Albany International Corp. (NYSE:AIN), a global advanced textiles and
materials processing company with core businesses in machine clothing
and engineered composites, reported a Q2 2013 loss from continuing
operations of $7.0 million. These results include restructuring charges
of $24.3 million, foreign currency revaluation losses of $1.4 million,
and net unfavorable income tax adjustments of $1.4 million (see Table 7).
Q2 2012 income from continuing operations was a loss of $57.8 million.
These results included a pension settlement charge of $110.6 million,
restructuring charges of $3.2 million, foreign currency revaluation
gains of $5.8 million, and net unfavorable income tax adjustments of
$0.4 million (see Table 8).
Table 1 summarizes net sales and the effect of changes in currency
translation rates:
Table 1
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|
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Impact of
|
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Percent
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|
|
Net Sales
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Changes
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Change
|
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Three Months ended
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in Currency
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excluding
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June 30,
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Percent
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|
Translation
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Currency
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(in thousands)
|
|
|
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2013
|
|
2012
|
|
Change
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Rates
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Rate Effect
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Machine Clothing (MC)
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|
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$
|
177,536
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$
|
177,122
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|
0.2
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%
|
|
$50
|
|
0.2
|
%
|
Engineered Composites (AEC)
|
|
|
|
|
20,438
|
|
|
14,818
|
|
37.9
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%
|
|
-
|
|
37.9
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%
|
Total
|
|
|
|
$
|
197,974
|
|
$
|
191,940
|
|
3.1
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%
|
|
$50
|
|
3.1
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%
|
|
|
|
|
|
|
|
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|
Q2 2013 gross profit was $77.4 million, or 39.1 percent of net sales,
compared to $78.5 million, or 40.9 percent of net sales, in the same
period of 2012. The decrease in gross profit percentage was principally
attributable to a higher portion of total net sales coming from the
Engineered Composites segment, and $0.9 million of inventory write-offs
associated with the termination of a legacy program at AEC’s Boerne,
Texas, facility. In Machine Clothing, the gross profit margin decreased
slightly from 44.2 percent in 2012 to 43.8 percent in 2013.
Selling, technical, general, and research (STG&R) expenses were $56.6
million, or 28.6 percent of net sales, in the second quarter of 2013,
including gains of $0.5 million related to the revaluation of
non-functional-currency assets and liabilities. In the second quarter of
2012, STG&R expenses were $50.8 million, or 26.5 percent of net sales,
including gains of $2.7 million related to the revaluation of
non-functional-currency assets and liabilities. Q2 2013 compensation
expense included $0.4 million of unfavorable accrual adjustments as a
result of increases in the Company’s share price, while comparable Q2
2012 expense included $1.5 million of favorable accrual adjustments for
changes in the Company share price and other items. These accrual
adjustments are all reflected in the Unallocated expenses segment.
The following table summarizes second-quarter operating income:
Table 2
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Operating Income/(loss)
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|
Three Months ended
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|
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June 30,
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(in thousands)
|
|
|
|
2013
|
|
2012
|
Machine Clothing
|
|
|
|
$
|
20,699
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|
|
$
|
44,997
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|
Engineered Composites
|
|
|
|
|
(1,825
|
)
|
|
|
(369
|
)
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Research expenses
|
|
|
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|
(7,673
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)
|
|
|
(7,253
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)
|
Pension settlement charge - Unallocated
|
|
|
|
|
-
|
|
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|
(110,560
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)
|
Unallocated expenses
|
|
|
|
|
(14,714
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)
|
|
|
(12,819
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)
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Total
|
|
|
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|
($3,513
|
)
|
|
|
($86,004
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)
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|
|
|
|
|
|
|
Operating results were affected by restructuring and currency
revaluation as described below:
Table 3
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|
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Expenses/(income) in Q2
|
|
Expenses/(income) in Q2
|
|
|
|
|
2013 resulting from
|
|
2012 resulting from
|
|
|
|
|
|
|
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(in thousands)
|
|
|
|
Restructuring
|
|
Revaluation
|
|
Restructuring
|
|
Revaluation
|
Machine Clothing
|
|
|
|
$
|
24,230
|
|
($452
|
)
|
|
$
|
2,903
|
|
($2,721
|
)
|
Engineered Composites
|
|
|
|
|
91
|
|
-
|
|
|
|
-
|
|
-
|
|
Unallocated expenses
|
|
|
|
|
-
|
|
2
|
|
|
|
249
|
|
2
|
|
Total
|
|
|
|
$
|
24,321
|
|
($450
|
)
|
|
$
|
3,152
|
|
($2,719
|
)
|
|
|
|
|
|
|
|
|
|
|
|
During the second quarter of 2013, the Company completed consultations
with employee works councils regarding the Company’s Machine Clothing
production facilities in Sélestat and St. Junien, France. As a result,
the Company recorded a restructuring charge of $24 million in Q2. These
restructuring charges are primarily severance and social costs. Under
the terms of the restructuring plan, the Company will also provide
training, outplacement, and other programs. The costs for those programs
will be recorded as restructuring in future quarters when they are
incurred.
