EX-99.1 2 a50917987ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Albany International Reports Second-Quarter Results

Second-Quarter Financial Highlights

- Net sales were $193.5 million, a decrease of 2.3 percent compared to Q2 2013.
- Adjusted EBITDA for Q2 2014 was $37.3 million, compared to $36.1 million in Q2 2013 (see Tables 6 and 7).
- Q2 2014 income attributable to the Company was $0.35 per share. Earnings were reduced by restructuring charges of $0.04 and income tax adjustments of $0.03, and were increased by an insurance-recovery gain of $0.03 and foreign currency revaluation gains of $0.02 (see Table 10).
- Q2 2013 income attributable to the Company was a loss of $0.23 per share. Earnings were reduced by restructuring charges of $0.47, foreign currency revaluation losses of $0.03, income tax adjustments of $0.05, and a loss from discontinued operations of $0.01 (see Table 11).
- Net debt declined $15.8 million during the quarter to $78.2 million (see Table 15).

ROCHESTER, N.H.--(BUSINESS WIRE)--August 4, 2014--Albany International Corp. (NYSE:AIN) reported Q2 2014 income attributable to the Company of $11.2 million. Earnings were reduced by restructuring charges of $2.0 million and income tax adjustments of $0.8 million, and were increased by an insurance-recovery gain of $1.0 million and foreign currency revaluation gains of $1.0 million. In addition, income was reduced by $1.6 million to correct previously reported inventory values (see discussion below).

Q2 2013 income attributable to the Company was a loss of $7.4 million. Earnings were reduced by restructuring charges of $24.3 million, foreign currency revaluation losses of $1.4 million, income tax adjustments of $1.4 million, and a loss from discontinued operations of $0.4 million.

Table 1 summarizes net sales and the effect of changes in currency translation rates:

Table 1

|  |  |  |  |  |  |  | Impact of |  | Percent
|  | Net Sales |  |  |  | Changes |  | Change
|  | Three Months ended |  |  |  | in Currency |  | excluding
|  | June 30, |  | Percent |  | Translation |  | Currency Rate
(in thousands) |  | 2014 |  | 2013 |  | Change |  | Rates |  | Effect
Machine Clothing (MC) |  | $172,809 |  | $177,536 |  | -2.7% |  | $1,572 |  | -3.5%
Albany Engineered Composites (AEC) |  | 20,709 |  | 20,438 |  | 1.3% |  | - |  | 1.3%
Total |  | $193,518 |  | $197,974 |  | -2.3% |  | $1,572 |  | -3.0%

The year-over-year decline in second-quarter MC sales was attributable to North America, where sales were particularly strong in Q2 2013. Compared to Q1 and the second half of 2013, North American sales improved. Sales in the rest of the world remained stable and were at levels comparable to Q2 2013. AEC sales rebounded from the transitional effects of the change in LEAP invoicing terms discussed in Q1.

During the second quarter, the Company determined that the value of MC inventories reported in prior periods was overstated. The overstatement originated when the Company transitioned to a new ERP system in the Americas in 2008 and Europe in 2011. Included in cost of goods sold for the second quarter is a charge of $1.6 million to correct the overstatement by reducing the carrying value of inventory associated with intercompany transfers.

Q2 2014 gross profit was $75.3 million, or 38.9 percent of net sales, compared to $77.4 million, or 39.1 percent of net sales, in the same period of 2013. MC gross profit margin declined from 43.8 percent in 2013 to 42.4 percent in 2014 principally due to the $1.6 million charge for the inventory valuation correction. AEC’s gross profit margin improved from 3.3 percent in Q2 2013 to 11.4 percent in Q2 2014 due to improvements in profitability of programs at the Company’s Boerne, Texas, facility.

Selling, technical, general, and research (STG&R) expenses were $54.4 million, or 28.1 percent of net sales, in the second quarter of 2014, including losses of $0.4 million related to the revaluation of nonfunctional-currency assets and liabilities. In Q2 2013, STG&R expenses were $56.6 million, or 28.6 percent of net sales, including income of $0.5 million related to the revaluation of nonfunctional-currency assets and liabilities. Q2 2013 STG&R expenses also included $1.0 million of corporate charges for increased legal expenses and accrual adjustments for the Company’s self-insured medical program.

The following table presents expenses associated with internally funded research and development by segment:

Table 2

|  | Research and development
|  | expenses by segment
|  | Three Months ended
|  | June 30,
(in thousands) |  | 2014 |  | 2013
Machine Clothing |  | $5,185 |  | $4,815
Albany Engineered Composites |  | 2,267 |  | 2,507
Corporate expenses |  | 199 |  | 351
Total |  | $7,651 |  | $7,673

The following table summarizes second-quarter operating income by segment:

Table 3

|  | Operating Income/(loss)
|  | Three Months ended
|  | June 30,
(in thousands) |  | 2014 |  | 2013
Machine Clothing |  | $33,879 |  |  | $14,821 |
Albany Engineered Composites |  | (3,545 | ) |  | (4,678 | )
Corporate expenses |  | (11,357 | ) |  | (13,656 | )
Total |  | $18,977 |  |  | ($3,513 | )

Segment operating income was affected by restructuring and currency revaluation as shown in Table 4 below. Restructuring expense was principally related to the ongoing costs associated with the restructuring in France.

