What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-26 compared with 2021-07-28 · 150 added, 106 removed, 571 unchanged (31% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

7 unchanged sentences

Interest expense, net 3,734 2,242 11,521 10,042

Aviation Manufacturing Jobs Protection (AMJP) grant ( 5,832 ) — ( 5,832 ) —

Other expense/(income), net 2,753 ( 2,745 ) 4,215 13,915

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

4 unchanged sentences

Amortization of pension liability adjustments:

Prior service credit ( 1,118 ) ( 1,114 ) ( 2,237 ) ( 2,228 )

Net actuarial loss 1,108 1,232 2,217 2,476

Prior service cost/ (credit) ( 1,119 ) ( 1,114 ) ( 3,356 ) ( 3,342 )

Net actuarial loss/ (gain) 1,103 1,244 3,320 3,720

Payments and amortization related to interest rate swaps included in earnings 1,803 1,219 5,049 2,742

2 unchanged sentences

Pension/postretirement settlements and curtailments — — — ( 113 )

Amortization of prior service cost 335 278 671 557

Amortization of net actuarial loss ( 332 ) ( 308 ) ( 665 ) ( 619 )

Amortization of prior service cost/ (credit) 336 274 1,007 831

Amortization of net actuarial loss/ (gain) ( 331 ) ( 306 ) ( 996 ) ( 925 )

Payments and amortization related to interest rate swaps included in earnings ( 466 ) ( 311 ) ( 1,304 ) ( 701 )

7 unchanged sentences

(in thousands, except share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash and cash equivalents $ 286,217 $ 241,316

30 unchanged sentences

authorized 25,000,000 shares;

issued and outstanding 1,617,998 in 2021 and 2020

issued and outstanding 1,154 in 2021 and 1,617,998 in 2020

Additional paid in capital 436,079 433,696

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2021 2020 2021 2020

9 unchanged sentences

Provision for credit losses from uncollected receivables and contract assets ( 1,075 ) ( 105 ) ( 1,158 ) 1,664

Foreign currency remeasurement (gain)/loss on intercompany loans ( 723 ) 194 ( 1,031 ) 15,581

Foreign currency remeasurement loss/(gain) on intercompany loans 480 169 ( 551 ) 15,750

Fair value adjustment on foreign currency options 29 ( 64 ) 169 —

25 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 4,113 ) 4,545 ( 2,111 ) ( 751 )

Increase/(decrease) in cash and cash equivalents 15,459 ( 18,643 ) 12,014 8,497

Increase in cash and cash equivalents 32,887 11,267 44,901 19,764

Cash and cash equivalents at beginning of period 253,330 204,037 241,316 195,540

13 unchanged sentences

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Albany International Corp.’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Company recognizes government grants only when there is reasonable assurance that we will comply with the conditions attached to them and the grants will be received.

Government grants are recognized in the Consolidated Statements of Income on a systematic basis over the periods in which we recognize as expenses the related costs for which the grants are intended to compensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support with no future related costs is recognized in the Consolidated Statements of Income of the period in which it becomes receivable.

During the third quarter of 2021, the Company was awarded an Aviation Manufacturing Jobs Protection Program ("AMJP") grant of $ 5.8 million, under the American Rescue Plan of the U.S.

Department of Transportation.

The AMJP grant is an income related grant, the purpose of which is to provide payroll assistance to eligible U.S.

aircraft manufacturing/repair businesses who were impacted due to the COVID-19 downturn during 2020.

The Company received $ 2.9 million in cash in September 2021, and anticipates receiving the remaining balance in 2022.

Accordingly, the Company recognized $ 5.8 million in its Consolidated Statements of Income for the quarter and year-to-date ended September 30, 2021, and reflected cash received to date as an operating activity within the Consolidated Statements of Cash Flows.

Reportable Segments and Revenue Recognition

8 unchanged sentences

Under this program, AEC through ASC, is the exclusive supplier of advanced composite fan blades and cases under a long-term supply contract.