Q2 2013 Other income/expense, net, was expense of $2.2 million,
including losses related to the revaluation of non-functional-currency
intercompany balances of $1.9 million. Other income/expense, net, in Q2
2012 was income of $2.6 million, including gains of $3.1 million related
to the revaluation of non-functional-currency intercompany balances.
The following table summarizes currency revaluation effects on certain
financial metrics:
Table 4
|
|
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|
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Income/(loss) attributable
|
|
|
|
|
to currency revaluation
|
|
|
|
|
Three Months ended
|
|
|
|
|
June 30,
|
(in thousands)
|
|
|
|
2013
|
|
2012
|
Operating income
|
|
|
|
$450
|
|
$2,719
|
Other income/(expense), net
|
|
|
|
(1,894
|
)
|
3,128
|
Total
|
|
|
|
($1,444
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)
|
$5,847
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|
The Company’s income tax rate, excluding tax adjustments, was 39.0
percent for the second quarter of 2013, compared to 26.5 percent for the
same period of 2012. The increase in the estimated tax rate, compared to
Q2 2012, was primarily attributable to changes in the anticipated amount
and distribution of income and loss among the countries in which we
operate. Q2 2013 income tax expense included a charge of $0.9 million
for the change in the estimated income tax rate, and a charge of $0.5
million for discrete tax adjustments. For Q2 2012, income tax expense
was a benefit of $29.6 million, which included a tax benefit of $36.2
million related to the pension settlement charge, a net discrete tax
charge of $0.7 million, and a favorable adjustment of $0.3 million
related to the change in the estimated income tax rate.
The following tables summarize Adjusted EBITDA:
Table 5
|
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|
Three Months ended June 30, 2013
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Research
|
|
|
|
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|
|
Machine
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Engineered
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|
and
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Total
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(in thousands)
|
|
|
|
Clothing
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|
Composites
|
|
Unallocated
|
|
Company
|
Income/(loss) from continuing operations
|
|
|
|
$
|
20,699
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|
|
|
($1,825
|
)
|
|
($25,902
|
)
|
|
|
($7,028
|
)
|
Interest expense, net
|
|
|
|
|
-
|
|
|
|
-
|
|
|
3,547
|
|
|
|
3,547
|
|
Income tax (benefit)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
(2,243
|
)
|
|
|
(2,243
|
)
|
Depreciation and amortization
|
|
|
|
|
11,479
|
|
|
|
1,874
|
|
|
2,728
|
|
|
|
16,081
|
|
EBITDA
|
|
|
|
|
32,178
|
|
|
|
49
|
|
|
(21,870
|
)
|
|
|
10,357
|
|
Restructuring and other, net
|
|
|
|
|
24,230
|
|
|
|
91
|
|
|
-
|
|
|
|
24,321
|
|
Foreign currency revaluation losses/(gains)
|
|
|
|
|
(452
|
)
|
|
|
-
|
|
|
1,896
|
|
|
|
1,444
|
|
Adjusted EBITDA
|
|
|
|
$
|
55,956
|
|
|
$
|
140
|
|
|
($19,974
|
)
|
|
$
|
36,122
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30, 2012
|
|
|
|
|
|
|
|
Research
|
|
|
|
|
|
|
Machine
|
|
Engineered
|
|
and
|
|
Total
|
(in thousands)
|
|
|
|
Clothing
|
|
Composites
|
|
Unallocated
|
|
Company
|
Income/(loss) from continuing operations
|
|
|
|
$
|
44,997
|
|
|
|
($369
|
)
|
|
($102,403
|
)
|
|
|
($57,775
|
)
|
Interest expense, net
|
|
|
|
|
-
|
|
|
|
-
|
|
|
3,969
|
|
|
|
3,969
|
|
Income tax (benefit)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
(29,643
|
)
|
|
|
(29,643
|
)
|
Depreciation and amortization
|
|
|
|
|
11,745
|
|
|
|
1,448
|
|
|
2,849
|
|
|
|
16,042
|
|
EBITDA
|
|
|
|
|
56,742
|
|
|
|
1,079
|
|
|
(125,228
|
)
|
|
|
(67,407
|
)
|
Restructuring and other, net
|
|
|
|
|
2,903
|
|
|
|
-
|
|
|
249
|
|
|
|
3,152
|
|
Foreign currency revaluation losses/(gains)
|
|
|
|
|
(2,721
|
)
|
|
|
-
|
|
|
(3,126
|
)
|
|
|
(5,847
|
)
|
Pension settlement charge
|
|
|
|
|
-
|
|
|
|
-
|
|
|
110,560
|
|
|
|
110,560
|
|
Adjusted EBITDA
|
|
|
|
$
|
56,924
|
|
|
$
|
1,079
|
|
|
($17,545
|
)
|
|
$
|
40,458
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital spending for equipment and software was $15.2 million for the
second quarter of 2013, bringing the year-to-date total to $28.5
million, including $16.8 million for the Engineered Composites segment
and its expansion associated with the LEAP program. Depreciation and
amortization was $16.1 million for the second quarter of 2013.