Table 4

|  | Expenses/(gain) in Q2 2014 |  |  | Expenses/(gain) in Q2 2013
|  | resulting from |  |  | resulting from
(in thousands) |  | Restructuring |  | Revaluation |  |  | Restructuring |  | Revaluation
Machine Clothing |  | $1,297 |  | $350 |  |  | $24,230 |  | ($452 | )
Albany Engineered Composites |  | 660 |  | 61 |  |  | 91 |  | - |
Corporate expenses |  | - |  | 2 |  |  | - |  | 2 |
Total |  | $1,957 |  | $413 |  |  | $24,321 |  | ($450 | )

Q2 2014 Other income/expense, net, was income of $2.1 million, including gains related to the revaluation of nonfunctional-currency balances of $1.4 million, and an insurance-recovery gain of $1.0 million related to a claim for weather damage to the Company’s MC manufacturing facility in Germany. Q2 2013 Other income/expense, net, was expense of $2.2 million including losses related to the revaluation of nonfunctional-currency balances of $1.9 million.

The following table summarizes currency revaluation effects on certain financial metrics:

Table 5

|  | Income/(loss) attributable
|  | to currency revaluation
|  | Three Months ended
|  | June 30,
(in thousands) |  | 2014 |  | 2013
Operating income |  | ($413 | ) |  | $450 |
Other income/(expense), net |  | 1,397 |  |  | (1,894 | )
Total |  | $984 |  |  | ($1,444 | )

The Company’s income tax rate, excluding tax adjustments, was 36.5 percent for Q2 2014, compared to 39.0 percent for the same period of 2013. Discrete tax charges and changes in the estimated income tax rate increased income tax expense by $0.8 million in 2014 and $1.4 million in 2013.

The following tables summarize Adjusted EBITDA:

Table 6

Three Months ended June 30, 2014 |  |  |  | Albany |  | Corporate |  |
|  | Machine |  | Engineered |  | expenses |  | Total
(in thousands) |  | Clothing |  | Composites |  | and other |  | Company
Net income |  | $33,879 |  | ($3,545 | ) |  | ($19,157 | ) |  | $11,177 |
Interest expense, net |  | - |  | - |  |  | 2,717 |  |  | 2,717 |
Income tax expense |  | - |  | - |  |  | 7,216 |  |  | 7,216 |
Depreciation and amortization |  | 11,554 |  | 2,453 |  |  | 2,090 |  |  | 16,097 |
EBITDA |  | 45,433 |  | (1,092 | ) |  | (7,134 | ) |  | 37,207 |
Restructuring and other, net |  | 1,297 |  | 660 |  |  | - |  |  | 1,957 |
Foreign currency revaluation losses/(gains) |  | 350 |  | 61 |  |  | (1,395 | ) |  | (984 | )
Gain on insurance recovery |  | - |  | - |  |  | (961 | ) |  | (961 | )
Pretax loss attributable to noncontrolling interest in ASC |  | - |  | 45 |  |  | - |  |  | 45 |
Adjusted EBITDA |  | $47,080 |  | ($326 | ) |  | ($9,490 | ) |  | $37,264 |

Table 7

Three months ended June 30, 2013 |  |  |  | Albany |  | Corporate |  |
|  | Machine |  | Engineered |  | expenses |  | Total
(in thousands) |  | Clothing |  | Composites |  | and other |  | Company
Net income/(loss) |  | $14,821 |  |  | ($4,678 | ) |  | ($17,522 | ) |  | ($7,379 | )
Loss from discontinued operations |  | - |  |  | - |  |  | 351 |  |  | 351 |
Interest expense, net |  | - |  |  | - |  |  | 3,547 |  |  | 3,547 |
Income tax expense |  | - |  |  | - |  |  | (2,243 | ) |  | (2,243 | )
Depreciation and amortization |  | 11,809 |  |  | 2,064 |  |  | 2,208 |  |  | 16,081 |
EBITDA |  | 26,630 |  |  | (2,614 | ) |  | (13,659 | ) |  | 10,357 |
Restructuring and other, net |  | 24,230 |  |  | 91 |  |  | - |  |  | 24,321 |
Foreign currency revaluation (gains)/losses |  | (452 | ) |  | - |  |  | 1,896 |  |  | 1,444 |
Adjusted EBITDA |  | $50,408 |  |  | ($2,523 | ) |  | ($11,763 | ) |  | $36,122 |

Capital spending for equipment and software was $12.8 million for Q2 2014, bringing the year-to-date total to $27.7 million. Depreciation and amortization was $16.1 million for Q2 2014 and $32.0 million for the first six months of 2014.

