Albany International (NYSE:AIN), the paper manufacturing equipment maker, published its 10-K last Thursday, and revealed a Staff Accounting Bulletin No. 108 adjustment that was unique in that it affected the firm’s pension and other post-employment benefit reporting; haven’t seen many of those yet.
It turns out that the post-retirement benefit obligation had been underaccrued by $2.1 million; the net adjustment to bring it up to snuff was for $1.47 million, or $.05 per basic share. According to the benefit plan footnotes, “[t]he underaccrual was related to cash payments made by the Company during in 2004 and 2005 for retiree medical and life insurance benefits,” making it sound like there were payments made for something in those years that were incorrectly classified as for medical and life insurance benefits. It’s hard to figure out what other way there could have been an underaccrual related to cash payments. The filing is rather short on details.
Another interesting aspect of the correction: these errors occurred in 2004 and 2005. Call them old. They were discovered in 2006 and evaluated in accordance with SAB 108. In that they were old errors, they were perfect candidates for the “beginning retained earnings catch-up” treatment available under SAB 108 - but the company ran the adjustment through earnings in operating expenses. Maybe they just decided to take the high road. And maybe I just haven’t seen enough annuals yet, but that’s the first in-earnings SAB 108 adjustment I’ve come across.
AIN 1-yr chart