Albany International Reports Third-Quarter Results

  Albany International Reports Third-Quarter Results

Third-quarter Financial Highlights

  *Net sales from continuing operations were $194.6 million, a decrease of
    2.8 percent compared to Q3 2011.
  *Adjusted EBITDA from continuing operations for Q3 2012 was $41.9 million
    compared to $38.8 million in Q3 2011 (see Tables 4 and 5).
  *Q3 2012 income from continuing operations was $0.29 per share. These
    results include restructuring charges of $0.06, foreign currency
    revaluation losses of $0.07 and net unfavorable income tax adjustments of
    $0.04 (see Table 6).
  *Q3 2011 income from continuing operations was $0.46 per share. These
    results include restructuring charges of $0.06 and foreign currency
    revaluation gains of $0.14 (see Table 7).
  *Net debt declined $31.2 million during the quarter (see Table 8).

Business Wire

ROCHESTER, N.H. -- October 31, 2012

Albany International Corp. (NYSE:AIN), a global advanced textiles and
materials processing company with core businesses in machine clothing and
engineered composites, reported Q3 2012 income from continuing operations of
$9.1 million ($0.29 per share). These results include restructuring charges of
$2.7 million ($0.06 per share), foreign currency revaluation losses of $3.6
million ($0.07 per share), and net unfavorable income tax adjustments of $1.3
million ($0.04 per share) (see Table 6).

Q3 2011 income from continuing operations was $14.5 million ($0.46 per share).
These results included restructuring charges of $2.7 million ($0.06 per share)
and foreign currency revaluation gains of $6.6 million ($0.14 per share) (see
Table 7).

Net sales from continuing operations were $194.6 million, a decrease of 2.8
percent compared to Q3 2011. The following table summarizes net sales by
segment and the effect of changes in currency translation rates:

Table 1
                                                Impact of     Percent
               Net Sales                               Changes         Change
               Three Months ended                     in Currency     excluding
              September 30,               Percent     Translation     Currency
(in          2012        2011        Change    Rates         Rate
thousands)                                                             Effect
Machine
Clothing     $ 177,471   $ 188,334   -5.8  %   ($5,449  )    -2.9   %
(MC)
Engineered
Composites    17,118     11,918    43.6     -            43.6   
(AEC)
Total        $ 194,589   $ 200,252   -2.8  %   ($5,449  )    -0.1   %
                          

A transition to new contract terms with a major customer in North America,
accelerating the transfer of inventory ownership to that customer, increased
Q3 net sales by $8 million, and will have a smaller positive residual impact
on sales over the next two quarters.

Gross profit was $79.7 million (40.9 percent of net sales) in the third
quarter of 2012, compared to $78.1 million (39.0 percent of net sales) in the
same period of 2011. The increase in gross profit percentage was primarily due
to Machine Clothing, where gross profit margins increased from 42.1 percent in
2011 to 44.6 percent in 2012 as a result of high plant utilization in the
Americas and favorable geographic sales mix.

Selling, technical, general, and research (STG&R) expenses were $53.8 million,
or 27.6 percent of net sales, in the third quarter of 2012. STG&R expenses
included losses of $1.4 million related to the revaluation of
non-functional-currency assets and liabilities. In the third quarter of 2011,
STG&R expenses were $48.6 million, or 24.3 percent of net sales, including
gains of $5.8 million related to the revaluation of non-functional-currency
assets and liabilities.

The following table summarizes third-quarter operating income by segment.

Table 2
                        Operating Income/(loss)
                          Three Months ended
                         September 30,
(in thousands)          2012          2011
Machine Clothing        $ 44,918     $ 48,867  
Engineered Composites    (312    )    (1,434  )
Research expenses        (6,734  )    (6,400  )
Unallocated expenses     (14,760 )    (14,275 )
Total                   $ 23,112     $ 26,758  
                                       

Q3 2012 Machine Clothing operating income included restructuring charges of
$2.7 million and foreign currency revaluation losses of $1.4 million. Q3 2011
Machine Clothing operating income included restructuring charges of $2.6
million and foreign currency revaluation gains of $5.8 million.