In July, Safran reported that its Snecma subsidiary had been selected by GE to produce parts for the GE9X engine, including the 3-D woven forward fan case. Albany Safran Composites, LLC (“ASC”), as the exclusive supplier to Safran companies of 3-D woven composite aircraft engine parts, has commenced development efforts on the 9X case with Snecma, and is in the process of finalizing the commercial and other terms under which ASC will supply these parts.

CFO Comments

CFO and Treasurer John Cozzolino commented, “As expected, net debt improved during the second quarter. Net debt decreased about $16 million compared to the end of Q1 2014, and was $78 million at the end of Q2 2014 (see Table 15). The Company’s leverage ratio this quarter, as defined in our primary debt agreements, was 1.56. The improvement in net debt, as compared to the increase we saw in the first quarter, was due to a continuation of strong operating income combined with improved working capital performance and lower cash outflows for capital expenditures and taxes. With capital expenditures of approximately $28 million in the first half of the year, we now expect full-year spending to total $60 to $70 million. Cash paid for income taxes was about $2 million during the quarter and $9 million through the end of June. We continue to expect cash taxes of approximately $16 million for the full year.”

CEO Comments

President and Chief Executive Officer Joe Morone said, “Q2 2014 was a strong quarter for Albany International, with both businesses performing well and as expected. Despite the negative effect of the $1.6 million inventory adjustment, Adjusted EBITDA improved to $37.3 million for the quarter, compared to $36.1 million in Q2 2013. And for the first half of the year, Adjusted EBITDA was $75.0 million compared to $69.9 million in 2013.

“In MC, while sales were down 3 percent compared to a very strong Q2 last year; on a sequential basis sales in each major geographic segment were either stable or improved. Performance with strategic customers and in key product segments was again exceptional, and excluding that adjustment to inventory, gross margins were well within the normal range.

“AEC also performed well on all fronts – the ramp-up of the LEAP program, turnaround in our Boerne, Texas, operation, and continued progress in research and technology.

“Two noteworthy developments for AEC occurred just after the close of the quarter. AEC, through Albany Safran Composites, is developing the composite fan case for the GE9X, the engine that will power Boeing’s 777x aircraft. According to GE, the 9X will be the largest turbofan engine ever developed; AEC’s participation on a component as critical as the fan case thus represents a significant and highly visible market validation of the advantages of its composite technology. We have not yet finalized contract details, but we currently anticipate an annual revenue opportunity from this program of approximately $20-$25 million, once full-rate production levels are attained. Entry into service is currently projected for the end of the decade, with full-rate production early next decade. Because of the scale of the fan case, this will be a capital intensive program, but we do not at this time expect average annual total Company capital expenditures to exceed our previous estimates of $70 million per year for the rest of the decade.

“The second development took place at the recently concluded Farnborough Airshow. CFM reported that it had won over 850 new orders for the LEAP engine, bringing total orders to over 7,500 engines. CFM also reported that it has increased its estimate for the size of the single-air engine market in which the LEAP engine competes from 40,000 to 45,000 engines. CFM also disclosed during the show that it is working on enhancements to LEAP which have the potential to reduce ‘hundreds of pounds’ of engine weight. As we have discussed before AEC is developing with Safran additional composite parts that are candidates for inclusion in future upgrades to the LEAP engine.

“Turning to the outlook, because of seasonal effects, the second half of the year in MC and thus the overall Company is typically weaker than the first half. But on a year-over-year basis, barring any downside macro-economic developments, we currently expect second-half 2014 MC Adjusted EBITDA to be stronger than second-half 2013. We also expect AEC revenue to be stronger in the second half than it was in both the first half of 2014 and the second half of 2013. And for the overall Company, while second-half Adjusted EBITDA will likely be weaker than first-half, we currently expect it to be stronger than it was for the comparable period last year.

“In sum this was a good quarter, with both businesses performing well and as expected, significant developments in AEC, and an outlook for continued favorable year-over-year performance in the second half of the year.”

The Company plans a webcast to discuss second-quarter 2014 financial results on Tuesday, August 5, 2014, at 9:00 a.m. Eastern Time. For access, go to www.albint.com.

About Albany International Corp.

Albany International is a global advanced textiles and materials processing company, with two core businesses. Machine Clothing is the world’s leading producer of custom-designed fabrics and belts essential to production in the paper, nonwovens, and other process industries. Albany Engineered Composites is a rapidly growing supplier of highly engineered composite parts for the aerospace industry. Albany International is headquartered in Rochester, New Hampshire, operates 20 plants in 11 countries, employs 4,100 people worldwide, and is listed on the New York Stock Exchange (Symbol AIN). Additional information about the Company and its products and services can be found at www.albint.com.