CEO Comments
President and CEO Joe Morone said, “Q2 2013 was another solid quarter
for Albany International. Both businesses performed well and continued
on track toward their near- and long-term targets. Sales were up 3
percent compared to Q2 2012, with MC essentially flat and AEC up 38
percent. Adjusted EBITDA declined from $40 million in Q2 2012 to $36
million but was roughly comparable to the prior period once the negative
effects of the AEC program write-offs and accrual adjustments discussed
above (see STG&R paragraph) are taken into account. Cash generation was
strong, with net debt declining by $11 million. Year to date, sales are
3 percent ahead of last year and Adjusted EBITDA is 6 percent ahead.
“In MC, sales and Adjusted EBITDA were nearly identical to Q2 2012.
Gross margins were slightly lower, essentially holding at the same
levels as the past several quarters. Performance in the Americas, both
North and South, was once again strong, as underlying conditions
remained stable in our key market segments and our already strong market
position continued to strengthen. In Europe, sales were stable for the
sixth consecutive quarter, while orders reached their highest quarterly
level since Q4 2011. In Asia, sales were also stable, although at levels
roughly 10 percent below 2012 levels; orders improved significantly
compared to each of the last three quarters, and are slightly ahead of
where they were a year ago. In both Europe and Asia, our competitive
performance with key customers continues to be very strong.
“Even though MC Adjusted EBITDA for the first half of this year is $8
million ahead of last year, and the short-term trends in Europe and Asia
are considerably more encouraging, we still expect full-year 2013 MC
Adjusted EBITDA to be comparable to full-year 2012 Adjusted EBITDA. This
is because of the anticipated impact on the second half of 2013 of the
change in contract terms governing treatment of inventory (a shift from
consignment to recognition of revenue upon delivery) that we agreed to
last year with our largest customer. We disclosed in Q3 2012 that this
change led to an acceleration of $8 million in revenue; the reverse
effect will be felt in the second half of this year, as our customer
works off the formerly consigned inventory that we recognized as revenue
last year. So even though market and competitive conditions are positive
in the Americas, and order patterns in Europe and Asia have improved, we
expect this inventory effect, coupled with normal summer slowdowns in
Europe, to create a large enough drop in sales and income to bring
Adjusted EBITDA for the full year to a level comparable to last year.
“In AEC, Adjusted EBITDA declined compared to Q2 2012 as result of the
write-offs associated with the termination of a legacy program in our
Boerne, Texas, operation that we mentioned in our Q1 release. With this
program termination behind us, we expect to see steady and significant
improvements in profitability beginning in the second half of this year,
which should continue through the decade as LEAP production begins to
ramp up in 2015 and beyond.
“The LEAP program continues on schedule. Construction of Plant 1 in
Rochester, New Hampshire, is now essentially complete, and the first
wave of manufacturing equipment is being installed. Maturation of
manufacturing processes and equipment, and production of parts for
testing, continue to progress. At the recently concluded Paris Air Show,
the LEAP program, and our participation in it, generated considerable
interest. CFM now reports 5,300 orders in hand for LEAP engines, and
indications continue to point to a robust market.
“As I have stated in the past, our objective is to establish AEC as the
leading Tier 2 supplier of highly engineered composites to the aerospace
industry, and to realize its growth potential of $300 million to $500
million in revenue by 2020. Expanding AEC’s portfolio of business beyond
the four LEAP parts currently slated for production is a necessary next
step in the effort to realize this growth potential. We continue to work
on a broad array of opportunities; among the most promising of these are
potential additional parts for subsequent versions of the LEAP engine,
extrapolations of the LEAP fan module to larger and smaller engines,
components for the new ceramic matrix composite engine nozzle under
development by Boeing, and other airframe applications. At the Paris Air
Show, Safran unveiled prototypes of two examples of new engine
applications that AEC has been working on with them: a ceramic matrix
composite low-pressure turbine blade, for possible application on future
versions of the LEAP engine; and a 3D-woven composite fan blade for an
open rotor engine, a leading engine candidate for the next-generation
single-aisle aircraft.