AEC net sales to Safran were $ 54.0 million and $ 57.0 million in the first six months of 2021 and 2020, respectively.

The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $ 105.1 million and $ 127.1 million as of June 30, 2021 and December 31, 2020, respectively.

AEC net sales to Safran were $ 81.6 million and $ 73.6 million in the first nine months of 2021 and 2020, respectively.

The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $ 103.4 million and $ 127.1 million as of

September 30, 2021 and December 31, 2020, respectively.

Other significant programs by AEC include the F-35, Boeing 787, Sikorsky CH-53K and JASSM, as well as the fan case for the GE9X engine.

2 unchanged sentences

The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

(in thousands)

16 unchanged sentences

4,388 3,727 13,105 12,322

AMJP grant ( 5,832 ) — ( 5,832 ) —

Other expense/(income), net 2,753 ( 2,745 ) 4,215 13,915

Income before income taxes $ 43,831 $ 39,276 $ 126,367 $ 107,137

$ 44,886 $ 47,813 $ 82,536 $ 67,861

There were no material changes to total assets of the reportable segments in the first six months of 2021.

The table below presents restructuring costs by reportable segment (also see Note 4):

Three months ended June 30, Six months ended June 30,

There were no material changes to total assets of the reportable segments in the first nine months of 2021.

The table below presents restructuring costs by reportable segment:

Three months ended September 30, Nine months ended September 30,

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Total $ 187 $ 710 $ 230 $ 4,189

Restructuring costs in the first nine months of 2021 were not significant.

Restructuring liabilities at quarter-end were less than $ 1 million, related to termination and other costs, which are expected to be substantially paid within one year.

In 2020, AEC reduced its workforce at various locations, principally in the U.S., leading to restructuring charges of $ 2.6 million for the first nine months of 2020.

Machine Clothing restructuring charges for the first nine months of 2020 were principally related to the plant closure of its MC production facility in Sélestat, France that was announced in 2017.

Products and services provided under long-term contracts represent a significant portion of sales in the Albany Engineered Composites segment and we account for these contracts using the percentage of completion (actual cost to estimated cost) method.

2 unchanged sentences

Changes in the estimated profitability of long-term contracts could be caused by increases or decreases in the contract value, revisions to customer delivery requirements, updated labor or overhead rates, factors affecting the supply chain, changes in the evaluation of contract risks and opportunities, or other factors.

Changes in the estimated profitability of long-term contracts increased operating income by $ 4.3 million and $ 3.7 million for the second quarter and first half of 2021, respectively.

Adjustments in the estimated profitability of long-term contracts increased operating income by $ 7.4 million and $ 6.4 million for the second quarter and first half of 2020, respectively.

Changes in the estimated profitability of long-term contracts increased operating income by $ 2.1 million and $ 2.4 million for the three and nine month periods

ended September 30, 2021, respectively.

Adjustments in the estimated profitability of long-term contracts increased operating income by $ 3.5 million and $ 9.5 million for the three and nine month periods ended September 30, 2020, respectively.

We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.

The following table disaggregates revenue for each product group by timing of revenue recognition:

Three months ended June 30, 2021

Three months ended September 30, 2021

(in thousands)

8 unchanged sentences

Total revenue $ 156,895 $ 75,547 $ 232,442

Six months ended June 30, 2021

Nine months ended September 30, 2021

(in thousands) Point in Time Revenue

7 unchanged sentences

Total revenue $ 471,604 $ 217,718 $ 689,322

Three months ended June 30, 2020

Three months ended September 30, 2020

(in thousands)

9 unchanged sentences

$ 142,378 $ 69,621 $ 211,999

Six months ended June 30, 2020

Nine months ended September 30, 2020

(in thousands) Point in Time Revenue

8 unchanged sentences

The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing ("PMC") and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

(in thousands)

5 unchanged sentences

$ 154,171 $ 138,747 $ 462,298 $ 428,782

As permitted by ASC 606, we only disclose the value of unsatisfied performance obligations for contracts with an original expected duration of greater than one year.