This release contains certain items, such as earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, sales excluding currency effects, income tax rate exclusive of income tax adjustments, net debt, net income attributable to the Company, excluding adjustments (on an absolute and per-share basis), and certain income and expense items on a per-share basis that could be considered non-GAAP financial measures. Such items are provided because management believes that, when presented together with the GAAP items to which they relate, they provide additional useful information to investors regarding the Company’s operational performance. Presenting increases or decreases in sales, after currency effects are excluded, can give management and investors insight into underlying sales trends. An understanding of the impact in a particular quarter of specific restructuring costs, or other gains and losses, on operating income or EBITDA can give management 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. All non-GAAP financial measures in this release relate to the Company’s continuing operations.

The effect of changes in currency translation rates is calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. That amount is then compared to the U.S. dollar amount reported in the current period. The Company calculates Income tax adjustments by adding discrete tax items to the effect of a change in tax rate for the reporting period. The Company calculates its income tax rate, exclusive of income tax adjustments, by removing income tax adjustments from total Income tax expense, then dividing that result by Income before income taxes. The Company calculates EBITDA by removing the following from Net income: Interest expense net, Income tax expense, Depreciation and amortization, and Income or loss from Discontinued Operations. Adjusted EBITDA is calculated by adding to EBITDA, costs associated with restructuring and pension settlement charges, adding or subtracting revaluation losses or gains, subtracting building sale gains, and subtracting Income attributable to the noncontrolling interest in ASC. The Company believes that EBITDA and Adjusted EBITDA provide useful information to investors because they provide an indication of the strength and performance of the Company's ongoing business operations, including its ability to fund discretionary spending such as capital expenditures and strategic investments, as well as its ability to incur and service debt. While depreciation and amortization are operating costs under GAAP, they are non-cash expenses equal to current period allocation of costs associated with capital and other long-lived investments made in prior periods. While restructuring expenses, foreign currency revaluation losses or gains, pension settlement charges, and building sale gains have an impact on the Company's net income, removing them from EBITDA can provide, in the opinion of the Company, a better measure of operating performance. EBITDA is also a calculation commonly used by investors and analysts to evaluate and compare the periodic and future operating performance and value of companies. EBITDA, as defined by the Company, may not be similar to EBITDA measures of other companies. Such EBITDA measures may not be considered measurements under GAAP, and should be considered in addition to, but not as substitutes for, the information contained in the Company’s statements of income.

The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important insight into underlying quarterly earnings and are financial performance metrics commonly used by investors. The Company calculates the per-share amount for items included in continuing operations by using the effective tax rate utilized in that reporting period and the weighted average number of shares outstanding for each period.

Table 8

Six Months ended June 30, 2014 |  |  |  | Albany |  | Corporate |  |
|  | Machine |  | Engineered |  | expenses |  | Total
(in thousands) |  | Clothing |  | Composites |  | and other |  | Company
Net income |  | $70,022 |  | ($7,021 | ) |  | ($41,131 | ) |  | $21,870 |
Interest expense, net |  | - |  | - |  |  | 5,635 |  |  | 5,635 |
Income tax expense |  | - |  | - |  |  | 14,673 |  |  | 14,673 |
Depreciation and amortization |  | 23,009 |  | 4,775 |  |  | 4,221 |  |  | 32,005 |
EBITDA |  | 93,031 |  | (2,246 | ) |  | (16,602 | ) |  | 74,183 |
Restructuring and other, net |  | 2,159 |  | 980 |  |  | - |  |  | 3,139 |
Foreign currency revaluation losses/(gains) |  | 502 |  | 99 |  |  | (1,901 | ) |  | (1,300 | )
Gain on insurance recovery |  | - |  | - |  |  | (961 | ) |  | (961 | )
Pretax income attributable to noncontrolling interest in ASC |  | - |  | (13 | ) |  | - |  |  | (13 | )
Adjusted EBITDA |  | $95,692 |  | ($1,180 | ) |  | ($19,464 | ) |  | $75,048 |