“In sum, Q2 2013 was another solid quarter for Albany International.
Both businesses performed well, and our outlook for each, both near- and
long-term, remains unchanged.”
CFO Comments
CFO and Treasurer John Cozzolino commented, “Net debt declined
approximately $11 million as compared to Q1 (see Table 9), as cash flow
from strong operating results was partially offset by about $15 million
of capital expenditures. The Company’s leverage ratio, as defined in our
primary debt agreements, was 1.75 at the end of Q2, while $166 million
was available on our $330 million credit facility. Cash balances, mostly
held outside of the U.S., totaled about $197 million at the end of Q2.
“During Q2, the Company entered into forward interest rate swap
transactions for the period of July 2015 through March 2018, when our
current revolving credit facility expires. On a total notional amount of
$110 million, these swap transactions effectively fix the LIBOR portion
of our interest expense at 1.414 percent, which at the current leverage
ratio would result in an interest rate of 2.79 percent. These swaps take
effect upon the expiration of our existing swaps that were entered into
in 2010.
“As previously discussed, in Q2 the Company completed consultations with
employee works councils regarding Machine Clothing production facilities
in France. As a result, a restructuring charge of about $24 million was
recorded in Q2. The charge reflects the expected cash costs for
severance and social costs, which are expected to be substantially paid
out during Q3 and Q4 of this year. Additional cash costs for training,
outplacement, and other programs will be recorded as restructuring
charges as they are incurred over the next several quarters and could
total $6 to $8 million. Furthermore, a non-cash credit for the pension
curtailment impact of this restructuring will be calculated and recorded
in Q3. Based on an assessment of equipment located at the affected
facilities, the restructuring charges recorded in the second quarter did
not include any provision for impairment of fixed assets. Annual savings
from this restructuring are expected to be about $10 million per year.
The Company continues to expect to start realizing a portion of these
savings beginning in the fourth quarter of 2013, with the full effect to
be realized by the second half of 2014.
“The Company’s income tax rate in Q2, exclusive of tax adjustments, was
about 39 percent, and is expected to stay around that level for the
full-year 2013. The increase in the tax rate, compared to the mid-30
percent range anticipated at the end of Q1, 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, and payments related to tax audits, cash paid for income taxes
through the first two quarters of 2013 was $14.6 million and is expected
to total about $25 million for the full year.”
The Company plans a webcast to discuss second-quarter 2013 financial
results on Thursday, August 1, 2013, 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 4,000 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,
Adjusted EBITDA, sales excluding currency effects, 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. 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 tax. The Company calculates EBITDA
by adding Interest expense net, Income taxes, and Depreciation and
Amortization to Income from Continuing Operations. 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 sale 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 for the most recent reporting period, the
full-year tax rate for the comparable period of the prior year, and the
weighted average number of shares outstanding for each period.
Table 7
Quarter ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
Pre-tax
|
|
|
|
After-tax
|
|
Shares
|
|