Contracts in the MC segment are generally for periods of less than a year.

Most contracts in the AEC segment are short duration firm-fixed-price orders representing performance obligations with an original maturity of less than one year.

Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 149 million and $ 85 million as of June 30, 2021 and 2020, respectively, and related primarily to firm contracts in the AEC segment.

Of the remaining performance obligations as of June 30, 2021, we expect to recognize as revenue approximately $ 48 million during 2021, $ 62 million during 2022, $ 24 million during 2023, and the remainder during 2024.

Remaining performance obligations on contracts that had an original duration of greater than one year totaled $ 155 million and $ 81 million as of September 30, 2021 and 2020, respectively, and related primarily to firm contracts in the AEC segment.

Of the remaining performance obligations as of September 30, 2021, we expect to recognize as revenue approximately $ 29 million during 2021, $ 66 million during 2022, $ 37 million during 2023, and the remainder during 2024.

Pensions and Other Postretirement Benefit Plans

2 unchanged sentences

The Company accrues the cost of providing these benefits during the active service period of the employees.

The composition of the net periodic benefit cost for the six months ended June 30, 2021 and 2020, was as follows:

The composition of the net periodic benefit cost for the nine months ended September 30, 2021 and 2020, was as follows:

Pension plans

12 unchanged sentences

The amount of net periodic benefit cost is determined at the beginning of each year and generally only varies from quarter to quarter when a significant event occurs, such as a curtailment or a settlement.

There were no such events in the first six months of 2021.

There were no such events in the first nine months of 2021.

On July 29, 2021, the Company notified the participants of the U.S.

Pension Plus Plan (the "Plan") of its intent to terminate the Plan.

In order to facilitate such termination, the Company has amended the Plan to, among other things, establish the termination date and set forth the procedures for termination.

The Company also filed the necessary application with the Internal Revenue Service requesting the issuance of a determination letter regarding the Plan’s qualification status at termination.

The Plan was terminated on September 30, 2021.

This has not resulted in a curtailment or settlement charge during the nine month period ended September 30, 2021.

In the second quarter of 2020, the Company recorded expense of $ 0.4 million related to curtailments and settlements.

1 unchanged sentence

Other components of net periodic benefit cost are included in the line item Other (income)/expense, net in the Consolidated Statements of Income.

Restructuring

Restructuring costs in the first six months of 2021 were not significant.

Restructuring costs in the first six months of 2020 were related to reductions in workforce at various AEC locations, principally in the United States, as well as related to discontinued operations at the Machine Clothing production facility in Sélestat, France.

Since 2017, we have recorded $ 13.9 million of restructuring charges related to this action.

There were no charges related to the impairment of assets for the periods presented.

The following table summarizes charges reported in the Consolidated Statements of Income under “Restructuring expenses, net”:

Three months ended June 30, Six months ended June 30,

(in thousands) 2021 2020 2021 2020

Machine Clothing $ 10 $ 388 $ ( 58 ) $ 1,030

Albany Engineered Composites ( 48 ) 2,248 41 2,248

Corporate expenses 29 201 60 201

Total $ ( 9 ) $ 2,837 $ 43 $ 3,479

The table below presents the year-to-date changes in restructuring liabilities for 2021 and 2020, all of which are related to termination and other costs:

(in thousands)

2020 Restructuring

charges accrued

translation /other

Total termination and other costs $ 2,195 $ 43 $ ( 1,485 ) $ 11 $ 764

(in thousands)

2019 Restructuring

charges accrued

translation /other

Total termination and other costs $ 2,042 $ 3,479 $ ( 1,410 ) $ ( 5 ) $ 4,106

We expect that approximately $ 0.6 million of Accrued liabilities for restructuring at June 30, 2021 will be paid within one year and approximately $ 0.2 million will be paid the following year.