Table 9

Six months ended June 30, 2013 |  |  |  | Albany |  | Corporate |  |
|  | Machine |  | Engineered |  | expenses |  | Total
(in thousands) |  | Clothing |  | Composites |  | and other |  | Company
Net income |  | $52,377 |  |  | ($9,081 | ) |  | ($39,164 | ) |  | $4,132 |
Loss from discontinued operations |  | - |  |  | - |  |  | 351 |  |  | 351 |
Interest expense, net |  | - |  |  | - |  |  | 7,572 |  |  | 7,572 |
Income tax expense |  | - |  |  | - |  |  | 4,005 |  |  | 4,005 |
Depreciation and amortization |  | 23,679 |  |  | 3,795 |  |  | 4,481 |  |  | 31,955 |
EBITDA |  | 76,056 |  |  | (5,286 | ) |  | (22,755 | ) |  | 48,015 |
Restructuring and other, net |  | 24,423 |  |  | 534 |  |  | - |  |  | 24,957 |
Foreign currency revaluation (gains)/losses |  | (1,195 | ) |  | - |  |  | 1,907 |  |  | 712 |
Gain on sale of former manufacturing facility |  | - |  |  | - |  |  | (3,763 | ) |  | (3,763 | )
Adjusted EBITDA |  | $99,284 |  |  | ($4,752 | ) |  | ($24,611 | ) |  | $69,921 |

Table 10

Three months ended June 30, 2014

|  | Pre-tax |  | Tax |  | After-tax |  | Per Share
(in thousands, except per share amounts) |  | amounts |  | Effect |  | Effect |  | Effect
Restructuring and other, net |  | $1,957 |  | $714 |  | $1,243 |  | $0.04
Foreign currency revaluation gains |  | 984 |  | 359 |  | 625 |  | 0.02
Gain on insurance recovery |  | 961 |  | - |  | 961 |  | 0.03
Net discrete income tax charge |  | - |  | 569 |  | 569 |  | 0.02
Unfavorable effect of change in income tax rate |  | - |  | 278 |  | 278 |  | 0.01
Adjustment to correct MC inventory value |  | 1,577 |  | 576 |  | 1,001 |  | 0.03

Table 11

Three months ended June 30, 2013

|  | Pre-tax |  | Tax |  | After-tax |  | Per Share
(in thousands, except per share amounts) |  | amounts |  | Effect |  | Effect |  | Effect
Restructuring and other, net |  | $24,321 |  | $9,485 |  | $14,836 |  | $0.47
Foreign currency revaluation losses |  | 1,444 |  | 563 |  | 881 |  | 0.03
Net discrete income tax charge |  | - |  | 485 |  | 485 |  | 0.02
Unfavorable effect of change in income tax rate |  | - |  | 888 |  | 888 |  | 0.03

Table 12

Six months ended June 30, 2014

|  | Pre-tax |  | Tax |  | After-tax |  | Per Share
(in thousands, except per share amounts) |  | amounts |  | Effect |  | Effect |  | Effect
Restructuring and other, net |  | $3,139 |  | $1,128 |  | $2,011 |  | $0.06
Foreign currency revaluation gains |  | 1,300 |  | 469 |  | 831 |  | 0.03
Gain on insurance recovery |  | 961 |  | - |  | 961 |  | 0.03
Net discrete income tax charge |  | - |  | 1,673 |  | 1,673 |  | 0.05
Adjustment to correct MC inventory value |  | 1,577 |  | 576 |  | 1,001 |  | 0.03

Table 13

Six months ended June 30, 2013

|  | Pre-tax |  | Tax |  | After-tax |  | Per Share
(in thousands, except per share amounts) |  | amounts |  | Effect |  | Effect |  | Effect
Restructuring and other, net |  | $24,957 |  | $9,701 |  | $15,256 |  | $0.48
Foreign currency revaluation losses |  | 712 |  | 314 |  | 398 |  | 0.01
Gain on sale of former manufacturing facility |  | 3,763 |  | 1,279 |  | 2,484 |  | 0.08
Net discrete income tax charge |  | - |  | 695 |  | 695 |  | 0.03

The following table contains the calculation of net income per share attributable to the Company, excluding adjustments:

Table 14

|  | Three Months ended |  |  | Six Months ended
|  | June 30, |  |  | June 30,
Per share amounts (Basic) |  | 2014 |  | 2013 |  |  | 2014 |  | 2013
Net income/(loss) attributable to the Company, reported |  | $0.35 |  |  | ($0.23 | ) |  |  | $0.69 |  |  | $0.13 |
Adjustments: |  |  |  |  |  |  |  |  |
Loss on discontinued operations |  | - |  |  | 0.01 |  |  |  | - |  |  | 0.01 |
Restructuring charges |  | 0.04 |  |  | 0.47 |  |  |  | 0.06 |  |  | 0.48 |
Discrete tax charges and effect of change in income tax rate |  | 0.03 |  |  | 0.05 |  |  |  | 0.05 |  |  | 0.03 |
Foreign currency revaluation (gains)/ losses |  | (0.02 | ) |  | 0.03 |  |  |  | (0.03 | ) |  | 0.01 |
Gain on insurance recovery |  | (0.03 | ) |  | - |  |  |  | (0.03 | ) |  | - |
Gain on the sale of a former manufacturing facility |  | - |  |  | - |  |  |  | - |  |  | (0.08 | )
Net income attributable to the Company, excluding adjustments |  | $0.37 |  |  | $0.33 |  |  |  | $0.74 |  |  | $0.58 |

