10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(√) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2014

OR

(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 1-10026

ALBANY INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)

Delaware	14-0462060
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)
216 Airport Drive, Rochester, New Hampshire	03867
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code 518-445-2200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [ √ ] No [    ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ √ ] No [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	[ √ ]	Accelerated filer	[    ]
Non-accelerated filer	[    ]	Smaller reporting company	[    ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [    ] No [ √ ]

The registrant had 28.6 million shares of Class A Common Stock and 3.3 million shares of Class B Common Stock outstanding as of October 17, 2014.

ALBANY INTERNATIONAL CORP.

TABLE OF CONTENTS

		Page No.
Part I Financial information
	Item 1. Financial Statements
	Consolidated statements of income– three and nine months ended September 30, 2014 and 2013	3
	Consolidated statements of comprehensive income– three and nine months ended September 30, 2014 and 2013	4
	Consolidated balance sheets – September 30, 2014 and December 31, 2013	5
	Consolidated statements of cash flows – three and nine months ended September 30, 2014 and 2013	6
	Notes to consolidated financial statements	7
	Forward-looking statements	25
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	41
	Item 4. Controls and Procedures	41
Part II Other Information
	Item 1. Legal Proceedings	41
	Item 1A. Risk Factors	42
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 3. Defaults upon Senior Securities	42
	Item 4.  Mine Safety Disclosures	42
	Item 5. Other Information	42
	Item 6. Exhibits	42

2

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

Three Months Ended				Nine Months Ended
September 30,				September 30,
2014		2013		2014		2013
$179,861		$183,147	Net sales	$553,686		$567,775
111,242		115,146	Cost of goods sold	334,915		349,572
68,619		68,001	Gross profit	218,771		218,203
33,618		39,143	Selling, general, and administrative expenses	112,787		117,690
14,924		13,347	Technical, product engineering, and research    expenses	43,190		41,040
919		2,256	Restructuring and other, net	4,058		27,213
19,158		13,255	Operating income	58,736		32,260
2,486		3,484	Interest expense, net	8,121		11,056
(1,864	)	2,692	Other (income)/expenses, net	(4,464	)	5,637
18,536		7,079	Income before income taxes	55,079		15,567
6,762		2,381	Income tax expense	21,435		6,386
11,774		4,698	Income from continuing operations	33,644		9,181
-		-	Loss from operations of discontinued business	-		(575	)
-		-	Income tax benefit on discontinued operations	-		(224	)
-		-	Loss from discontinued operations	-		(351	)
11,774		4,698	Net income	33,644		8,830
(38	)	-	Net loss attributable to the noncontrolling interest	(8	)	-
$11,812		$4,698	Net income attributable to the Company	$33,652		$8,830
			Earnings per share attributable to Company shareholders - Basic
$0.37		$0.15	Income from continuing operations	$1.06		$0.29
0.00		0.00	Discontinued operations	0.00		(0.01	)
$0.37		$0.15	Net income attributable to the Company	$1.06		$0.28
			Earnings per share attributable to Company shareholders - Diluted
$0.37		$0.15	Income from continuing operations	$1.05		$0.29
0.00		0.00	Discontinued operations	0.00		(0.01	)
$0.37		$0.15	Net income attributable to the Company	$1.05		$0.28
			Shares of the Company used in computing earnings per share:
31,848		31,719	Basic	31,822		31,615
31,946		31,841	Diluted	31,924		31,744
$0.16		$0.15	Dividends per share	$0.47		$0.44

The accompanying notes are an integral part of the consolidated financial statements

3

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

Three Months Ended					Nine Months Ended
September 30,					September 30,
2014		2013			2014		2013
$11,774		$4,698		Net income	$33,644		$8,830
				Other comprehensive income, before tax:
(27,765	)	17,805		Foreign currency translation adjustments	(29,705	)	4,536
-		14,417		Pension/postretirement plan remeasurement	-		14,417
-		7,974		Pension/postretirement plan amendment	-		7,974
				Amortization of pension liability adjustment:
-		17		Transition obligation	-		51
(1,108	)	(974	)	Prior service (credit)/cost	(3,325	)	(2,791	)
1,343		1,635		Net actuarial loss	4,026		4,963
480		467		Payments related to interest rate swaps included in earnings	1,431		1,377
446		(865	)	Derivative valuation adjustment	(869	)	1,096
				Income taxes related to items of other comprehensive income:
-		(5,623	)	Pension/postretirement plan remeasurement	-		(5,623	)
-		(3,110	)	Pension/postretirement plan amendment	-		(3,110	)
(94	)	(265	)	Amortization of pension liability adjustment	(280	)	(806	)
(187	)	(183	)	Payments related to interest rate swaps included in earnings	(558	)	(537	)
(174	)	338		Derivative valuation adjustment	339		(427	)
(15,285	)	36,331		Comprehensive income/(loss)	4,703		29,950
(31	)	-		Net loss and comprehensive income attributable to the noncontrolling interest	(1	)	-
($15,316	)	$36,331		Comprehensive income/(loss) attributable to the Company	$4,702		$29,950

The accompanying notes are an integral part of the consolidated financial statements

4

ALBANY INTERNATIONAL CORP.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	September 30,		December 31,
	2014		2013
ASSETS
Cash and cash equivalents	$195,461		$222,666
Accounts receivable, net	147,483		163,547
Inventories	121,592		112,739
Deferred income taxes	13,666		13,873
Prepaid expenses and other current assets	9,238		9,659
Total current assets	487,440		522,484
Property, plant and equipment, net	408,096		418,830
Intangibles	443		616
Goodwill	74,022		78,890
Income taxes receivable and deferred	110,609		119,612
Other assets	31,331		26,456
Total assets	$1,111,941		$1,166,888
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable	$551		$625
Accounts payable	32,211		36,397
Accrued liabilities	100,809		112,331
Current maturities of long-term debt	15		3,764
Income taxes payable and deferred	5,898		5,391
Total current liabilities	139,484		158,508
Long-term debt	283,100		300,111
Other noncurrent liabilities	96,991		106,014
Deferred taxes and other credits	52,895		54,476
Total liabilities	572,470		619,109
SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00 per share;
authorized 2,000,000 shares; none issued	-		-
Class A Common Stock, par value $.001 per share;
authorized 100,000,000 shares; issued
37,076,689 in 2014 and 36,997,277 in 2013	37		37
Class B Common Stock, par value $.001 per share;
authorized 25,000,000 shares; issued and
outstanding 3,235,048 in 2014 and 2013	3		3
Additional paid in capital	418,546		416,728
Retained earnings	453,286		434,598
Accumulated items of other comprehensive income:
Translation adjustments	(30,841	)	(138	)
Pension and postretirement liability adjustments	(46,964	)	(48,383	)
Derivative valuation adjustment	(634	)	(977	)
Treasury stock (Class A), at cost 8,459,498 shares
in 2014 and 8,463,635 in 2013	(257,481	)	(257,571	)
Total Company shareholders' equity	535,952		544,297
Noncontrolling interest	3,519		3,482
Total equity	539,471		547,779
Total liabilities and shareholders' equity	$1,111,941		$1,166,888

The accompanying notes are an integral part of the consolidated financial statements

5

ALBANY INTERNATIONAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW

(in thousands)

(unaudited)

Three Months Ended					Nine Months Ended
September 30,					September 30,
2014		2013			2014		2013
				OPERATING ACTIVITIES
$11,774		$4,698		Net income	$33,644		$8,830
				Adjustments to reconcile net income to net cash provided by operating activities:
13,737		14,230		Depreciation	42,120		42,868
1,999		1,567		Amortization	5,621		4,884
(2,637	)	(283	)	Change in long-term liabilities, deferred taxes and other credits	95		(4,274	)
557		264		Provision for write-off of property, plant and equipment	1,286		329
-		-		Gain on disposition or involuntary conversion of assets	(961	)	(3,763	)
(16	)	(420	)	Excess tax benefit of options exercised	(161	)	(944	)
213		287		Compensation and benefits paid or payable in Class A Common Stock	1,160		(887	)
				Changes in operating assets and liabilities that provide/(use) cash, net of business divestitures:
(4,368	)	5,759		Accounts receivable	9,929		(479	)
(1,279	)	290		Inventories	(12,238	)	(240	)
661		327		Prepaid expenses and other current assets	275		(1,706	)
100		129		Income taxes prepaid and receivable	114		309
(2,128	)	4,516		Accounts payable	(2,867	)	3,924
4,414		4,076		Accrued liabilities	(8,265	)	25,005
1,819		(4,101	)	Income taxes payable	760		(8,978	)
(2,383	)	(593	)	Other, net	(6,512	)	(1,824	)
22,463		30,746		Net cash provided by operating activities	64,000		63,054
				INVESTING ACTIVITIES
(18,704	)	(18,378	)	Purchases of property, plant and equipment	(46,106	)	(46,186	)
(189	)	(728	)	Purchased software	(504	)	(1,376	)
-		-		Proceeds from sale or involuntary conversion of assets	961		6,268
-		13,000		Proceeds from sale of discontinued operations, net of expenses	-		13,000
(18,893	)	(6,106	)	Net cash used in investing activities	(45,649	)	(28,294	)
				FINANCING ACTIVITIES
5,420		5,271		Proceeds from borrowings	10,090		57,176
(6,815	)	(18,562	)	Principal payments on debt	(30,924	)	(69,221	)
223		1,661		Proceeds from options exercised	610		4,629
16		420		Excess tax benefit of options exercised	161		944
-		-		Debt acquisition costs	-		(1,639	)
(5,094	)	(4,747	)	Dividends paid	(14,633	)	(9,170	)
(6,250	)	(15,957	)	Net cash used in financing activities	(34,696	)	(17,281	)
(8,695	)	6,805		Effect of exchange rate changes on cash and cash equivalents	(10,860	)	4,612
(11,375	)	15,488		(Decrease)/increase in cash and cash equivalents	(27,205	)	22,091
206,836		197,321		Cash and cash equivalents at beginning of period	222,666		190,718
$195,461		$212,809		Cash and cash equivalents at end of period	$195,461		$212,809

The accompanying notes are an integral part of the consolidated financial statements

6

ALBANY INTERNATIONAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments and elimination of intercompany transactions necessary for a fair presentation of results for such periods. Albany International Corp. (“Albany”) 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 information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Risk Factors,” “ Legal Proceedings,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” “Quantitative and Qualitative Disclosures about Market Risk” and the Consolidated Financial Statements and Notes thereto included in Items 1A, 3, 7, 7A and 8, respectively, of the Albany International Corp. Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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.

2. 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). Under the terms of the transaction agreements, ASC is the exclusive supplier to Safran of advanced 3D-woven composite parts for use in aircraft and rocket engines, thrust reversers and nacelles, and aircraft landing and braking systems (the “Safran Applications”). AEC may develop and supply parts other than advanced 3D-woven composite parts for all aerospace applications, as well as advanced 3D-woven composite parts for any aerospace applications that are not Safran Applications (such as airframe applications) and any non-aerospace applications.

The agreement provides Safran an option to purchase Albany’s remaining 90 percent interest upon the occurrence of certain bankruptcy or performance default events, or if Albany’s Engineered Composites business is sold to a direct competitor of Safran. The purchase price is based initially on the same valuation of ASC used to determine Safran’s 10% equity interest, and increases over time as LEAP production increases.

In accordance with the operating agreement, Albany received a $28 million preferred holding in ASC which includes a preferred return based on the Company’s revolving credit agreement. The common shares of ASC are owned 90 percent by Albany and 10 percent by Safran.

7

The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity:

(in thousands, except percentages)	Nine months ended September 30, 2014
Net income of ASC	$679
Less: Return attributable to the Company's preferred holding	759
Net loss of ASC available for common ownership	(80	)
Ownership percentage of noncontrolling shareholder	10	%
Net loss attributable to noncontrolling interest	($8	)
Noncontrolling interest as of December 31, 2013	$3,482
Adjustment to net assets contributed by Albany	38
Net loss attributable to noncontrolling interest	(8	)
Changes in other comprehensive income attributable to noncontrolling interest	7
Noncontrolling interest as of September 30, 2014	$3,519

3. Reportable Segments

Effective January 1, 2014, Albany International Corp. (the “Company”)  changed its business segment reporting by recasting, for all prior periods, certain expenses previously identified as Research and Unallocated expenses to existing segments.  The Company has two reportable segments: Machine Clothing (MC) and Albany Engineered Composites (AEC), and had Research and Unallocated expenses that were not allocated to these segments.  Substantially all research and development expenses are now included in segment operating expenses. Prior to this change, Unallocated expenses included long-term incentive compensation for all Company employees.  To the extent such programs are related to MC and AEC employees, such expenses are now included in segment operating expenses. Additionally, the amounts previously referred to as “Unallocated expenses,” is now referred to as “Corporate expenses.”  These changes are being made to be consistent with how the chief operating decision-maker assesses Company performance.  On April 10, 2014, we filed a Form 8-K to show the effect of these changes on previously reported results and, accordingly, the 2013 segment results in this report reflect the effect of this change.

8

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)	2014		2013		2014		2013
Net sales
Machine Clothing	$157,891		$162,864		$494,788		$507,809
Albany Engineered Composites	21,970		20,283		58,898		59,966
Consolidated total	$179,861		$183,147		$553,686		$567,775
Operating income
Machine Clothing	$33,308		$27,910		$103,329		$80,287
Albany Engineered Composites	(2,765	)	(3,951	)	(9,785	)	(13,032	)
Corporate expenses	(11,385	)	(10,704	)	(34,808	)	(34,995	)
Operating income before reconciling items	19,158		13,255		58,736		32,260
Reconciling items:
Interest income	(527	)	(351	)	(1,079	)	(951	)
Interest expense	3,013		3,835		9,200		12,007
Other expense/ (income), net	(1,864	)	2,692		(4,464	)	5,637
Income before income taxes	$18,536		$7,079		$55,079		$15,567

The table below presents restructuring costs by reportable segment (also see Note 5):

	Three months ended September 30,			Nine months ended September 30,
(in thousands)	2014		2013	2014	2013
Restructuring expense
Machine Clothing	$968		$2,250	$3,127	$26,673
Albany Engineered Composites	(49	)	6	931	540
Consolidated total	$919		$2,256	$4,058	$27,213

Machine Clothing restructuring expense was principally related to the reduction in manufacturing capacity at the production facilities in France. Restructuring expenses in the Albany Engineered Composites operations were principally related to organizational changes and exiting certain aerospace programs.

There were no material changes in the total assets of the reportable segments during this period.

4. Pensions and Other Postretirement Benefit Plans

Pension Plans

The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The U.S. qualified defined benefit pension plan has been closed to new participants since October 1998 and, as of February 2009, benefits accrued under this plan were frozen. As a result of the freeze, employees covered by the pension plan will receive, at retirement, benefits already accrued through February 2009, but no new benefits accrue after that date. Benefit accruals under the U.S. Supplemental Executive Retirement Plan ("SERP") were similarly frozen. The eligibility, benefit formulas, and contribution requirements for plans outside of the U.S. vary by location.

9

Other Postretirement Benefits

In addition to providing pension benefits, the Company provides various medical, dental, and life insurance benefits for certain retired United States employees. U.S. employees hired prior to 2005 may become eligible for these benefits if they reach normal retirement age while working for the Company. Benefits provided under this plan are subject to change. Retirees share in the cost of these benefits. Effective January 2005, any new employees who wish to be covered under this plan will be responsible for the full cost of such benefits. In September 2008, we changed the cost sharing arrangement under this program such that increases in health care costs are the responsibility of plan participants. In August 2013, we reduced the life insurance benefit for retirees and eliminated the benefit for active employees.

The Company also provides certain postretirement life insurance benefits to retired employees in Canada. The Company accrues the cost of providing postretirement benefits during the active service period of the employees. The Company currently funds the plan as claims are paid.

The composition of the net periodic benefit plan cost for the nine months ended September 30, 2014 and 2013 was as follows:

	Pension plans				Other postretirement benefits
(in thousands)	2014		2013		2014		2013
Components of net periodic benefit cost:
Service cost	$2,521		$2,526		$236		$789
Interest cost	7,217		5,999		2,057		2,374
Expected return on assets	(7,260	)	(6,103	)	-		-
Amortization of prior service cost/(credit)	41		27		(3,366	)	(2,818	)
Amortization of transition obligation	-		51		-		-
Amortization of net actuarial loss	1,845		2,357		2,181		2,606
Curtailment	(710	)	-		-		-
Settlement	-		315		-		-
Net periodic benefit cost	$3,654		$5,172		$1,108		$2,951

In September 2014, certain participants of the U.S. pension plan were notified of a limited-time opportunity whereby they could elect to receive the value of their pension benefit in a lump-sum payment. All lump-sum payments will be funded from pension plan assets and are expected to be made before the end of 2014. As a result of this initiative, and depending on the number of participants that elect the lump-sum payment, the Company expects to record a non-cash settlement charge of approximately $5 to $10 million in 2014. The payments are not expected to have a significant impact on the plan’s funded status.

5. Restructuring

During the second quarter of 2013, the Company commenced a program to restructure operations at the Company’s Machine Clothing production facilities in France. The restructuring, when completed, will have reduced employment by approximately 200 positions at these locations. As of September 30, 2014, approximately 190 positions had been eliminated.

Under the terms of the restructuring plan, the Company provides training, outplacement and other benefits, the costs of which are recorded as restructuring when they are incurred. The Company recorded a curtailment gain of $0.7 million for the first nine months of 2014 related to the elimination of pension accruals, which reduced net restructuring expense as reflected in the table below. Such curtailment gains are recorded as employees terminate employment and, accordingly, we expect to

10

record additional gains during 2014. Remaining costs for this program are expected to be between $1 and $2 million, and we expect these costs to occur over the next several quarters.

Restructuring expenses in the Albany Engineered Composites operations were principally related to organizational changes and exiting certain aerospace programs.

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

	Three months ended September 30,			Nine months ended September 30,
(in thousands)	2014		2013	2014	2013
Machine Clothing	$968		$2,250	$3,127	$26,673
Albany Engineered Composites	(49	)	6	931	540
Total	$919		$2,256	$4,058	$27,213

Nine months ended September 30, 2014 (in thousands)	Total restructuring costs incurred	Termination and other costs	Impairment of plant and equipment	Benefit plan curtailment/ settlement
Machine Clothing	$3,127	$3,837	$-	($710	)
Albany Engineered Composites	931	320	611	-
Total	$4,058	$4,157	$611	($710	)

Nine months ended September 30, 2013 (in thousands)	Total restructuring costs incurred	Termination and other costs	Impairment of plant and equipment	Benefit plan curtailment/ settlement
Machine Clothing	$26,673	$26,837	$-	($164	)
Albany Engineered Composites	540	452	88	-
Total	$27,213	$27,289	$88	($164	)

We expect that substantially all Accrued liabilities for restructuring will be paid within one year. The table below presents year-to-date changes in restructuring liabilities for 2014 and 2013, all of which related to termination costs:

(in thousands)	December 31, 2013	Restructuring charges accrued	Payments		Currency translation/other		September 30, 2014
Total Termination costs	$9,656	$4,148	($10,904	)	($277	)	$2,623

(in thousands)	December 31, 2012	Restructuring charges accrued	Payments		Currency translation/other	September 30, 2013
Total Termination costs	$4,947	$25,860	($5,529	)	$609	$25,887

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6. Other (Income)/Expenses, net

The components of Other (income)/expenses, net, are:

	Three months ended September 30,			Nine months ended September 30,
(in thousands)	2014		2013	2014		2013
Currency transactions	($1,916	)	$1,975	($3,819	)	$3,879
Bank fees and amortization of debt issuance costs	271		203	868		1,201
Gain on insurance recovery	(165	)	-	(1,126	)	-
Organizational costs related to Albany Safran Composites	-		500	-		500
Other	(54	)	14	(387	)	57
Total	($1,864	)	$2,692	($4,464	)	$5,637

In July 2013, the Company’s manufacturing facility in Germany was damaged by severe weather. At that time, the Company expensed the remaining book value of the damaged property, but that value was minimal. The gain recorded in the third quarter of 2014 represented the finalization of the insurance claim.

7. Income Taxes

The following table presents components of income tax expense/(benefit) for the three and nine months ended September 30, 2014 and 2013:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2014		2013		2014	2013
Income tax based on income from continuing operations, at estimated tax rates of 34.9% and 41.0%, respectively	$6,470		$2,902		$19,226	$6,382
Provision for change in estimated tax rates	(243	)	170		-	-
Income tax before discrete items	6,227		3,072		19,226	6,382
Discrete tax expense/(benefit):
Provision for/adjustment to beginning of year valuation allowances	-		-		437	-
Provision for/resolution of tax audits and contingencies, net	330		-		1,310	425
Adjustments to prior period tax liabilities	205		(818	)	459	(734	)
Enacted legislation change	-		(269	)	-	(269	)
Repatriation of non-U.S. prior years' earnings	-		396		-	582
Other discrete tax adjustments, net	-		-		3	-
Total income tax expense/(benefit)	$6,762		$2,381		$21,435	$6,386

The third quarter estimated effective tax rate on continuing operations was 34.9 percent in 2014, as compared to 41.0 percent for the same period in 2013. The change in the estimated effective tax rate was primarily attributable to changes in the anticipated amount and distribution of income and loss among the countries in which we operate. 