Other (Income)/Expense, net

The components of Other (Income)/Expense, net are:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

(in thousands)

6 unchanged sentences

Total $ 2,753 $ ( 2,745 ) $ 4,215 $ 13,915

Other (income)/expense, net included losses related to the revaluation of nonfunctional-currency balances of $ 0.3 million for the first six months of 2021, compared to losses of $ 14.9 million for the first six months of 2020, which principally resulted from an intercompany demand loan payable by a Mexican subsidiary.

As a result of changes in business conditions that occurred in the first quarter of 2020, loan repayments on that intercompany loan are not expected in the foreseeable future and, beginning April 1, 2020, the revaluation effects are recorded in Other comprehensive income.

The following table presents components of income tax expense for the three and six months ended June 30, 2021 and 2020:

Three months ended June 30, Six months ended

Other (income)/expense, net included losses related to the revaluation of nonfunctional-currency balances of $ 0.8 million for the first nine months of 2021, compared to losses of $ 14.7 million for the first nine months of 2020, which principally resulted from an intercompany demand loan payable by a Mexican subsidiary.

As a result of changes in

business conditions that occurred in the first quarter of 2020, loan repayments on that intercompany loan are not expected in the foreseeable future and, beginning April 1, 2020, the revaluation effects are recorded in Other comprehensive income.

The following table presents components of income tax expense for the three and nine months ended September 30, 2021 and 2020:

Three months ended September 30, Nine months ended

September 30,

(in thousands, except percentages)

17 unchanged sentences

Under this method, loss jurisdictions, which cannot recognize a tax benefit with regard to their generated losses, are excluded from the annual effective tax rate ("AETR") calculation and their taxes will be recorded discretely in each quarter.

In the second quarter of 2020, the Company recorded a net tax benefit of $ 1.5 million as a result of a US state tax audit settlement;

In the third quarter of 2021, the Company recorded a net tax benefit of $ 0.7 million related to U.S.

adjustments of prior period liabilities.

In the first quarter of 2021, the Company recorded a net tax benefit of $ 1.4 million related to a U.S.

adjustment of prior period liabilities and, additionally, the Company recorded an expense of $ 0.3 million related to the establishment of a foreign uncertain tax position.

In the third quarter of 2020, the Company recorded a net tax benefit of $ 1.8 million related to U.S.

adjustments of prior period liabilities.

In the second quarter of 2020, the Company recorded a net tax benefit of $ 1.5 million as a result of a U.S.

state tax audit settlement;

the Company also recorded a net deferred tax expense of $ 1.0 million due to an adjustment of net operating losses related to settled audits.

2 unchanged sentences

The amounts used in computing earnings per share and the weighted average number of shares of potentially dilutive securities are as follows:

Three months ended June 30, Six months ended

Three months ended September 30, Nine months ended September 30,

(in thousands, except market price and earnings per share)

11 unchanged sentences

Accumulated Other Comprehensive Income (AOCI)

The table below presents changes in the components of AOCI for the period December 31, 2020 to June 30, 2021:

The table below presents changes in the components of AOCI for the period December 31, 2020 to September 30, 2021:

(in thousands)

9 unchanged sentences

Net current period other comprehensive income ( 17,124 ) 602 4,019 ( 12,503 )

June 30, 2021 $ ( 85,384 ) $ ( 39,282 ) $ ( 7,398 ) $ ( 132,064 )

The table below presents changes in the components of AOCI for the period December 31, 2019 to June 30, 2020:

September 30, 2021 $ ( 100,327 ) $ ( 39,059 ) $ ( 5,525 ) $ ( 144,911 )

The table below presents changes in the components of AOCI for the period December 31, 2019 to September 30, 2020:

(in thousands) Translation

8 unchanged sentences

Net current period other comprehensive income 3,038 558 ( 7,274 ) ( 3,678 )

June 30, 2020 $ ( 139,635 ) $ ( 48,962 ) $ ( 11,030 ) $ ( 199,627 )

September 30, 2020 $ ( 119,814 ) $ ( 49,436 ) $ ( 10,409 ) $ ( 179,659 )

The components of our Accumulated Other Comprehensive Income that are reclassified to the Statement of Income relate to our pension and postretirement plans and interest rate swaps.

