Delivering Value Albany International 2002 Annual Report Our Vision We want Albany International to be the Company of Choice that delivers value for: • Shareholders Our Business • Customers • Employees Albany International supplies the worldwide pulp • Suppliers and paper industry, as well as other process industries, with technologically advanced structured materials and related services. Our Mission Albany International’s mission is The Company is the world’s largest producer of custom- to supply the global paper and designed engineered fabrics called paper machine clothing paperboard industry, as well as (PMC). These consumable fabrics are used on all grades of paper other process industries, with the world’s leading advanced materi- from lightweight paper to heavyweight containerboard. PMC als and structural technologies, fabrics, essential to the papermaking process, are manufactured yielding attractive returns to our shareholders, exceptional value from monofilaments, multifilaments, and synthetic fiber materials. to our customers, outstanding Building on this core competency, Albany International has opportunities for our employees, and mutually rewarding relation- developed complementary technologies that allow for strate- ships with our suppliers. gic diversification and growth opportunities. These businesses include Albany Door Systems and Applied Technologies. Founded in 1895, the Company is head- quartered in Albany, New York, and employs approximately 6,200 people worldwide. Our plants are strategically located to serve our global customers. DRYING PRESSING FORMING PROCESS BELTS Paper machine clothing from Albany Simulated paper machine of the 21st century with Albany International fabrics and belts. International is a consumable engineered product used in specific applications of the papermaking process. 2002 Financial Highlights Years ended December 31, 2002 2001 ($ millions, except per share amounts) Net sales $816.0 $836.7 Gross profit 340.3 339.4 Operating income 102.1 84.1 Net income 48.9 32.2 Net income per share – basic 1.52 1.04 Net income per share – diluted 1.50 1.03 ($ millions, except per share amounts) Excluding the cumulative effect of changes in accounting principles in both years, earnings are as follows: Income before cumulative effect of accounting changes $54.8 $33.3 Income per share – basic $1.70 $1.07 Income per share – diluted $1.68 $1.06 Highlights of 2002 • Completed $75 million cost reduction initiatives since 1999. Announced new $30 million cost reduction initiative to be • completed by June 2004. Reduced Inventory and Accounts Receivable by a combined • $30.8 Million*. * excludes effects of currency translation and sale of accounts receivable Table of Contents Financial Highlights . 1 YEAR-END TOTAL DEBT TOTAL CUMULATIVE millions SHAREHOLDER RETURN* Albany International Today/ $600 $200 Around the World . Foldout Section $500 Letter to Our Shareholders . 6 $150 Albany International $400 Delivering Value $300 $100 Our Customers. 10 S&P 500 Our Employees . 12 $200 $50 Our Suppliers. 14 $100 Financial Section . 16 0 0 1999 2000 2001 2002 1999 2000 2001 2002 Corporate Information . 49 * Total Cumulative Shareholder Return includes changes in market value of common stock plus dividends. Assumes $100 invested in 1999. Directors and Officers . 50 1 Albany International today... ENGINEERED FABRICS Engineered Products Albany International’s Burgo Verzuolo custom-engineered wires, PM 9 fabrics, and belts have applications in the nonwovens, pulp, building, Paper Machine food, and specialty indus- Clothing tries. These products are Corrugator Albany International is the manufactured to extremely Belts industry leader in the supply high standards and are These engineered belts of paper machine clothing, strategically significant to are used to produce custom-designed fabrics and the customers’ operations. boxboard from linerboard belts used to produce all With end products from and corrugated medium. grades of paper, paperboard, diapers to glass mat to With a presence in every and pulp. Paper machine industrial wipes, these board-producing region of the clothing fabrics, which fabrics offer high-quality world, Albany International include Forming, Press, and solutions to process Corrugator Belts are globally Dryer Fabrics and Process needs. recognized as durable, Belts, are strategic products dependable belts that for our customers. perform under the most demanding conditions. ALBANY APPLIE DOOR SYSTEMS PrimaLoft Albany International’s patented “synthetic down” The global leader in the supply insulation is used in the of high-performance doors, home furnishings and outer- ® Albany Door Systems offers a wear markets. PrimaLoft complete range of products, synthetic insulation, originally