Per Share
|
|
|
|
|
amounts
|
|
Tax Effect
|
|
Effect
|
|
Outstanding
|
|
Effect
|
Restructuring and other, net
|
|
|
|
$
|
24,321
|
|
$
|
9,485
|
|
$
|
14,836
|
|
31,628
|
|
$
|
0.47
|
Foreign currency revaluation losses
|
|
|
|
|
1,444
|
|
|
563
|
|
|
881
|
|
31,628
|
|
|
0.03
|
Negative effect of change in estimated income tax rate
|
|
|
|
|
-
|
|
|
888
|
|
|
888
|
|
31,628
|
|
|
0.03
|
Net discrete income tax charge
|
|
|
|
|
-
|
|
|
485
|
|
|
485
|
|
31,628
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8
Quarter ended June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
Pre-tax
|
|
|
|
After-tax
|
|
Shares
|
|
Per Share
|
|
|
|
|
amounts
|
|
Tax Effect
|
|
Effect
|
|
Outstanding
|
|
Effect
|
Restructuring and other, net
|
|
|
|
$
|
3,152
|
|
$
|
1,214
|
|
$
|
1,938
|
|
31,349
|
|
$
|
0.06
|
Foreign currency revaluation gains
|
|
|
|
|
5,847
|
|
|
2,251
|
|
|
3,596
|
|
31,349
|
|
|
0.11
|
Pension settlement charge
|
|
|
|
|
110,560
|
|
|
36,161
|
|
|
74,399
|
|
31,349
|
|
|
2.37
|
Favorable effect of change in estimated tax rate
|
|
|
|
|
-
|
|
|
297
|
|
|
297
|
|
31,349
|
|
|
0.01
|
Net discrete income tax charge
|
|
|
|
|
-
|
|
|
682
|
|
|
682
|
|
31,349
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table contains the calculation of net debt:
Table 9
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
June 30, 2013
|
|
March 31, 2013
|
|
December 31, 2012
|
Notes and loans payable
|
|
|
|
$
|
610
|
|
$
|
780
|
|
$
|
586
|
Current maturities of long-term debt
|
|
|
|
|
55,014
|
|
|
55,014
|
|
|
83,276
|
Long-term debt
|
|
|
|
|
265,368
|
|
|
278,622
|
|
|
235,877
|
Total debt
|
|
|
|
|
320,992
|
|
|
334,416
|
|
|
319,739
|
Cash
|
|
|
|
|
197,321
|
|
|
199,833
|
|
|
190,718
|
Net debt
|
|
|
|
$
|
123,671
|
|
$
|
134,583
|
|
$
|
129,021
|
|
|
|
|
|
|
|
|
|
The following tables summarize year-to-date Adjusted EBITDA:
Table 10
|
|
|
|
|
|
|
|
|
|
|
Six Months ended June 30, 2013
|
|
|
|
|
|
|
|
Research
|
|
|
|
|
|
|
Machine
|
|
Engineered
|
|
and
|
|
Total
|
(in thousands)
|
|
|
|
Clothing
|
|
Composites
|
|
Unallocated
|
|
Company
|
Income/(loss) from continuing operations
|
|
|
|
$
|
63,607
|
|
|
|
($3,888
|
)
|
|
($55,236
|
)
|
|
$
|
4,483
|
|
Interest expense, net
|
|
|
|
|
-
|
|
|
|
-
|
|
|
7,572
|
|
|
|
7,572
|
|
Income tax expense
|
|
|
|
|
-
|
|
|
|
-
|
|
|
4,005
|
|
|
|
4,005
|
|
Depreciation and amortization
|
|
|
|
|
23,039
|
|
|
|
3,576
|
|
|
5,340
|
|
|
|
31,955
|
|
EBITDA
|
|
|
|
|
86,646
|
|
|
|
(312
|
)
|
|
(38,319
|
)
|
|
|
48,015
|
|
Restructuring and other, net
|
|
|
|
|
24,423
|
|
|
|
534
|
|
|
-
|
|
|
|
24,957
|
|
Foreign currency revaluation losses/(gains)
|
|
|
|
|
(1,195
|
)
|
|
|
-
|
|
|
1, 907
|
|
|
|
712
|
|
Gain on sale of former manufacturing facility
|
|
|
|
|
-
|
|
|
|
-
|
|
|
(3,763
|
)
|
|
|
(3,763
|
)
|
Adjusted EBITDA
|
|
|
|
$
|
109,874
|
|
|
$
|
222
|
|
|
($40,175
|
)
|
|
$
|
69,921
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 11
|
|
|
|
|
|
|
|
|
|
|
Six Months ended June 30, 2012
|
|
|
|
|
|
|
|
Research
|
|
|
|
|
|
|
Machine
|
|
Engineered
|
|
and
|
|
Total
|
(in thousands)
|
|
|
|
Clothing
|
|
Composites
|
|
Unallocated
|
|
Company
|
Income/(loss) from continuing operations
|
|
|
|
$
|
75,842
|
|
|
|
($340
|
)
|
|
($133,406
|
)
|
|
|
($57,904
|
)
|
Interest expense, net
|
|
|
|
|
-
|
|
|
|
-
|
|
|
8,613
|
|
|
|
8,613
|
|
Income tax (benefit)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
(39,615
|
)
|
|
|
(39,615
|
)
|
Depreciation and amortization
|
|
|
|
|
23,798
|
|
|
|
2,853
|
|
|
5,418
|
|
|
|
32,069
|
|
EBITDA
|
|
|
|
|
99,640
|
|
|
|
2,513
|
|
|
(158,990
|
)
|
|
|
(56,837
|
)
|
Restructuring and other, net
|
|
|
|
|
3,576
|
|
|
|
-
|
|
|
(166
|
)
|
|
|
3,410
|
|
Foreign currency revaluation losses/(gains)
|
|
|
|
|
(955
|
)
|
|
|