The following table contains the calculation of net debt:

Table 15

|  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
(in thousands) |  | 2014 |  | 2014 |  | 2013 |  | 2012 |  | 2011
Notes and loans payable |  | $692 |  | $797 |  | $625 |  | $586 |  | $424
Current maturities of long-term debt |  | 1,265 |  | 2,514 |  | 3,764 |  | 83,276 |  | 1,263
Long-term debt |  | 283,104 |  | 299,108 |  | 300,111 |  | 235,877 |  | 373,125
Total debt |  | 285,061 |  | 302,419 |  | 304,500 |  | 319,739 |  | 374,812
Cash |  | 206,836 |  | 208,379 |  | 222,666 |  | 190,718 |  | 118,909
Net debt |  | $78,225 |  | 94,040 |  | $81,834 |  | $129,021 |  | $255,903

This press release may contain statements, estimates, or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections.

Forward-looking statements in this release or in the webcast include, without limitation, statements about economic and paper industry trends and conditions during 2014 and in future years; sales, EBITDA, Adjusted EBITDA and operating income expectations in 2014 and in future periods in each of the Company’s businesses and for the Company as a whole; the timing and impact of production and development programs in the Company’s AEC business segment and AEC sales growth potential; the amount and timing of capital expenditures, future tax rates and cash paid for taxes, depreciation and amortization; future debt and net debt levels and debt covenant ratios; and future revaluation gains and losses. Furthermore, a change in any one or more of the foregoing factors could have a material effect on the Company’s financial results in any period. Such statements are based on current expectations, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Statements expressing management’s assessments of the growth potential of its businesses, or referring to earlier assessments of such potential, are not intended as forecasts of actual future growth, and should not be relied on as such. While management believes such assessments to have a reasonable basis, such assessments are, by their nature, inherently uncertain. This release and earlier releases set forth a number of assumptions regarding these assessments, including historical results, independent forecasts regarding the markets in which these businesses operate, and the timing and magnitude of orders for our customers’ products. Historical growth rates are no guarantee of future growth, and such independent forecasts and assumptions could prove materially incorrect, in some cases.

ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended |  |  |  | Six Months Ended
June 30, |  |  |  | June 30,
2014 |  | 2013 |  |  |  | 2014 |  | 2013
$193,518 |  |  | $197,974 |  |  | Net sales |  | $373,825 |  |  | $384,628 |
118,175 |  |  | 120,541 |  |  | Cost of goods sold |  | 223,673 |  |  | 234,426 |
75,343 |  |  | 77,433 |  |  | Gross profit |  | 150,152 |  |  | 150,202 |
40,012 |  |  | 41,994 |  |  | Selling, general, and administrative expenses |  | 79,169 |  |  | 78,547 |
14,397 |  |  | 14,631 |  |  | Technical, product engineering, and research expenses |  | 28,266 |  |  | 27,693 |
1,957 |  |  | 24,321 |  |  | Restructuring and other, net |  | 3,139 |  |  | 24,957 |
18,977 |  |  | (3,513 | ) |  | Operating income |  | 39,578 |  |  | 19,005 |
2,717 |  |  | 3,547 |  |  | Interest expense, net |  | 5,635 |  |  | 7,572 |
(2,133 | ) |  | 2,211 |  |  | Other (income)/expenses, net |  | (2,600 | ) |  | 2,945 |
18,393 |  |  | (9,271 | ) |  | Income before income taxes |  | 36,543 |  |  | 8,488 |
7,216 |  |  | (2,243 | ) |  | Income tax expense |  | 14,673 |  |  | 4,005 |
11,177 |  |  | (7,028 | ) |  | Income from continuing operations |  | 21,870 |  |  | 4,483 |
- |  |  | (575 | ) |  | (Loss)/income from operations of discontinued business |  | - |  |  | (575 | )
- |  |  | (224 | ) |  | Income tax (benefit)/expense on discontinued operations |  | - |  |  | (224 | )
- |  |  | (351 | ) |  | (Loss)/income from discontinued operations |  | - |  |  | (351 | )
11,177 |  |  | (7,379 | ) |  | Net income/(loss) |  | 21,870 |  |  | 4,132 |
(42 | ) |  | - |  |  | Net income attributable to the noncontrolling interest |  | 30 |  |  | - |
$11,219 |  |  | ($7,379 | ) |  | Net income/(loss) attributable to the Company |  | $21,840 |  |  | $4,132 |
|  |  |  | Earnings per share attributable to Company shareholders - Basic |  |  |  |
$0.35 |  |  | ($0.22 | ) |  | Income/(loss) from continuing operations |  | $0.69 |  |  | $0.14 |
0.00 |  |  | (0.01 | ) |  | Discontinued operations |  | 0.00 |  |  | (0.01 | )
$0.35 |  |  | ($0.23 | ) |  | Net income/(loss) attributable to the Company |  | $0.69 |  |  | $0.13 |
|  |  |  | Earnings per share attributable to Company shareholders - Diluted |  |  |  |
$0.35 |  |  | ($0.22 | ) |  | Income/(loss) from continuing operations |  | $0.68 |  |  | $0.14 |
0.00 |  |  | (0.01 | ) |  | Discontinued operations |  | 0.00 |  |  | (0.01 | )
$0.35 |  |  | ($0.23 | ) |  | Net income/(loss) attributable to the Company |  | $0.68 |  |  | $0.13 |
|  |  |  | Shares of the Company used in computing earnings per share: |  |  |  |
31,832 |  |  | 31,628 |  |  | Basic |  | 31,809 |  |  | 31,562 |
31,935 |  |  | 31,628 |  |  | Diluted |  | 31,913 |  |  | 31,687 |
$0.16 |  |  | $0.15 |  |  | Dividends per share |  | $0.31 |  |  | $0.29 |

ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
|  | June 30, |  |  | December 31,
|  | 2014 |  |  | 2013
ASSETS |  |  |  |  |
Cash and cash equivalents |  | $206,836 |  |  |  | $222,666 |
Accounts receivable, net |  | 148,473 |  |  |  | 163,547 |
Inventories |  | 123,889 |  |  |  | 112,739 |
Deferred income taxes |  | 13,900 |  |  |  | 13,873 |
Prepaid expenses and other current assets |  | 10,120 |  |  |  | 9,659 |
Total current assets |  | 503,218 |  |  |  | 522,484 |
Property, plant and equipment, net |  | 414,758 |  |  |  | 418,830 |
Intangibles |  | 501 |  |  |  | 616 |
Goodwill |  | 78,635 |  |  |  | 78,890 |
Income taxes receivable and deferred |  | 111,942 |  |  |  | 119,612 |
Other assets |  | 29,709 |  |  |  | 26,456 |
Total assets |  | $1,138,763 |  |  |  | $1,166,888 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |
Notes and loans payable |  | $692 |  |  |  | $625 |
Accounts payable |  | 35,698 |  |  |  | 36,397 |
Accrued liabilities |  | 100,006 |  |  |  | 112,331 |
Current maturities of long-term debt |  | 1,265 |  |  |  | 3,764 |
Income taxes payable and deferred |  | 4,378 |  |  |  | 5,391 |
Total current liabilities |  | 142,039 |  |  |  | 158,508 |
Long-term debt |  | 283,104 |  |  |  | 300,111 |
Other noncurrent liabilities |  | 100,940 |  |  |  | 106,014 |
Deferred taxes and other credits |  | 53,302 |  |  |  | 54,476 |
Total liabilities |  | 579,385 |  |  |  | 619,109 |
SHAREHOLDERS' EQUITY |  |  |  |  |
Preferred stock, par value $5.00 per share; |  |  |  |  |
authorized 2,000,000 shares; none issued |  | - |  |  |  | - |
Class A Common Stock, par value $.001 per share; |  |  |  |  |
authorized 100,000,000 shares; issued |  |  |  |  |
37,064,939 in 2014 and 36,997,277 in 2013 |  | 37 |  |  |  | 37 |
Class B Common Stock, par value $.001 per share; |  |  |  |  |
authorized 25,000,000 shares; issued and |  |  |  |  |
outstanding 3,235,048 in 2014 and 3,235,048 in 2013 |  | 3 |  |  |  | 3 |
Additional paid in capital |  | 418,117 |  |  |  | 416,728 |
Retained earnings |  | 446,570 |  |  |  | 434,598 |
Accumulated items of other comprehensive income: |  |  |  |  |
Translation adjustments |  | (1,976 | ) |  |  | (138 | )
Pension and postretirement liability adjustments |  | (48,205 | ) |  |  | (48,383 | )
Derivative valuation adjustment |  | (1,199 | ) |  |  | (977 | )
Treasury stock (Class A), at cost 8,459,498 shares |  |  |  |  |
in 2014 and 8,463,635 in 2013 |  | (257,481 | ) |  |  | (257,571 | )
Total Company shareholders' equity |  | 555,866 |  |  |  | 544,297 |
Noncontrolling interest |  | 3,512 |  |  |  | 3,482 |
Total equity |  | 559,378 |  |  |  | 547,779 |
Total liabilities and shareholders' equity |  | $1,138,763 |  |  |  | $1,166,888 |

ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
Three Months Ended |  |  |  | Six Months Ended
June 30, |  |  |  |  | June 30,
2014 |  | 2013 |  |  |  |  | 2014 |  | 2013
|  |  |  | OPERATING ACTIVITIES |  |  |  |
$11,177 |  |  | ($7,379 | ) |  | Net income |  | $21,870 |  |  | $4,132 |
|  |  |  | Adjustments to reconcile net income to net cash provided by /(used in) operating activities: |  |  |  |
14,276 |  |  | 14,427 |  |  |  | Depreciation |  | 28,383 |  |  | 28,638 |
1,821 |  |  | 1,654 |  |  |  | Amortization |  | 3,622 |  |  | 3,317 |
2,946 |  |  | (7,864 | ) |  |  | Change in long-term liabilities, deferred taxes and other credits |  | 2,732 |  |  | (3,991 | )
728 |  |  | 21 |  |  |  | Provision for write-off of property, plant and equipment |  | 729 |  |  | 65 |
(961 | ) |  | - |  |  |  | (Gain) on disposition or involuntary conversion of assets |  | (961 | ) |  | (3,763 | )
(106 | ) |  | (172 | ) |  |  | Excess tax benefit of options exercised |  | (145 | ) |  | (524 | )
405 |  |  | (476 | ) |  |  | Compensation and benefits paid or payable in Class A Common Stock |  | 947 |  |  | (1,174 | )
|  |  |  | Changes in operating assets and liabilities, net of business divestitures: |  |  |  |
3,333 |  |  | (4,515 | ) |  |  | Accounts receivable |  | 14,297 |  |  | (6,238 | )
(1,963 | ) |  | 2,458 |  |  |  | Inventories |  | (10,959 | ) |  | (530 | )
1,762 |  |  | 1,544 |  |  |  | Prepaid expenses and other current assets |  | (386 | ) |  | (2,033 | )
(7 | ) |  | 28 |  |  |  | Income taxes prepaid and receivable |  | 14 |  |  | 180 |
555 |  |  | (1,139 | ) |  |  | Accounts payable |  | (739 | ) |  | (592 | )
170 |  |  | 29,912 |  |  |  | Accrued liabilities |  | (12,679 | ) |  | 20,929 |
651 |  |  | 441 |  |  |  | Income taxes payable |  | (1,059 | ) |  | (4,877 | )
(2,098 | ) |  | (793 | ) |  |  | Other, net |  | (4,129 | ) |  | (1,231 | )
32,689 |  |  | 28,147 |  |  |  | Net cash provided by operating activities |  | 41,537 |  |  | 32,308 |
|  |  |  | INVESTING ACTIVITIES |  |  |  |
(12,799 | ) |  | (14,620 | ) |  |  | Purchases of property, plant and equipment |  | (27,402 | ) |  | (27,808 | )
(21 | ) |  | (555 | ) |  |  | Purchased software |  | (315 | ) |  | (648 | )
961 |  |  | - |  |  |  | Proceeds from sale or involuntary conversion of assets |  | 961 |  |  | 6,268 |
(11,859 | ) |  | (15,175 | ) |  |  | Net cash (used in)/provided by investing activities |  | (26,756 | ) |  | (22,188 | )
|  |  |  | FINANCING ACTIVITIES |  |  |  |
235 |  |  | 5,037 |  |  |  | Proceeds from borrowings |  | 4,670 |  |  | 51,905 |
(17,593 | ) |  | (18,476 | ) |  |  | Principal payments on debt |  | (24,109 | ) |  | (50,659 | )
261 |  |  | 1,004 |  |  |  | Proceeds from options exercised |  | 387 |  |  | 2,968 |
106 |  |  | 172 |  |  |  | Excess tax benefit of options exercised |  | 145 |  |  | 524 |
- |  |  | (76 | ) |  |  | Debt acquisition costs |  | - |  |  | (1,639 | )
(4,774 | ) |  | (4,423 | ) |  |  | Dividends paid |  | (9,539 | ) |  | (4,423 | )
(21,765 | ) |  | (16,762 | ) |  |  | Net cash (used in)/provided by financing activities |  | (28,446 | ) |  | (1,324 | )
(608 | ) |  | 1,278 |  |  | Effect of exchange rate changes on cash and cash equivalents |  | (2,165 | ) |  | (2,193 | )
(1,543 | ) |  | (2,512 | ) |  | (Decrease)/increase in cash and cash equivalents |  | (15,830 | ) |  | 6,603 |
208,379 |  |  | 199,833 |  |  | Cash and cash equivalents at beginning of period |  | 222,666 |  |  | 190,718 |
$206,836 |  |  | $197,321 |  |  | Cash and cash equivalents at end of period |  | $206,836 |  |  | $197,321 |

CONTACT:
Albany International Corp.
Investors
John Cozzolino, 518-445-2281
john.cozzolino@albint.com
or
Media
Susan Siegel, 603-330-5866
susan.siegel@albint.com