ALBANY INTERNATIONAL CORP /DE/ 10-Q

ITEM 1. FINANCIAL STATEMENTS ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net sales $ 232,442 $ 211,999 $ 689,322 $ 673,753 Cost of goods sold 140,400 124,697 407,006 393,999 Gross profit 92,042 87,302 282,316 279,754 Selling, general, and administrative expenses 37,696 39,518 116,899 118,167 Technical and research expenses 9,673 8,301 28,916 26,304 Restructuring expenses, net 187 710 230 4,189 Operating income 44,486 38,773 136,271 131,094 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 Income before income taxes 43,831 39,276 126,367 107,137 Income tax expense 12,889 9,686 36,375 37,504 Net income 30,942 29,590 89,992 69,633 Net income/(loss) attributable to the noncontrolling interest 80 1 150 ( 1,419 ) Net income attributable to the Company $ 30,862 $ 29,589 $ 89,842 $ 71,052 Earnings per share attributable to Company shareholders - Basic $ 0.95 $ 0.92 $ 2.78 $ 2.20 Earnings per share attributable to Company shareholders - Diluted $ 0.95 $ 0.91 $ 2.77 $ 2.20 Shares of the Company used in computing earnings per share: Basic 32,381 32,337 32,369 32,326 Diluted 32,434 32,344 32,424 32,333 Dividends declared per share, Class A and Class B $ 0.20 $ 0.19 $ 0.60 $ 0.57 The accompanying notes are an integral part of the consolidated financial statements 3 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 30,942 $ 29,590 $ 89,992 $ 69,633 Other comprehensive income/(loss), before tax: Foreign currency translation and other adjustments ( 14,709 ) 19,249 ( 16,497 ) 3,047 Pension/postretirement settlements and curtailments — — — 378 Amortization of pension liability adjustments: 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 Derivative valuation adjustment 722 ( 385 ) 369 ( 12,515 ) Income taxes related to items of other comprehensive income/(loss): Pension/postretirement settlements and curtailments — — — ( 113 ) 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 ) Derivative valuation adjustment ( 186 ) 98 ( 95 ) 3,200 Comprehensive income/(loss) 18,095 49,558 77,489 65,955 Comprehensive income/(loss) attributable to the noncontrolling interest ( 112 ) 202 ( 69 ) ( 957 ) Comprehensive income/(loss) attributable to the Company $ 18,207 $ 49,356 $ 77,558 $ 66,912 The accompanying notes are an integral part of the consolidated financial statements 4 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) September 30, 2021 December 31, 2020 ASSETS Cash and cash equivalents $ 286,217 $ 241,316 Accounts receivable, net 199,124 188,423 Contract assets, net 115,924 139,289 Inventories 118,129 110,478 Income taxes prepaid and receivable 3,509 5,940 Prepaid expenses and other current assets 29,021 31,830 Total current assets $ 751,924 $ 717,276 Property, plant and equipment, net 426,806 448,554 Intangibles, net 41,020 46,869 Goodwill 183,568 187,553 Deferred income taxes 30,538 38,757 Noncurrent receivables, net 33,471 36,265 Other assets 72,916 74,662 Total assets $ 1,540,243 $ 1,549,936 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 54,397 $ 49,173 Accrued liabilities 112,481 125,459 Current maturities of long-term debt — 9 Income taxes payable 14,623 16,222 Total current liabilities 181,501 190,863 Long-term debt 350,000 398,000 Other noncurrent liabilities 117,057 130,424 Deferred taxes and other liabilities 11,352 10,784 Total liabilities 659,910 730,071 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; 40,759,527 issued in 2021 and 39,115,405 in 2020 41 39 Class B Common Stock, par value $ .001 per share; authorized 25,000,000 shares; issued and outstanding 1,154 in 2021 and 1,617,998 in 2020 — 2 Additional paid in capital 436,079 433,696 Retained earnings 841,162 770,746 Accumulated items of other comprehensive income: Translation adjustments ( 100,327 ) ( 83,203 ) Pension and postretirement liability adjustments ( 39,059 ) ( 39,661 ) Derivative valuation adjustment ( 5,525 ) ( 9,544 ) Treasury stock (Class A), at cost; 8,379,804 shares in 2021 and 8,391,011 shares in 2020 ( 255,768 ) ( 256,009 ) Total Company shareholders' equity 876,603 816,066 Noncontrolling interest 3,730 3,799 Total equity 880,333 819,865 Total liabilities and shareholders' equity $ 1,540,243 $ 1,549,936 The accompanying notes are an integral part of the consolidated financial statements 5 Index ALBANY INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 OPERATING ACTIVITIES Net income $ 30,942 $ 29,590 $ 89,992 $ 69,633 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 15,925 16,285 48,485 47,289 Amortization 2,289 1,997 6,862 7,017 Change in deferred taxes