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    <TD colspan=2>&nbsp;</td>
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  <TR>

    <TD nowrap valign=top> 3.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">Based on my knowledge, the financial statements, and other financial information included in this 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 report;</P>
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    <TD nowrap valign=top>&nbsp;</td>
    <TD colspan=2>&nbsp;</td>
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  <TR>

    <TD nowrap valign=top> 4.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">The registrant&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a&#150;15(e) and 15d&#150;15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a&#150;15(f) and 15d&#150;15(f)) for the registrant and have:</P>
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    <TD>&nbsp;</td>
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  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top width="4%"> (a)&nbsp; &nbsp; &nbsp;    </td>
    <TD>
      <P align="justify">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 report is being prepared;</P>
    </td>
  </TR>
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    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
  </TR>


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    <TD>&nbsp; </td>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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;</P>
    </td>
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    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
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    <TD>&nbsp; </td>
    <TD nowrap valign=top> (c)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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</P>
    </td>
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    <TD>&nbsp;</td>
    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
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    <TD>&nbsp; </td>
    <TD nowrap valign=top> (d)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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 (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and</P>
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    <TD colspan=2>&nbsp;</td>
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    <TD nowrap valign=top> 5.&nbsp; &nbsp; &nbsp;        </td>
    <TD colspan=2>
      <P align="justify">The registrant&#146;s other certifying officer(s) 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 the registrant&#146;s board of directors (or persons performing the equivalent functions):</P>
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    <TD nowrap valign=top>&nbsp;</td>
    <TD>&nbsp;</td>
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  <TR>

    <TD>&nbsp; </td>
    <TD nowrap valign=top> (a)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">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 information; and</P>
    </td>
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    <TD colspan=3>&nbsp; </td>
  </TR>
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    <TD>&nbsp; </td>
    <TD nowrap valign=top> (b)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</P>
    </td>
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<p><font size=2>Date: May 7, 2010</font> </p>
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    <td width="57%" align=left>&nbsp;&nbsp;&nbsp;</td>
    <td align=left width="3%">By</td>
    <td align=left width="40%"> <font size=2>/</font><font size=2>s/ Michael K. Burke</font> </td>
  </tr>
  <tr>
    <td width="57%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="40%">
      <hr noshade size=1 width="240" align="left">
       </td>
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  <tr valign="bottom">
    <td width="57%" align=left>&nbsp;</td>
    <td align=left width="3%">&nbsp;</td>
    <td align=left width="40%"> <font size=2>Michael K. Burke</font>  <br>
      <font size=2>Senior Vice President and Chief Financial Officer</font>  <br>
      <font size=2>(Principal Financial Officer)</font> </td>
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<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>e38696ex32_1.htm
<DESCRIPTION>CERTIFICATION
<TEXT>

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<P style="text-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> In connection with the Quarterly Report of Albany International Corp. (the Company) on Form 10-Q for the period ending March 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the Report), Joseph G. Morone, President and Chief Executive Officer, and Michael K. Burke, Senior 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 style="font-family: 'Arial';font-size: 10pt;" width="100%" cellpadding="0">

  <TR>

    <TD nowrap valign=top> (1)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and</P>
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    <TD nowrap valign=top> (2)&nbsp; &nbsp; &nbsp;       </td>
    <TD>
      <P align="justify">The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</P>
    </td>
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</TABLE>
<p><font size=2>Date: May 7, 2010</font> <br>
</p>
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    <td width=50%></td>
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    <td align=left width="47%">&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align=left width="3%">By </td>
    <td align=left width="50%"> <font size=2>/s/ Joseph G. Morone</font> </td>
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    <td width="47%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
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      <hr noshade size=1 width="270" align="left">
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    <td align=left width="47%">&nbsp;</td>
    <td align=left width="3%">&nbsp; </td>
    <td align=left width="50%"><font size=2>Joseph G. Morone</font>  <br>
      <font size=2>President and Chief Executive Officer</font>  <br>
      <font size=2>(Principal Executive Officer)</font> </td>
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    <td width="3%">&nbsp;</td>
    <td width="50%">&nbsp; </td>
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    <td width="47%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="50%">&nbsp; </td>
  </tr>
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    <td align=left width="47%">&nbsp;</td>
    <td align=left width="3%">By </td>
    <td align=left width="50%"> <font size=2>/s/ Michael K. Burke</font> </td>
  </tr>
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    <td width="47%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="50%">
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    <td align=left width="47%">&nbsp;</td>
    <td align=left width="3%">&nbsp;</td>
    <td align=left width="50%"><font size=2>Michael K. Burke</font>  <br>
      <font size=2>Senior Vice President and Chief Financial Officer</font>  <br>
      <font size=2>(Principal Financial Officer)</font> </td>
  </tr>