Q3 2012 Other income/expense, net, was expense of $3.1 million, including
losses of $2.2 million related to the revaluation of non-functional-currency
intercompany balances. Other income/expense, net, in Q3 2011 was nil,
including income of $0.8 million related to the revaluation of
non-functional-currency intercompany balances.

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

Table 3
                              Income/(loss) attributable
                                to currency revaluation
                                Three Months ended
                               September 30,
(in thousands)                2012            2011
Operating income              ($1,406  )      $  5,774
Other income/(expense), net   ( 2,174  )        815
Total                         ($3,580  )      $  6,589
                                              

The Company’s effective income tax rate, exclusive of discrete tax items, was
35.4 percent for the third quarter of 2012, and 34.6 percent for the third
quarter of 2011. The Company recorded favorable discrete income tax
adjustments of $0.7 million in 2012 and $0.1 million in 2011. A change in the
estimated income tax rate increased income tax expense by $2.0 million in 2012
and $0.2 million in 2011.

The following tables summarize Adjusted EBITDA from continuing operations:

Table 4
Three Months ended                              Research     
September 30, 2012
                          Machine      Engineered     and             Total
(in thousands)          Clothing   Composites   Unallocated   Company
Income from             $ 44,918     ($312 )   ($35,525  )   $ 9,081
continuing operations
Interest expense, net    -          -        3,997         3,997
Income tax expense       -          -        6,965         6,965
Depreciation and         11,469     1,471    2,606         15,546
amortization
EBITDA from              56,387     1,159    (21,957   )    35,589
continuing operations
Restructuring and        2,739      -        -             2,739
other, net
Foreign currency         1,401      3        2,176         3,580
revaluation losses
Adjusted EBITDA from    $ 60,527   $  1,162    ($19,781  )   $ 41,908
continuing operations
                                                                        

Table 5
Three Months ended                               Research     
September 30, 2011
                           Machine      Engineered     and             Total
(in thousands)           Clothing   Composites   Unallocated   Company
Income from continuing   $48,867    ($1,434)     ($32,940)     $14,493
operations
Interest expense, net    -          -            4,377         4,377
Income tax expense       -          -            7,897         7,897
Depreciation and         12,049     1,241        2,642         15,932
amortization
EBITDA from continuing   60,916     (193)        (18,024)      42,699
operations
Restructuring and        2,610      -            81            2,691
other, net
Foreign currency         (5,775)    -            (814)         (6,589)
revaluation gains
Adjusted EBITDA from     $57,751    ($193)       ($18,757)     $38,801
continuing operations
                                                                       

Capital spending for equipment and software was $11.2 million for the third
quarter of 2012, bringing the year-to-date total to $25.4 million.
Depreciation and amortization related to continuing operations was $15.5
million. For 2012, we continue to expect approximately $35-$40 million of
capital spending and $63 million of depreciation and amortization.

CEO Comments

President and CEO Joseph Morone said, “Despite the continuing deterioration in
Europe, Q3 2012 was another good quarter for Albany International. Excluding
revaluation effects and restructuring, EBITDA was $42 million, compared to $39
million a year ago. Net debt declined by another $31 million.

"A transition to new contract terms with a major MC customer in North America
boosted Q3 sales by roughly $8 million, and EBITDA by roughly $3.5 million.
Excluding the effect of this change, total Company sales for Q3 2012 were 7
percent lower than Q3 2011, and Adjusted EBITDA was comparable.

“In MC, apart from that change in contract terms, sales in the Americas and
Asia held firm, while as expected, sales in Europe continued to deteriorate.
Compared to Q3 2011, sales in Europe were down 18 percent, which is consistent
with the overall European PMC industry. Globally, gross margins held at Q2
levels and our competitive performance was once again very strong,
particularly in the Americas.