and other liabilities 1,606 3,074 7,022 12,434 Impairment of property, plant and equipment 25 303 563 536 Non-cash interest expense 283 ( 309 ) 593 ( 138 ) Compensation and benefits paid or payable in Class A Common Stock 606 80 2,232 596 Provision for credit losses from uncollected receivables and contract assets ( 1,075 ) ( 105 ) ( 1,158 ) 1,664 Foreign currency remeasurement loss/(gain) on intercompany loans 480 169 ( 551 ) 15,750 Fair value adjustment on foreign currency options 29 ( 64 ) 169 — Changes in operating assets and liabilities that provided/(used) cash: Accounts receivable ( 10,927 ) ( 2,048 ) ( 14,292 ) 6,069 Contract assets ( 3,473 ) ( 7,923 ) 22,170 ( 27,932 ) Inventories 546 4,585 ( 9,838 ) ( 20,043 ) Prepaid expenses and other current assets 3,949 ( 4,532 ) 2,444 ( 6,989 ) Income taxes prepaid and receivable 2,717 ( 454 ) 2,408 ( 662 ) Accounts payable ( 296 ) ( 5,108 ) 4,312 ( 15,491 ) Accrued liabilities 5,112 2,838 ( 12,311 ) ( 8,063 ) Income taxes payable 2,871 1,786 ( 1,085 ) 3,741 Noncurrent receivables 1,245 ( 228 ) 2,832 169 Other noncurrent liabilities ( 1,319 ) 111 ( 5,582 ) ( 413 ) Other, net 1,324 ( 388 ) 3,232 ( 1,474 ) Net cash provided by operating activities 52,859 39,659 148,499 83,693 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 8,918 ) ( 9,349 ) ( 31,754 ) ( 31,320 ) Purchased software ( 106 ) ( 109 ) ( 394 ) ( 155 ) Net cash used in investing activities ( 9,024 ) ( 9,458 ) ( 32,148 ) ( 31,475 ) FINANCING ACTIVITIES Proceeds from borrowings — — 8,000 70,000 Principal payments on debt — ( 17,005 ) ( 56,009 ) ( 76,016 ) Principal payments on finance lease liabilities ( 363 ) ( 335 ) ( 1,067 ) ( 6,798 ) Taxes paid in lieu of share issuance — — ( 998 ) ( 490 ) Proceeds from options exercised 4 5 153 25 Dividends paid ( 6,476 ) ( 6,144 ) ( 19,418 ) ( 18,424 ) Net cash used in financing activities ( 6,835 ) ( 23,479 ) ( 69,339 ) ( 31,703 ) Effect of exchange rate changes on cash and cash equivalents ( 4,113 ) 4,545 ( 2,111 ) ( 751 ) 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 Cash and cash equivalents at end of period $ 286,217 $ 215,304 $ 286,217 $ 215,304 The accompanying notes are an integral part of the consolidated financial statements 6 Index ALBANY INTERNATIONAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Significant Accounting Policies Basis of Presentation In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of results for such periods. Albany International Corp. (Albany, the Registrant, the Company, we, us, or our) consolidates the financial results of its subsidiaries for all periods presented. The results for any interim period are not necessarily indicative of results for the full year. The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in Albany International Corp.’s Consolidated Financial Statements and accompanying Notes. Actual results could differ materially from those estimates. 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. 2. Reportable Segments and Revenue Recognition In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments. The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate. We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure. The Albany Engineered Composites (“AEC”) segment, including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group (“Safran”) owns a 10 percent noncontrolling interest, provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. AEC’s largest program relates to CFM International’s LEAP engine. 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 $ 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 7 Index 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. In 2020, approximately 46 percent of AEC sales were related to U.S. government contracts or programs. The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements: Three months ended September 30, Nine months ended September 30, (in thousands) 2021 2020 2021 2020 Net sales Machine Clothing $ 154,171 $ 138,747 $ 462,298 $ 428,782 Albany Engineered Composites 78,271 73,252 227,024 244,971 Consolidated total $ 232,442 $ 211,999 $ 689,322 $ 673,753 Operating income/(loss) Machine Clothing $ 55,467 $ 45,699 $ 161,731 $ 149,418 Albany Engineered Composites 2,917 6,828 13,019 22,749 Corporate expenses ( 13,898 ) ( 13,754 ) ( 38,479 ) ( 41,073 ) Operating income $ 44,486 $ 38,773 $ 136,271 $ 131,094 Reconciling items: Interest income ( 654 ) ( 1,485 ) ( 1,584 ) ( 2,280 ) Interest expense 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 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 Machine Clothing $ 251 $ 384 $ 193 $ 1,414 Albany Engineered Composites ( 81 ) 358 ( 40 ) 2,606 Corporate expenses 17 ( 32 ) 77 169 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. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. 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 $ 2.1 million and $ 2.4 million for the three and nine month periods 8 Index 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 September 30, 2021 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 153,306 $ 865 $ 154,171 Albany Engineered Composites ASC — 26,904 26,904 Other AEC 3,589 47,778 51,367 Total Albany Engineered Composites 3,589 74,682 78,271 Total revenue $ 156,895 $ 75,547 $ 232,442 Nine months ended September 30, 2021 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 459,703 $ 2,595 $ 462,298 Albany Engineered Composites ASC — 80,158 80,158 Other AEC 11,901 134,965 146,866 Total Albany Engineered Composites 11,901 215,123 227,024 Total revenue $ 471,604 $ 217,718 $ 689,322 Three months ended September 30, 2020 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 137,899 $ 848 $ 138,747 Albany Engineered Composites ASC — 17,301 17,301 Other AEC 4,479 51,472 55,951 Total Albany Engineered Composites 4,479 68,773 73,252 Total revenue $ 142,378 $ 69,621 $ 211,999 9 Index Nine months ended September 30, 2020 (in thousands) Point in Time Revenue Recognition Over Time Revenue Recognition Total Machine Clothing $ 426,238 $ 2,544 $ 428,782 Albany Engineered Composites ASC — 72,771 72,771 Other AEC 14,942 157,258 172,200 Total Albany Engineered Composites 14,942 230,029 244,971 Total revenue $ 441,180 $ 232,573 $ 673,753 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 September 30, Nine months ended September 30, (in thousands) 2021 2020 2021 2020 Americas PMC $ 81,780 $ 70,663 $ 237,425 $ 225,565 Eurasia PMC 53,277 50,923 164,320 150,220 Engineered Fabrics 19,114 17,161 60,553 52,997 Total Machine Clothing Net sales $ 154,171 $ 138,747 $ 462,298 $ 428,782 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 $ 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. 10 Index 3. Pensions and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The Company also provides certain postretirement benefits to retired employees in the U.S. and Canada. 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 nine months ended September 30, 2021 and 2020, was as follows: Pension plans Other postretirement benefits (in thousands) 2021 2020 2021 2020 Components of net periodic benefit cost: Service cost $ 1,630 $ 1,728 $ 99 $ 150 Interest cost 3,999 4,621 827 1,285 Expected return on assets ( 4,802 ) ( 5,139 ) — — Settlement — 145 — — Curtailment — 233 — — Amortization of prior service cost/(credit) 10 24 ( 3,366 ) ( 3,366 ) Amortization of net actuarial loss 1,625 1,776 1,695 1,944 Net periodic benefit cost $ 2,462 $ 3,388 $ ( 745 ) $ 13 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 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. Service cost for defined benefit pension and postretirement plans are reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net periodic benefit cost are included in the line item Other (income)/expense, net in the Consolidated Statements of Income. 4. Other (Income)/Expense, net The components of Other (Income)/Expense, net are: Three months ended September 30, Nine months ended September 30, (in thousands) 2021 2020 2021 2020 Currency transaction (gains)/losses $ 472 $ ( 149 ) $ 813 $ 14,702 Bank fees and amortization of debt issuance costs 74 96 284 264 Components of net periodic pension and postretirement cost other than service ( 6 ) 384 ( 12 ) 1,523 Other 2,213 ( 3,076 ) 3,130 ( 2,574 ) Total $ 2,753 $ ( 2,745 ) $ 4,215 $ 13,915 Other (income)/expense, net included losses related to the revaluation of nonfunctional-currency balances of $ 0.8 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 11 Index 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. 5. Income Taxes 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) 2021 2020 2021 2020 Income tax based on income from continuing operations (1) $ 13,150 $ 12,666 $ 37,733 $ 36,237 Provision for change in estimated tax rate 397 ( 1,196 ) 179 ( 1,687 ) Income tax before discrete items 13,547 11,470 37,912 34,550 Discrete tax expense: Exercise of U.S. stock options ( 4 ) ( 7 ) ( 160 ) ( 7 ) Adjustments to prior period tax liabilities ( 674 ) ( 1,750 ) ( 2,095 ) ( 983 ) Revaluation of deferred tax assets due to tax rate change — — 352 — Provision for/resolution of tax audits and contingencies, net — ( 46 ) 278 ( 1,779 ) Write-off of net operating losses related to tax audit — — — 1,830 Tax effect of non-deductible foreign exchange loss on intercompany loan — 3 — 3,658 Creation of valuation allowance — 8 — 230 Other 20 8 88 5 Total income tax expense $ 12,889 $ 9,686 $ 36,375 $ 37,504 (1) Calculated at estimated tax rates of 30.0 % and 32.2 %, respectively Income tax expense for the quarter was computed in accordance with ASC 740-270, Income Taxes – Interim Reporting. 