-
|
|
|
708
|
|
|
|
(247
|
)
|
Pension settlement charge
|
|
|
|
|
-
|
|
|
|
-
|
|
|
119,735
|
|
|
|
119,735
|
|
Adjusted EBITDA
|
|
|
|
$
|
102,261
|
|
|
$
|
2,513
|
|
|
($38,713
|
)
|
|
$
|
66,061
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2013 and in future years; sales, EBITDA, Adjusted
EBITDA and operating income expectations in 2013 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; the amount and timing of
charges related to announced restructuring activities; future 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 OPERATIONS
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Six Months Ended
|
June 30,
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
197,974
|
|
|
$
|
191,940
|
|
|
|
Net sales
|
|
|
$
|
384,628
|
|
|
$
|
372,017
|
|
|
120,541
|
|
|
|
113,440
|
|
|
|
Cost of goods sold
|
|
|
|
234,426
|
|
|
|
225,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,433
|
|
|
|
78,500
|
|
|
|
Gross profit
|
|
|
|
150,202
|
|
|
|
146,786
|
|
|
41,994
|
|
|
|
37,146
|
|
|
|
Selling, general, and administrative expenses
|
|
|
|
78,547
|
|
|
|
84,169
|
|
|
14,631
|
|
|
|
13,646
|
|
|
|
Technical, product engineering, and research expenses
|
|
|
|
27,693
|
|
|
|
26,385
|
|
|
24,321
|
|
|
|
3,152
|
|
|
|
Restructuring and other, net
|
|
|
|
24,957
|
|
|
|
3,410
|
|
|
-
|
|
|
|
110,560
|
|
|
|
Pension settlement expense
|
|
|
|
-
|
|
|
|
119,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,513
|
)
|
|
|
(86,004
|
)
|
|
|
Operating income/(loss)
|
|
|
|
19,005
|
|
|
|
(86,913
|
)
|
|
3,547
|
|
|
|
3,969
|
|
|
|
Interest expense, net
|
|
|
|
7,572
|
|
|
|
8,613
|
|
|
2,211
|
|
|
|
(2,555
|
)
|
|
|
Other expense/(income), net
|
|
|
|
2,945
|
|
|
|
1,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,271
|
)
|
|
|
(87,418
|
)
|
|
|
Income/(loss) before income taxes
|
|
|
|
8,488
|
|
|
|
(97,519
|
)
|
|
(2,243
|
)
|
|
|
(29,643
|
)
|
|
|
Income tax expense/(benefit)
|
|
|
|
4,005
|
|
|
|
(39,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,028
|
)
|
|
|
(57,775
|
)
|
|
|
Income/(loss) from continuing operations
|
|
|
|
4,483
|
|
|
|
(57,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(575
|
)
|
|
|
2,760
|
|
|
|
(Loss)/income from operations of discontinued business
|
|
|
|
(575
|
)
|
|
|
4,776
|
|
|
-
|
|
|
|
34,709
|
|
|
|
Gain on sale of discontinued business
|
|
|
|
-
|
|
|
|
92,677
|
|
|
(224
|
)
|
|
|
13,439
|
|
|
|
Income tax (benefit)/expense on discontinued operations
|
|
|
|
(224
|
)
|
|
|
26,253
|
|
|
(351
|
)
|
|
|
24,030
|
|
|
|
(Loss)/income from discontinued operations
|
|
|
|
(351
|
)
|
|
|
71,200
|
|
|
($7,379
|
)
|
|
|
($33,745
|
)
|
|
|
Net income/(loss)
|
|
|
$
|
4,132
|
|
|
$
|
13,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Basic
|
|
|
|
|
|
|
($0.22
|
)
|
|
|
($1.84
|
)
|
|
|
Income/(loss) from continuing operations
|
|
|
$
|
0.14
|
|
|
|
($1.85
|
)
|
|
(0.01
|
)
|
|
|
0.76
|
|
|
|
Discontinued operations
|
|
|
|
(0.01
|
)
|
|
|
2.27
|
|
|
($0.23
|
)
|
|
|
($1.08
|
)
|
|
|
Net income/(loss)
|
|
|
$
|
0.13
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Diluted
|
|
|
|
|
|
|
($0.22
|
)
|
|
|
($1.84
|
)
|
|
|
Income/(loss) from continuing operations
|
|
|
$
|
0.14
|
|
|
|
($1.84
|
)
|
|
(0.01
|
)
|
|
|
0.76
|
|
|
|
Discontinued operations
|
|
|
|
(0.01
|
)
|
|
|
2.26
|
|
|
($0.23
|
)
|
|
|
($1.08
|
)
|
|
|
Net income/(loss)
|
|
|
$
|
0.13
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing earnings per share:
|
|
|
|
|
|
|
31,628
|
|
|
|
31,349
|
|
|
|
Basic
|
|
|
|
31,562
|
|
|
|
31,329
|
|
|
31,628
|
|
|
|
31,349
|
|
|
|
Diluted
|
|
|
|
31,856
|
|
|
|
31,518
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.15
|
|
|
$
|
0.14
|
|
|
|
Dividends per share
|
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALBANY INTERNATIONAL CORP.