The Company records the residual U.S. and foreign taxes on certain amounts of current year foreign earnings that have been targeted for repatriation to the U.S. As a result, such amounts are not considered to be permanently reinvested, and the Company accrued as part of the income tax provision before discrete items, for the residual taxes on these earnings to the extent they cannot be repatriated in a tax-free manner. At September 30, 2014 the Company reported a deferred tax liability

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of $0.1 million on $3.6 million of prior year non-U.S. earnings that had been targeted for future repatriation to the U.S.

We conduct business globally and, as a result, the Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions.  In the normal course of business we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as the United States, Brazil, Canada, France, Germany, Italy, Mexico, and Switzerland. The open tax years in these jurisdictions range from 2000 to 2013. We are currently under audit in the U.S. and in other non-U.S. tax jurisdictions, including but not limited to Canada, Germany, and Italy.

It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change within a range of a net increase of $0 million to a net decrease of $2.6 million, from the reevaluation of uncertain tax positions arising in examinations, in appeals, or in the courts, or from the closure of tax statutes.

Not included in the range is $24 million of tax benefits in Germany related to a 1999 reorganization that have been challenged by the German tax authorities in the course of an audit.  In 2008 the German Federal Tax Court (FTC) denied tax benefits to other taxpayers in a case involving German tax laws relevant to our reorganization. One of these cases involved a non-German party, and in the ruling in that case, the FTC acknowledged that the German law in question may be violative of European Union (EU) principles and referred the issue to the European Court of Justice (ECJ) for its determination on this issue. In September 2009, the ECJ issued an opinion in this case that is generally favorable to the other taxpayer and referred the case back to the FTC for further consideration. In May 2010 the FTC released its decision, in which it resolved certain tax issues that may be relevant to our audit and remanded the case to a lower court for further development.  In 2012, the lower court decided in favor of the taxpayer and the government appealed the findings to the FTC.  On July 2, 2014, The FTC conducted a hearing in the aforementioned case involving the other taxpayer, and the taxpayer lost.  The final written decision of the FTC will be issued in the fourth quarter of 2014.  Although we believe that the relevant German tax law is violative of EU principles, management views the conclusion of this case as an opportunity to approach the German tax authorities with the goal of a settlement agreement.  We were required to pay tax and interest of approximately $13 million to the German tax authorities in order to pursue our appeal position.  In anticipation of a settlement, a portion of the prepaid taxes and interest along with certain deferred tax assets were adjusted downward by $6 million during the third quarter of 2014, which is included in Provision for/resolution of tax audits and contingencies in the above table. Also included on that line, for the third quarter of 2014, is a tax benefit related to the lapse of a tax statute.

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8. 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 data)	2014	2013	2014	2013
Net income attributable to the Company	$11,812	$4,698	$33,652	$8,830
Weighted average number of shares:
Weighted average number of shares used in
calculating basic net income per share	31,848	31,719	31,822	31,615
Effect of dilutive stock-based compensation plans:
Stock options	98	122	102	129
Weighted average number of shares used in
calculating diluted net income per share	31,946	31,841	31,924	31,744
Average market price of common stock used
for calculation of dilutive shares	$37.20	$34.43	$36.38	$30.53
Net income per share:
Basic	$0.37	$0.15	$1.06	$0.28
Diluted	$0.37	$0.15	$1.05	$0.28

The following table presents the number of shares issued and outstanding:

	Class A	Class B	Treasury	Net shares
	Shares	Shares	Shares	Outstanding
September 30, 2014	37,076,689	3,235,048	(8,459,498)	31,852,239
June 30, 2014	37,064,939	3,235,048	(8,459,498)	31,840,489
September 30, 2013	36,954,027	3,236,098	(8,463,635)	31,726,490

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9. Accumulated Other Comprehensive Income

The table below presents changes in the components of Accumulated Other Comprehensive Income for the period December 31, 2013 to September 30, 2014:

(in thousands)	Translation adjustments		Pension and postretirement liability adjustments		Derivative valuation adjustment		Total Other Comprehensive Income
December 31, 2013	($138	)	($48,383	)	($977	)	($49,498	)
Other comprehensive income before reclassifications	(30,703	)	998		(530	)	(30,235	)
Interest expense related to swaps reclassified to the     Statements of Income, net of tax	-		-		873		873
Pension and postretirement liability adjustments     reclassified to Statements of Income, net of tax	-		421		-		421
Net current period other comprehensive income	(30,703	)	1,419		343		(28,941	)
September 30, 2014	($30,841	)	($46,964	)	($634	)	($78,439	)

The components of our Accumulated Other Comprehensive Income that are reclassified to the Statements of Income relate to our pension and postretirement plans and interest rate swaps. The table below presents the amounts reclassified, and the line items of the Statements of Income that were affected:

	Three months ended September 30,				Nine months ended September 30,
Expense/(income)(in thousands)	2014		2013		2014		2013
Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:
Payments made on interest rate swaps included in earnings	$480		$467		$1,431		$1,377
Income tax effect	(187	)	(183	)	(558	)	(537	)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$293		$284		$873		$840
Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:
Amortization of prior service cost/(credit)	($1,108	)	($974	)	($3,325	)	($2,791	)
Amortization of transition obligation	-		17		-		51
Amortization of net actuarial loss	1,343		1,635		4,026		4,963
Total pretax amount reclassified (a)	235		678		701		2,223
Income tax effect	(94	)	(265	)	(280	)	(806	)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$141		$413		$421		$1,417

(a) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 4).

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10. Accounts Receivable

Accounts receivable includes trade receivables and revenue in excess of progress billings on long-term contracts in the Albany Engineered Composites business. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company determines the allowance based on historical write-off experience, customer-specific facts and economic conditions. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The components of Accounts receivable are summarized below:

(in thousands)	September 30, 2014			December 31, 2013
Trade and other accounts receivable		$146,348		$154,296
Revenue in excess of progress billings		9,799		20,525
Allowance for doubtful accounts		(8,664	)	(11,274	)
Total Accounts Receivable		$147,483		$163,547

11. Inventories

Inventories are stated at the lower of cost or market, and are valued at average cost, net of reserves. The Company maintains reserves for possible impairment in the value of inventories. Such reserves can be specific to certain inventory, or general based on judgments about the overall condition of the inventory. General reserves are established based on percentage write-downs applied to aged inventories, or for inventories that are slow-moving. If actual results differ from estimates, additional inventory write-downs may be necessary. These general reserves for aged inventory are relieved through income only when the inventory is sold.

As of September 30, 2014 and December 31, 2013, inventories consisted of the following:

(in thousands)	September  30, 2014	December 31, 2013
Raw materials	$29,208	$25,754
Work in process	47,383	45,998
Finished goods	45,001	40,987
Total inventories	$121,592	$112,739

During the second quarter of 2014, the Company identified an error in the value of Machine Clothing inventories reported in prior periods. Included in cost of goods sold for the first nine months of 2014 is a charge of $1.6 million to correct the errors by reducing inventories to their proper carrying values. The error relates to intercompany transfers of inventory and originated when the Company transitioned to a new ERP system in the Americas in 2008 and Europe in 2011.

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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 reporting units 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.

The entire balance of goodwill on our books is attributable to the Machine Clothing business. In the second quarter of 2014, the Company applied the qualitative assessment approach in performing its annual evaluation of goodwill and concluded that no impairment provision was required. In addition, there were no amounts at risk due to the large spread between the fair and carrying values.

We are continuing to amortize certain patents, trade names, customer contracts and technology assets that have finite lives. The changes in intangible assets and goodwill from December 31, 2013 to September 30, 2014, were as follows:

(in thousands)	December 31, 2013	Amortization		Currency Translation		September 30, 2014
Amortized intangible assets:
AEC trade names	$33	($4	)	$-		$29
AEC customer contracts	404	(151	)	-		253
AEC technology	179	(18	)	-		161
Total amortized intangible assets	$616	($173	)	$-		$443
Unamortized intangible assets:
Goodwill	$78,890	$-		($4,868	)	$74,022

Estimated amortization expense of intangibles for the years ending December 31, 2014 through 2018, is as follows:

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	Annual amortization
Year	(in thousands)
2014	$231
2015	231
2016	29
2017	29
2018	29

13. Financial Instruments

Long-term debt, principally to banks and bondholders, consists of:

(in thousands, except interest rates)	September 30, 2014		December 31, 2013
Private placement with a fixed interest rate of 6.84%, due 2015 and 2017	$100,000		$100,000
Credit agreement with borrowings outstanding at an end of period interest rate of 2.62% in 2014 and 2.53% in 2013 (including the effect of interest rate hedging transactions, as described below), due in 2018	183,000		200,000
Various notes and mortgages relative to operations principally outside the United States, at an average end of period rate of 5.50% in 2014 and 3.10% in 2013, due in varying amounts through 2021	115		3,875
Long-term debt	283,115		303,875
Less: current portion	(15	)	(3,764	)
Long-term debt, net of current portion	$283,100		$300,111

A note agreement and guaranty (“Prudential Agreement”) was entered into in October 2005, and was amended and restated as of September 17, 2010 and March 26, 2013, with the Prudential Insurance Company of America, and certain other purchasers with interest at 6.84% and a maturity date of October 25, 2017. The remaining obligation under the Prudential Agreement has a mandatory payment of $50 million due on October 25, 2015, and the final payment is due October 25, 2017. At the noteholders’ election, certain prepayments may also be required in connection with certain asset dispositions or financings. The notes may not otherwise be prepaid without a premium, under certain market conditions. The Prudential Agreement contains customary terms, as well as affirmative covenants, negative covenants, and events of default comparable to those in our current principal credit facility (as described below). For disclosure purposes, we are required to measure the fair value of outstanding debt on a recurring basis. As of September 30, 2014, the fair value of this debt was approximately $112.2 million, and was measured using active market interest rates, which would be considered Level 2 for fair value measurement purposes.

On March 26, 2013, we entered into a $330 million, unsecured Five-Year Revolving Credit Facility Agreement (“Credit Agreement”), under which $183 million of borrowings were outstanding as of September 30, 2014. The Credit Agreement replaces the previous $390 million five-year Credit Agreement made in 2010. The applicable interest rate for borrowings under the Credit Agreement, as well as under the former agreement, is LIBOR plus a spread, based on our leverage ratio at the time of

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borrowing. At the time of the last borrowing on September 22, 2014, the spread was 1.375%. The spread is based on a pricing grid, which ranges from 1.25% to 1.875%, based on our leverage ratio.

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. Based on our maximum leverage ratio and our consolidated EBITDA (as defined in the Credit Agreement), and without modification to any other credit agreements, as of September 30, 2014, we would have been able to borrow an additional $147 million under our agreement.

On July 16, 2010, we entered into interest rate hedging transactions that have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $105 million of the indebtedness drawn under the Credit Agreement at the rate of 2.04% until July 16, 2015. Under the terms of these transactions, we pay the fixed rate of 2.04% and the counterparties pay a floating rate based on the three-month LIBOR rate at each quarterly calculation date, which on July 16, 2014 was 0.24%. The net effect is to fix the effective interest rate on $105 million of indebtedness at 2.04%, plus the applicable spread, until these swap agreements expire. On September 30, 2014, the all-in rate on the $105 million of debt was 3.415%.

On May 20, 2013, we entered into interest rate hedging transactions for the period July 16, 2015 through March 16, 2018. These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $110 million of indebtedness drawn under the Credit Agreement at the rate of 1.414% during this period. Under the terms of these transactions, we pay the fixed rate of 1.414% and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date, which on September 30, 2014 was 0.1525%. The net effect is to fix the effective interest rate on $110 million of indebtedness at 1.414%, plus the applicable spread, during the swap period.

These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14 of the Notes to Consolidated Financial Statements. No cash collateral was received or pledged in relation to the swap agreements.

Under the Credit Agreement and Prudential Agreement, we are currently required to maintain a leverage ratio (as defined in the agreements) 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, 2014, our leverage ratio was 1.46 to 1.00 and our interest coverage ratio was 12.10 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 would not exceed 3.50 to 1.00 after giving pro forma effect to the acquisition.

Indebtedness under each of the Prudential Agreement and 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, 2014.

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

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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. As of September 30, 2014 and December 31, 2013, we have no Level 3 financial assets or liabilities.

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

	September 30, 2014				December 31, 2013
	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	$37,037	$-			$25,073	$-
Other Assets:
Common stock of foreign public company	781	-			952	-
Interest rate swap	-	830		(a)	-	1,517		(c)
Liabilities:
Other noncurrent liabilities:
Interest rate swap	-	(1,869	)	(b)	-	(3,119	)	(d)

(a)	Net of $4.9 million receivable floating leg and $4.1 million liability fixed leg
(b)	Net of $0.3 million receivable floating leg and $2.2 million liability fixed leg
(c)	Net of $5.6 million receivable floating leg and $4.1 million liability fixed leg

(d) Net of $0.7 million receivable floating leg and $3.8 million liability fixed leg

During the nine months ended September 30, 2014, there were no transfers between levels 1, 2, and 3.

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 common stock of a foreign public company is traded in an active market exchange. The shares are measured at fair value using closing stock prices and are recorded in the Consolidated Balance Sheets as Other assets. The securities are classified as available for sale, and as a result any unrealized gain or loss is recorded in the Shareholders’ Equity section of the Consolidated Balance Sheets rather than in the Consolidated Statements of Income. When the security is sold or impaired, gains and losses are reported on the Consolidated Statements of Income. Investments are considered to be impaired when a decline in fair value is judged to be other than temporary.

Foreign currency instruments are entered into periodically, and consist of foreign currency option contracts and forward contracts that are valued using quoted prices in active markets obtained from independent pricing sources. These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accounts payable, as applicable. Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expenses, net.

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When exercised, the foreign currency instruments are net settled with the same financial institution that bought or sold them. For all positions, whether options or forward contracts, there is risk from the possible inability of the financial institution to meet the terms of the contracts and the risk of unfavorable changes in interest and currency rates, which may reduce the value of the instruments. We seek to control risk by evaluating the creditworthiness of counterparties and by monitoring the currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies.

We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results.

Changes in exchange rates can result in revaluation gains and losses that are recorded in Selling, General and Administrative expenses or Other (income)/expenses, net. Revaluation gains and losses occur when our business units have cash, intercompany (recorded in Other (income)/expenses, net) or third-party trade (recorded in Selling, General and Administrative expenses) receivable or payable balances in a currency other than their local reporting (or functional) currency.

Operating results can also be affected by the translation of sales and costs, for each non-U.S. subsidiary, from the local functional currency to the U.S. dollar. The translation effect on the income statement is dependent on our net income or expense position in each non-U.S. currency in which we do business. A net income position exists when sales realized in a particular currency exceed expenses paid in that currency; a net expense position exists if the opposite is true.

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 Other noncurrent liabilities in the Consolidated Balance Sheets. Unrealized gains and losses on the swaps will flow through the caption Derivative valuation adjustment in the Shareholders’ equity section of the Consolidated Balance Sheets, to the extent that the hedges are highly effective. As of September 30, 2014, these interest rate swaps were determined to be 100% effective hedges of interest rate cash flow risk. Gains and losses related to the ineffective portion of the hedges will be recognized in the current period in earnings. Amounts accumulated in Other comprehensive income are reclassified as Interest expense, net when the related interest payments (that is, the hedged forecasted transactions) affect earnings. Interest expense related to the swaps totaled $1.4 million each of the nine month periods ended September 30, 2014 and 2013.

 Gains/ (losses) related to changes in fair value of derivative instruments that were recognized in Other (income)/expenses, net in the Statements of Income were as follows:

	Three months ended September 30,		Nine months ended September 30,
(in thousands)	2014	2013	2014	2013
Derivatives not designated as hedging instruments
Forward currency options	($142)	$108	$12	$108

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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 products that we previously manufactured. We produced asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. Such fabrics generally had a useful life of three to twelve months.

We were defending 3,925 claims as of September 30, 2014.

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
2005	29,411	6,257	1,297	24,451	$504
2006	24,451	6,841	1,806	19,416	3,879
2007	19,416	808	190	18,798	15
2008	18,798	523	110	18,385	52
2009	18,385	9,482	42	8,945	88
2010	8,945	3,963	188	5,170	159
2011	5,170	789	65	4,446	1,111
2012	4,446	90	107	4,463	530
2013	4,463	233	85	4,315	82
As of September 30, 2014	4,315	466	76	3,925	$433

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.

Exposure and disease information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, and often not until a trial date is imminent and a settlement demand has been received. For these reasons, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to 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 insurer, Liberty Mutual, has defended each case and funded settlements under a standard reservation of rights. As of September 30, 2014 we had resolved, by means of settlement or dismissal, 37,069 claims. The total cost of resolving all claims was $9.2 million. Of this amount, almost 100% was paid by our insurance carrier. The Company’s insurer has confirmed that although the coverage limits under two (of approximately 23) primary insurance policies have been exhausted, there still remains approximately $3 million in coverage limits under other applicable primary policies, and $140 million in coverage under excess umbrella coverage policies that should be available with respect to current and future asbestos claims.

Brandon Drying Fabrics, Inc. (“Brandon”), a subsidiary of Geschmay Corp., which is a subsidiary of the Company, is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant. Brandon was defending against 7,731 claims as of September 30, 2014.

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:

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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
2005	9,985	642	223	9,566	$-
2006	9,566	1,182	730	9,114	-
2007	9,114	462	88	8,740	-
2008	8,740	86	10	8,664	-
2009	8,664	760	3	7,907	-
2010	7,907	47	9	7,869	-
2011	7,869	3	11	7,877	-
2012	7,877	12	2	7,867	-
2013	7,867	55	3	7,815	-
As of September 30, 2014	7,815	86	2	7,731	$-

We acquired Geschmay Corp., formerly known as Wangner Systems Corporation, in 1999. Brandon is a wholly owned subsidiary of Geschmay Corp. In 1978, Brandon acquired certain assets from Abney Mills (“Abney”), a South Carolina textile manufacturer. Among the assets acquired by Brandon from Abney were assets of Abney’s wholly owned subsidiary, Brandon Sales, Inc. which had sold, among other things, dryer fabrics containing asbestos made by its parent, Abney. Although Brandon manufactured and sold dryer fabrics under its own name subsequent to the asset purchase, none of such fabrics contained asbestos. Because Brandon did not manufacture asbestos-containing products, and because it does not believe that it was the legal successor to, or otherwise responsible for obligations of Abney with respect to products manufactured by Abney, it believes it has strong defenses to the claims that have been asserted against it. As of September 30, 2014, Brandon has resolved, by means of settlement or dismissal, 9,874 claims for a total of $0.2 million. Brandon’s insurance carriers initially agreed to pay 88.2% of the total indemnification and defense costs related to these proceedings, subject to the standard reservation of rights. The remaining 11.8% of the costs had been borne directly by Brandon. During 2004, Brandon’s insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings.

For the same reasons set forth above with respect to Albany’s claims, as well as the fact that no amounts have been paid to resolve any Brandon claims since 2001, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to these remaining claims.

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.

Although we do not believe, based on currently available information and for the reasons stated above, that a meaningful estimate of a range of possible loss can be made with respect to such claims, based on our understanding of the insurance policies available, how settlement amounts have been allocated to various policies, our settlement experience, the absence of any judgments against the Company or Brandon, the ratio of paper mill claims to total claims filed, and the defenses available,

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we currently do not anticipate any material liability relating to the resolution of the aforementioned pending proceedings in excess of existing insurance limits.

Consequently, 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 and the trends in claims against us to date, we do not anticipate that additional claims likely to be filed against us in the future will have a material adverse effect on our financial position, results of operations, or cash flows. We are aware that litigation is inherently uncertain, especially when the outcome is dependent primarily on determinations of factual matters to be made by juries.

16. Changes in Shareholders’ Equity

The following table summarizes changes in Shareholders’ Equity:

(in thousands)	Class A Common Stock	Class B Common Stock	Additional paid in capital	Retained earnings	Accumulated items of other comprehensive income	Treasury stock	Noncontrolling Interest	Total Shareholders’ Equity
December 31, 2013	$37	$3	$416,728	$434,598	($49,498)	($257,571)	$3,482	$547,779
Net income	-	-	-	33,652	-	-	(8)	33,644
Dividends declared	-	-	-	(14,964)	-	-	-	(14,964)
Changes in equity related to noncontrolling interest in ASC	-	-	(24)	-	-	-	38	14
Compensation and benefits paid or payable in Class A Common Stock	-	-	1,011	-	-	-	-	1,011
Options exercised	-	-	771	-	-	-	-	771
Shares issued to Directors'	-	-	60	-	-	90	-	150
Cumulative translation adjustment	-	-	-	-	(30,703)	-	7	(30,696)
Change in pension liability adjustment	-	-	-	-	1,419	-	-	1,419
Change in derivative valuation adjustment	-	-	-	-	343	-	-	343
September 30, 2014	$37	$3	$418,546	$453,286	($78,439)	($257,481)	$3,519	$539,471

17. Recent Accounting Pronouncements

In March 2013, an accounting update was issued that addressed the accounting for the cumulative translation adjustment upon derecognition of subsidiaries.  Upon the sale of part of a foreign entity, or if the parent no longer holds a controlling financial interest in a subsidiary or group of assets, the parent company must transfer the cumulative translation adjustment to net income.  We adopted this update January 1, 2014, and it had no effect on our financial statements.