“Turning to our outlook for MC, we continue to expect comparable
year-over-year Adjusted EBITDA. For the immediate future, we expect the
quarterly volatility that we have experienced since the 2009 recession to
continue. We anticipate a sharp slowdown at the end of this year across all of
our markets, followed by a very slow start to next year, just as we
experienced in Q4 2011 and Q1 2012. If anything, given the greater economic
uncertainty, the slowdown at the end of this year has the potential to be more
severe than last year. For 2013, we expect continued weakness in demand in
Europe and given the structural conditions there, a near certainty of price
deterioration. Nonetheless, as long as we continue to take the actions
necessary to match capacity with underlying market conditions, and the
economies in North America and Asia hold firm in the first half of 2013 and
strengthen in the second half, we expect full-year 2013 Adjusted EBITDA to be
comparable to full-year 2012.

“For the longer term, given our competitive strength around the world, our
cost position and technology portfolio, the growth potential in Asia and South
America, and the economic health of our most important customers in North
America, we remain confident that under normal economic conditions and as long
as we continue to offset inflation, this business should generate steady
EBITDA and cash flow.

“AEC continued its string of strong quarters. Sales hit $17 million for the
quarter, an increase of 44 percent over the comparable period last year, and
EBITDA was once again in line with our expectation of a $5 million annualized
run-rate. The development program for the fan module of the LEAP engine
remains on schedule; the most important near-term milestones are production of
parts for CFM’s first LEAP engine test (currently scheduled for Q3 2013) and
construction of Plant 1 (scheduled for completion mid-2013). Our longer term
R&D activities continue to expand, including a growing array of joint R&D
activities with Safran directed at both low- and high-temperature
applications; activities aimed at airframe applications; and an exploration of
applications in the automotive industry. Construction of AEC’s new
45,000-square-foot advanced composites R&D Center will be completed in Q4 of
this year. Boeing’s ground test of the ceramic composite engine nozzle,
delayed by availability of the test engine, is also scheduled for late in Q4.

“In sum, Q3 2012 was a strong quarter, with both businesses performing well,
meeting our short-term expectations, and reinforcing our confidence in their
long-term potential. Our outlook remains unchanged. For Q4 and 2013, we
continue to expect stable year-over-year Adjusted EBITDA despite continuing
deterioration in European Machine Clothing.”

CFO Comments

CFO and Treasurer John Cozzolino commented, “Net debt declined approximately
$31 million as compared to Q2 (see Table 8), due to strong operating results
and cash flow from reductions in working capital. Total debt declined about
$22 million, compared to Q2, as cash received at the end of Q2 related to the
PrimaLoft^® sale was utilized to pay down debt. Our leverage ratio, as defined
in our primary debt agreements, was 1.06 at the end of Q3, while $256 million
was available on our $390 million credit facility. Cash balances, mostly held
outside of the U.S., increased to about $174 million at the end of Q3.

“Positive cash flow during Q3 from reductions in working capital, as shown in
the Consolidated Statements of Cash Flows, was mostly due to improvements in
accounts receivable and inventory. While Days Sales Outstanding remained flat
at 63 days, compared to Q2, reductions in accounts receivable generated
approximately $4 million of cash during the quarter. Inventory as a percent of
net sales improved from 16.1 percent at the end of Q2 to 15.2 percent at the
end of Q3, and reductions in inventory generated approximately $9 million of
cash during the quarter.

“Our income tax rate in Q3, exclusive of discrete tax adjustments, was about
35 percent, and is expected to be in the mid-30 percent range for the
full-year 2012. The increase in the tax rate forecast, compared to the
expectation discussed in Q2, is mostly due to a change in the expected
full-year geographic distribution of pre-tax income and the impact of
potential future repatriations of non-U.S. cash. Including the utilization of
net operating loss carry-forwards and other deferred tax assets, cash paid for
income taxes through Q3 2012 was $13.7 million, and is expected to total $15
million in 2012.”

The Company plans a webcast to discuss third-quarter 2012 financial results on
Thursday, November 1, 2012, 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 18 plants in 11 countries, employs 4,300 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), EBITDA from continuing operations,
Adjusted EBITDA, sales excluding currency effects, effective income tax rate
exclusive of income tax adjustments, net debt, 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.