The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Statement of Income that were affected for the three and six months ended June 30, 2021 and 2020:

Three months ended June 30, Six months ended June 30,

The table below presents the expense/(income) amounts reclassified from AOCI, and the line items of the Statement of Income that were affected for the three and nine months ended September 30, 2021 and 2020:

Three months ended September 30, Nine months ended September 30,

(in thousands)

19 unchanged sentences

The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity in the Company’s subsidiary Albany Safran Composites, LLC:

Six months ended June 30,

Nine months ended September 30,

(in thousands, except percentages) 2021 2020

12 unchanged sentences

The notes may be presented for payment at maturity, which is less than one year.

As of June 30, 2021 and December 31, 2020, Accounts receivable consisted of the following:

As of September 30, 2021 and December 31, 2020, Accounts receivable consisted of the following:

(in thousands)

September 30,

2021 December 31,

7 unchanged sentences

The Noncurrent receivables will be invoiced to the customer over a 10-year period, which began in 2020.

As of June 30, 2021 and December 31, 2020, Noncurrent receivables consisted of the following:

As of September 30, 2021 and December 31, 2020, Noncurrent receivables consisted of the following:

(in thousands)

September 30,

2021 December 31,

9 unchanged sentences

Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period.

As of June 30, 2021 and December 31, 2020, Contract assets and Contract liabilities consisted of the following:

As of September 30, 2021 and December 31, 2020, Contract assets and Contract liabilities consisted of the following:

(in thousands)

September 30,

2021 December 31,

4 unchanged sentences

Contract liabilities $ 6,250 $ 8,206

Contract assets decreased $ 26.1 million during the six-month period ended June 30, 2021.

Contract assets decreased $ 23.4 million during the nine-month period ended September 30, 2021.

The decrease was primarily due to invoicing to customers exceeding revenue recognized for satisfied performance obligations for contracts that were in a contract asset position.

There were no credit losses related to our Contract assets during the six month periods ended June 30, 2021 and June 30, 2020.

Contract liabilities decreased $ 1.1 million during the six-month period ended June 30, 2021, primarily due to revenue recognized from satisfied performance obligations exceeding amounts invoiced to customers that were in a contract liability position.

Revenue recognized for the six-month periods ended June 30, 2021 and 2020 that was included in the Contract liability balance at the beginning of the year was $ 4.7 million and $ 2.1 million, respectively.

There were no credit losses related to our Contract assets during the nine month periods ended September 30, 2021 and September 30, 2020.

Contract liabilities decreased $ 2.0 million during the nine-month period ended September 30, 2021, primarily due to revenue recognized from satisfied performance obligations exceeding amounts invoiced to customers that were in a contract liability position.

Revenue recognized for the nine-month periods ended September 30, 2021 and 2020 that was included in the Contract liability balance at the beginning of the year was $ 5.3 million and $ 3.5 million, respectively.

Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead.

4 unchanged sentences

Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories.

As of June 30, 2021 and December 31, 2020, Inventories consisted of the following:

As of September 30, 2021 and December 31, 2020, Inventories consisted of the following:

(in thousands)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Raw materials $ 57,534 $ 57,789

13 unchanged sentences

Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.

In the second quarter of 2021, management applied the qualitative assessment approach in performing its annual evaluation of goodwill for the Company's Machine Clothing reporting unit and three AEC reporting units and

concluded that each reporting unit’s fair value continued to exceed its carrying value.

In addition, there were no amounts at risk due to the estimated spread between the fair and carrying values.

In addition, there were no amounts at risk due to the estimated excess between the fair and carrying values.

Accordingly, no impairment charges were recorded.