In July 2013, amended accounting guidance was issued regarding the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. This guidance was adopted in the first quarter of 2014 and had the effect of reducing noncurrent deferred tax assets and noncurrent deferred tax liabilities by $7.1 million.

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In April 2014, an accounting update was issued regarding which disposals qualify for reporting as discontinued operations.  Additionally, new disclosures will apply for discontinued operations.  This accounting update is to be applied prospectively to new disposals and new classifications of disposal groups as held for sale beginning in periods after December 15, 2014.  We do not expect the adoption of this update to have a significant effect on our financial statements.

In June 2014, an accounting update was issued that replaces the existing revenue recognition framework regarding contracts with customers. This accounting update is effective for reporting periods beginning after December 15, 2016. We have not determined the impact of this update on our financial statements.

In June 2014, an accounting update was issued relating to accounting for share-based payments with a performance target that could be achieved after the requisite service period. The adoption of this accounting guidance will be effective for reporting periods beginning after December 15, 2015. We do not expect the adoption of this update to have a significant effect on our financial statements.

In August 2014, an accounting update was issued relating to how management assesses conditions and events that could raise substantial doubt about an entity’s ability to continue as a going concern. This accounting update is effective for reporting periods beginning after December 15, 2016.  We do not expect the adoption of this update to have a significant effect on our financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking statements

This quarterly report and the documents incorporated or deemed to be incorporated by reference in this quarterly report contain statements concerning our future results and performance and other matters that are “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or prior Quarterly Reports on Form 10-Q) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections.

There are a number of risks, uncertainties, and other important factors that could cause actual results to differ materially from the forward-looking statements, including, but not limited to:

· Conditions in the industries in which our Machine Clothing segment competes, including the paper industry, along with general risks associated with economic downturns;

· Failure to remain competitive in the industries in which our Machine Clothing segment competes;

· Failure to have, achieve, or maintain anticipated profitable growth in our Albany Engineered Composites segment; and

· Other risks and uncertainties detailed in this report.

Further information concerning important factors that could cause actual events or results to be materially different from the forward-looking statements can be found in “Business Environment and

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“Trends,” “Liquidity,” and “Legal Proceedings” sections of this quarterly report, as well as in the “Risk Factors,” section of our most recent Annual Report on Form 10-K. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on future performance. The forward-looking statements included or incorporated by reference in this quarterly report are made on the basis of our assumptions and analyses, as of the time the statements are made, in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances.

Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained or incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of the Company. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes.

Overview

See Note 3, “Reportable Segments”, under Item 1, Financial Statements, for a discussion of recasting Research and Unallocated expenses to reportable segments.

Our reportable segments: Machine Clothing (MC) and Albany Engineered Composites (AEC), draw on many of the same advanced textiles and materials processing capabilities, and compete on the basis of proprietary, product-based advantage that is grounded in those core capabilities. As a result, technology and manufacturing advances in one tend to benefit the other.

MC is the Company’s long-established core business and primary generator of cash. While the paper and paperboard industry in our traditional geographic markets has suffered from well-documented overcapacity in publication grades, especially newsprint, the industry is still expected to grow on a global basis, driven by demand for packaging and tissue grades, as well as the expansion of paper consumption and production in Asia and South America. We feel we are now well-positioned in these markets, with high-quality, low-cost production in growth markets, substantially lower fixed costs in mature markets, and continued strength in new product development, field services, and manufacturing technology. Although we consider the market for Machine Clothing as having flat growth potential, the business has been a significant generator of cash, and we seek to maintain the cash-generating potential of this business by maintaining the low costs that we achieved through restructuring, and competing vigorously by using our differentiated products and services to reduce our customers’ total cost of operation and improve their paper quality.

We believe that AEC provides the greatest growth potential, both near and long term, for our Company. Our strategy is to grow organically by focusing our proprietary technology on high-value aerospace and defense applications that cannot be served effectively by conventional composites. AEC (including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group owns a 10% noncontrolling interest) supplies a number of customers in the aerospace industry. AEC’s largest aerospace customer is the SAFRAN Group. Through ASC, AEC develops and sells composite aerospace components to SAFRAN, with the most significant program at present being the production of fan blades and other components for the LEAP engine. AEC (through ASC and otherwise) is also

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developing other new and potentially significant composite products for aerospace (engine and airframe) applications.

Consolidated Results of Operations

Net sales

The following table summarizes our net sales by business segment:

	Three months ended September 30,		% Change	Nine months ended September 30,		% Change
(in thousands, except percentages)	2014	2013		2014	2013
Machine Clothing	$157,891	$162,864	-3.1%	$494,788	$507,809	-2.6%
Albany Engineered Composites	21,970	20,283	8.3%	58,898	59,966	-1.8%
Total	$179,861	$183,147	-1.8%	$553,686	$567,775	-2.5%

Net sales were affected by the following:

Three month comparison

· Changes in currency translation rates had the effect of decreasing net sales by $0.9 million during the third quarter of 2014 as compared to 2013.

· The year-over-year decline in third-quarter MC sales was primarily attributable to lower sales in the Americas.

· AEC sales increased due to growth in the LEAP and JSF LiftFan® programs.

· Excluding the effect of changes in currency translation rates:

· Total Company Net sales decreased 1.3% compared to the same period in 2013

· Net sales in MC decreased 2.5%

· Net sales in AEC increased 8.3%

Nine month comparison

· Changes in currency translation rates had the effect of increasing net sales by $1.4 million during 2014 as compared to 2013.

· The year-over-year decline in the first nine months MC sales was attributable to lower sales in the Americas.

· The decrease in AEC sales was principally due to the shift during the first quarter to larger scale LEAP part production, together with the related change in invoicing terms, resulting in a build-up of inventory and an associated temporary lag in sales in the first quarter of 2014.

· Excluding the effect of changes in currency translation rates:

· Total Company Net sales decreased 2.7% compared to the same period in 2013

· Net sales in MC decreased 2.8%

· Net sales in AEC decreased 1.8%

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Gross Profit

The following table summarizes gross profit by business segment:

	Three months ended September 30,				Nine months ended September 30,
(in thousands, except percentages)	2014		2013		2014		2013
Machine Clothing	$66,117		$67,773		$213,326		$219,559
Albany Engineered Composites	2,855		1,061		6,506		1,542
Corporate expenses	(353	)	(833	)	(1,061	)	(2,898	)
Total	$68,619		$68,001		$218,771		$218,203
% of Net sales	38.2	%	37.1	%	39.5	%	38.4	%

Three month comparison

The increase in gross profit, compared to the same period in 2013, was principally due to the net effect of the following:

· Gross profit margins in MC increased from 41.6 percent to 41.9 percent principally due to the effect of restructuring in France.

· AEC gross margin for the third quarter of 2014 was 13.0 percent compared to 5.2 percent in 2013 principally due to improvements in profitability at the Company’s Boerne, Texas operation.

Nine month comparison

The increase in gross profit during 2014 was principally due to the net effect of the following:

· A $5.6 million decrease due to lower sales in MC.

· A $5.1 million increase due to higher gross profit margin in AEC due to improvements in profitability at the Company’s Boerne, Texas operation.

· A charge of $1.6 million in the second quarter of 2014 to correct an error in the value of Machine Clothing inventories reported in prior periods.

· A $1.8 million reduction in cost associated with the Company’s U.S. postretirement plan, resulting from plan changes in 2013.

Selling, Technical, General, and Research (STG&R)

The following table summarizes STG&R by business segment:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2014		2013		2014		2013
Machine Clothing	$31,843		$37,613		$106,870		$112,599
Albany Engineered Composites	5,668		5,006		15,361		14,034
Corporate expenses	11,031		9,871		33,746		32,097
Total	$48,542		$52,490		$155,977		$158,730
% of Net sales	27.0	%	28.7	%	28.2	%	28.0	%

Three month comparison

STG&R expenses decreased $3.9 million, compared to the same period in 2013, principally due to the net effect of the following:

· Revaluation of nonfunctional currency assets and liabilities resulted in gains of $2.2 million during the third quarter of 2014 and losses of $1.3 million in the comparable quarter of 2013.

· Currency translation decreased 2014 STG&R expenses by $0.5 million.

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Nine month comparison

STG&R expenses decreased $2.8 million, compared to the same period in 2013, principally due to the net effect of the following:

· Revaluation of nonfunctional currency assets and liabilities resulted in gains of $1.6 million during the first nine months of 2014 and losses of $0.1 million in comparable period of 2013.

· A gain on the sale of former manufacturing facility in Australia reduced 2013 expenses by $3.8 million.

· Compared to the first nine months of 2013, bad debt expense was $1.6 million lower.

· Compared to the first nine months of 2013, corporate professional fee expenses were reduced by $1.0 million.

· Currency translation decreased STG&R expense by $0.7 million.

Pension Plan

In September 2014, certain participants of the U.S. pension plan were notified of a limited-time opportunity whereby they could elect to receive the value of their pension benefit in a lump-sum payment. All lump-sum payments will be funded from pension plan assets and are expected to be made before the end of 2014. As a result of this initiative, and depending on the number of participants that elect the lump-sum payment, the Company expects to record a non-cash settlement charge of approximately $5 to $10 million in 2014. The payments are not expected to have a significant impact on the plan’s funded status.

Research and Development

The following table summarizes expenses associated with internally funded research and development by business segment:

	Three months ended September 30,		Nine months ended September 30,
(in thousands)	2014	2013	2014	2013
Machine Clothing	$4,510	$4,142	$14,532	$13,343
Albany Engineered Composites	3,593	2,874	8,179	7,321
Corporate expenses	159	402	550	1,418
Total	$8,262	$7,418	$23,261	$22,082

Restructuring Expense

In addition to the items discussed above affecting gross profit and STG&R, operating income was affected by restructuring costs of $0.9 million in the third quarter of 2014 and $2.3 million in the third quarter of 2013.

The following table summarizes restructuring expense by business segment:

	Three months ended September 30,		Nine months ended September 30,
(in thousands)	2014	2013	2014	2013
Machine Clothing	$968	$2,250	$3,127	$26,673
Albany Engineered Composites	(49)	6	931	540
Total	$919	$2,256	$4,058	$27,213

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Machine Clothing restructuring expense was principally related to the reduction in manufacturing capacity at production facilities in France. Restructuring expenses in the Albany Engineered Composites operations were principally related to organizational changes and exiting certain aerospace programs.

During the second quarter of 2013, the Company commenced a program to restructure operations at the Company’s Machine Clothing production facilities in France. The restructuring, when completed, will have reduced employment by approximately 200 positions at these locations. As of September 30, 2014, approximately 190 positions had been eliminated. Accordingly, the Company is now realizing substantially all of the expected $10 million of annual cost savings, which principally impacts the Cost of goods sold line in the Statements of Income.

Under the terms of the restructuring plan, the Company provides training, outplacement and other benefits, the costs of which are recorded as restructuring when they are incurred. The Company recorded a curtailment gain of $0.7 million for the first nine months of 2014 related to the elimination of pension accruals, which reduced net restructuring expense as reflected in the table above. Such curtailment gains are recorded as employees terminate employment and, accordingly, we expect to record additional gains during 2014. Remaining costs for this program are expected to be between $1 and $2 million, and we expect these costs to occur over the next several quarters.

For more information on our restructuring charges, see Note 5 to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

Operating Income

The following table summarizes operating income by business segment:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2014		2013		2014		2013
Machine Clothing	$33,308		$27,910		$103,329		$80,287
Albany Engineered Composites	(2,765	)	(3,951	)	(9,785	)	(13,032	)
Corporate expenses	(11,385	)	(10,704	)	(34,808	)	(34,995	)
Total	$19,158		$13,255		$58,736		$32,260

Other Earnings Items

	Three months ended September 30,			Nine months ended September 30,
(in thousands)	2014		2013	2014		2013
Interest expense, net	$2,486		$3,484	$8,121		$11,056
Other (income)/expenses, net	(1,864	)	2,692	(4,464	)	5,637
Income tax expense/(benefit)	6,762		2,381	21,435		6,386
Loss from discontinued operations, net of tax	-		-	-		(351	)
Net loss attributable to the noncontrolling interest	(38	)	-	(8	)	-

Interest Expense, net

Third quarter Interest expense, net, decreased $1.0 million principally due to lower average interest rates that resulted from using the revolving credit facility for the first $50 million payment in October 2013 under the Prudential Agreement. For more information on borrowings and interest rates, see Note 13 to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

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Other (Income)/Expenses, net

Other (income)/expenses, net included the following:

Three month comparison

· Foreign currency revaluations of intercompany balances resulted in gains of $1.9 million during the third quarter of 2014 and losses of $2.0 million in the third quarter 2013.

· In July 2013, the Company’s MC manufacturing facility in Germany was damaged by severe weather. In the third quarter of 2014, we recorded a gain of $0.2 million, related to the finalization of the insurance claim.

Nine month comparison

· Foreign currency revaluations of intercompany balances resulted in gains of $3.8 million for the first nine months of 2014 and a $3.9 million loss for the comparable period of 2013.

· Bank fees and amortization of debt issuance costs were $0.9 million in the first nine months of 2014 and $1.2 million for the comparable period of 2013.

· The insurance recovery gain described above resulted in income of $1.1 million for the first nine months of 2014.

Income Tax

The Company has operations which constitute a taxable presence in 19 countries outside of the United States. All of these countries except one had income tax rates that were lower than the United States federal tax rate of 35% during the periods reported. The jurisdictional location of earnings is a significant component of our effective tax rate each year and therefore on our overall income tax expense.

Three month comparison

The Company’s effective tax rates for the third quarters of 2014 and 2013 were 36.5% and 33.6%, respectively. The tax rate is affected by recurring items, such as the income tax rate in the U.S. and in non-U.S. jurisdictions and the mix of income earned in those jurisdictions. The tax rate is also affected by U.S. tax costs on foreign earnings that have been or will be repatriated to the U.S., and by discrete items that may occur in any given year but are not consistent from year to year.

Significant items that impacted the tax rates in the third quarter of 2014 included the following (percentages reflect the effect of each item as a percentage of Income before income taxes):

· The income tax rate on continuing operations, excluding discrete items, was 34.9%.

· A tax charge of $7.1 million (38.3%), primarily related to a recent unfavorable outcome in the tax court pertaining to another taxpayer with similar facts to the Company.

· A net tax benefit was recognized in the amount of $6.8 million (-36.5%) primarily due to the lapse of a tax statute.

· A $0.2 million (1.1%) net expense related to adjustments to prior year estimated tax liabilities and $0.2 million (-1.3%) tax benefit for the effect of a change in the estimated tax rate for the year.

Significant items that impacted the third-quarter 2013 tax rate included the following:

· The income tax rate on continuing operations, excluding discrete items, was 41.0%.

· A $0.5 million (7.4%) net benefit related to discrete items and the effect of a change in the estimated tax rate for the year.

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Nine month comparison

The Company’s effective tax rates for the first nine-month periods of 2014 and 2013 were 38.9% and 41.0%, respectively.

Significant items that impacted the 2014 tax rate included the following (percentages reflect the effect of each item as a percentage of Income before income taxes):

· The income tax rate on continuing operations, excluding discrete items, was 34.9%.

· A net charge of $1.3 million (2.4%) for the resolution of and provision for income tax controversies.

· A $0.5 million (0.8%) net charge for adjustments to estimated prior year tax liabilities.

· A charge of $0.4 million (0.8%) for a change to the beginning of year valuation allowance.

Significant items that impacted the 2013 tax rate included the following:

· The income tax rate on continuing operations, excluding discrete items, was 41.0%.

Segment Results of Operations

Machine Clothing Segment

Business Environment and Trends

MC is our primary business segment and accounted for nearly 90% of our consolidated revenues during the first nine months of 2014. Machine clothing is purchased primarily by manufacturers of paper and paperboard.

According to RISI, Inc., global production of paper and paperboard is expected to grow at an annual rate of approximately 2% over the next five years, driven primarily by secular demand increases in Asia and South America, with stabilization in the mature markets of Europe and North America.

Shifting demand for paper, across different paper grades as well as across geographical regions, continues to drive the elimination of papermaking capacity in areas with significant established capacity, primarily in the mature markets of Europe and North America. At the same time, the newest, most efficient machines are being installed in areas of growing demand, including Asia and South America generally, as well as tissue and towel paper grades in all regions. Recent technological advances in Paper Machine Clothing, while contributing to the papermaking efficiency of customers, have lengthened the useful life of many of our products and had an adverse impact on overall paper machine clothing demand. These factors help to explain why Paper Machine Clothing revenue growth grows at a lesser rate than growth in paper production.

The Company’s manufacturing and product platforms position us well to meet these shifting demands across product grades and geographic regions. Our strategy for meeting these challenges continues to be to grow share in all markets, with new products and technology, and to maintain our manufacturing footprint to align with global demand, while we offset the effects of inflation through continuous productivity improvement.

We have incurred significant restructuring charges in recent periods as we reduced Paper Machine Clothing manufacturing capacity in the United States, Canada, Germany, Finland, France, the Netherlands, Sweden, and Australia.

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Review of Operations

	Three months ended September 30,				Nine months ended September 30,
(in thousands, except percentages)	2014		2013		2014		2013
Net sales	$157,891		$162,864		$494,788		$507,809
Gross profit	66,117		67,773		213,326		219,559
% of net sales	41.9	%	41.6	%	43.1	%	43.2	%
Operating income	33,308		27,910		103,329		80,287

Net Sales

Net sales were affected by the following:

Three month comparison

· Changes in currency translation rates had the effect of decreasing 2014 sales by $0.9 million.

· Excluding the effect of changes in currency translation rates, sales decreased 2.5% compared to the same period in 2013.

· The year-over-year decline in third-quarter MC sales was primarily attributable to lower sales in the Americas.

Nine month comparison

· Changes in currency translation rates had the effect of increasing 2014 sales by $1.4 million.

· The year-over-year decline in the first nine months MC sales was attributable to lower sales in the Americas.

· Excluding the effect of changes in currency translation rates, sales decreased 2.8% compared to the same period in 2013.

Gross Profit

Three month comparison

The decrease in gross profit was principally due to lower sales as described above.

Nine month comparison

The decrease in gross profit was principally due to the net effect of the following:

· A $5.6 million decrease due to lower sales.

· A $0.6 million decrease due to lower gross margin, including the charge for the inventory valuation error reported in the second quarter.

Operating Income

The increase in operating income was principally due to the net effect of the following:

Three month comparison

· Restructuring charges of $1.0 million in the third quarter 2014, compared to $2.3 million in 2013.

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· Revaluation of nonfunctional currency assets and liabilities resulted in third quarter gains of $2.3 million in 2014, compared to losses of $1.3 million in 2013.

Nine month comparison

· Restructuring charges of $3.1 million in the first nine months of 2014, compared to $26.7 million in 2013.

· Revaluation of nonfunctional currency assets and liabilities resulted in gains of $1.8 million for the first nine months of 2014, compared to $0.1 million of losses in 2013.

Albany Engineered Composites Segment

Business Environment and Trends

The Albany Engineered Composites segment (AEC), including Albany Safran Composites, LLC (ASC), in which our customer SAFRAN Group owns a 10 percent noncontrolling interest, provides custom-designed advanced composite structures based on proprietary technology to customers in the aerospace and defense industries. AEC’s largest current development program relates to the LEAP engine being developed by CFM International. Under this program, AEC, through ASC, is developing a family of composite parts, including fan blades, to be incorporated into the LEAP engine. In 2013, approximately 10 percent of this segment’s sales were related to U.S. government contracts or programs.

Review of Operations

	Three months ended September 30,				Nine months ended September 30,
(in thousands, except percentages)	2014		2013		2014		2013
Net sales	$21,970		$20,283		$58,898		$59,966
Gross profit	2,855		1,061		6,506		1,542
% of net sales	13.0	%	5.2	%	11.0	%	2.6	%
Operating income/(loss)	(2,765	)	(3,951	)	(9,785	)	(13,032	)

Net Sales

Three and nine month comparisons

· Third quarter sales increased in 2014 due to growth in the LEAP and JSF LiftFan® programs.

· Sales for the first nine months of 2014 were lower than 2013 due to the shift during the first quarter of 2014 to larger scale LEAP part production, together with the related change in invoicing terms, resulting in a build-up of inventory and an associated temporary lag in sales.

Gross Profit

Three and nine month comparisons

The increase in gross profit included the following:

· AEC gross margin was higher in 2014 principally due to improvements in profitability at the Company’s Boerne, Texas operation.