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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>5
<FILENAME>e38696ex99_1.htm
<DESCRIPTION>QUANTITATIVE AND QUALITATIVE DISCLOSURES
<TEXT>

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<P style="text-align: center;"> <B>EXHIBIT (99.1)</B><BR>

<B>MARKET RISK SENSITIVITY &#150; AS OF DECEMBER 31, 2009</B></P>
<P> We have 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> <B>Foreign Currency Exchange Rate Risk</B></P>


<P> We have manufacturing plants and sales transactions worldwide and therefore
are 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, we
periodically enter 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 nonfunctional currencies subject to potential
loss amount to approximately &#36;689 million. The potential loss in fair value
resulting from a hypothetical 10% adverse change in quoted foreign currency
exchange rates amounts to &#36;68.9 million. Furthermore, related to foreign
currency transactions, we have exposure to nonfunctional currency balances
totaling &#36;103.7 million. This amount includes, on an absolute basis,
exposures to foreign currency assets and liabilities. On a net basis, we had
approximately &#36;43.5 million of foreign currency liabilities as of December
31, 2009. As currency rates change, these nonfunctional 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;4.4 million. Actual results may
differ.</P>


<P> <B>Interest Rate Risk</B></P>
<P> We are exposed to interest rate fluctuations with respect to our variable rate debt, depending on general economic conditions.</P>
<TABLE border=0 cellspacing=0 style="font-family: 'Arial';font-size: 10pt;" width=100% cellpadding="0">

  <TR>

    <TD> </td>
    <TD> </td>
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    <TD align=left> <FONT size=2>On December 31, 2009, we had the following variable rate debt:</FONT> </td>
    <TD align=left>&nbsp;  </td>
  </TR>
  <tr valign="bottom">
    <td align=left colspan="2">
      <hr size="1" noshade>
    </td>
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  <TR valign="bottom">

    <TD align=left> <B><FONT size=2>(in thousands, except interest rates)</FONT></B> </td>
    <TD align=left>&nbsp;  </td>
  </TR>
  <tr valign="bottom">
    <td align=left colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>

  <TR valign="bottom">

    <TD align=left> <B><FONT size=2>Short-term debt</FONT></B> </td>
    <TD align=left>&nbsp;  </td>
  </TR>

  <TR valign="bottom">

    <TD align=left> <FONT size=2>Notes payable, end of period  interest rate of 4.88%</FONT> </td>
    <TD align=right> <FONT size=2>&#36;15,296</FONT> </td>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</td>
    <TD align=left>&nbsp;</td>
  </TR>

  <TR valign="bottom">

    <TD align=left> <B><FONT size=2>Long-term debt</FONT></B> </td>
    <TD align=left>&nbsp;  </td>
  </TR>


  <TR valign="bottom">

    <TD align=left> <FONT size=2>April 2006 credit agreement with borrowings outstanding at an end of </FONT></td>
    <TD align=left>&nbsp;  </td>
  </TR>

  <TR valign="bottom">

    <TD align=left> <FONT size=2>period</FONT>  <FONT size=2>interest rate of 1.35% in 2009</FONT></td>
    <TD align=right> <FONT size=2>308,000</FONT> </td>
  </TR>
  <TR valign="bottom">
    <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 to operations principally outside</FONT> </td>
    <TD align=left>&nbsp;  </td>
  </TR>

  <TR valign="bottom">

    <TD align=left> <FONT size=2>the United States, at an average end of period rate of 5.40% in 2009, </FONT></td>
    <TD align=left>&nbsp;  </td>
  </TR>

  <TR valign="bottom">

    <TD align=left> <FONT size=2> due in varying amounts through 2021</FONT> </td>
    <TD align=right> <FONT size=2>212</FONT> </td>
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    <td align=left colspan="2">
      <hr size="1" noshade>
    </td>
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  <TR valign="bottom">

    <TD align=left> <FONT size=2>Total</FONT> </td>
    <TD align=right> <FONT size=2>&#36;323,508</FONT> </td>
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    <TD align=left colspan="2">
      <hr size="1" noshade>
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<P> Assuming borrowings were outstanding for an entire year, an increase/decrease of one percentage point in weighted average interest rates would increase/decrease interest expense by &#36;3.2 million. To manage interest rate risk, we will periodically enter into interest rate swap agreements to effectively fix the interest rates on variable debt to a specific rate for a period of time. As of December 31, 2009, we had no such swap agreements in place.</P>

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