2 unchanged sentences

(in thousands, except interest rates)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Revolving credit agreement with borrowings outstanding at an end of period interest rate of 3.74 % in 2021 and 3.50 % in 2020 (including the effect of interest rate hedging transactions, as described below), due in 2024

5 unchanged sentences

On October 27, 2020, we entered into a $ 700 million unsecured Four-Year Revolving Credit Facility Agreement (the “Credit Agreement”) which amended and restated the prior amended and restated $ 685 million Five-Year Revolving Credit Facility Agreement, which we had entered into on November 7, 2017 (the “Prior Agreement”).

Under the Credit Agreement, $ 350 million of borrowings were outstanding as of June 30, 2021.

Under the Credit Agreement, $ 350 million of borrowings were outstanding as of September 30, 2021.

The applicable interest rate for borrowings was LIBOR plus a spread, based on our leverage ratio at the time of borrowing.

At the time of the last borrowing on June 30, 2021, the spread was 1.625 %.

At the time of the last borrowing on September 16, 2021, the spread was 1.625 %.

The spread was based on a pricing grid, which ranged from 1.500 % to 2.000 %, based on our leverage ratio.

Based on our maximum leverage ratio and our Consolidated EBITDA, and without modification to any other credit agreements, as of June 30, 2021, we would have been able to borrow an additional $ 350 million under the Agreement.

Based on our maximum leverage ratio and our Consolidated EBITDA, and without modification to any other credit agreements, as of September 30, 2021, we would have been able to borrow an additional $ 350 million under the Agreement.

The Credit Agreement contains customary terms, as well as affirmative covenants, negative covenants and events of default that are comparable to those in the Prior Agreement.

3 unchanged sentences

These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $ 350 million of indebtedness drawn under the Credit Agreement at the rate of 0.838 % during the period.

Under the terms of these transactions, we pay the fixed rate of 0.838 % and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date, which on June 16, 2021 was 0.08 %.

On November 27, 2017, we terminated our interest rate swap agreements, originally entered into on May 9, 2016, that had effectively fixed the interest rate on $ 300 million of revolving credit borrowings, in order to enter into a new interest rate swap with a greater notional amount, and the same maturity as the Credit Agreement.

2 unchanged sentences

Under the terms of these transactions, we pay the fixed rate of 2.11 % and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date, which on June 16, 2021 was 0.08 %, during the swap period.

On June 16, 2021, the all-in-rate on the $ 350 million of debt was 3.735 %.

On September 16, 2021, the all-in-rate on the $ 350 million of debt was 3.735 %.

These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14.

1 unchanged sentence

Under the Credit Agreement, we are currently required to maintain a leverage ratio (as defined in the agreement) of not greater than 3.50 to 1.00 and minimum interest coverage (as defined) of 3.00 to 1.00.

As of June 30, 2021, our leverage ratio was 1.08 to 1.00 and our interest coverage ratio was 15.02 to 1.00.

As of September 30, 2021, our leverage ratio was 1.07 to 1.00 and our interest coverage ratio was 14.51 to 1.00.

We may purchase our Common Stock or pay dividends to the extent our leverage ratio remains at or below 3.50 to 1.00, and may make acquisitions with cash, provided our leverage ratio does not exceed the limits noted above.

Indebtedness under the Credit Agreement is ranked equally in right of payment to all unsecured senior debt.

We were in compliance with all debt covenants as of June 30, 2021.

We were in compliance with all debt covenants as of September 30, 2021.

Fair-Value Measurements

2 unchanged sentences

Level 3 inputs are unobservable data points for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.

We had no Level 3 financial assets or liabilities at June 30, 2021, or at December 31, 2020.

We had no Level 3 financial assets or liabilities at September 30, 2021, or at December 31, 2020.

The following table presents the fair-value hierarchy for our Level 1 and Level 2 financial and non-financial assets and liabilities, which are measured at fair value on a recurring basis:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

11 unchanged sentences

Unrealized gains and losses on the swaps flow through the caption Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets.