Long-term contracts

In the accounting for long-term fixed price contracts, we estimate the profit margin expected at the completion of the contract and recognize a pro-rata share of that profit during the course of the contract using a cost-to-cost or units of delivery approach. Changes in estimated contract profitability will affect revenue and gross profit when the change occurs, which could have a significant favorable

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or unfavorable effect on revenue and gross profit in any reporting period. The table below provides a summary of long-term contracts that were in process at the end of each period.

	September 30,
(in thousands)	2014	2013
Total value of contracts in process	$21,475	$24,686
Revenue recognized to date	12,017	20,230
Revenue to be recognized in future periods	9,458	4,456

Operating Income

Three and nine month comparisons

Operating income improved in 2014 principally due to the increase in gross profit as described above.

Liquidity and Capital Resources

Cash Flow Summary

	Nine months ended September 30,
(in thousands)	2014		2013
Net income	$33,644		$8,830
Depreciation and amortization	47,741		47,752
Changes in working capital	(18,804	)	16,011
Gain on involuntary conversion or disposition of assets	(961	)	(3,763	)
Changes in long-term liabilities, deferred taxes and other credits	95		(4,274	)
Other operating items	2,285		(1,502	)
Net cash provided by/(used in) operating activities	64,000		63,054
Net cash provided by/(used in) investing activities	(45,649	)	(28,294	)
Net cash (used in)/provided by financing activities	(34,696	)	(17,281	)
Effect of exchange rate changes on cash flows	(10,860	)	4,612
(Decrease)/increase in cash and cash equivalents	(27,205	)	22,091
Cash and cash equivalents at beginning of year	222,666		190,718
Cash and cash equivalents at end of period	$195,461		$212,809

Operating activities

Cash provided by operating activities was $64.0 million for the first nine months of 2014, compared to $63.1 million in the same period last year. Significant changes in working capital include a $2.9 million decrease in Accounts payable in the first nine months of 2014 resulting from timing of payments, compared to a $3.9 million increase in Accounts payable for the first nine months of 2013. Cash paid for income taxes was $14.4 million and $21.2 million for the first nine months of 2014 and 2013, respectively. Compared to the first nine months of 2013, cash flows from Accounts receivable provided $10.4 million of cash flow, while the cash flows from Inventories had a net cash use of $12.0 million. Cash paid for restructuring was $10.9 million and $5.5 million for the first nine months of 2014 and 2013, respectively.

At September 30, 2014, we had $195 million of cash and cash equivalents, of which $173 million was held by subsidiaries outside of the United States. As disclosed in Note 7 contained in Item

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1, “Notes to Consolidated Financial Statements”, we determined that all but $3.6 million of this amount (which represents the amount of prior year earnings to be repatriated to the United States at some point in the future) is intended to be utilized by these non-U.S. operations for an indefinite period of time. Our current plans do not anticipate that we will need funds generated from foreign operations to fund our domestic operations or satisfy debt obligations in the United States. In the event that such funds were to be needed to fund operations in the U.S., and if associated accruals for U.S. tax have not already been provided, we would be required to accrue and pay additional U.S. taxes to repatriate these funds.

Investing Activities

Capital spending for equipment and software was $46.6 million for the first nine months of 2014, including $24.1 million for AEC. The Company expects full-year capital expenditure spending of $60 to $70 million. During the first quarter of 2013, the Company completed the sale of its production facility in Gosford, Australia, resulting in net proceeds of about $6.3 million.

Financing Activities

Dividends have been declared each quarter since the fourth quarter of 2001. Decisions with respect to whether a dividend will be paid, and the amount of the dividend, are made by the Board of Directors each quarter. The dividend declared in the fourth quarter of 2012 was also paid during that quarter which resulted in two dividend payments during the fourth quarter of 2012, and no cash payments for dividends during the first quarter of 2013. To the extent the Board declares cash dividends in the future, we expect to pay such dividends out of operating cash flows. Future cash dividends will also depend on debt covenants and on the Board’s assessment of our ability to generate sufficient cash flows.

Capital Resources

We finance our business activities primarily with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below. Our subsidiaries outside of the United States may also maintain working capital lines with local banks, but borrowings under such local facilities tend not to be significant. Substantially all of our cash balance at September 30, 2014 was held by non-U.S. subsidiaries. Based on cash on hand and credit facilities, we anticipate that the Company has sufficient capital resources to operate for the foreseeable future. We were in compliance with all debt covenants as of September 30, 2014.

On March 26, 2013, we entered into a $330 million, unsecured Five-Year Revolving Credit Facility Agreement ("Credit Agreement"), under which $183 million of borrowings were outstanding as of September 30, 2014. The applicable interest rate for borrowings under the Credit Agreement is LIBOR plus a spread, based on our leverage ratio at the time of borrowing. At the time of the last borrowing on September 22, 2014, the spread was 1.375%. The spread is based on a pricing grid, which ranges from 1.25% to 1.875%, based on our leverage ratio.

On July 16, 2010, we entered into interest rate hedging transactions that have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $105 million of the indebtedness drawn under the Credit Agreement at the rate of 2.04% until July 16, 2015. Under the terms of these transactions, we pay the fixed rate of 2.04% and the counterparties pay a floating rate based on the three-month LIBOR rate at each quarterly calculation date, which on July 16, 2014

36

was 0.24%. The net effect is to fix the effective interest rate on $105 million of indebtedness at 2.04%, plus the applicable spread, until these swap agreements expire. On September 30, 2014, the all-in rate on the $105 million of debt was 3.415%.

On May 20, 2013, we entered into interest rate hedging transactions for the period July 16, 2015 through March 16, 2018. These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $110 million of indebtedness drawn under the Credit Agreement at the rate of 1.414% during this period. Under the terms of these transactions, we pay the fixed rate of 1.414% and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date, which on September 30, 2014 was 0.1525%. The net effect is to fix the effective interest rate on $110 million of indebtedness at 1.414%, plus the applicable spread, during the swap period.

As of September 30, 2014, our leverage ratio was 1.46 to 1.00 and our interest coverage ratio was 12.10 to 1.00. We may purchase our Common Stock or pay dividends to the extent our leverage ratio remains at or below 3.5 to 1.00, and may make acquisitions with cash provided our leverage ratio would not exceed 3.50 to 1.00 after giving pro forma effect to the acquisition.

These interest rate swaps are accounted for as hedges of future cash flows. For more information on our interest rate swaps, see Note 13 to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

Off-Balance Sheet Arrangements

As of September 30, 2014, we have no off-balance sheet arrangements required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K.

Recent Accounting Pronouncements

The information set forth under Note 17 contained in Item 1, “Notes to Consolidated Financial Statements” which is incorporated herein by reference.

Non-GAAP Measures

This Form 10-Q contains certain items, such as earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, sales excluding currency effects, income tax rate excluding adjustments, net debt, net income attributable to the Company, excluding adjustments (on an absolute and per-share basis), and certain income and expense items on a per- share basis that could be considered non-GAAP financial measures. Such items are provided because management believes that, when presented together with the GAAP items to which they relate, they provide additional useful information to investors regarding the Company’s operational performance. Presenting increases or decreases in sales, after currency effects are excluded, can give management and investors insight into underlying sales trends. An understanding of the impact in a particular period of specific restructuring costs, or other gains and losses, on operating income or EBITDA can give management and investors additional insight into performance, especially when compared to periods in which such items had a greater or lesser effect, or no effect. All non-GAAP financial measures in this report relate to the Company’s continuing operations.

The effect of changes in currency translation rates is calculated by converting amounts reported in local currencies into U.S. dollars at the exchange rate of a prior period. That amount is then

37

compared to the U.S. dollar amount reported in the current period. The Company calculates Income tax adjustments by adding discrete tax items to the effect of a change in tax rate for the reporting period. The Company calculates its income tax rate, exclusive of income tax adjustments, by removing income tax adjustments from total Income tax expense, then dividing that result by Income before income taxes. The Company calculates EBITDA by removing the following from Net income: Interest expense net, Income tax expense, Depreciation and amortization, and Income or loss from Discontinued Operations. Adjusted EBITDA is calculated by adding to EBITDA, costs associated with restructuring and pension settlement charges, adding or subtracting revaluation losses or gains, subtracting building sale and insurance-recovery gains, and subtracting Income attributable to the noncontrolling interest in ASC. The Company believes that EBITDA and Adjusted EBITDA provide useful information to investors because they provide an indication of the strength and performance of the Company's ongoing business operations, including its ability to fund discretionary spending such as capital expenditures and strategic investments, as well as its ability to incur and service debt. While depreciation and amortization are operating costs under GAAP, they are non-cash expenses equal to current period allocation of costs associated with capital and other long-lived investments made in prior periods. While restructuring expenses, foreign currency revaluation losses or gains, pension settlement charges, and building sale and insurance-recovery gains have an impact on the Company's net income, removing them from EBITDA can provide, in the opinion of the Company, a better measure of operating performance. EBITDA is also a calculation commonly used by investors and analysts to evaluate and compare the periodic and future operating performance and value of companies. EBITDA, as defined by the Company, may not be similar to EBITDA measures of other companies. Such EBITDA measures may not be considered measurements under GAAP, and should be considered in addition to, but not as substitutes for, the information contained in the Company’s Statements of Income.

The following tables show the calculation of EBITDA and Adjusted EBITDA:

Three months ended September 30, 2014
(in thousands)	Machine Clothing		AEC		Corporate expenses and other		Total Company
Net income	$33,308		($2,765	)	($18,769	)	$11,774
Interest expense, net	-		-		2,486		2,486
Income tax expense	-		-		6,762		6,762
Depreciation and amortization	11,060		2,607		2,069		15,736
EBITDA	44,368		(158	)	(7,452	)	36,758
Restructuring and other, net	968		(49	)	-		919
Foreign currency revaluation losses/(gains)	(2,308	)	135		(1,915	)	(4,088	)
Gain on insurance recovery	-		-		(165	)	(165	)
Pretax loss attributable to noncontrolling interest in ASC	-		77		-		77
Adjusted EBITDA	$43,028		$5		($9,532	)	$33,501

38

Nine months ended September 30, 2014
(in thousands)	Machine Clothing		AEC		Corporate expenses and other		Total Company
Net income	$103,329		($9,785	)	($59,900	)	$33,644
Interest expense, net	-		-		8,121		8,121
Income tax expense	-		-		21,435		21,435
Depreciation and amortization	34,069		7,382		6,290		47,741
EBITDA	137,398		(2,403	)	(24,054	)	110,941
Restructuring and other, net	3,127		931		-		4,058
Foreign currency revaluation losses/(gains)	(1,806	)	234		(3,815	)	(5,387	)
Gain on insurance recovery	-		-		(1,126	)	(1,126	)
Pretax loss attributable to noncontrolling interest in ASC	-		63		-		63
Adjusted EBITDA	$138,719		($1,175	)	($28,995	)	$108,549

Three months ended September 30, 2013
(in thousands)	Machine Clothing	AEC		Corporate expenses and other		Total Company
Net income	$27,910	($3,951	)	($19,261	)	$4,698
Interest expense, net	-	-		3,484		3,484
Income tax expense	-	-		2,381		2,381
Depreciation and amortization	11,404	2,299		2,094		15,797
EBITDA	39,314	(1,652	)	(11,302	)	26,360
Restructuring and other, net	2,250	6		-		2,256
Foreign currency revaluation losses/(gains)	1,328	-		1,975		3,303
Adjusted EBITDA	$42,892	($1,646	)	($9,327	)	$31,919

Nine months ended September 30, 2013
(in thousands)	Machine Clothing	AEC		Corporate expenses and other		Total Company
Net income	$80,287	($13,032	)	($58,425	)	$8,830
Loss/(income) from discontinued operations				$351		$351
Interest expense, net	-	-		11,056		11,056
Income tax expense	-	-		6,386		6,386
Depreciation and amortization	35,083	6,094		6,575		47,752
EBITDA	115,370	(6,938	)	(34,057	)	74,375
Restructuring and other, net	26,673	540		-		27,213
Foreign currency revaluation losses/(gains)	133	-		3,882		4,015
Gain on sale of former manufacturing facility	-	-		(3,763	)	(3,763	)
Adjusted EBITDA	$142,176	($6,398	)	($33,938	)	$101,840

The Company discloses certain income and expense items on a per-share basis. The Company believes that such disclosures provide important insight into the underlying quarterly earnings and are financial performance metrics commonly used by investors. The Company calculates the per-share amount for items included in continuing operations by using the effective tax rate utilized in that reporting period and the weighted average number of shares outstanding for each period.

39

The following tables show the earnings per share effect of certain income and expense items:

Three months ended September 30, 2014	Pre tax	Tax	After tax	Per Share
(in thousands, except per share amounts)	Amounts	Effect	Effect	Effect
Restructuring and other, net	$919	$321	$598	$0.02
Foreign currency revaluation gains	4,088	1,427	2,661	0.08
Gain on insurance recovery	165	-	165	0.01
Net discrete income tax charges	-	536	536	0.02
Favorable effect of change in income tax rate	-	243	243	0.01

Nine months ended September 30, 2014	Pre tax	Tax	After tax	Per Share
(in thousands, except per share amounts)	Amounts	Effect	Effect	Effect
Restructuring and other, net	$4,058	$1,455	$2,603	$0.08
Foreign currency revaluation gains	5,387	$1,024	$4,363	0.14
Gain on insurance recovery	1,126	-	1,126	0.04
Net discrete income tax charges	-	2,209	2,209	0.07

Three months ended September 30, 2013	Pre tax	Tax	After tax	Per Share
(in thousands, except per share amounts)	Amounts	Effect	Effect	Effect
Restructuring and other, net	$2,256	$925	$1,331	$0.04
Foreign currency revaluation losses	3,303	1,354	1,949	0.06
Unfavorable effect of change in income tax rate	-	170	170	0.01
Net discrete income tax benefit	-	691	691	0.02

Nine months ended September 30, 2013	Pre tax	Tax	After tax	Per Share
(in thousands, except per share amounts)	Amounts	Effect	Effect	Effect
Restructuring and other, net	$27,213	$10,626	$16,587	$0.52
Foreign currency revaluation losses	4,015	1,668	2,347	0.07
Gain on sale of former manufacturing facility	3,763	1,279	2,484	0.08
Net discrete income tax charges	-	4	4	0.00

The following table contains the calculation of net income per share attributable to the Company, excluding adjustments:

	Three months ended September 30,				Nine months ended September 30,
Per share amounts (Basic)	2014		2013		2014		2013
Net income attributable to the Company	$0.37		$0.15		$1.06		$0.28
Adjustments:
Loss on discontinued operations	-		-		-		0.01
Restructuring and other, net	0.02		0.04		0.08		0.52
Discrete tax charges and effect of change in income tax rate	0.01		(0.01	)	0.07		-
Foreign currency revaluation (gains)/losses	(0.08	)	0.06		(0.11	)	0.07
Gain on insurance recovery	(0.01	)	-		(0.04	)	-
Gain on sale of former manufacturing facility	-		-		-		(0.08	)
Net income attributable to the Company, excluding adjustments	$0.31		$0.24		$1.06		$0.80

40

The following table contains the calculation of net debt:

(in thousands)	September 30,  2014	June 30,  2014	March 31,  2014	December 31, 2013
Notes and loans payable	$551	$692	$797	$625
Current maturities of long-term debt	15	1,265	2,514	3,764
Long-term debt	283,100	283,104	299,108	300,111
Total debt	283,666	285,061	302,419	304,500
Cash	195,461	206,836	208,379	222,666
Net debt	$88,205	$78,225	$94,040	$81,834

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For discussion of our exposure to market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk”, which is included as an exhibit to this Form 10-Q.

Item 4. Controls and Procedures

a) Disclosure controls and procedures.

The principal executive officers and principal financial officer, based on their evaluation of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that the Company’s disclosure controls and procedures are effective for ensuring that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in filed or submitted reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. 

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information set forth above under Note 15 in Item 1, “Notes to Consolidated Financial Statements” is incorporated herein by reference.

41

Item 1A. Risk Factors .

There have been no material changes in risks since December 31, 2013. For discussion of risk factors, refer to Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We made no share purchases during the third quarter of 2014. We remain authorized by the Board of Directors to purchase up to 2 million shares of our Class A Common Stock.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
99.1	Quantitative and qualitative disclosures about market risks as reported at September 30, 2014.
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, formatted in eXtensible Business Reporting Language (XBRL), filed herewith:
	(i)	Consolidated Statements of Income for the three and nine months ended September 30, 2014 and 2013.

(ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and 2013.

(iii) Consolidated Balance Sheets at September 30, 2014 and December 31, 2013.

(iv) Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2014 and 2013.

(v) Notes to Consolidated Financial Statements.

As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Sections 11 and 12 of the Securities Act and Section 18 of the Securities Exchange Act or otherwise subject to liability under those sections. 

42

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ALBANY INTERNATIONAL CORP .
(Registrant)

Date: November 4, 2014

By /s/ John B. Cozzolino

John B. Cozzolino
Chief Financial Officer and Treasurer

(Principal Financial Officer)

43

EX-31.1

EXHIBIT (31.1)

CERTIFICATION PURSUANT TO

RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph G. Morone, certify that:

1. I have reviewed this report on Form 10-Q of Albany International Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2014

By	/s/ Joseph G. Morone
	Joseph G. Morone
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT (31.2)

CERTIFICATION PURSUANT TO

RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John B. Cozzolino, certify that:

1. I have reviewed this report on Form 10-Q of Albany International Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2014

By	/s/ John B. Cozzolino
	John B. Cozzolino
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

EX-32.1

EXHIBIT (32.1)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Albany International Corp. (the Company) on Form 10-Q for the period ending September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the Report), Joseph G. Morone, President and Chief Executive Officer, and John B. Cozzolino, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 Dated: November 4, 2014

/s/ Joseph G. Morone

Joseph G. Morone

President and Chief Executive Officer

(Principal Executive Officer)

/s/ John B. Cozzolino

John B. Cozzolino

Chief Financial Officer and Treasurer

(Principal Financial Officer)

EX-99.1

EXHIBIT (99.1)

MARKET RISK SENSITIVITY – AS OF September 30, 2014

We have market risk with respect to foreign currency exchange rates and interest rates. The market risk is the potential loss arising from adverse changes in these rates as discussed below.

Foreign Currency Exchange Rate Risk

We have manufacturing plants and sales transactions worldwide and therefore are subject to foreign currency risk. This risk is composed of both potential losses from the translation of foreign currency financial statements and the remeasurement of foreign currency transactions. To manage this risk, we periodically enter into forward exchange contracts either to hedge the net assets of a foreign investment or to provide an economic hedge against future cash flows. The total net assets of non-U.S. operations and long-term intercompany loans denominated in nonfunctional currencies subject to potential loss amount to approximately $592.5 million. The potential loss in fair value resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to $59.3 million. Furthermore, related to foreign currency transactions, we have exposure to various nonfunctional currency balances totaling $133.5 million. This amount includes, on an absolute basis, exposures to assets and liabilities held in currencies other than our local entity’s functional currency. On a net basis, we had $56.1 million of foreign currency liabilities as of September 30, 2014. As currency rates change, these nonfunctional currency balances are revalued, and the corresponding adjustment is recorded in the income statement. A hypothetical change of 10% in currency rates could result in an adjustment to the income statement of approximately $5.6 million. Actual results may differ.

Interest Rate Risk

We are exposed to interest rate fluctuations with respect to our variable rate debt, depending on general economic conditions.

On September 30, 2014, we had the following variable rate debt:

 

Assuming borrowings were outstanding for an entire year, an increase of one percentage point in weighted average interest rates would increase interest expense by $0.8 million. To manage interest rate risk, we may periodically enter into interest rate swap agreements to effectively fix the interest rates on variable debt to a specific rate for a period of time.