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 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. In the first quarter of 2020, the Company recorded a $ 1.8 million out-of-period charge related to developments in ongoing tax audits, which resulted in a corresponding decrease in deferred tax assets. 12 Index 6. Earnings Per Share 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 September 30, Nine months ended September 30, (in thousands, except market price and earnings per share) 2021 2020 2021 2020 Net income attributable to the Company $ 30,862 $ 29,589 $ 89,842 $ 71,052 Weighted average number of shares: Weighted average number of shares used in calculating basic net income per share 32,381 32,337 32,369 32,326 Effect of dilutive stock-based compensation plans 53 7 55 7 Weighted average number of shares used in calculating diluted net income per share 32,434 32,344 32,424 32,333 Average market price of common stock used for calculation of dilutive shares $ 80.33 $ 51.81 $ 82.41 $ 57.05 Net income attributable to the Company per share: Basic $ 0.95 $ 0.92 $ 2.78 $ 2.20 Diluted $ 0.95 $ 0.91 $ 2.77 $ 2.20 7. Accumulated Other Comprehensive Income (AOCI) The table below presents changes in the components of AOCI for the period December 31, 2020 to September 30, 2021: (in thousands) Translation adjustments Pension and postretirement liability adjustments Derivative adjustment Total Other Comprehensive Income December 31, 2020 $ ( 83,203 ) $ ( 39,661 ) $ ( 9,544 ) $ ( 132,408 ) Other comprehensive income/(loss) before reclassifications, net of tax ( 17,124 ) 627 274 ( 16,223 ) Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax — — 3,745 3,745 Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax — ( 25 ) — ( 25 ) Net current period other comprehensive income ( 17,124 ) 602 4,019 ( 12,503 ) September 30, 2021 $ ( 100,327 ) $ ( 39,059 ) $ ( 5,525 ) $ ( 144,911 ) 13 Index The table below presents changes in the components of AOCI for the period December 31, 2019 to September 30, 2020: (in thousands) Translation adjustments Pension and postretirement liability adjustments Derivative adjustment Total Other Comprehensive Income December 31, 2019 $ ( 122,852 ) $ ( 49,994 ) $ ( 3,135 ) $ ( 175,981 ) Other comprehensive income/(loss) before reclassifications, net of tax 3,038 9 ( 9,315 ) ( 6,268 ) Pension/postretirement curtailment loss, net of tax — 265 — 265 Interest expense related to swaps reclassified to the Consolidated Statements of Income, net of tax — — 2,041 2,041 Pension and postretirement liability adjustments reclassified to Consolidated Statements of Income, net of tax — 284 — 284 Net current period other comprehensive income 3,038 558 ( 7,274 ) ( 3,678 ) 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 nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, (in thousands) 2021 2020 2021 2020 Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income: Expense/(income) related to interest rate swaps included in Income before taxes (a) $ 1,803 $ 1,219 $ 5,049 $ 2,742 Income tax effect ( 466 ) ( 311 ) ( 1,304 ) ( 701 ) Effect on net income due to items reclassified from Accumulated Other Comprehensive Income $ 1,337 $ 908 $ 3,745 $ 2,041 Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income: Pension/postretirement curtailment — — — 378 Amortization of prior service credit ( 1,119 ) ( 1,114 ) ( 3,356 ) ( 3,342 ) Amortization of net actuarial loss 1,103 1,244 3,320 3,720 Total pretax amount reclassified (b) ( 16 ) 130 ( 36 ) 756 Income tax effect 5 ( 32 ) 11 ( 207 ) Effect on net income due to items reclassified from Accumulated Other Comprehensive Income $ ( 11 ) $ 98 $ ( 25 ) $ 549 (a) Included in Interest expense, net are payments related to the interest rate swap agreements and amortization of swap buyouts (see Notes 13 and 14). (b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 3). 8. Noncontrolling Interest Effective October 31, 2013, Safran S.A. (Safran) acquired a 10 percent equity interest in a new Albany subsidiary, Albany Safran Composites, LLC (ASC). 