|
CONSOLIDATED BALANCE SHEETS
|
(in thousands, except share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
197,321
|
|
|
$
|
190,718
|
|
Accounts receivable, net
|
|
|
|
|
174,881
|
|
|
|
171,535
|
|
Inventories
|
|
|
|
|
117,443
|
|
|
|
119,183
|
|
Income taxes receivable and deferred
|
|
|
|
|
20,298
|
|
|
|
20,594
|
|
Prepaid expenses and other current assets
|
|
|
|
|
12,311
|
|
|
|
10,435
|
|
Total current assets
|
|
|
|
|
522,254
|
|
|
|
512,465
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
406,845
|
|
|
|
420,154
|
|
Intangibles
|
|
|
|
|
733
|
|
|
|
848
|
|
Goodwill
|
|
|
|
|
75,688
|
|
|
|
76,522
|
|
Deferred taxes
|
|
|
|
|
125,549
|
|
|
|
123,886
|
|
Other assets
|
|
|
|
|
26,875
|
|
|
|
22,822
|
|
Total assets
|
|
|
|
$
|
1,157,944
|
|
|
$
|
1,156,697
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Notes and loans payable
|
|
|
|
$
|
610
|
|
|
$
|
586
|
|
Accounts payable
|
|
|
|
|
34,032
|
|
|
|
35,117
|
|
Accrued liabilities
|
|
|
|
|
130,269
|
|
|
|
103,257
|
|
Current maturities of long-term debt
|
|
|
|
|
55,014
|
|
|
|
83,276
|
|
Income taxes payable and deferred
|
|
|
|
|
7,795
|
|
|
|
13,552
|
|
Total current liabilities
|
|
|
|
|
227,720
|
|
|
|
235,788
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
265,368
|
|
|
|
235,877
|
|
Other noncurrent liabilities
|
|
|
|
|
131,808
|
|
|
|
136,012
|
|
Deferred taxes and other credits
|
|
|
|
|
52,771
|
|
|
|
55,509
|
|
Total liabilities
|
|
|
|
|
677,667
|
|
|
|
663,186
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
36,875,127 in 2013 and 36,642,204 in 2012
|
|
|
|
|
37
|
|
|
|
37
|
|
Class B Common Stock, par value $.001 per share;
|
|
|
|
|
|
|
authorized 25,000,000 shares; issued and
|
|
|
|
|
|
|
outstanding 3,236,098 in 2013 and 2012
|
|
|
|
|
3
|
|
|
|
3
|
|
Additional paid in capital
|
|
|
|
|
397,606
|
|
|
|
395,381
|
|
Retained earnings
|
|
|
|
|
430,736
|
|
|
|
435,775
|
|
Accumulated items of other comprehensive income:
|
|
|
|
|
|
|
Translation adjustments
|
|
|
|
|
(22,153
|
)
|
|
|
(7,659
|
)
|
Pension and postretirement liability adjustments
|
|
|
|
|
(67,255
|
)
|
|
|
(69,484
|
)
|
Derivative valuation adjustment
|
|
|
|
|
(1,126
|
)
|
|
|
(2,878
|
)
|
Treasury stock (Class A), at cost 8,463,635 shares
|
|
|
|
|
|
|
in 2013 and 8,467,873 in 2012
|
|
|
|
|
(257,571
|
)
|
|
|
(257,664
|
)
|
Total shareholders' equity
|
|
|
|
|
480,277
|
|
|
|
493,511
|
|
Total liabilities and shareholders' equity
|
|
|
|
$
|
1,157,944
|
|
|
$
|
1,156,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALBANY INTERNATIONAL CORP.