XML

Noncontrolling Interest (Details) (USD $)	3 Months Ended		9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Oct. 31, 2013 Albany Safran Composites, LLC [Member]	Sep. 30, 2014 Albany Safran Composites, LLC [Member]
Noncontrolling Interest [Line Items]
Cash contribution					$ 28,000,000
Net income	11,774,000	4,698,000	33,644,000	8,830,000		679,000
Less: Return attributable to the Company's preferred holding						759,000
Net income of ASC available for common ownership	11,812,000	4,698,000	33,652,000	8,830,000		(80,000)
Ownership percentage of noncontrolling shareholder						10.00%
Net loss attributable to the noncontrolling interest	(38,000)		(8,000)			(8,000)
Ownership interest in ASC						90.00%
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Noncontrolling interest, beginning balance			3,482,000			3,482,000
Adjustment to net assets contributed by Albany			14,000			38,000
Net loss attributable to the noncontrolling interest	(38,000)		(8,000)			(8,000)
Changes in other comprehensive income attributable to noncontrolling interest						7,000
Noncontrolling interest, ending balance	$ 3,519,000		$ 3,519,000			$ 3,519,000

XML

Inventories (Details) (USD $)			9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Correction of Inventory Valuation Error [Member]
Inventories [Abstract]
Raw materials	$ 29,208,000	$ 25,754,000
Work in process	47,383,000	45,998,000
Finished goods	45,001,000	40,987,000
Total inventories	121,592,000	112,739,000
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Charge resulting from correction of error			$ 1,600,000

XML

Income Taxes (Narrative) (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Line Items]
Estimated tax rate		34.90%	41.00%
Unrepatriated foreign earnings	$ 100,000	$ 100,000
Estimated range of change, upper bound	0	0
Estimated range of change, lower bound	(2,600,000)	(2,600,000)
Provision for/resolution of tax audits and contingencies, net	330,000	1,310,000	425,000
Scenario, Plan [Member]
Income Tax Disclosure [Line Items]
Foreign earnings targeted for repatriation		3,600,000
Earliest Tax Year [Member]
Income Tax Disclosure [Line Items]
Open tax years		2000
Latest Tax Year [Member]
Income Tax Disclosure [Line Items]
Open tax years		2013
Federal Ministry of Finance, Germany [Member]
Income Tax Disclosure [Line Items]
Unrecognized tax benefits	24,000,000	24,000,000
Payment to taxing authority to pursue litigation		13,000,000
Provision for/resolution of tax audits and contingencies, net	$ 6,000,000

XML

Goodwill and Other Intangible Assets (Schedule of Changes in Intangible Assets and Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Amortized intangible assets:
Beginning balance	$ 616
Amortization	(173)
Currency Translation
Ending balance	443
Goodwill
Beginning balance	78,890
Amortization
Currency translation	(4,868)
Ending balance	74,022
AEC Trade Names [Member]
Amortized intangible assets:
Beginning balance	33
Amortization	(4)
Currency Translation
Ending balance	29
AEC Customer Contracts [Member]
Amortized intangible assets:
Beginning balance	404
Amortization	(151)
Currency Translation
Ending balance	253
AEC Technology [Member]
Amortized intangible assets:
Beginning balance	179
Amortization	(18)
Currency Translation
Ending balance	$ 161

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Other (Income)/Expense, net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Other (Income)/Expense, net [Abstract]
Currency transactions	$ (1,916)	$ 1,975	$ (3,819)	$ 3,879
Bank fees and amortization of debt issuance costs	271	203	868	1,201
Gain on insurance recovery	(165)		(1,126)
Organizational costs related to Albany Safran Composites		500		500
Other	(54)	14	(387)	57
Total	$ (1,864)	$ 2,692	$ (4,464)	$ 5,637

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Inventories (Tables)

9 Months Ended

Sep. 30, 2014

Inventories [Abstract]

Schedule of Inventories

As of September 30, 2014 and December 31, 2013, inventories consisted of the following:

(in thousands)	September 30, 2014		December 31, 2013
Raw materials	$	29,208	$	25,754
Work in process		47,383		45,998
Finished goods		45,001		40,987
Total inventories	$	121,592	$	112,739

 

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Financial Instruments (Schedule of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Long-term debt	$ 283,115	$ 303,875
Less: current portion	(15)	(3,764)
Long-term debt, net of current portion	283,100	300,111
Private Placement, Notes [Member]
Debt Instrument [Line Items]
Long-term debt	100,000	100,000
Interest rate	6.84%
Maturity date	Oct. 25, 2017
Maturity date range, start	Jan. 01, 2015
Maturity date range, end	Dec. 31, 2017
Credit Agreement [Member]
Debt Instrument [Line Items]
Long-term debt	183,000	200,000
Credit agreement, end of period interest rate	2.62%	2.53%
Year of maturity	2018
Various Notes and Mortgages [Member]
Debt Instrument [Line Items]
Long-term debt	$ 115	$ 3,875
Various notes and mortgages, average end of period rate	5.50%	3.10%
Maturity date range, end	Dec. 31, 2021

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Reportable Segments (Tables)

9 Months Ended

Sep. 30, 2014

Reportable Segments [Abstract]

Schedule of Financial Data by Reporting Segment

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)	2014			2013			2014			2013
Net sales
Machine Clothing	$	157,891		$	162,864		$	494,788		$	507,809
Albany Engineered Composites		21,970			20,283			58,898			59,966
Consolidated total	$	179,861		$	183,147		$	553,686		$	567,775
Operating income
Machine Clothing	$	33,308		$	27,910		$	103,329		$	80,287
Albany Engineered Composites		(2,765	)		(3,951	)		(9,785	)		(13,032	)
Corporate expenses		(11,385	)		(10,704	)		(34,808	)		(34,995	)
Operating income before reconciling items		19,158			13,255			58,736			32,260
Reconciling items:
Interest income		(527	)		(351	)		(1,079	)		(951	)
Interest expense		3,013			3,835			9,200			12,007
Other expense/ (income), net		(1,864	)		2,692			(4,464	)		5,637
Income before income taxes	$	18,536		$	7,079		$	55,079		$	15,567

Schedule of Restructuring Costs by Reporting Segment

The table below presents restructuring costs by reportable segment (also see Note 5):

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014			2013		2014		2013
Restructuring expense
Machine Clothing	$	968		$	2,250	$	3,127	$	26,673
Albany Engineered Composites		(49	)		6		931		540
Consolidated total	$	919		$	2,256	$	4,058	$	27,213

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Earnings Per Share (Schedule of Shares Issued and Outstanding) (Details)	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Class of Stock [Line Items]
Treasury Shares	(8,459,498)	(8,459,498)	(8,463,635)	(8,463,635)
Net shares Outstanding	31,852,239	31,840,489		31,726,490
Common Class A [Member]
Class of Stock [Line Items]
Common Stock, shares issued	37,076,689	37,064,939	36,997,277	36,954,027
Common Class B [Member]
Class of Stock [Line Items]
Common Stock, shares issued	3,235,048	3,235,048	3,235,048	3,236,098
Net shares Outstanding	3,235,048		3,235,048

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Pensions and Other Postretirement Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended		9 Months Ended
	Dec. 31, 2014 Scenario, Forecast [Member] Minimum [Member]	Dec. 31, 2014 Scenario, Forecast [Member] Maximum [Member]	Sep. 30, 2014 Pension Plans [Member]	Sep. 30, 2013 Pension Plans [Member]	Sep. 30, 2014 Other Postretirement Benefits [Member]	Sep. 30, 2013 Other Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost			$ 2,521	$ 2,526	$ 236	$ 789
Interest cost			7,217	5,999	2,057	2,374
Expected return on assets			(7,260)	(6,103)
Amortization of prior service cost/(credit)			41	27	(3,366)	(2,818)
Amortization of transition obligation				51
Amortization of net actuarial loss			1,845	2,357	2,181	2,606
Curtailment			(710)
Settlement	(5,000)	(10,000)		315
Net periodic benefit cost			$ 3,654	$ 5,172	$ 1,108	$ 2,951

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Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Schedule of Changes in Claims

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 endedDecember 31,	OpeningNumber ofClaims		ClaimsDismissed,Settled, orResolved		New Claims		ClosingNumber ofClaims		Amounts Paid(thousands) toSettle orResolve
2005		29,411		6,257		1,297		24,451	$	504
2006		24,451		6,841		1,806		19,416		3,879
2007		19,416		808		190		18,798		15
2008		18,798		523		110		18,385		52
2009		18,385		9,482		42		8,945		88
2010		8,945		3,963		188		5,170		159
2011		5,170		789		65		4,446		1,111
2012		4,446		90		107		4,463		530
2013		4,463		233		85		4,315		82
As of September 30, 2014		4,315		466		76		3,925	$	433

Brandon Drying Fabrics, Inc. [Member]

Schedule of Changes in Claims

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
2005		9,985		642		223		9,566	$	-
2006		9,566		1,182		730		9,114		-
2007		9,114		462		88		8,740		-
2008		8,740		86		10		8,664		-
2009		8,664		760		3		7,907		-
2010		7,907		47		9		7,869		-
2011		7,869		3		11		7,877		-
2012		7,877		12		2		7,867		-
2013		7,867		55		3		7,815		-
As of September 30, 2014		7,815		86		2		7,731	$	-

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Accumulated Other Comprehensive Income (Schedule of Items Reclassified to Statement of Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total pretax amount reclassified	$ (18,536)		$ (7,079)		$ (55,079)		$ (15,567)
Income tax effect	6,762		2,381		21,435		6,386
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	(11,812)		(4,698)		(33,652)		(8,830)
Derivative Valuation Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Payments made on interest rate swaps included in earnings	480		467		1,431		1,377
Income tax effect	(187)		(183)		(558)		(537)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	293		284		873		840
Accumulated Defined Benefit Plans Adjustment, Net Prior Service Cost (Credit) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total pretax amount reclassified	(1,108)		(974)		(3,325)		(2,791)
Accumulated Defined Benefit Plans Adjustment, Net Transition Asset (Obligation) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total pretax amount reclassified			17				51
Accumulated Defined Benefit Plans Adjustment, Net Unamortized Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total pretax amount reclassified	1,343		1,635		4,026		4,963
Pension and Postretirement Liability Adjustments [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total pretax amount reclassified	235	[1]	678	[1]	701	[1]	2,223	[1]
Income tax effect	(94)		(265)		(280)		(806)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income	$ 141		$ 413		$ 421		$ 1,417

[1] These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 4).

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Fair-Value Measurements (Schedule of (Losses)/Gains on Changes in Fair Value of Derivative Instruments) (Details) (Foreign Currency Options [Member], Not Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Foreign Currency Options [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
(Losses)/gains recognized in income, net	$ (142)	$ 108	$ 12	$ 108

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Income Taxes (Schedule of Components of Income Tax Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes [Abstract]
Income tax based on income from continuing operations, at estimated tax rates of 34.9% and 41.0%, respectively	$ 6,470	$ 2,902	$ 19,226	$ 6,382
Provision for change in estimated tax rates	(243)	170
Income tax before discrete items	6,227	3,072	19,226	6,382
Provision for/adjustment to beginning of year valuation allowances			437
Provision for/resolution of tax audits and contingencies, net	330		1,310	425
Adjustments to prior period tax liabilities	205	(818)	459	(734)
Enacted legislation change		(269)		(269)
Repatriation of non-U.S. prior years' earnings		396		582
Other discrete tax adjustments, net			3
Total income tax expense/(benefit)	$ 6,762	$ 2,381	$ 21,435	$ 6,386
Estimated tax rate			34.90%	41.00%

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Reportable Segments

9 Months Ended

Sep. 30, 2014

Reportable Segments [Abstract]

Reportable Segments

3. Reportable Segments

Effective January 1, 2014, Albany International Corp. (the “Company”) changed its business segment reporting by recasting, for all prior periods, certain expenses previously identified as Research and Unallocated expenses to existing segments. The Company has two reportable segments: Machine Clothing (MC) and Albany Engineered Composites (AEC), and had Research and Unallocated expenses that were not allocated to these segments. Substantially all research and development expenses are now included in segment operating expenses. Prior to this change, Unallocated expenses included long-term incentive compensation for all Company employees. To the extent such programs are related to MC and AEC employees, such expenses are now included in segment operating expenses. Additionally, the amounts previously referred to as “Unallocated expenses,” is now referred to as “Corporate expenses.” These changes are being made to be consistent with how the chief operating decision-maker assesses Company performance. On April 10, 2014, we filed a Form 8-K to show the effect of these changes on previously reported results and, accordingly, the 2013 segment results in this report reflect the effect of this change.

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)	2014			2013			2014			2013
Net sales
Machine Clothing	$	157,891		$	162,864		$	494,788		$	507,809
Albany Engineered Composites		21,970			20,283			58,898			59,966
Consolidated total	$	179,861		$	183,147		$	553,686		$	567,775
Operating income
Machine Clothing	$	33,308		$	27,910		$	103,329		$	80,287
Albany Engineered Composites		(2,765	)		(3,951	)		(9,785	)		(13,032	)
Corporate expenses		(11,385	)		(10,704	)		(34,808	)		(34,995	)
Operating income before reconciling items		19,158			13,255			58,736			32,260
Reconciling items:
Interest income		(527	)		(351	)		(1,079	)		(951	)
Interest expense		3,013			3,835			9,200			12,007
Other expense/ (income), net		(1,864	)		2,692			(4,464	)		5,637
Income before income taxes	$	18,536		$	7,079		$	55,079		$	15,567

 

The table below presents restructuring costs by reportable segment (also see Note 5):

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014			2013		2014		2013
Restructuring expense
Machine Clothing	$	968		$	2,250	$	3,127	$	26,673
Albany Engineered Composites		(49	)		6		931		540
Consolidated total	$	919		$	2,256	$	4,058	$	27,213

Machine Clothing restructuring expense was principally related to the reduction in manufacturing capacity at the production facilities in France. Restructuring expenses in the Albany Engineered Composites operations were principally related to organizational changes and exiting certain aerospace programs.

There were no material changes in the total assets of the reportable segments during this period.

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Contingencies (Narrative) (Details) (Asbestos Litigation [Member], USD $) In Millions, unless otherwise specified	Sep. 30, 2014 claims	Dec. 31, 2003
Loss Contingencies [Line Items]
Total resolved claims, by means of settlement or dismissal	37,069
Total cost of resolution	$ 9.2
Resolution costs paid by insurance carrier	100.00%
Confirmed insurance coverage	140
Number of policies	23
Policies Exhausted [Member]
Loss Contingencies [Line Items]
Number of policies	2
Other Available Policies [Member]
Loss Contingencies [Line Items]
Confirmed insurance coverage	3
Brandon Drying Fabrics, Inc. [Member]
Loss Contingencies [Line Items]
Total resolved claims, by means of settlement or dismissal	9,874
Total cost of resolution	$ 0.2
Resolution costs paid by insurance carrier	100.00%	88.20%
Percent of resolution costs paid by entity		11.80%

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Restructuring (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 employees
Restructuring Cost and Reserve [Line Items]
Reduction in employees	200
Number of positions eliminated to date	190
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Expected costs	$ 1
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Expected costs	$ 2

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Taxes [Abstract]

Schedule of Components of Income Tax Expense

The following table presents components of income tax expense/(benefit) for the three and nine months ended September 30, 2014 and 2013:
 

		Three months ended September 30,								Nine months ended September 30,
(in thousands)	2014				2013				2014			2013
Income tax based on income from continuing operations, at estimated tax rates of 34.9% and 41.0%, respectively		$	6,470			$	2,902			$	19,226		$	6,382
Provision for change in estimated tax rates			(243	)			170				-			-
Income tax before discrete items			6,227				3,072				19,226			6,382
Discrete tax expense/(benefit):
Provision for/adjustment to beginning of year valuation allowances			-				-				437			-
Provision for/resolution of tax audits and contingencies, net			330				-				1,310			425
Adjustments to prior period tax liabilities			205				(818	)			459			(734	)
Enacted legislation change			-				(269	)			-			(269	)
Repatriation of non-U.S. prior years' earnings			-				396				-			582
Other discrete tax adjustments, net			-				-				3			-
Total income tax expense/(benefit)		$	6,762			$	2,381			$	21,435		$	6,386

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Other (Income)/Expense, net (Tables)

9 Months Ended

Sep. 30, 2014

Other (Income)/Expense, net [Abstract]

Other (Income)/Expense, Net

The components of Other (income)/expenses, net, are:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014			2013		2014			2013
Currency transactions	$	(1,916	)	$	1,975	$	(3,819	)	$	3,879
Bank fees and amortization of debt issuance costs		271			203		868			1,201
Gain on insurance recovery		(165	)		-		(1,126	)		-
Organizational costs related to Albany Safran Composites		-			500		-			500
Other		(54	)		14		(387	)		57
Total	$	(1,864	)	$	2,692	$	(4,464	)	$	5,637

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Goodwill and Other Intangible Assets (Schedule of Estimated Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Goodwill and Other Intangible Assets [Abstract]
2014	$ 231
2015	231
2016	29
2017	29
2018	$ 29

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Restructuring (Schedule of Restructuring Charges) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Restructuring and other, net
Restructuring and other, net	$ 919	$ 2,256	$ 4,058	$ 27,213
Termination and Other Costs [Member]
Restructuring and other, net
Restructuring and other, net			4,157	27,289
Impairment of Plant and Equipment [Member]
Restructuring and other, net
Restructuring and other, net			611	88
Benefit Plan Curtailment/ Settlement [Member]
Restructuring and other, net
Restructuring and other, net			(710)	(164)
Machine Clothing [Member]
Restructuring and other, net
Restructuring and other, net	968	2,250	3,127	26,673
Machine Clothing [Member] | Termination and Other Costs [Member]
Restructuring and other, net
Restructuring and other, net			3,837	26,837
Machine Clothing [Member] | Impairment of Plant and Equipment [Member]
Restructuring and other, net
Restructuring and other, net
Machine Clothing [Member] | Benefit Plan Curtailment/ Settlement [Member]
Restructuring and other, net
Restructuring and other, net			(710)	(164)
Engineered Composites [Member]
Restructuring and other, net
Restructuring and other, net	(49)	6	931	540
Engineered Composites [Member] | Termination and Other Costs [Member]
Restructuring and other, net
Restructuring and other, net			320	452
Engineered Composites [Member] | Impairment of Plant and Equipment [Member]
Restructuring and other, net
Restructuring and other, net			611	88
Engineered Composites [Member] | Benefit Plan Curtailment/ Settlement [Member]
Restructuring and other, net
Restructuring and other, net

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule Computing 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 data)	2014		2013		2014		2013
Net income attributable to the Company	$	11,812	$	4,698	$	33,652	$	8,830
Weighted average number of shares:
Weighted average number of shares used in
calculating basic net income per share		31,848		31,719		31,822		31,615
Effect of dilutive stock-based compensation plans:
Stock options		98		122		102		129
Weighted average number of shares used in
calculating diluted net income per share		31,946		31,841		31,924		31,744
Average market price of common stock used
for calculation of dilutive shares	$	37.20	$	34.43	$	36.38	$	30.53
Net income per share:
Basic	$	0.37	$	0.15	$	1.06	$	0.28
Diluted	$	0.37	$	0.15	$	1.05	$	0.28

Schedule of Shares Issued and Outstanding

The following table presents the number of shares issued and outstanding:
 

	Class A		Class B		Treasury			Net shares
	Shares		Shares		Shares			Outstanding
September 30, 2014		37,076,689		3,235,048		(8,459,498	)		31,852,239
June 30, 2014		37,064,939		3,235,048		(8,459,498	)		31,840,489
September 30, 2013		36,954,027		3,236,098		(8,463,635	)		31,726,490

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2014

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income

The table below presents changes in the components of Accumulated Other Comprehensive Income for the period December 31, 2013 to September 30, 2014:
 

(in thousands)	Translation adjustments			Pension and postretirement liability adjustments			Derivative valuation adjustment			Total Other Comprehensive Income
December 31, 2013		($138	)		($48,383	)		($977	)		($49,498	)
Other comprehensive income before reclassifications		(30,703	)		998			(530	)		(30,235	)
Interest expense related to swaps reclassified to the Statements of Income, net of tax		-			-			873			873
Pension and postretirement liability adjustments reclassified to Statements of Income, net of tax		-			421			-			421
Net current period other comprehensive income		(30,703	)		1,419			343			(28,941	)
September 30, 2014		($30,841	)		($46,964	)		($634	)		($78,439	)

Schedule of Accumulated Other Comprehensive Income Components Reclassified to Statement of Income

The components of our Accumulated Other Comprehensive Income that are reclassified to the Statements of Income relate to our pension and postretirement plans and interest rate swaps. The table below presents the amounts reclassified, and the line items of the Statements of Income that were affected:
 

	Three months ended September 30,						Nine months ended September 30,
Expense/(income)(in thousands)	2014			2013			2014			2013
Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:
Payments made on interest rate swaps included in earnings		$480			$467			$1,431			$1,377
Income tax effect		(187	)		(183	)		(558	)		(537	)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income		$293			$284			$873			$840
Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:
Amortization of prior service cost/(credit)		($1,108	)		($974	)		($3,325	)		($2,791	)
Amortization of transition obligation		-			17			-			51
Amortization of net actuarial loss		1,343			1,635			4,026			4,963
Total pretax amount reclassified (a)		235			678			701			2,223
Income tax effect		(94	)		(265	)		(280	)		(806	)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income		$141			$413			$421			$1,417

 (a)

These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 4).

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Noncontrolling Interest

9 Months Ended

Sep. 30, 2014

Noncontrolling Interest [Abstract]

Noncontrolling Interest

2. 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). Under the terms of the transaction agreements, ASC is the exclusive supplier to Safran of advanced 3D-woven composite parts for use in aircraft and rocket engines, thrust reversers and nacelles, and aircraft landing and braking systems (the “Safran Applications”). AEC may develop and supply parts other than advanced 3D-woven composite parts for all aerospace applications, as well as advanced 3D-woven composite parts for any aerospace applications that are not Safran Applications (such as airframe applications) and any non-aerospace applications.

The agreement provides Safran an option to purchase Albany's remaining 90 percent interest upon the occurrence of certain bankruptcy or performance default events, or if Albany's Engineered Composites business is sold to a direct competitor of Safran. The purchase price is based initially on the same valuation of ASC used to determine Safran's 10% equity interest, and increases over time as LEAP production increases.