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: 14 Index Nine months ended September 30, (in thousands, except percentages) 2021 2020 Net income/(loss) of Albany Safran Composites (ASC) $ 2,495 $ ( 13,310 ) Less: Return attributable to the Company's preferred holding 991 884 Net income/(loss) of ASC available for common ownership $ 1,504 $ ( 14,194 ) Ownership percentage of noncontrolling shareholder 10 % 10 % Net income/(loss) attributable to the noncontrolling interest $ 150 $ ( 1,419 ) Noncontrolling interest, beginning of year $ 3,799 $ 4,006 Net income/(loss) attributable to the noncontrolling interest 150 ( 1,419 ) Changes in other comprehensive income attributable to the noncontrolling interest ( 219 ) 462 Noncontrolling interest, end of interim period $ 3,730 $ 3,049 9. Accounts Receivable Accounts receivable includes trade receivables. In connection with certain sales in Asia, the Company accepts a bank promissory note as customer payment. The notes may be presented for payment at maturity, which is less than one year. As of September 30, 2021 and December 31, 2020, Accounts receivable consisted of the following: (in thousands) September 30, 2021 December 31, 2020 Trade and other accounts receivable $ 176,320 $ 167,370 Bank promissory notes 25,828 24,860 Allowance for expected credit losses ( 3,024 ) ( 3,807 ) Accounts receivable, net $ 199,124 $ 188,423 The Company has Noncurrent receivables in the AEC segment that represent revenue earned, which has extended payment terms. The Noncurrent receivables will be invoiced to the customer over a 10-year period, which began in 2020. As of September 30, 2021 and December 31, 2020, Noncurrent receivables consisted of the following: (in thousands) September 30, 2021 December 31, 2020 Noncurrent receivables $ 33,681 $ 36,539 Allowance for expected credit losses ( 210 ) ( 274 ) Noncurrent receivables, net $ 33,471 $ 36,265 10. Contract Assets and Liabilities Contract assets includes unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheets. 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 September 30, 2021 and December 31, 2020, Contract assets and Contract liabilities consisted of the following: 15 Index (in thousands) September 30, 2021 December 31, 2020 Contract assets $ 116,653 $ 140,348 Allowance for expected credit losses ( 729 ) ( 1,059 ) Contract assets, net $ 115,924 $ 139,289 Contract liabilities $ 6,250 $ 8,206 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 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. 11. Inventories Costs included in inventories are raw materials, labor, supplies and allocable depreciation and overhead. Raw material inventories are valued on an average cost basis. Other inventory cost elements are valued at cost, using the first-in, first-out method. The Company writes down the inventories for estimated obsolescence, and to lower of cost or net realizable value based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related write-down represents the new cost basis of such inventories. As of September 30, 2021 and December 31, 2020, Inventories consisted of the following: (in thousands) September 30, 2021 December 31, 2020 Raw materials $ 57,534 $ 57,789 Work in process 44,715 40,416 Finished goods 15,880 12,273 Total inventories $ 118,129 $ 110,478 12. Goodwill and Other Intangible Assets Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Our reportable segments are consistent with our operating segments. Determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates, and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment whenever events, such as significant changes in the business climate, plant closures, changes in product offerings, or other circumstances indicate that the carrying amount may not be recoverable. To determine fair value, we utilize two market-based approaches and an income approach. Under the market-based approaches, we utilize information regarding the Company, as well as publicly available industry information, to determine earnings multiples and sales multiples. 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. 16 Index 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 excess between the fair and carrying values. Accordingly, no impairment charges were recorded. 