service, and maintenance for developed for the U.S. Military, internal and external applica- offers “soft and comfortable Techniweave tions. This product line of flexible as goose down” properties Techniweave is a recog- and rigid doors includes roll-up for the home market and nized leader in the field of and sectional doors, bifold lightweight warmth and water advanced materials and and freezer doors, mining and resistance for the technical composite structures, dock doors, paint and machine outerwear market. Distributed with industrial, aerospace, protection doors, and more. worldwide, PrimaLoft has athletic, and personal care Each door is custom designed developed strong consumer applications. Using glass, to the customer’s specifications brand recognition. ceramics, graphite, and other and can be manufactured in nontraditional materials, sizes that range from 1 square Techniweave products build meter to 110 square meters our materials core compe- with operating speeds up to 3 tencies while developing meters per second. new market opportunities. D TECHNOLOGIES Industrial Advanced Process Thermal Technologies Protection Albany International is a Systems specialty manufacturer of Albany International’s expert- high-quality filtration products ise in materials research and belts for liquids/solids High led to the development of and air/solids separation in a Performance personal security and aero- variety of process industries, Materials space insulation applications as well as similar products Combining textile and material for high-temperature protec- for tannery and textile process process technology, Albany tion. These specialty applica- applications. Using standard International has produced its tions bring our technologies materials as well as high- Pyropel ® high-temperature into high-temperature areas temperature and specialty insulation family. These prod- where we can expand our materials and structures, ucts feature superior resistance application of traditional these products are designed to thermal, electrical, and products. to offer superior operating chemical attack. Applications life and performance. include insulation in molding processes, as well as engineering components for chemical, analytical, and semiconductor equipment. Corporate Office Albany International Albany International Italia S.a.r.l. Albany, New York Techniweave, Inc. Marghera – Venezia, Italy Rochester, New Hampshire Research Co. Albany International Canada Corp. Mansfield, Massachusetts Monofilament Plant Cowansville, Québec (2) Homer, New York Perth, Ontario U.S. Forming Fabrics Menasha, Wisconsin Albany International A.B. Albany International Pty. Ltd. Montgomery, Alabama Halmstad, Sweden (2) Gosford, N.S.W., Australia Portland, Tennessee Albany International Oy Albany International U.S. Press Fabrics Helsinki, Finland Tecidos Tecnicos Ltda. East Greenbush, New York Järvenpää, Finland Indaial, Brazil St. Stephen, South Carolina Albany International Ltd. Albany International de México S.A. de C.V. U.S. Dryer Fabrics James Kenyon Cuautitlán, Mexico Menands, New York Bury, Lancashire, England Albany International (China) Co., Ltd. Geschmay Corp. Albany International B.V. Panyu City, Guangdong, China Greenville, South Carolina Dieren, Netherlands (2) Albany International Korea, Inc. Process Belts Albany International France S.A.S. Chungju, Korea Tumwater, Washington Ribérac, France Sélestat, France Albany Door Systems Engineered Products Halmstad, Sweden Appleton, Wisconsin Württembergische Filztuchfabrik Lawrenceville, Georgia Portland, Tennessee D. Geschmay GmbH & Co KG Lippstadt, Germany Göppingen, Germany Gosford, N.S.W., Australia Barrie, Ont., Canada Cofpa S.A. St. Junien, France Associated Company Beier Albany & Company (Proprietary) Limited Pinetown, South Africa (2) indicates two plants at the location Albany International Around the World. Letter to Our Shareholders Last year was a challenging one for our Company. At the beginning of 2002, I promised that we would continue to manage the business fundamen- tals by focusing on those areas within our direct control — operational efficiency, process improvement, and product and tech- nology innovation. Albany International employees have delivered on the promise with improvements in operations and increased earnings. Chairman of the Board and Chief Executive Officer Frank R. Schmeler believes that by focusing our Company on delivering value, we can become the Company of Choice for our shareholders, customers, employees, and suppliers. 6 Delivering on platform for enhancing customer Albany Value the Promise service and relationships and for Concept improving internal efficiencies. In the weak economic environment While we are proud of our accom- Our team’s successful implemen-