In accordance with the operating agreement, Albany received a $28 million preferred holding in ASC which includes a preferred return based on the Company's revolving credit agreement. The common shares of ASC are owned 90 percent by Albany and 10 percent by Safran.

The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity:

(in thousands, except percentages)	Nine months ended  September 30, 2014
Net income of ASC	$	679
Less: Return attributable to the Company's preferred holding		759
Net loss of ASC available for common ownership		(80	)
Ownership percentage of noncontrolling shareholder		10	%
Net loss attributable to noncontrolling interest	$	(8	)
Noncontrolling interest as of December 31, 2013	$	3,482
Adjustment to net assets contributed by Albany		38
Net loss attributable to noncontrolling interest		(8	)
Changes in other comprehensive income attributable to noncontrolling interest		7
Noncontrolling interest as of September 30, 2014	$	3,519

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Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2014

Accounts Receivable [Abstract]

Schedule of Accounts Receivable

The components of Accounts receivable are summarized below:
 

(in thousands)	September 30, 2014			December 31, 2013
Trade and other accounts receivable	$	146,348		$	154,296
Revenue in excess of progress billings		9,799			20,525
Allowance for doubtful accounts		(8,664	)		(11,274	)
Total Accounts Receivable	$	147,483		$	163,547

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Reportable Segments (Schedule of Financial Data by Reporting Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]
Net sales	$ 179,861	$ 183,147	$ 553,686	$ 567,775
Operating income	19,158	13,255	58,736	32,260
Other expense/(income), net	(1,864)	2,692	(4,464)	5,637
Income before income taxes	18,536	7,079	55,079	15,567
Machine Clothing [Member]
Segment Reporting Information [Line Items]
Net sales	157,891	162,864	494,788	507,809
Operating income	33,308	27,910	103,329	80,287
Engineered Composites [Member]
Segment Reporting Information [Line Items]
Net sales	21,970	20,283	58,898	59,966
Operating income	(2,765)	(3,951)	(9,785)	(13,032)
Corporate Expenses [Member]
Segment Reporting Information [Line Items]
Operating income	(11,385)	(10,704)	(34,808)	(34,995)
Significant Reconciling Items [Member]
Segment Reporting Information [Line Items]
Interest income	(527)	(351)	(1,079)	(951)
Interest expense	3,013	3,835	9,200	12,007
Other expense/(income), net	$ (1,864)	$ 2,692	$ (4,464)	$ 5,637

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Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts Receivable [Abstract]
Trade and other accounts receivable	$ 146,348	$ 154,296
Revenue in excess of progress billings	9,799	20,525
Allowance for doubtful accounts	(8,664)	(11,274)
Total Accounts Receivable	$ 147,483	$ 163,547

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF INCOME [Abstract]
Net sales	$ 179,861	$ 183,147	$ 553,686	$ 567,775
Cost of goods sold	111,242	115,146	334,915	349,572
Gross profit	68,619	68,001	218,771	218,203
Selling, general, and administrative expenses	33,618	39,143	112,787	117,690
Technical, product engineering, and research expenses	14,924	13,347	43,190	41,040
Restructuring and other, net	919	2,256	4,058	27,213
Operating income	19,158	13,255	58,736	32,260
Interest expense, net	2,486	3,484	8,121	11,056
Other (income)/expenses, net	(1,864)	2,692	(4,464)	5,637
Income before income taxes	18,536	7,079	55,079	15,567
Income tax expense	6,762	2,381	21,435	6,386
Income from continuing operations	11,774	4,698	33,644	9,181
Loss from operations of discontinued business				(575)
Income tax benefit on discontinued operations				(224)
Loss from discontinued operations				(351)
Net income	11,774	4,698	33,644	8,830
Net loss attributable to the noncontrolling interest	(38)		(8)
Net income attributable to the Company	$ 11,812	$ 4,698	$ 33,652	$ 8,830
Earnings per share attributable to Company shareholders - Basic
Income from continuing operations	$ 0.37	$ 0.15	$ 1.06	$ 0.29
Discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Net income attributable to the Company	$ 0.37	$ 0.15	$ 1.06	$ 0.28
Earnings per share attributable to Company shareholders - Diluted
Income from continuing operations	$ 0.37	$ 0.15	$ 1.05	$ 0.29
Discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Net income attributable to the Company	$ 0.37	$ 0.15	$ 1.05	$ 0.28
Shares of the Company used in computing earnings per share:
Basic	31,848	31,719	31,822	31,615
Diluted	31,946	31,841	31,924	31,744
Dividends per share	$ 0.16	$ 0.15	$ 0.47	$ 0.44

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Restructuring (Schedule of Restructuring Liability) (Details) (Termination Costs [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Termination Costs [Member]
Restructuring Reserve [Roll Forward]
Beginning balance	$ 9,656	$ 4,947
Restructuring charges accrued	4,148	25,860
Payments	(10,904)	(5,529)
Currency translation/other	(277)	609
Ending balance	$ 2,623	$ 25,887

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
OPERATING ACTIVITIES
Net income	$ 11,774	$ 4,698	$ 33,644	$ 8,830
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	13,737	14,230	42,120	42,868
Amortization	1,999	1,567	5,621	4,884
Change in long-term liabilities, deferred taxes and other credits	(2,637)	(283)	95	(4,274)
Provision for write-off of property, plant and equipment	557	264	1,286	329
Gain on disposition or involuntary conversion of assets			(961)	(3,763)
Excess tax benefit of options exercised	(16)	(420)	(161)	(944)
Compensation and benefits paid or payable in Class A Common Stock	213	287	1,160	(887)
Changes in operating assets and liabilities that provide/(use) cash, net of business divestitures:
Accounts receivable	(4,368)	5,759	9,929	(479)
Inventories	(1,279)	290	(12,238)	(240)
Prepaid expenses and other current assets	661	327	275	(1,706)
Income taxes prepaid and receivable	100	129	114	309
Accounts payable	(2,128)	4,516	(2,867)	3,924
Accrued liabilities	4,414	4,076	(8,265)	25,005
Income taxes payable	1,819	(4,101)	760	(8,978)
Other, net	(2,383)	(593)	(6,512)	(1,824)
Net cash provided by operating activities	22,463	30,746	64,000	63,054
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(18,704)	(18,378)	(46,106)	(46,186)
Purchased software	(189)	(728)	(504)	(1,376)
Proceeds from sale or involuntary conversion of assets			961	6,268
Proceeds from sale of discontinued operations, net of expenses		13,000		13,000
Net cash used in investing activities	(18,893)	(6,106)	(45,649)	(28,294)
FINANCING ACTIVITIES
Proceeds from borrowings	5,420	5,271	10,090	57,176
Principal payments on debt	(6,815)	(18,562)	(30,924)	(69,221)
Proceeds from options exercised	223	1,661	610	4,629
Excess tax benefit of options exercised	16	420	161	944
Debt acquisition costs				(1,639)
Dividends paid	(5,094)	(4,747)	(14,633)	(9,170)
Net cash used in financing activities	(6,250)	(15,957)	(34,696)	(17,281)
Effect of exchange rate changes on cash and cash equivalents	(8,695)	6,805	(10,860)	4,612
(Decrease)/increase in cash and cash equivalents	(11,375)	15,488	(27,205)	22,091
Cash and cash equivalents at beginning of period	206,836	197,321	222,666	190,718
Cash and cash equivalents at end of period	$ 195,461	$ 212,809	$ 195,461	$ 212,809

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Fair-Value Measurements (Schedule of Fair Value of Financial Assets and Liabilities) (Details) (USD $)	Sep. 30, 2014		Dec. 31, 2013
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member]
Assets:
Cash equivalents	$ 37,037,000		$ 25,073,000
Common stock of foreign public company	781,000		952,000
Interest rate swap
Liabilities:
Interest rate swap
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Cash equivalents
Common stock of foreign public company
Interest rate swap	830,000	[1]	1,517,000	[2]
Liabilities:
Interest rate swap	(1,869,000)	[3]	(3,119,000)	[4]
Interest Rate Swap [Member]
Derivative asset:
Liability for fixed rate leg	4,100,000		4,100,000
Receivable for floating rate leg	4,900,000		5,600,000
Derivative liability:
Liability for fixed rate leg	2,200,000		3,800,000
Receivable for floating rate leg	$ 300,000		$ 700,000

[1] Net of $4.9 million receivable floating leg and $4.1 million liability fixed leg

[2] Net of $5.6 million receivable floating leg and $4.1 million liability fixed leg

[3] Net of $0.3 million receivable floating leg and $2.2 million liability fixed leg

[4] Net of $0.7 million receivable floating leg and $3.8 million liability fixed leg

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Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Financial Instruments [Abstract]

Schedule of Long-Term Debt

Long-term debt, principally to banks and bondholders, consists of:

(in thousands, except interest rates)	September 30, 2014			December 31, 2013
Private placement with a fixed interest rate of 6.84%, due 2015 and 2017	$	100,000		$	100,000
Credit agreement with borrowings outstanding at an end of period interest rate of 2.62% in 2014 and 2.53% in 2013 (including the effect of interest rate hedging transactions, as described below), due in 2018		183,000			200,000
Various notes and mortgages relative to operations principally outside the United States, at an average end of period rate of 5.50% in 2014 and 3.10% in 2013, due in varying amounts through 2021		115			3,875
Long-term debt		283,115			303,875
Less: current portion		(15	)		(3,764	)
Long-term debt, net of current portion	$	283,100		$	300,111

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Recent Accounting Pronouncements (Details) (Accounting Standards Update 2013-11 [Member], Scenario, Adjustment [Member], USD $) In Millions, unless otherwise specified	Jun. 30, 2014
Accounting Standards Update 2013-11 [Member] | Scenario, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Noncurrent deferred tax assets	$ (7.1)
Noncurrent deferred tax liabilities	$ (7.1)

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Changes in Shareholders' Equity

9 Months Ended

Sep. 30, 2014

Changes in Shareholders' Equity [Abstract]

Changes in Shareholders' Equity

16. Changes in Shareholders' Equity

The following table summarizes changes in Shareholders' Equity:

(in thousands)	Class A Common Stock		Class B Common Stock		Additional paid in capital			Retained earnings			Accumulated items of other comprehensive income			Treasury stock			Noncontrolling Interest			Total Shareholders' Equity
December 31, 2013	$	37	$	3	$	416,728		$	434,598		$	(49,498	)	$	(257,571	)	$	3,482		$	547,779
Net income		-		-		-			33,652			-			-			(8	)		33,644
Dividends declared		-		-		-			(14,964	)		-			-			-			(14,964	)
Changes in equity related to noncontrolling interest in ASC		-		-		(24	)		-			-			-			38			14
Compensation and benefits paid or payable in Class A Common Stock		-		-		1,011			-			-			-			-			1,011
Options exercised		-		-		771			-			-			-			-			771
Shares issued to Directors'		-		-		60			-			-			90			-			150
Cumulative translation adjustment		-		-		-			-			(30,703	)		-			7			(30,696	)
Change in pension liability adjustment		-		-		-			-			1,419			-			-			1,419
Change in derivative valuation adjustment		-		-		-			-			343			-			-			343
September 30, 2014	$	37	$	3	$	418,546		$	453,286		$	(78,439	)	$	(257,481	)	$	3,519		$	539,471

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Fair-Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair-Value Measurements [Abstract]

Schedule of Fair Value of Financial Assets and Liabilities

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

	September 30, 2014						December 31, 2013
	Quotedprices in active markets		Significantother observable inputs				Quotedprices in active markets		Significantother observable inputs
(in thousands)	(Level 1)		(Level 2)				(Level 1)		(Level 2)
Fair Value
Assets:
Cash equivalents	$	37,037	$	-			$	25,073	$	-
Other Assets:
Common stock of foreign public company		781		-				952		-
Interest rate swap		-		830		(a)		-		1,517		(c)
Liabilities:
Other noncurrent liabilities:
Interest rate swap		-		(1,869	)	(b)		-		(3,119	)	(d)

(a) Net of $4.9 million receivable floating leg and $4.1 million liability fixed leg

(b) Net of $0.3 million receivable floating leg and $2.2 million liability fixed leg

(c) Net of $5.6 million receivable floating leg and $4.1 million liability fixed leg

(d) Net of $0.7 million receivable floating leg and $3.8 million liability fixed leg

Schedule of (Losses)/Gains on Changes in Fair Value of Derivative Instruments

Gains/ (losses) related to changes in fair value of derivative instruments that were recognized in Other (income)/expenses, net in the Statements of Income were as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014			2013		2014		2013
Derivatives not designated as hedging instruments
Forward currency options	$	(142	)	$	108	$	12	$	108

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Noncontrolling Interest (Tables)

9 Months Ended

Sep. 30, 2014

Noncontrolling Interest [Abstract]

Schedule of Income Attributable to Noncontrolling Interest and Noncontrolling Equity

The table below presents a reconciliation of income attributable to the noncontrolling interest and noncontrolling equity:

(in thousands, except percentages)	Nine months ended  September 30, 2014
Net income of ASC	$	679
Less: Return attributable to the Company's preferred holding		759
Net loss of ASC available for common ownership		(80	)
Ownership percentage of noncontrolling shareholder		10	%
Net loss attributable to noncontrolling interest	$	(8	)
Noncontrolling interest as of December 31, 2013	$	3,482
Adjustment to net assets contributed by Albany		38
Net loss attributable to noncontrolling interest		(8	)
Changes in other comprehensive income attributable to noncontrolling interest		7
Noncontrolling interest as of September 30, 2014	$	3,519

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Basis of Presentation

9 Months Ended

Sep. 30, 2014

Basis of Presentation [Abstract]

Basis of Presentation

1. Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments and elimination of intercompany transactions necessary for a fair presentation of results for such periods. Albany International Corp. (“Albany”) 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 information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Risk Factors,” “ Legal Proceedings,” “Management's Discussion and Analysis of Financial Condition and Results of Operation,” “Quantitative and Qualitative Disclosures about Market Risk” and the Consolidated Financial Statements and Notes thereto included in Items 1A, 3, 7, 7A and 8, respectively, of the Albany International Corp. Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income	$ 11,774	$ 4,698	$ 33,644	$ 8,830
Other comprehensive income, before tax:
Foreign currency translation adjustments	(27,765)	17,805	(29,705)	4,536
Pension/postretirement plan remeasurement		14,417		14,417
Pension/postretirement plan amendment		7,974		7,974
Amortization of pension liability adjustment:
Transition obligation		17		51
Prior service (credit)/cost	(1,108)	(974)	(3,325)	(2,791)
Net actuarial loss	1,343	1,635	4,026	4,963
Payments related to interest rate swaps included in earnings	480	467	1,431	1,377
Derivative valuation adjustment	446	(865)	(869)	1,096
Income taxes related to items of other comprehensive income:
Pension/postretirement plan remeasurement		(5,623)		(5,623)
Pension/postretirement plan amendment		(3,110)		(3,110)
Amortization of pension liability adjustment	(94)	(265)	(280)	(806)
Payments related to interest rate swaps included in earnings	(187)	(183)	(558)	(537)
Derivative valuation adjustment	(174)	338	339	(427)
Comprehensive income/(loss)	(15,285)	36,331	4,703	29,950
Net loss and comprehensive income attributable to the noncontrolling interest	(31)		(1)
Comprehensive income/(loss) attributable to the Company	$ (15,316)	$ 36,331	$ 4,702	$ 29,950

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Inventories

9 Months Ended

Sep. 30, 2014

Inventories [Abstract]

Inventories

11. Inventories

Inventories are stated at the lower of cost or market, and are valued at average cost, net of reserves. The Company maintains reserves for possible impairment in the value of inventories. Such reserves can be specific to certain inventory, or general based on judgments about the overall condition of the inventory. General reserves are established based on percentage write-downs applied to aged inventories, or for inventories that are slow-moving. If actual results differ from estimates, additional inventory write-downs may be necessary. These general reserves for aged inventory are relieved through income only when the inventory is sold.

As of September 30, 2014 and December 31, 2013, inventories consisted of the following:

(in thousands)	September 30, 2014		December 31, 2013
Raw materials	$	29,208	$	25,754
Work in process		47,383		45,998
Finished goods		45,001		40,987
Total inventories	$	121,592	$	112,739

 

During the second quarter of 2014, the Company identified an error in the value of Machine Clothing inventories reported in prior periods. Included in cost of goods sold for the first nine months of 2014 is a charge of $1.6 million to correct the errors by reducing inventories to their proper carrying values.  The error relates to intercompany transfers of inventory and originated when the Company transitioned to a new ERP system in the Americas in 2008 and Europe in 2011.

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Document and Entity Information In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Oct. 17, 2014 Common Class A [Member]	Oct. 17, 2014 Common Class B [Member]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Entity Registrant Name	ALBANY INTERNATIONAL CORP /DE/
Entity Central Index Key	0000819793
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		28.6	3.3

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

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 reporting units 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.
 

The entire balance of goodwill on our books is attributable to the Machine Clothing business. In the second quarter of 2014, the Company applied the qualitative assessment approach in performing its annual evaluation of goodwill and concluded that no impairment provision was required. In addition, there were no amounts at risk due to the large spread between the fair and carrying values.

We are continuing to amortize certain patents, trade names, customer contracts and technology assets that have finite lives. The changes in intangible assets and goodwill from December 31, 2013 to September 30, 2014, were as follows:
 

(in thousands)	December 31, 2013		Amortization			Currency Translation			September 30, 2014
Amortized intangible assets:
AEC trade names	$	33	$	(4	)	$	-		$	29
AEC customer contracts		404		(151	)		-			253
AEC technology		179		(18	)		-			161
Total amortized intangible assets	$	616	$	(173	)	$	-		$	443
Unamortized intangible assets:
Goodwill	$	78,890	$	-		$	(4,868	)	$	74,022

Estimated amortization expense of intangibles for the years ending December 31, 2014 through 2018, is as follows:
 

	Annual amortization(in thousands)
Year
2014		$	231
2015			231
2016			29
2017			29
2018			29

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
ASSETS
Cash and cash equivalents	$ 195,461	$ 222,666
Accounts receivable, net	147,483	163,547
Inventories	121,592	112,739
Deferred income taxes	13,666	13,873
Prepaid expenses and other current assets	9,238	9,659
Total current assets	487,440	522,484
Property, plant and equipment, net	408,096	418,830
Intangibles	443	616
Goodwill	74,022	78,890
Income taxes receivable and deferred	110,609	119,612
Other assets	31,331	26,456
Total assets	1,111,941	1,166,888
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and loans payable	551	625
Accounts payable	32,211	36,397
Accrued liabilities	100,809	112,331
Current maturities of long-term debt	15	3,764
Income taxes payable and deferred	5,898	5,391
Total current liabilities	139,484	158,508
Long-term debt	283,100	300,111
Other noncurrent liabilities	96,991	106,014
Deferred taxes and other credits	52,895	54,476
Total liabilities	572,470	619,109
SHAREHOLDERS' EQUITY
Preferred stock, par value $5.00 per share; authorized 2,000,000 shares; none issued
Common Stock	40	40
Additional paid-in capital	418,546	416,728
Retained earnings	453,286	434,598
Accumulated items of other comprehensive income:
Translation adjustments	(30,841)	(138)
Pension and postretirement liability adjustments	(46,964)	(48,383)
Derivative valuation adjustment	(634)	(977)
Treasury stock (Class A), at cost 8,459,498 shares in 2014 and 8,463,635 in 2013	(257,481)	(257,571)
Total Company shareholders' equity	535,952	544,297
Noncontrolling interest	3,519	3,482
Total equity	539,471	547,779
Total liabilities and shareholders' equity	1,111,941	1,166,888
Common Class A [Member]
SHAREHOLDERS' EQUITY
Common Stock	37	37
Common Class B [Member]
SHAREHOLDERS' EQUITY
Common Stock	$ 3	$ 3

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Other (Income)/Expense, net

9 Months Ended

Sep. 30, 2014

Other (Income)/Expense, net [Abstract]

Other (Income)/Expense, net

6. Other (Income)/Expenses, net

The components of Other (income)/expenses, net, are:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014			2013		2014			2013
Currency transactions	$	(1,916	)	$	1,975	$	(3,819	)	$	3,879
Bank fees and amortization of debt issuance costs		271			203		868			1,201
Gain on insurance recovery		(165	)		-		(1,126	)		-
Organizational costs related to Albany Safran Composites		-			500		-			500
Other		(54	)		14		(387	)		57
Total	$	(1,864	)	$	2,692	$	(4,464	)	$	5,637

In July 2013, the Company's manufacturing facility in Germany was damaged by severe weather. At that time, the Company expensed the remaining book value of the damaged property, but that value was minimal. The gain recorded in the third quarter of 2014 represented the finalization of the insurance claim.

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Restructuring

9 Months Ended

Sep. 30, 2014

Restructuring [Abstract]

Restructuring

5. Restructuring

During the second quarter of 2013, the Company commenced a program to restructure operations at the Company's Machine Clothing production facilities in France. The restructuring, when completed, will have reduced employment by approximately 200 positions at these locations. As of September 30, 2014, approximately 190 positions had been eliminated.