13. Financial Instruments Long-term debt, principally to banks and noteholders, consists of: (in thousands, except interest rates) 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 $ 350,000 $ 398,000 Other debt, at an average end of period rate of 5.50 % in 2020, paid in varying amounts through April 2021 — 9 Long-term debt 350,000 398,009 Less: current portion — ( 9 ) Long-term debt, net of current portion $ 350,000 $ 398,000 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 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 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 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. The Borrowings are guaranteed by certain of the Company’s subsidiaries. Our ability to borrow additional amounts under the Credit Agreement is conditional upon the absence of any defaults, as well as the absence of any material adverse change (as defined in the Credit Agreement). On June 14, 2021, we entered into interest rate swap agreements for the period October 17, 2022 through October 27, 2024. 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 September 16, 2021 was 0.09 %. 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. We received $ 6.3 million when the swap agreements were terminated, which has been fully amortized into interest expense through March 2021. On November 28, 2017, we entered into interest rate swap agreements for the period December 18, 2017 through October 17, 2022. 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 2.11 % during the period. 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 September 16, 2021 was 0.09 %, during the swap period. On September 16, 2021, the all-in-rate on the $ 350 million of debt was 3.735 %. 17 Index These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14. No cash collateral was received or pledged in relation to the swap agreements. 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 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 September 30, 2021. 14. Fair-Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting principles establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. 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 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: September 30, 2021 December 31, 2020 Quoted prices in active markets Significant other observable inputs Quoted prices in active markets Significant other observable inputs (in thousands) (Level 1) (Level 2) (Level 1) (Level 2) Fair Value Assets: Cash equivalents $ 32,878 $ — $ 17,508 $ — Other Assets: Common stock of unaffiliated foreign public company (a) 741 — 748 — Interest rate swaps — 174 — — Liabilities: Other noncurrent liabilities: Interest rate swaps — ( 7,622 ) — ( 12,714 ) (a) Original cost basis $ 0.5 million. Cash equivalents include short-term securities that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities. The interest rate swaps are accounted for as hedges of future cash flows. The fair value of our interest rate swaps are derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve, and is included in Other assets and/or Other noncurrent liabilities in the Consolidated Balance Sheets. 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 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 $ 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. 18 Index 15. Contingencies Asbestos Litigation Albany International Corp. 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 3,625 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: Year ended December 31, Opening Number of Claims Claims Dismissed, Settled, or Resolved New Claims Closing Number of Claims Amounts Paid (thousands) to Settle or Resolve 2016 3,791 148 102 3,745 $ 758 2017 3,745 105 90 3,730 55 2018 3,730 152 106 3,684 100 2019 3,684 51 75 3,708 25 2020 3,708 152 59 3,615 57 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. Due to the fact that information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to pending or future claims and therefore are unable to estimate a range of reasonably possible loss in excess of amounts already accrued for pending or future claims. While we believe we have meritorious defenses to these claims, we have settled certain claims for amounts we consider reasonable given the facts and circumstances of each case. Our insurance carrier has defended each case and funded settlements under a standard reservation of rights. 