|
CONSOLIDATED STATEMENTS OF CASH FLOW
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Six Months Ended
|
June 30,
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
($7,379
|
)
|
|
|
($33,745
|
)
|
|
|
Net income/(loss)
|
|
|
$
|
4,132
|
|
|
$
|
13,296
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by /(used
in) operating activities:
|
|
|
|
|
|
14,427
|
|
|
|
14,340
|
|
|
|
Depreciation
|
|
|
|
28,638
|
|
|
|
28,685
|
|
|
1,654
|
|
|
|
1,767
|
|
|
|
Amortization
|
|
|
|
3,317
|
|
|
|
3,553
|
|
|
-
|
|
|
|
209
|
|
|
|
Noncash interest expense
|
|
|
|
-
|
|
|
|
614
|
|
|
(7,864
|
)
|
|
|
(58,125
|
)
|
|
|
Change in long-term liabilities, deferred taxes and other credits
|
|
|
|
(3,991
|
)
|
|
|
(125,244
|
)
|
|
-
|
|
|
|
110,197
|
|
|
|
Write-off of pension liability adjustment due to settlement
|
|
|
|
-
|
|
|
|
118,350
|
|
|
21
|
|
|
|
677
|
|
|
|
Provision for write-off of property, plant and equipment
|
|
|
|
65
|
|
|
|
200
|
|
|
-
|
|
|
|
(34,709
|
)
|
|
|
(Gain) on disposition of assets
|
|
|
|
(3,763
|
)
|
|
|
(92,677
|
)
|
|
(172
|
)
|
|
|
(8
|
)
|
|
|
Excess tax benefit of options exercised
|
|
|
|
(524
|
)
|
|
|
(11
|
)
|
|
(476
|
)
|
|
|
566
|
|
|
|
Compensation and benefits paid or payable in Class A Common Stock
|
|
|
|
(1,174
|
)
|
|
|
1,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities, net of business
divestitures:
|
|
|
|
|
|
|
(4,515
|
)
|
|
|
(13,893
|
)
|
|
|
Accounts receivable
|
|
|
|
(6,238
|
)
|
|
|
(10,525
|
)
|
|
2,458
|
|
|
|
3,783
|
|
|
|
Inventories
|
|
|
|
(530
|
)
|
|
|
(129
|
)
|
|
1,544
|
|
|
|
619
|
|
|
|
Prepaid expenses and other current assets
|
|
|
|
(2,033
|
)
|
|
|
(997
|
)
|
|
28
|
|
|
|
832
|
|
|
|
Income taxes prepaid and receivable
|
|
|
|
180
|
|
|
|
7,392
|
|
|
(1,139
|
)
|
|
|
(6,199
|
)
|
|
|
Accounts payable
|
|
|
|
(592
|
)
|
|
|
(25
|
)
|
|
29,912
|
|
|
|
9,179
|
|
|
|
Accrued liabilities
|
|
|
|
20,929
|
|
|
|
7,364
|
|
|
441
|
|
|
|
(4,486
|
)
|
|
|
Income taxes payable
|
|
|
|
(4,877
|
)
|
|
|
(2,530
|
)
|
|
(793
|
)
|
|
|
(1,784
|
)
|
|
|
Other, net
|
|
|
|
(1,231
|
)
|
|
|
(2,167
|
)
|
|
28,147
|
|
|
|
(10,780
|
)
|
|
|
Net cash provided by/(used in) operating activities
|
|
|
|
32,308
|
|
|
|
(53,448
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
(14,620
|
)
|
|
|
(9,881
|
)
|
|
|
Purchases of property, plant and equipment
|
|
|
|
(27,808
|
)
|
|
|
(14,190
|
)
|
|
(555
|
)
|
|
|
22
|
|
|
|
Purchased software
|
|
|
|
(648
|
)
|
|
|
(8
|
)
|
|
-
|
|
|
|
-
|
|
|
|
Proceeds from sale of assets
|
|
|
|
6,268
|
|
|
|
-
|
|
|
-
|
|
|
|
38,081
|
|
|
|
Proceeds from sale of discontinued operations, net of expenses
|
|
|
|
-
|
|
|
|
150,654
|
|
|
(15,175
|
)
|
|
|
28,222
|
|
|
|
Net cash (used in)/provided by investing activities
|
|
|
|
(22,188
|
)
|
|
|
136,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
5,037
|
|
|
|
29,164
|
|
|
|
Proceeds from borrowings
|
|
|
|
51,905
|
|
|
|
38,164
|
|
|
(18,476
|
)
|
|
|
(11,981
|
)
|
|
|
Principal payments on debt
|
|
|
|
(50,659
|
)
|
|
|
(69,223
|
)
|
|
1,004
|
|
|
|
79
|
|
|
|
Proceeds from options exercised
|
|
|
|
2,968
|
|
|
|
268
|
|
|
172
|
|
|
|
8
|
|
|
|
Excess tax benefit of options exercised
|
|
|
|
524
|
|
|
|
11
|
|
|
(76
|
)
|
|
|
-
|
|
|
|
Debt acquisition costs
|
|
|
|
(1,639
|
)
|
|
|
-
|
|
|
(4,423
|
)
|
|
|
(4,069
|
)
|
|
|
Dividends paid
|
|
|
|
(4,423
|
)
|
|
|
(8,138
|
)
|
|
(16,762
|
)
|
|
|
13,201
|
|
|
|
Net cash (used in)/provided by financing activities
|
|
|
|
(1,324
|
)
|
|
|
(38,918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
1,278
|
|
|
|
(6,976
|
)
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(2,193
|
)
|
|
|
1,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,512
|
)
|
|
|
23,667
|
|
|
|
Increase/(decrease) in cash and cash equivalents
|
|
|
|
6,603
|
|
|
|
45,683
|
|
|
199,833
|
|
|
|
140,925
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
190,718
|
|
|
|
118,909
|
|
$
|
197,321
|
|
|
$
|
164,592
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
197,321
|
|
|
$
|
164,592
|
|
Copyright Business Wire 2013