Under the terms of the restructuring plan, the Company provides training, outplacement and other benefits, the costs of which are recorded as restructuring when they are incurred. The Company recorded a curtailment gain of $0.7 million for the first nine months of 2014 related to the elimination of pension accruals, which reduced net restructuring expense as reflected in the table below. Such curtailment gains are recorded as employees terminate employment and, accordingly, we expect to record additional gains during 2014. Remaining costs for this program are expected to be between $1 and $2 million, and we expect these costs to occur over the next several quarters.

Restructuring expenses in the Albany Engineered Composites operations were principally related to organizational changes and exiting certain aerospace programs.

Thefollowing table summarizes charges reported in the Statements of Income under “Restructuring and other, net”:

	Three months ended  September 30,						Nine months ended  September 30,
(in thousands)		2014			2013			2014		2013
Machine Clothing		$	968		$	2,250		$	3,127	$	26,673
Albany Engineered Composites			(49	)		6			931		540
Total		$	919		$	2,256		$	4,058	$	27,213

Nine months ended September 30, 2014(in thousands)	Totalrestructuringcosts incurred		Termination andother costs		Impairment ofplant andequipment		Benefit plancurtailment/settlement
Machine Clothing	$	3,127	$	3,837	$	-	$	(710	)
Albany Engineered Composites		931		320		611		-
Total	$	4,058	$	4,157	$	611	$	(710	)

Nine months ended September 30, 2013 (in thousands)	Total restructuring costs incurred		Termination and other costs		Impairment of plant and equipment		Benefit plan curtailment/ settlement
Machine Clothing	$	26,673	$	26,837	$	-	$	(164	)
Albany Engineered Composites		540		452		88		-
Total	$	27,213	$	27,289	$	88	$	(164	)

We expect that substantially all Accrued liabilities for restructuring will be paid within one year. The table below presents year-to-date changes in restructuring liabilities for 2014 and 2013 all of which related to termination costs:

	December 31,		Restructuring					Currency			September 30,
(in thousands)	2013		charges accrued		Payments			translation/other			2014
Total Termination costs	$	9,656	$	4,148	$	(10,904	)	$	(277	)	$	2,623

	December 31,		Restructuring					Currency		September 30,
(in thousands)	2012		charges accrued		Payments			translation/other		2013
Total Termination costs	$	4,947	$	25,860	$	(5,529	)	$	609	$	25,887

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

17. Recent Accounting Pronouncements

In March 2013, an accounting update was issued that addressed the accounting for the cumulative translation adjustment upon derecognition of subsidiaries.  Upon the sale of part of a foreign entity, or if the parent no longer holds a controlling financial interest in a subsidiary or group of assets, the parent company must transfer the cumulative translation adjustment to net income.  We adopted this update January 1, 2014, and it had no effect on our financial statements.

In July 2013, amended accounting guidance was issued regarding the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. This guidance was adopted in the first quarter of 2014 and had the effect of reducing noncurrent deferred tax assets and noncurrent deferred tax liabilities by $7.1 million.

In April 2014, an accounting update was issued regarding which disposals qualify for reporting as discontinued operations.  Additionally, new disclosures will apply for discontinued operations.  This accounting update is to be applied prospectively to new disposals and new classifications of disposal groups as held for sale beginning in periods after December 15, 2014.  We do not expect the adoption of this update to have a significant effect on our financial statements.

In June 2014, an accounting update was issued that replaces the existing revenue recognition framework regarding contracts with customers. This accounting update is effective for reporting periods beginning after December 15, 2016. We have not determined the impact of this update on our financial statements.

In June 2014, an accounting update was issued relating to accounting for share-based payments with a performance target that could be achieved after the requisite service period. The adoption of this accounting guidance will be effective for reporting periods beginning after December 15, 2015. We do not expect the adoption of this update to have a significant effect on our financial statements.

In August 2014, an accounting update was issued relating to how management assesses conditions and events that could raise substantial doubt about an entity's ability to continue as a going concern. This accounting update is effective for reporting periods beginning after December 15, 2016.  We do not expect the adoption of this update to have a significant effect on our financial statements.

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Financial Instruments

9 Months Ended

Sep. 30, 2014

Financial Instruments [Abstract]

Financial Instruments

13. Financial Instruments

Long-term debt, principally to banks and bondholders, consists of:

(in thousands, except interest rates)	September 30, 2014			December 31, 2013
Private placement with a fixed interest rate of 6.84%, due 2015 and 2017	$	100,000		$	100,000
Credit agreement with borrowings outstanding at an end of period interest rate of 2.62% in 2014 and 2.53% in 2013 (including the effect of interest rate hedging transactions, as described below), due in 2018		183,000			200,000
Various notes and mortgages relative to operations principally outside the United States, at an average end of period rate of 5.50% in 2014 and 3.10% in 2013, due in varying amounts through 2021		115			3,875
Long-term debt		283,115			303,875
Less: current portion		(15	)		(3,764	)
Long-term debt, net of current portion	$	283,100		$	300,111

A note agreement and guaranty (“Prudential Agreement”) was entered into in October 2005, and was amended and restated as of September 17, 2010 and March 26, 2013, with the Prudential Insurance Company of America, and certain other purchasers with interest at 6.84% and a maturity date of October 25, 2017. The remaining obligation under the Prudential Agreement has a mandatory payment of $50 million due on October 25, 2015, and the final payment is due October 25, 2017. At the noteholders' election, certain prepayments may also be required in connection with certain asset dispositions or financings. The notes may not otherwise be prepaid without a premium, under certain market conditions. The Prudential Agreement contains customary terms, as well as affirmative covenants, negative covenants, and events of default comparable to those in our current principal credit facility (as described below). For disclosure purposes, we are required to measure the fair value of outstanding debt on a recurring basis. As of September 30, 2014, the fair value of this debt was approximately $112.2 million, and was measured using active market interest rates, which would be considered Level 2 for fair value measurement purposes.

On March 26, 2013, we entered into a $330 million, unsecured Five-Year Revolving Credit Facility Agreement (“Credit Agreement”), under which $183 million of borrowings were outstanding as of September 30, 2014. The Credit Agreement replaces the previous $390 million five-year Credit Agreement made in 2010. The applicable interest rate for borrowings under the Credit Agreement, as well as under the former agreement, is LIBOR plus a spread, based on our leverage ratio at the time of borrowing. At the time of the last borrowing on September 22, 2014, the spread was 1.375%. The spread is based on a pricing grid, which ranges from 1.25% to 1.875%, based on our leverage ratio.
 

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. Based on our maximum leverage ratio and our consolidated EBITDA (as defined in the Credit Agreement), and without modification to any other credit agreements, as of September 30, 2014, we would have been able to borrow an additional $147 million under our agreement.

On July 16, 2010, we entered into interest rate hedging transactions that have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $105 million of the indebtedness drawn under the Credit Agreement at the rate of 2.04% until July 16, 2015. Under the terms of these transactions, we pay the fixed rate of 2.04% and the counterparties pay a floating rate based on the three-month LIBOR rate at each quarterly calculation date, which on July 16, 2014 was 0.24%. The net effect is to fix the effective interest rate on $105 million of indebtedness at 2.04%, plus the applicable spread, until these swap agreements expire. On September 30, 2014, the all-in rate on the $105 million of debt was 3.415%.
 

On May 20, 2013, we entered into interest rate hedging transactions for the period July 16, 2015 through March 16, 2018. These transactions have the effect of fixing the LIBOR portion of the effective interest rate (before addition of the spread) on $110 million of indebtedness drawn under the Credit Agreement at the rate of 1.414% during this period. Under the terms of these transactions, we pay the fixed rate of 1.414% and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date, which on September 30, 2014 was 0.1525%. The net effect is to fix the effective interest rate on $110 million of indebtedness at 1.414%, plus the applicable spread, during the swap period.
 

These interest rate swaps are accounted for as a hedge of future cash flows, as further described in Note 14 of the Notes to Consolidated Financial Statements. No cash collateral was received or pledged in relation to the swap agreements.
 

Under the Credit Agreement and Prudential Agreement, we are currently required to maintain a leverage ratio (as defined in the agreements) 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, 2014, our leverage ratio was 1.46 to 1.00 and our interest coverage ratio was 12.10 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 would not exceed 3.50 to 1.00 after giving pro forma effect to the acquisition.
 

Indebtedness under each of the Prudential Agreement and 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, 2014.

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2014

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

9. Accumulated Other Comprehensive Income

The table below presents changes in the components of Accumulated Other Comprehensive Income for the period December 31, 2013 to September 30, 2014:
 

(in thousands)	Translation adjustments			Pension and postretirement liability adjustments			Derivative valuation adjustment			Total Other Comprehensive Income
December 31, 2013		($138	)		($48,383	)		($977	)		($49,498	)
Other comprehensive income before reclassifications		(30,703	)		998			(530	)		(30,235	)
Interest expense related to swaps reclassified to the Statements of Income, net of tax		-			-			873			873
Pension and postretirement liability adjustments reclassified to Statements of Income, net of tax		-			421			-			421
Net current period other comprehensive income		(30,703	)		1,419			343			(28,941	)
September 30, 2014		($30,841	)		($46,964	)		($634	)		($78,439	)

The components of our Accumulated Other Comprehensive Income that are reclassified to the Statements of Income relate to our pension and postretirement plans and interest rate swaps. The table below presents the amounts reclassified, and the line items of the Statements of Income that were affected:
 

	Three months ended September 30,						Nine months ended September 30,
Expense/(income)(in thousands)	2014			2013			2014			2013
Pretax Derivative valuation reclassified from Accumulated Other Comprehensive Income:
Payments made on interest rate swaps included in earnings		$480			$467			$1,431			$1,377
Income tax effect		(187	)		(183	)		(558	)		(537	)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income		$293			$284			$873			$840
Pretax pension and postretirement liabilities reclassified from Accumulated Other Comprehensive Income:
Amortization of prior service cost/(credit)		($1,108	)		($974	)		($3,325	)		($2,791	)
Amortization of transition obligation		-			17			-			51
Amortization of net actuarial loss		1,343			1,635			4,026			4,963
Total pretax amount reclassified (a)		235			678			701			2,223
Income tax effect		(94	)		(265	)		(280	)		(806	)
Effect on net income due to items reclassified from Accumulated Other Comprehensive Income		$141			$413			$421			$1,417

 (a)

These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 4).

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Fair-Value Measurements (Narrative) (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Interest Rate Swap [Member]
Derivative [Line Items]
Interest expense	$ 1,400	$ 1,400
Hedge effectiveness, percent	100.00%

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

The following table presents components of income tax expense/(benefit) for the three and nine months ended September 30, 2014 and 2013:
 

		Three months ended September 30,								Nine months ended September 30,
(in thousands)	2014				2013				2014			2013
Income tax based on income from continuing operations, at estimated tax rates of 34.9% and 41.0%, respectively		$	6,470			$	2,902			$	19,226		$	6,382
Provision for change in estimated tax rates			(243	)			170				-			-
Income tax before discrete items			6,227				3,072				19,226			6,382
Discrete tax expense/(benefit):
Provision for/adjustment to beginning of year valuation allowances			-				-				437			-
Provision for/resolution of tax audits and contingencies, net			330				-				1,310			425
Adjustments to prior period tax liabilities			205				(818	)			459			(734	)
Enacted legislation change			-				(269	)			-			(269	)
Repatriation of non-U.S. prior years' earnings			-				396				-			582
Other discrete tax adjustments, net			-				-				3			-
Total income tax expense/(benefit)		$	6,762			$	2,381			$	21,435		$	6,386

The third quarter estimated effective tax rate on continuing operations was 34.9 percent in 2014, as compared to 41.0 percent for the same period in 2013. The change in the estimated effective tax rate was primarily attributable to changes in the anticipated amount and distribution of income and loss among the countries in which we operate.

The Company records the residual U.S. and foreign taxes on certain amounts of current year foreign earnings that have been targeted for repatriation to the U.S.  As a result, such amounts are not considered to be permanently reinvested, and the Company accrued as part of the income tax provision before discrete items, for the residual taxes on these earnings to the extent they cannot be repatriated in a tax-free manner. At September 30, 2014 the Company reported a deferred tax liability of $0.1 million on $3.6 million of prior year non-U.S. earnings that had been targeted for future repatriation to the U.S.

We conduct business globally and, as a result, the Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as the United States, Brazil, Canada, France, Germany, Italy, Mexico, and Switzerland. The open tax years in these jurisdictions range from 2000 to 2013. We are currently under audit in the U.S. and in other non-U.S. tax jurisdictions, including but not limited to Canada, Germany, and Italy.

It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change within a range of a net increase of $0 million to a net decrease of $2.6 million, from the reevaluation of uncertain tax positions arising in examinations, in appeals, or in the courts, or from the closure of tax statutes. 

Not included in the range is $24 million of tax benefits in Germany related to a 1999 reorganization that have been challenged by the German tax authorities in the course of an audit.  In 2008 the German Federal Tax Court (FTC) denied tax benefits to other taxpayers in a case involving German tax laws relevant to our reorganization. One of these cases involved a non-German party, and in the ruling in that case, the FTC acknowledged that the German law in question may be violative of European Union (EU) principles and referred the issue to the European Court of Justice (ECJ) for its determination on this issue. In September 2009, the ECJ issued an opinion in this case that is generally favorable to the other taxpayer and referred the case back to the FTC for further consideration. In May 2010 the FTC released its decision, in which it resolved certain tax issues that may be relevant to our audit and remanded the case to a lower court for further development.  In 2012, the lower court decided in favor of the taxpayer and the government appealed the findings to the FTC.  On July 2, 2014, The FTC conducted a hearing in the aforementioned case involving the other taxpayer, and the taxpayer lost.  The final written decision of the FTC will be issued in the fourth quarter of 2014.  Although we believe that the relevant German tax law is violative of EU principles, management views the conclusion of this case as an opportunity to approach the German tax authorities with the goal of a settlement agreement.  We were required to pay tax and interest of approximately $13 million to the German tax authorities in order to pursue our appeal position.  In anticipation of a settlement, a portion of the prepaid taxes and interest along with certain deferred tax assets were adjusted downward by $6 million during the third quarter of 2014, which is included in Provision for/resolution of tax audits and contingencies in the above table. Also included on that line, for the third quarter of 2014, is a tax benefit related to the lapse of a tax statute.

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Earnings Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

8. 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 data)	2014		2013		2014		2013
Net income attributable to the Company	$	11,812	$	4,698	$	33,652	$	8,830
Weighted average number of shares:
Weighted average number of shares used in
calculating basic net income per share		31,848		31,719		31,822		31,615
Effect of dilutive stock-based compensation plans:
Stock options		98		122		102		129
Weighted average number of shares used in
calculating diluted net income per share		31,946		31,841		31,924		31,744
Average market price of common stock used
for calculation of dilutive shares	$	37.20	$	34.43	$	36.38	$	30.53
Net income per share:
Basic	$	0.37	$	0.15	$	1.06	$	0.28
Diluted	$	0.37	$	0.15	$	1.05	$	0.28

The following table presents the number of shares issued and outstanding:
 

	Class A		Class B		Treasury			Net shares
	Shares		Shares		Shares			Outstanding
September 30, 2014		37,076,689		3,235,048		(8,459,498	)		31,852,239
June 30, 2014		37,064,939		3,235,048		(8,459,498	)		31,840,489
September 30, 2013		36,954,027		3,236,098		(8,463,635	)		31,726,490

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Accounts Receivable

9 Months Ended

Sep. 30, 2014

Accounts Receivable [Abstract]

Accounts Receivable

10. Accounts Receivable

Accounts receivable includes trade receivables and revenue in excess of progress billings on long-term contracts in the Albany Engineered Composites business. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company determines the allowance based on historical write-off experience, customer-specific facts and economic conditions. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The components of Accounts receivable are summarized below:
 

(in thousands)	September 30, 2014			December 31, 2013
Trade and other accounts receivable	$	146,348		$	154,296
Revenue in excess of progress billings		9,799			20,525
Allowance for doubtful accounts		(8,664	)		(11,274	)
Total Accounts Receivable	$	147,483		$	163,547

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Changes in Shareholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Balance			$ 547,779
Net income	11,774	4,698	33,644	8,830
Dividends declared			(14,964)
Changes in equity related to noncontrolling interest in ASC			14
Compensation and benefits paid or payable in Class A Common Stock			1,011
Options exercised			771
Shares issued to Directors			150
Cumulative translation adjustment			(30,696)
Change in pension liability adjustment			1,419
Change in derivative valuation adjustment			343
Balance	539,471		539,471
Common Stock [Member] | Common Class A [Member]
Balance			37
Net income
Dividends declared
Changes in equity related to noncontrolling interest in ASC
Compensation and benefits paid or payable in Class A Common Stock
Options exercised
Shares issued to Directors
Cumulative translation adjustment
Change in pension liability adjustment
Change in derivative valuation adjustment
Balance	37		37
Common Stock [Member] | Common Class B [Member]
Balance			3
Net income
Dividends declared
Changes in equity related to noncontrolling interest in ASC
Compensation and benefits paid or payable in Class A Common Stock
Options exercised
Shares issued to Directors
Cumulative translation adjustment
Change in pension liability adjustment
Change in derivative valuation adjustment
Balance	3		3
Additional Paid-in Capital [Member]
Balance			416,728
Net income
Dividends declared
Changes in equity related to noncontrolling interest in ASC			(24)
Compensation and benefits paid or payable in Class A Common Stock			1,011
Options exercised			771
Shares issued to Directors			60
Cumulative translation adjustment
Change in pension liability adjustment
Change in derivative valuation adjustment
Balance	418,546		418,546
Retained Earnings [Member]
Balance			434,598
Net income			33,652
Dividends declared			(14,964)
Changes in equity related to noncontrolling interest in ASC
Compensation and benefits paid or payable in Class A Common Stock
Options exercised
Shares issued to Directors
Cumulative translation adjustment
Change in pension liability adjustment
Change in derivative valuation adjustment
Balance	453,286		453,286
Accumulated Items of Other Comprehensive Income [Member]
Balance			(49,498)
Net income
Dividends declared
Changes in equity related to noncontrolling interest in ASC
Compensation and benefits paid or payable in Class A Common Stock
Options exercised
Shares issued to Directors
Cumulative translation adjustment			(30,703)
Change in pension liability adjustment			1,419
Change in derivative valuation adjustment			343
Balance	(78,439)		(78,439)
Treasury Stock [Member]
Balance			(257,571)
Net income
Dividends declared
Changes in equity related to noncontrolling interest in ASC
Compensation and benefits paid or payable in Class A Common Stock
Options exercised
Shares issued to Directors			90
Cumulative translation adjustment
Change in pension liability adjustment
Change in derivative valuation adjustment
Balance	(257,481)		(257,481)
Noncontrolling Interest [Member]
Balance			3,482
Net income			(8)
Dividends declared
Changes in equity related to noncontrolling interest in ASC			38
Compensation and benefits paid or payable in Class A Common Stock
Options exercised
Shares issued to Directors
Cumulative translation adjustment			7
Change in pension liability adjustment
Change in derivative valuation adjustment
Balance	$ 3,519		$ 3,519

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Contingencies (Schedule of Changes in Claims) (Details) (Asbestos Litigation [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014 claims	Dec. 31, 2013 claims	Dec. 31, 2012 claims	Dec. 31, 2011 claims	Dec. 31, 2010 claims	Dec. 31, 2009 claims	Dec. 31, 2008 claims	Dec. 31, 2007 claims	Dec. 31, 2006 claims	Dec. 31, 2005 claims
Loss Contingencies [Line Items]
Opening Number of Claims	4,315	4,463	4,446	5,170	8,945	18,385	18,798	19,416	24,451	29,411
Claims Dismissed, Settled, or Resolved	466	233	90	789	3,963	9,482	523	808	6,841	6,257
New Claims	76	85	107	65	188	42	110	190	1,806	1,297
Closing Number of Claims	3,925	4,315	4,463	4,446	5,170	8,945	18,385	18,798	19,416	24,451
Amounts Paid (thousands) to Settle or Resolve ($)	$ 433	$ 82	$ 530	$ 1,111	$ 159	$ 88	$ 52	$ 15	$ 3,879	$ 504
Brandon Drying Fabrics, Inc. [Member]
Loss Contingencies [Line Items]
Opening Number of Claims	7,815	7,867	7,877	7,869	7,907	8,664	8,740	9,114	9,566	9,985
Claims Dismissed, Settled, or Resolved	86	55	12	3	47	760	86	462	1,182	642
New Claims	2	3	2	11	9	3	10	88	730	223
Closing Number of Claims	7,731	7,815	7,867	7,877	7,869	7,907	8,664	8,740	9,114	9,566
Amounts Paid (thousands) to Settle or Resolve ($)

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2014

Goodwill and Other Intangible Assets [Abstract]

Schedule of Changes in Intangible Assets and Goodwill

We are continuing to amortize certain patents, trade names, customer contracts and technology assets that have finite lives. The changes in intangible assets and goodwill from December 31, 2013 to September 30, 2014, were as follows:
 

(in thousands)	December 31, 2013		Amortization			Currency Translation			September 30, 2014
Amortized intangible assets:
AEC trade names	$	33	$	(4	)	$	-		$	29
AEC customer contracts		404		(151	)		-			253
AEC technology		179		(18	)		-			161
Total amortized intangible assets	$	616	$	(173	)	$	-		$	443
Unamortized intangible assets:
Goodwill	$	78,890	$	-		$	(4,868	)	$	74,022

Schedule of Estimated Amortization Expense

Estimated amortization expense of intangibles for the years ending December 31, 2014 through 2018, is as follows:
 

	Annual amortization(in thousands)
Year
2014		$	231
2015			231
2016			29
2017			29
2018			29

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Accumulated Other Comprehensive Income (Schedule of Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (49,498)
Other comprehensive income before reclassifications	(30,235)
Interest expense related to swaps reclassified to the Statement of Operations, net of tax	873
Pension and postretirement liability adjustments reclassified to Statements of Income, net of tax	421
Net current period other comprehensive income	(28,941)
Ending balance	(78,439)
Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(138)
Other comprehensive income before reclassifications	(30,703)
Interest expense related to swaps reclassified to the Statement of Operations, net of tax
Pension and postretirement liability adjustments reclassified to Statements of Income, net of tax
Net current period other comprehensive income	(30,703)
Ending balance	(30,841)
Pension and Postretirement Liability Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(48,383)
Other comprehensive income before reclassifications	998
Interest expense related to swaps reclassified to the Statement of Operations, net of tax
Pension and postretirement liability adjustments reclassified to Statements of Income, net of tax	421
Net current period other comprehensive income	1,419
Ending balance	(46,964)
Derivative Valuation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(977)
Other comprehensive income before reclassifications	(530)
Interest expense related to swaps reclassified to the Statement of Operations, net of tax	873
Pension and postretirement liability adjustments reclassified to Statements of Income, net of tax
Net current period other comprehensive income	343
Ending balance	$ (634)

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Contingencies

9 Months Ended

Sep. 30, 2014

Contingencies [Abstract]

Contingencies

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 products that we previously manufactured. We produced asbestos-containing paper machine clothing synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. Such fabrics generally had a useful life of three to twelve months.