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. Of this amount, almost 100 % was paid by our insurance carrier, who has confirmed that we have approximately $ 140 million of remaining coverage under primary and excess policies that should be available with respect to current and future asbestos claims. The Company’s subsidiary, Brandon Drying Fabrics, Inc. (“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 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. Since 2004, Brandon’s insurance carriers have covered 100 % of indemnification and defense costs, subject to policy limits and a standard reservation of rights. In some of these asbestos cases, the Company is named both as a direct defendant and as the “successor in interest” to Mount Vernon Mills (“Mount Vernon”). We acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos-containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. We deny any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, we have successfully moved for dismissal in a number of actions. 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 19 Index 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. 16. Changes in Shareholders’ Equity The following table summarizes changes in Shareholders’ Equity for the period December 31, 2020 to September 30, 2021: Class A Common Stock Class B Common Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Class A Treasury Stock Noncontrolling Interest Total Equity (in thousands) Shares Amount Shares Amount Shares Amount December 31, 2020 39,115 $ 39 1,618 $ 2 $ 433,696 $ 770,746 $ ( 132,408 ) 8,391 $ ( 256,009 ) $ 3,799 $ 819,865 Net income — — — — — 27,582 — — — 27 27,609 Compensation and benefits paid or payable in shares 20 — — — ( 13 ) — — — — — ( 13 ) Options exercised 6 — — — 128 — — — — — 128 Dividends declared Class A Common Stock, $ 0.20 per share — — — — — ( 6,150 ) — — — — ( 6,150 ) Class B Common Stock, $ 0.20 per share — — — — — ( 324 ) — — — — ( 324 ) Cumulative translation adjustments — — — — — — ( 15,955 ) — — ( 210 ) ( 16,165 ) Pension and postretirement liability adjustments — — — — — — 509 — — — 509 Derivative valuation adjustment — — — — — — 752 — — — 752 March 31, 2021 39,141 $ 39 1,618 $ 2 $ 433,811 $ 791,854 $ ( 147,102 ) 8,391 $ ( 256,009 ) $ 3,616 $ 826,211 Net income — — — — — 31,397 — — — 43 31,440 Compensation and benefits paid or payable in shares — — — — 692 — — — — — 692 Options exercised 1 — — — 21 — — — — — 21 Shares issued to Directors' — — — — 706 — — ( 11 ) 241 — 947 Dividends declared Class A Common Stock, $ 0.20 per share — — — — — ( 6,150 ) — — — — ( 6,150 ) Class B Common Stock, $ 0.20 per share — — — — — ( 323 ) — — — — ( 323 ) Cumulative translation adjustments — — — — — — 13,774 — — 183 13,957 Pension and postretirement liability adjustments — — — — — — ( 130 ) — — — ( 130 ) Derivative valuation adjustment — — — — — — 1,394 — — — 1,394 June 30, 2021 39,142 $ 39 1,618 $ 2 $ 435,230 $ 816,778 $ ( 132,064 ) 8,380 $ ( 255,768 ) $ 3,842 $ 868,059 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 20 Index The following table summarizes changes in Shareholders’ Equity for the period December 31, 2019 to September 30, 2020: Class A Common Stock Class B Common Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Class A Treasury Stock Noncontrolling Interest Total Equity (in thousands) Shares Amount Shares Amount Shares Amount December 31, 2019 39,099 $ 39 1,618 $ 2 $ 432,518 $ 698,496 $ ( 175,981 ) 8,409 $ ( 256,391 ) $ 4,006 $ 702,689 Adoption of accounting standards (a) — — — — — ( 1,443 ) — — — — ( 1,443 ) Net income — — — — — 9,109 — — — ( 1,515 ) 7,594 Compensation and benefits paid or payable in shares 13 — — — ( 682 ) — — — — — ( 682 ) Options exercised — — — — — — — — — Shares issued to Directors' — — — — — — — — — — — Dividends declared Class A Common Stock, $ 0.19 per share — — — — — ( 5,834 ) — — — — ( 5,834 ) Class B Common Stock, $ 0.19 per share — — — — — ( 307 ) — — — — ( 307 ) Cumulative translation adjustments — — — — — — ( 25,747 ) — — 109 ( 25,638 ) Pension and postretirement liability adjustments — — — — — — 890 — — — 890 Derivative valuation adjustment — — — — — — ( 7,708 ) — — — ( 7,708 ) March 31, 2020 39,112 $ 39 1,618 $ 2 $ 431,836 $ 700,021 $ ( 208,546 ) 8,409 $ ( 256,391 ) $ 2,600 $ 669,561 Net income — — — — — 32,354 — — — 95 32,449 Compensation and benefits paid or payable in shares — — — — 466 — — ( 15 ) 317 — 783 Options exercised 1 — — — 20 — — — — — 20 Shares issued to Directors' — — — — 416 — — — — — 416 Dividends declared Class A Common Stock, $ 0.20 per share — — — — — ( 5,835 ) — — — — ( 5,835 ) Class B Common Stock, $ 0.20 per share — — — — — ( 307 ) — — — — ( 307 ) Cumulative translation adjustments — — — — — — 8,964 — — 152 9,116 Pension and postretirement liability adjustments — — — — — — 142 — — — 142 Derivative valuation adjustment — — — — — — ( 187 ) — — — ( 187 ) 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 21 Index (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. (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. 22 Index