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 effective 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 tax.
The Company calculates EBITDA by adding Interest expense net, Income taxes,
and Depreciation and Amortization to Net income. Adjusted EBITDA is calculated
by adding to EBITDA, costs associated with restructuring and pension
settlement charges, and then adding or subtracting revaluation losses or gains
and subtracting building share gains. The Company believes that EBITDA and
Adjusted EBITDA provide useful information to investors because they provide
an indication of the strength and performance of the Company'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
during the applicable reporting period and the weighted average number of
shares outstanding for the period.

Table 6
Quarter ended September 30, 2012
               Pre-tax   Tax       After-tax   Shares        Per
                                                                        Share
(in
thousands,
except per      amounts   Effect    Effect      Outstanding   Effect
share
amounts)
Restructuring
and other,
net from        $ 2,739   $ 970     $  1,769    31,363        $ 0.06
continuing
operations
Foreign
currency
revaluation      3,580    1,267     2,313    31,363         0.07
losses from
continuing
operations
Negative
effect of       -          1,968     1,968    31,363         0.06
change in tax
rate
Discrete
income tax
benefit from     -        684       684      31,363         0.02
continuing
operations
                                                                        

Table 7
Quarter ended September 30, 2011
               Pre-tax   Tax       After-tax   Shares        Per
                                                                        Share
(in
thousands,
except per      amounts   Effect    Effect      Outstanding   Effect
share
amounts)
Restructuring
and other,
net from        $ 2,691   $ 931     $  1,760    31,278        $ 0.06
continuing
operations
Foreign
currency
revaluation      6,589    2,280     4,309    31,278         0.14
gains from
continuing
operations
Negative
effect of       -          241       241      31,278         0.01
change in tax
rate
Discrete
income tax
benefit from     -        97        97       31,278         0.00
continuing
operations
                                                                        

The Company defines net debt as total debt minus cash. Management views net
debt, a non-GAAP financial measure, as a measure of the Company's ability to
reduce debt, add to cash balances, pay dividends, repurchase stock, and fund
investing and financing activities.A reconciliation oftotal debt to net debt
as of September 30, 2012, June 30, 2012, and December 31, 2011, is shown
below:

The following table contains the calculation of net debt:

Table 8
(in thousands)                  September 30,   June 30,    December 31,
                                  2012              2012          2011
Notes and loans payable         $   276         $ 357       $   424
Current maturities of              33,066       30,355       1,263
long-term debt
Long-term debt                     289,129      313,632      373,125
Total debt                         322,471      344,344      374,812
Cash                               173,939      164,592      118,909
Net debt                        $   148,532     $ 179,752   $   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 future economic and paper industry conditions;
sales, EBITDA, Adjusted EBITDA and operating income expectations in future
periods in each of the Company’s businesses and for the Company as a whole,
the timing and impact of certain production and development programs in the
Company’s AEC business segment; the amount and timing of capital expenditures,
future tax rates and cash paid for taxes, depreciation and amortization,
future debt levels and debt covenant ratios, future revaluation gains and
losses, and the Company’s ability to reduce costs. 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                                     Nine Months Ended
September 30,                                          September 30,
                                                                     
2012          2011                                     2012          2011
                                                                     
$ 194,589     $ 200,252     Net sales                  $ 566,606     $ 589,887
 114,938     122,190    Cost of goods sold          340,169     352,697
                                                                     
  79,651        78,062      Gross profit                 226,437       237,190
  41,166        35,947      Selling, general, and        125,335       127,317
                            administrative expenses
                            Technical, product
  12,634        12,666      engineering, and             39,019        41,105
                            research expenses
  2,739         2,691       Restructuring and other,     6,149         4,456
                            net
 -           -          Pension settlement          119,735     -
                            expense
                                                                     
  23,112        26,758      Operating income/(loss)      (63,801 )     64,312
  3,997         4,377       Interest expense, net        12,610        13,939
 3,069       (9      )   Other expense/(income),     5,062       4,811
                            net
                                                                     