We were defending 3,925 claims as of September 30, 2014.

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 endedDecember 31,	OpeningNumber ofClaims		ClaimsDismissed,Settled, orResolved		New Claims		ClosingNumber ofClaims		Amounts Paid(thousands) toSettle orResolve
2005		29,411		6,257		1,297		24,451	$	504
2006		24,451		6,841		1,806		19,416		3,879
2007		19,416		808		190		18,798		15
2008		18,798		523		110		18,385		52
2009		18,385		9,482		42		8,945		88
2010		8,945		3,963		188		5,170		159
2011		5,170		789		65		4,446		1,111
2012		4,446		90		107		4,463		530
2013		4,463		233		85		4,315		82
As of September 30, 2014		4,315		466		76		3,925	$	433

 

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.

Exposure and disease information sufficient to meaningfully estimate a range of possible loss of a particular claim is typically not available until late in the discovery process, and often not until a trial date is imminent and a settlement demand has been received. For these reasons, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to 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 insurer, Liberty Mutual, has defended each case and funded settlements under a standard reservation of rights. As of September 30, 2014 we had resolved, by means of settlement or dismissal, 37,069 claims. The total cost of resolving all claims was $9.2 million. Of this amount, almost 100% was paid by our insurance carrier. The Company's insurer has confirmed that although the coverage limits under two (of approximately 23) primary insurance policies have been exhausted, there still remains approximately $3 million in coverage limits under other applicable primary policies, and $140 million in coverage under excess umbrella coverage policies that should be available with respect to current and future asbestos claims.

Brandon Drying Fabrics, Inc. (“Brandon”), a subsidiary of Geschmay Corp., which is a subsidiary of the Company, is also a separate defendant in many of the asbestos cases in which Albany is named as a defendant. Brandon was defending against 7,731 claims as of September 30, 2014.

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
2005		9,985		642		223		9,566	$	-
2006		9,566		1,182		730		9,114		-
2007		9,114		462		88		8,740		-
2008		8,740		86		10		8,664		-
2009		8,664		760		3		7,907		-
2010		7,907		47		9		7,869		-
2011		7,869		3		11		7,877		-
2012		7,877		12		2		7,867		-
2013		7,867		55		3		7,815		-
As of September 30, 2014		7,815		86		2		7,731	$	-

 

We acquired Geschmay Corp., formerly known as Wangner Systems Corporation, in 1999. Brandon is a wholly owned subsidiary of Geschmay Corp. In 1978, Brandon acquired certain assets from Abney Mills (“Abney”), a South Carolina textile manufacturer. Among the assets acquired by Brandon from Abney were assets of Abney's wholly owned subsidiary, Brandon Sales, Inc. which had sold, among other things, dryer fabrics containing asbestos made by its parent, Abney. Although Brandon manufactured and sold dryer fabrics under its own name subsequent to the asset purchase, none of such fabrics contained asbestos. Because Brandon did not manufacture asbestos-containing products, and because it does not believe that it was the legal successor to, or otherwise responsible for obligations of Abney with respect to products manufactured by Abney, it believes it has strong defenses to the claims that have been asserted against it. As of September 30, 2014, Brandon has resolved, by means of settlement or dismissal, 9,874 claims for a total of $0.2 million. Brandon's insurance carriers initially agreed to pay 88.2% of the total indemnification and defense costs related to these proceedings, subject to the standard reservation of rights. The remaining 11.8% of the costs had been borne directly by Brandon. During 2004, Brandon's insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings.

For the same reasons set forth above with respect to Albany's claims, as well as the fact that no amounts have been paid to resolve any Brandon claims since 2001, we do not believe a meaningful estimate can be made regarding the range of possible loss with respect to these remaining claims.

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.

Although we do not believe, based on currently available information and for the reasons stated above, that a meaningful estimate of a range of possible loss can be made with respect to such claims, based on our understanding of the insurance policies available, how settlement amounts have been allocated to various policies, our settlement experience, the absence of any judgments against the Company or Brandon, the ratio of paper mill claims to total claims filed, and the defenses available, we currently do not anticipate any material liability relating to the resolution of the aforementioned pending proceedings in excess of existing insurance limits.

Consequently, 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 and the trends in claims against us to date, we do not anticipate that additional claims likely to be filed against us in the future will have a material adverse effect on our financial position, results of operations, or cash flows. We are aware that litigation is inherently uncertain, especially when the outcome is dependent primarily on determinations of factual matters to be made by juries.

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Pensions and Other Postretirement Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2014

Pensions and Other Postretirement Benefit Plans [Abstract]

Schedule of Net Periodic Benefit Plan Cost

The composition of the net periodic benefit plan cost for the nine months ended September 30, 2014 and 2013 was as follows:
 

	Pension plans						Other postretirement benefits
(in thousands)	2014			2013			2014			2013
Components of net periodic benefit cost:
Service cost	$	2,521		$	2,526		$	236		$	789
Interest cost		7,217			5,999			2,057			2,374
Expected return on assets		(7,260	)		(6,103	)		-			-
Amortization of prior service cost/(credit)		41			27			(3,366	)		(2,818	)
Amortization of transition obligation		-			51			-			-
Amortization of net actuarial loss		1,845			2,357			2,181			2,606
Curtailment		(710	)		-			-			-
Settlement		-			315			-			-
Net periodic benefit cost	$	3,654		$	5,172		$	1,108		$	2,951

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Earnings Per Share (Schedule Computing Earnings Per Share and Weighted Average Number of Shares) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]
Net income attributable to the Company	$ 11,812	$ 4,698	$ 33,652	$ 8,830
Weighted average number of shares:
Weighted average number of shares used in calculating basic net income per share	31,848	31,719	31,822	31,615
Effect of dilutive stock-based compensation plans:
Stock options	98	122	102	129
Weighted average number of shares used in calculating diluted net income per share	31,946	31,841	31,924	31,744
Average market price of common stock used for calculation of dilutive shares	$ 37.20	$ 34.43	$ 36.38	$ 30.53
Net income per share:
Basic	$ 0.37	$ 0.15	$ 1.06	$ 0.28
Diluted	$ 0.37	$ 0.15	$ 1.05	$ 0.28

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Reportable Segments (Schedule of Restructuring Costs by Reporting Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Restructuring expense
Restructuring expense	$ 919	$ 2,256	$ 4,058	$ 27,213
Machine Clothing [Member]
Restructuring expense
Restructuring expense	968	2,250	3,127	26,673
Engineered Composites [Member]
Restructuring expense
Restructuring expense	$ (49)	$ 6	$ 931	$ 540

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Preferred Stock, par value per share	$ 5.00	$ 5.00
Preferred Stock, shares authorized	2,000,000	2,000,000
Preferred Stock, shares issued	0	0
Common Stock, shares outstanding	31,852,239
Treasury stock, shares	8,459,498	8,463,635
Common Class A [Member]
Common Stock, par value per share	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	37,076,689	36,997,277
Common Class B [Member]
Common Stock, par value per share	$ 0.001	$ 0.001
Common Stock, shares authorized	25,000,000	25,000,000
Common Stock, shares issued	3,235,048	3,235,048
Common Stock, shares outstanding	3,235,048	3,235,048

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Pensions and Other Postretirement Benefit Plans

9 Months Ended

Sep. 30, 2014

Pensions and Other Postretirement Benefit Plans [Abstract]

Pensions and Other Postretirement Benefit Plans

4. Pensions and Other Postretirement Benefit Plans

Pension Plans

The Company has defined benefit pension plans covering certain U.S. and non-U.S. employees. The U.S. qualified defined benefit pension plan has been closed to new participants since October 1998 and, as of February 2009, benefits accrued under this plan were frozen. As a result of the freeze, employees covered by the pension plan will receive, at retirement, benefits already accrued through February 2009, but no new benefits accrue after that date. Benefit accruals under the U.S. Supplemental Executive Retirement Plan ("SERP") were similarly frozen. The eligibility, benefit formulas, and contribution requirements for plans outside of the U.S. vary by location.

Other Postretirement Benefits

In addition to providing pension benefits, the Company provides various medical, dental, and life insurance benefits for certain retired United States employees. U.S. employees hired prior to 2005 may become eligible for these benefits if they reach normal retirement age while working for the Company. Benefits provided under this plan are subject to change. Retirees share in the cost of these benefits. Effective January 2005, any new employees who wish to be covered under this plan will be responsible for the full cost of such benefits. In September 2008, we changed the cost sharing arrangement under this program such that increases in health care costs are the responsibility of plan participants. In August 2013, we reduced the life insurance benefit for retirees and eliminated the benefit for active employees.

The Company also provides certain postretirement life insurance benefits to retired employees in Canada. The Company accrues the cost of providing postretirement benefits during the active service period of the employees. The Company currently funds the plan as claims are paid.

The composition of the net periodic benefit plan cost for the nine months ended September 30, 2014 and 2013 was as follows:
 

	Pension plans						Other postretirement benefits
(in thousands)	2014			2013			2014			2013
Components of net periodic benefit cost:
Service cost	$	2,521		$	2,526		$	236		$	789
Interest cost		7,217			5,999			2,057			2,374
Expected return on assets		(7,260	)		(6,103	)		-			-
Amortization of prior service cost/(credit)		41			27			(3,366	)		(2,818	)
Amortization of transition obligation		-			51			-			-
Amortization of net actuarial loss		1,845			2,357			2,181			2,606
Curtailment		(710	)		-			-			-
Settlement		-			315			-			-
Net periodic benefit cost	$	3,654		$	5,172		$	1,108		$	2,951

In September 2014, certain participants of the U.S. pension plan were notified of a limited-time opportunity whereby they could elect to receive the value of their pension benefit in a lump-sum payment. All lump-sum payments will be funded from pension plan assets and are expected to be made before the end of 2014. As a result of this initiative, and depending on the number of participants that elect the lump-sum payment, the Company expects to record a non-cash settlement charge of approximately $5 to $10 million in 2014. The payments are not expected to have a significant impact on the plan's funded status.

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Financial Instruments (Narrative) (Details) (USD $) In Millions, unless otherwise specified		9 Months Ended	0 Months Ended	9 Months Ended			9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Private Placement, Notes [Member]	Sep. 22, 2014 Credit Agreement [Member]	Sep. 30, 2014 Credit Agreement [Member]	Jul. 16, 2014 Credit Agreement [Member]	Dec. 31, 2010 Credit Agreement [Member]	Sep. 30, 2014 Credit Agreement [Member] Minimum [Member]	Sep. 30, 2014 Credit Agreement [Member] Maximum [Member]	May 20, 2013 Credit Agreement [Member] Interest Rate Swap [Member]	Jul. 16, 2010 Credit Agreement [Member] Interest Rate Swap [Member]
Debt Instrument [Line Items]
Interest rate		6.84%
Maturity date		Oct. 25, 2017
Year of maturity				2018
Payment required on October 25, 2015		$ 50
Fair value of long-term debt		112.2
Amount of credit facility				330		390
Amount of credit facility outstanding				183
Additional amount that can be borrowed on facility				147
Notional amount									$ 110	$ 105
Fixed interest rate in swap									1.414%	2.04%
LIBOR spread			1.375%				1.25%	1.875%
Effective annual rate				3.415%
Maximum leverage ratio allowed	3.50
Minimum interest coverage ratio required	3.00
Leverage ratio	1.46
Interest coverage ratio	12.10
LIBOR rate				0.1525%	0.24%

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Restructuring (Tables)

9 Months Ended

Sep. 30, 2014

Restructuring [Abstract]

Schedule of Restructuring Charges

Thefollowing table summarizes charges reported in the Statements of Income under “Restructuring and other, net”:

	Three months ended  September 30,						Nine months ended  September 30,
(in thousands)		2014			2013			2014		2013
Machine Clothing		$	968		$	2,250		$	3,127	$	26,673
Albany Engineered Composites			(49	)		6			931		540
Total		$	919		$	2,256		$	4,058	$	27,213

Nine months ended September 30, 2014(in thousands)	Totalrestructuringcosts incurred		Termination andother costs		Impairment ofplant andequipment		Benefit plancurtailment/settlement
Machine Clothing	$	3,127	$	3,837	$	-	$	(710	)
Albany Engineered Composites		931		320		611		-
Total	$	4,058	$	4,157	$	611	$	(710	)

Nine months ended September 30, 2013 (in thousands)	Total restructuring costs incurred		Termination and other costs		Impairment of plant and equipment		Benefit plan curtailment/ settlement
Machine Clothing	$	26,673	$	26,837	$	-	$	(164	)
Albany Engineered Composites		540		452		88		-
Total	$	27,213	$	27,289	$	88	$	(164	)

Schedule of Restructuring Liability

We expect that substantially all Accrued liabilities for restructuring will be paid within one year. The table below presents year-to-date changes in restructuring liabilities for 2014 and 2013 all of which related to termination costs:

	December 31,		Restructuring					Currency			September 30,
(in thousands)	2013		charges accrued		Payments			translation/other			2014
Total Termination costs	$	9,656	$	4,148	$	(10,904	)	$	(277	)	$	2,623

	December 31,		Restructuring					Currency		September 30,
(in thousands)	2012		charges accrued		Payments			translation/other		2013
Total Termination costs	$	4,947	$	25,860	$	(5,529	)	$	609	$	25,887

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Changes in Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2014

Changes in Shareholders' Equity [Abstract]

Schedule of Activity in Shareholders' Equity

The following table summarizes changes in Shareholders' Equity:

(in thousands)	Class A Common Stock		Class B Common Stock		Additional paid in capital			Retained earnings			Accumulated items of other comprehensive income			Treasury stock			Noncontrolling Interest			Total Shareholders' Equity
December 31, 2013	$	37	$	3	$	416,728		$	434,598		$	(49,498	)	$	(257,571	)	$	3,482		$	547,779
Net income		-		-		-			33,652			-			-			(8	)		33,644
Dividends declared		-		-		-			(14,964	)		-			-			-			(14,964	)
Changes in equity related to noncontrolling interest in ASC		-		-		(24	)		-			-			-			38			14
Compensation and benefits paid or payable in Class A Common Stock		-		-		1,011			-			-			-			-			1,011
Options exercised		-		-		771			-			-			-			-			771
Shares issued to Directors'		-		-		60			-			-			90			-			150
Cumulative translation adjustment		-		-		-			-			(30,703	)		-			7			(30,696	)
Change in pension liability adjustment		-		-		-			-			1,419			-			-			1,419
Change in derivative valuation adjustment		-		-		-			-			343			-			-			343
September 30, 2014	$	37	$	3	$	418,546		$	453,286		$	(78,439	)	$	(257,481	)	$	3,519		$	539,471

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Fair-Value Measurements

9 Months Ended

Sep. 30, 2014

Fair-Value Measurements [Abstract]

Fair-Value Measurements

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. As of September 30, 2014 and December 31, 2013, we have no Level 3 financial assets or liabilities.

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

	September 30, 2014						December 31, 2013
	Quotedprices in active markets		Significantother observable inputs				Quotedprices in active markets		Significantother observable inputs
(in thousands)	(Level 1)		(Level 2)				(Level 1)		(Level 2)
Fair Value
Assets:
Cash equivalents	$	37,037	$	-			$	25,073	$	-
Other Assets:
Common stock of foreign public company		781		-				952		-
Interest rate swap		-		830		(a)		-		1,517		(c)
Liabilities:
Other noncurrent liabilities:
Interest rate swap		-		(1,869	)	(b)		-		(3,119	)	(d)

(a) Net of $4.9 million receivable floating leg and $4.1 million liability fixed leg

(b) Net of $0.3 million receivable floating leg and $2.2 million liability fixed leg

(c) Net of $5.6 million receivable floating leg and $4.1 million liability fixed leg

(d) Net of $0.7 million receivable floating leg and $3.8 million liability fixed leg

During the nine months ended September 30, 2014, there were no transfers between levels 1, 2, and 3.

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 common stock of a foreign public company is traded in an active market exchange. The shares are measured at fair value using closing stock prices and are recorded in the Consolidated Balance Sheets as Other assets. The securities are classified as available for sale, and as a result any unrealized gain or loss is recorded in the Shareholders' Equity section of the Consolidated Balance Sheets rather than in the Consolidated Statements of Income. When the security is sold or impaired, gains and losses are reported on the Consolidated Statements of Income. Investments are considered to be impaired when a decline in fair value is judged to be other than temporary.

Foreign currency instruments are entered into periodically, and consist of foreign currency option contracts and forward contracts that are valued using quoted prices in active markets obtained from independent pricing sources. These instruments are measured using market foreign exchange prices and are recorded in the Consolidated Balance Sheets as Other current assets and Accounts payable, as applicable. Changes in fair value of these instruments are recorded as gains or losses within Other (income)/expenses, net. 

When exercised, the foreign currency instruments are net settled with the same financial institution that bought or sold them. For all positions, whether options or forward contracts, there is risk from the possible inability of the financial institution to meet the terms of the contracts and the risk of unfavorable changes in interest and currency rates, which may reduce the value of the instruments. We seek to control risk by evaluating the creditworthiness of counterparties and by monitoring the currency exchange and interest rate markets while reviewing the hedging risks and contracts to ensure compliance with our internal guidelines and policies.

We operate our business in many regions of the world, and currency rate movements can have a significant effect on operating results.

Changes in exchange rates can result in revaluation gains and losses that are recorded in Selling, General and Administrative expenses or Other (income)/expenses, net. Revaluation gains and losses occur when our business units have cash, intercompany (recorded in Other (income)/expenses, net) or third-party trade (recorded in Selling, General and Administrative expenses) receivable or payable balances in a currency other than their local reporting (or functional) currency.

Operating results can also be affected by the translation of sales and costs, for each non-U.S. subsidiary, from the local functional currency to the U.S. dollar. The translation effect on the income statement is dependent on our net income or expense position in each non-U.S. currency in which we do business. A net income position exists when sales realized in a particular currency exceed expenses paid in that currency; a net expense position exists if the opposite is true.

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 Other noncurrent liabilities in the Consolidated Balance Sheets. Unrealized gains and losses on the swaps will flow through the caption Derivative valuation adjustment in the Shareholders' equity section of the Consolidated Balance Sheets, to the extent that the hedges are highly effective. As of September 30, 2014, these interest rate swaps were determined to be 100% effective hedges of interest rate cash flow risk. Gains and losses related to the ineffective portion of the hedges will be recognized in the current period in earnings. Amounts accumulated in Other comprehensive income are reclassified as Interest expense, net when the related interest payments (that is, the hedged forecasted transactions) affect earnings. Interest expense related to the swaps totaled $1.4 million each of the nine month periods ended September 30, 2014 and 2013.

Gains/ (losses) related to changes in fair value of derivative instruments that were recognized in Other (income)/expenses, net in the Statements of Income were as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014			2013		2014		2013
Derivatives not designated as hedging instruments
Forward currency options	$	(142	)	$	108	$	12	$	108