As of June 30, 2021, these interest rate swaps were determined to be highly effective hedges of interest rate cash flow risk.

As of September 30, 2021, these interest rate swaps were determined to be highly effective hedges of interest rate cash flow risk.

Amounts accumulated in Other comprehensive income are reclassified as Interest expense, net when the related interest payments (that is, the hedged forecasted transactions), and amortization related to the swap buyouts, affect earnings.

Interest (income)/expense related to payments under the active swap agreements totaled $ 3.5 million for the six month period ended June 30, 2021, and $ 1.9 million for the six month period ended June 30, 2020.

Additionally, non-cash interest income related to the amortization of swap buyouts totaled $ 0.3 million for the six month period ended June 30, 2021 and $ 0.4 million for the six month period ended June 30, 2020.

Interest (income)/expense related to payments under the active swap agreements totaled $ 5.3 million for the nine month period ended September 30, 2021, and $ 3.7 million for the nine month period ended September 30, 2020.

Additionally, non-cash interest income related to the amortization of swap buyouts totaled $ 0.3 million for the nine month period ended September 30, 2021 and $ 0.9 million for the nine month period ended September 30, 2020.

Contingencies

2 unchanged sentences

is a defendant in suits brought in various courts in the United States by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills.

We were defending 3,617 claims as of June 30, 2021.

We were defending 3,625 claims as of September 30, 2021.

The following table sets forth the number of claims filed, the number of claims settled, dismissed or otherwise resolved, and the aggregate settlement amount during the periods presented:

7 unchanged sentences

2020 3,708 152 59 3,615 57

2021 (As of June 30) 3,615 9 11 3,617 $ —

2021 (As of September 30) 3,615 9 19 3,625 $ —

We anticipate that additional claims will be filed against the Company and related companies in the future, but are unable to predict the number and timing of such future claims.

2 unchanged sentences

Our insurance carrier has defended each case and funded settlements under a standard reservation of rights.

As of June 30, 2021, we had resolved, by means of settlement or dismissal, 37,957 claims.

As of September 30, 2021, we had resolved, by means of settlement or dismissal, 37,957 claims.

The total cost of resolving all claims was $ 10.4 million.

2 unchanged sentences

(“Brandon”), is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant, despite never having manufactured any fabrics containing asbestos.

While Brandon was defending against 7,709 claims as of June 30, 2021, only twelve claims have been filed against Brandon since January 1, 2012, and a negligible amount of settlement costs have been incurred since 2001.

While Brandon was defending against 7,709 claims as of September 30, 2021, only twelve claims have been filed against Brandon since January 1, 2012, and a negligible amount of settlement costs have been incurred since 2001.

Brandon was acquired by the Company in 1999, and has its own insurance policies covering periods prior to 1999.

8 unchanged sentences

We currently do not anticipate, based on currently available information, that the ultimate resolution of the aforementioned proceedings will have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

Although we cannot predict the number and timing of future claims, based on the foregoing factors, the trends in claims filed against us, and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows.

Although we cannot predict the number and timing of future claims, based on the foregoing

factors, the trends in claims filed against us, and available insurance, we also do not currently anticipate that potential future claims will have a material adverse effect on our financial position, results of operations, or cash flows.

Changes in Shareholders’ Equity

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2020 to June 30, 2021:

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2020 to September 30, 2021:

Additional paid-in capital

30 unchanged sentences

June 30, 2021 39,142 $ 39 1,618 $ 2 $ 435,230 $ 816,778 $ ( 132,064 ) 8,380 $ ( 255,768 ) $ 3,842 $ 868,059

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2019 to June 30, 2020:

Net income — — — — — 30,862 — — — 80 30,942

Compensation and benefits paid or payable in shares — — — — 845 — — — — — 845

Options exercised 1 — — — 4 — — — — — 4

Shares issued to Directors' — — — — — — — — — — —

Dividends declared

Class A Common Stock, $ 0.20 per share

— — — — — ( 6,478 ) — — — — ( 6,478 )