  16,046        22,390      Income/(loss) before         (81,473 )     45,562
                            income taxes
 6,965       7,897      Income tax                  (32,650 )    14,303
                            expense/(benefit)
                                                                     
 9,081       14,493     Income/(loss) from          (48,823 )    31,259
                            continuing operations
                                                                     
  -             3,316       Income from operations       4,776         16,307
                            of discontinued business
  (301    )     -           (Loss)/gain on sale of       92,376        -
                            discontinued business
                            Income tax
 (683    )    1,135      (benefit)/expense on        25,570      5,397
                            discontinued operations
 382         2,181      Income from discontinued    71,582      10,910
                            operations
$ 9,463      $ 16,674     Net income                 $ 22,759     $ 42,169
                                                                     
                            Earnings per share -
                            Basic
$ 0.29        $ 0.46        Income/(loss) from           ($1.56  )   $ 1.00
                            continuing operations
 0.01        0.07       Discontinued operations     2.29        0.35
$ 0.30       $ 0.53       Net income                 $ 0.73       $ 1.35
                                                                     
                            Earnings per share -
                            Diluted
$ 0.29        $ 0.46        Income/(loss) from           ($1.55  )   $ 0.99
                            continuing operations
 0.01        0.07       Discontinued operations     2.27        0.35
$ 0.30       $ 0.53       Net income                 $ 0.72       $ 1.34
                                                                     
                            Shares used in computing
                            earnings per share:
  31,363        31,278      Basic                        31,340        31,255
  31,550        31,462      Diluted                      31,550        31,476
                                                                     
$ 0.14        $ 0.13        Dividends per share        $ 0.41        $ 0.38


ALBANY INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
                                                              
                                                 September 30,   December 31,
                                                 2012            2011
ASSETS
Cash and cash equivalents                        $ 173,939       $ 118,909
Accounts receivable, net                           170,825         147,511
Inventories                                        121,696         129,803
Income taxes receivable and deferred               19,918          30,010
Prepaid expenses and other current assets          9,583           13,349
Current assets of discontinued operations         -             67,351    
Total current assets                               495,961         506,933
                                                                 
Property, plant and equipment, net                 422,356         438,953
Intangibles                                        904             1,079
Goodwill                                           75,066          75,469
Deferred taxes                                     110,777         134,644
Other assets                                       25,633          23,383
Noncurrent assets of discontinued operations      -             50,467    
Total assets                                     $ 1,130,697    $ 1,230,928 
                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable                          $ 276           $ 424
Accounts payable                                   27,232          32,708
Accrued liabilities                                114,426         105,104
Current maturities of long-term debt               33,066          1,263
Income taxes payable and deferred                  3,973           8,766
Current liabilities of discontinued operations    -             22,446    
Total current liabilities                          178,973         170,711
                                                                 
Long-term debt                                     289,129         373,125
Other noncurrent liabilities                       110,360         185,596
Deferred taxes and other credits                   56,060          71,529
Noncurrent liabilities of discontinued            -             14,117    
operations
Total liabilities                                 634,522       815,078   
                                                                 
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              37
36,629,604 in 2012 and 36,540,842 in 2011
Class B Common Stock, par value $.001 per
share; authorized 25,000,000 shares; issued        3               3
and outstanding 3,236,098 in 2012 and 2011
Additional paid in capital                         393,801         391,495
Retained earnings                                  431,954         422,044
Accumulated items of other comprehensive
income:
Translation adjustments                            (16,944   )     (19,111   )
Pension and postretirement liability               (51,871   )     (118,104  )
adjustments
Derivative valuation adjustment                    (3,141    )     (2,594    )
Treasury stock (Class A), at cost 8,467,873       (257,664  )    (257,920  )
shares in 2012, and 8,479,487 shares in 2011
Total shareholders' equity                        496,175       415,850   
Total liabilities and shareholders' equity       $ 1,130,697    $ 1,230,928 
                                                                             

                                                              
ALBANY INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                                   
                                                                   
Three Months Ended                                  Nine Months Ended
September 30,                                       September 30,
                                                                   
2012          2011                                  2012           2011
                            OPERATING ACTIVITIES
$ 9,463       $ 16,674      Net income              $ 22,759       $ 42,169
                            Adjustments to
                            reconcile net income
                            to net cash provided
                            by operating
                            activities:
  13,953        14,407      Depreciation              42,638         42,933
  1,593         2,261       Amortization              4,862          6,750
  210           188         Noncash interest          824            565
                            expense
                            Change in long-term
  1,478         (11,021 )   liabilities, deferred     (116,374 )     (11,045 )
                            taxes and other
                            credits
                            Provision for
  -             40          write-off of              200            104
                            property, plant and
                            equipment
                            Write-off of pension
  -             -           liability adjustment      118,350        -
                            due to settlement
  301           -           (Gain) on disposition     (92,376  )     (1,022  )
                            of assets
  (26     )     (18     )   Excess tax benefit of     (37      )     (53     )
                            options exercised
                            Compensation and
  392           679         benefits paid or          1,795          1,969
                            payable in Class A
                            Common Stock
                                                                   
                            Changes in operating
                            assets and
                            liabilities, net of
                            business acquisitions
                            and divestitures:
  3,655         (17,091 )   Accounts receivable       (6,870   )     (10,186 )
  8,505         4,062       Inventories               8,376          (13,250 )
  746           281         Prepaid expenses and      (251     )     (2,192  )
                            other current assets
  (4,216  )     (2,897  )   Accounts payable          (4,241   )     1,005
  5,707         9,226       Accrued liabilities       13,071         5,136
  1,768         5,738       Income taxes payable      (762     )     10,597
 (359    )    (25     )   Other, net               (2,242   )    822     
                            Net cash provided
 43,170      22,504     by/(used in)             (10,278  )    74,302  
                            operating activities
                                                                   
                            INVESTING ACTIVITIES
                            Purchases of
  (11,047 )     (4,261  )   property, plant and       (25,237  )     (18,155 )
                            equipment
  (146    )     (346    )   Purchased software        (154     )     (2,098  )
  -             -           Proceeds from sale of     -              2,860
                            assets
                            Proceeds from sale of
 -           -          discontinued             150,654      -       
                            operations
                            Net cash (used
 (11,193 )   (4,607  )   in)/provided by          125,263     (17,393 )
                            investing activities
                                                                   
                            FINANCING ACTIVITIES
  7,000         741         Proceeds from             45,164         1,385
                            borrowings
  (29,131 )     (29,090 )   Principal payments on     (98,354  )     (37,087 )
                            debt
  811           114         Proceeds from options     1,079          415
                            exercised
  26            18          Excess tax benefit of     37             53
                            options exercised
 (4,390  )    (4,066  )   Dividends paid           (12,528  )    (11,560 )
 (25,684 )   (32,283 )   Net cash (used in)       (64,602  )   (46,794 )
                            financing activities
                                                                   
                            Effect of exchange
 3,054       (12,892 )   rate changes on cash     4,647        (2,648  )
                            and cash equivalents
                                                                   
                            Increase/(decrease)
  9,347         (27,278 )   in cash and cash          55,030         7,467
                            equivalents
                            Change in cash
  -             (306    )   balances of               -              (1,282  )
                            discontinued
                            operations
                            Cash and cash
 164,592     151,694    equivalents at           118,909      117,925 
                            beginning of period
                            Cash and cash
$ 173,939   $ 124,110    equivalents at end of   $ 173,939    $ 124,110 
                            period
                                                                   

Contact:

Investors:
Albany International Corp.
John Cozzolino, 518-445-2281
john.cozzolino@albint.com
or
Media:
Albany International Corp.
Susan Siegel, 603-330-5866
susan.siegel@albint.com
or
Kekst and Company for Albany International
Michael Herley, 212-521-4897
michael-herley@kekst.com
 
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