Class B Common Stock, $ 0.20 per share

— — — — — — — — — — —

Conversion of Class B shares to Class A shares (b) 1,617 2 ( 1,617 ) ( 2 ) — — — — — — —

Cumulative translation adjustments — — — — — — ( 14,943 ) — — ( 192 ) ( 15,135 )

Pension and postretirement liability adjustments — — — — — — 223 — — — 223

Derivative valuation adjustment — — — — — — 1,873 — — — 1,873

September 30, 2021 40,760 $ 41 1 $ — $ 436,079 $ 841,162 $ ( 144,911 ) 8,380 $ ( 255,768 ) $ 3,730 $ 880,333

The following table summarizes changes in Shareholders’ Equity for the period December 31, 2019 to September 30, 2020:

Additional paid-in capital

35 unchanged sentences

June 30, 2020 39,113 $ 39 1,618 $ 2 $ 432,738 $ 726,233 $ ( 199,627 ) 8,394 $ ( 256,074 ) $ 2,847 $ 706,158

Net income — — — — — 29,589 — — — 1 29,590

Compensation and benefits paid or payable in shares — — — — 80 — — — — — 80

Options exercised 1 — — — 5 — — — — — 5

Shares issued to Directors' — — — — — — — — — — —

Dividends declared

Class A Common Stock, $ 0.19 per share

— — — — — ( 5,837 ) — — — — ( 5,837 )

Class B Common Stock, $ 0.19 per share

— — — — — ( 307 ) — — — — ( 307 )

Cumulative translation adjustments — — — — — — 19,821 — — 201 20,022

Pension and postretirement liability adjustments — — — — — — ( 474 ) — — — ( 474 )

Derivative valuation adjustment — — — — — — 621 — — — 621

September 30, 2020 39,114 $ 39 1,618 $ 2 $ 432,823 $ 749,678 $ ( 179,659 ) 8,394 $ ( 256,074 ) $ 3,049 $ 749,858

(a) The Company adopted the provisions of ASC 326, Current Expected Credit Losses ("CECL") effective January 1, 2020, which resulted in a decrease to Retained earnings of $ 1.4 million.

Recent Accounting Pronouncements

As disclosed in our March 31, 2020 Form 10Q, in March 2020, ASU 2020-04, Reference Rate Reform, was issued to provide optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates such as LIBOR.

The expedients and exceptions provided by this update will not be available after December 31, 2022, other than for certain hedging relationships entered into prior.

For the Company’s cash flow hedges in which the designated hedged risk is LIBOR, the Company has adopted the portion of the guidance that allows it to assert that it remains probable that the hedged forecasted transaction will occur.

The Company plans to adopt the remaining applicable provisions of this guidance beginning on July 1, 2021.

(b) In the third quarter of 2021, Standish Family Holdings, LLC and J.S.

Standish Company (the "Selling Stockholders") agreed to sell to J.P.

Morgan Securities LLC 1,566,644 shares of the Company’s Class A Common Stock, par value $ 0.001 per share, to be issued upon conversion of an equal number of shares of the Company’s Class B common stock, par value $ 0.001 per share, at a price per share of $ 75.9656 (the "Transaction").

Immediately following the Transaction, the Selling Stockholders and related persons (including Christine L.

Standish and John C.

Standish) hold in the aggregate shares of the Company’s common stock entitling them to cast less than one percent of the combined votes entitled to be cast by all stockholders of the Company.

Costs associated with the Transaction were borne directly by the Selling Stockholders.

On October 25, 2021, the Company's Board of Directors authorized the Company to repurchase shares of up to $ 200 million through open market purchases, privately negotiated transactions or otherwise, and to determine the prices, times and amounts.

The program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company's discretion.

The share repurchase program does not have an expiration date.

The timing and amount of any share repurchases will be based on the Company’s liquidity, general business and market conditions, debt covenant restrictions and other factors, including alternative investment opportunities and capital structure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements