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Reportable Segments
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Reportable Segments Reportable Segments
In accordance with applicable disclosure guidance for enterprise segments and related information, the internal organization that is used by management for making operating decisions and assessing performance is used as the basis for our reportable segments.
The Machine Clothing (“MC”) segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, tissue and towel, nonwovens, fiber cement and several other industrial applications. We sell our MC products directly to customer end-users in countries across the globe. Our products, manufacturing processes, and distribution channels for MC are substantially the same in each region of the world in which we operate.
We design, manufacture, and market paper machine clothing (used in the manufacturing of paper, paperboard, tissue and towel) for each section of the paper machine and for every grade of paper. Paper machine clothing products are customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.
The Albany Engineered Composites (“AEC”) segment, including Albany Safran Composites, LLC (“ASC”), in which our customer SAFRAN Group (“Safran”) owns a 10 percent noncontrolling interest, provides highly engineered, advanced composite structures to customers in the commercial and defense aerospace industries. AEC’s largest program relates to CFM International’s LEAP engine. Under this program, AEC through ASC, is the exclusive supplier of advanced composite fan blades and cases under a long-term supply contract. The manufacturing spaces used for the production of parts under the long-term supply agreement are owned by Safran, and leased to the Company at either a market rent or a minimal cost. All lease expense is reimbursable by Safran to the Company due to the cost-plus nature of the supply agreement. In the fourth quarter of 2019, Safran leased manufacturing space from AEC for the GE9X program. Rent paid by Safran under this lease amounted to $0.7 million for the first nine months of 2020. AEC Net sales to Safran, substantially all of which were through ASC, were $73.6 million and $175.2 million in the first nine months of 2020 and 2019, respectively.
The total of Accounts receivable, Contract assets and Noncurrent receivables due from Safran amounted to $119.8 million and $114.5 million as of September 30, 2020 and December 31, 2019, respectively. Other significant programs by AEC include the F-35, Boeing 787, Sikorsky CH-53K and JASSM, as well as the fan case for the GE9X engine. In 2019, approximately 25 percent of AEC sales were related to U.S. government contracts or programs.
The following tables show data by reportable segment, reconciled to consolidated totals included in the financial statements:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2020201920202019
Net sales
Machine Clothing
$138,747 $151,324 $428,782 $450,673 
Albany Engineered Composites
73,252 119,809 244,971 345,781 
Consolidated total
$211,999 $271,133 $673,753 $796,454 
Operating income/(loss)
Machine Clothing
$45,699 $51,906 $149,418 $145,688 
Albany Engineered Composites
6,828 17,345 22,749 44,598 
Corporate expenses
(13,754)(13,573)(41,073)(40,290)
Operating income
$38,773 $55,678 $131,094 $149,996 
Reconciling items:
Interest income
(1,485)(851)(2,280)(2,037)
Interest expense
3,727 4,838 12,322 15,072 
Other expense/(income), net
(2,745)(1,628)13,915 (1,906)
Income before income taxes
$39,276 $53,319 $107,137 $138,867 

There were no material changes in the total assets of the reportable segments in the first nine months of 2020.
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)2020201920202019
Machine Clothing$384 $(211)$1,414 $1,125 
Albany Engineered Composites358 (33)2,606 18 
Corporate expenses(32)— 169 (4)
Total$710 $(244)$4,189 $1,139 

Products and services provided under long-term contracts represent a significant portion of sales in the Albany Engineered Composites segment and we account for these contracts using the percentage of completion (actual cost to estimated cost) method. That method requires significant judgment and estimation, which could be considerably different if the underlying circumstances were to change. When adjustments in estimated contract revenues or costs are required, any changes from prior estimates are included in earnings in the period the change occurs. In 2020, net adjustments to the estimated profitability of long-term contracts increased gross profit by $3.5 million and $9.5 million for the three and nine month periods, respectively, ended September 30, 2020. In 2019, net adjustments to the estimated profitability of long-term contracts increased gross profit by $3.2 million and $8.8 million for the three and nine month periods, respectively, ended September 30, 2019.
We disaggregate revenue earned from contracts with customers for each of our business segments and product groups based on the timing of revenue recognition, and groupings used for internal review purposes.
The following tables disaggregate revenue for each product group by timing of revenue recognition:
Three months ended September 30, 2020
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$137,899 $848 $138,747 
Albany Engineered Composites
ASC— 17,301 17,301 
Other AEC4,479 51,472 55,951 
Total Albany Engineered Composites4,479 68,773 73,252 
Total revenue$142,378 $69,621 $211,999 

Nine months ended September 30, 2020
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$426,238 $2,544 $428,782 
Albany Engineered Composites
ASC— 72,771 72,771 
Other AEC14,942 157,258 172,200 
Total Albany Engineered Composites14,942 230,029 244,971 
Total revenue$441,180 $232,573 $673,753 

Three months ended September 30, 2019
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$150,524 $800 $151,324 
Albany Engineered Composites
ASC— 56,414 56,414 
Other AEC6,708 56,687 63,395 
Total Albany Engineered Composites6,708 113,101 119,809 
Total revenue$157,232 $113,901 $271,133 
Nine months ended September 30, 2019
(in thousands)Point in Time Revenue
Recognition		Over Time Revenue
Recognition		Total
Machine Clothing$448,273 $2,400 $450,673 
Albany Engineered Composites
ASC— 170,551 170,551 
Other AEC22,850 152,380 175,230 
Total Albany Engineered Composites22,850 322,931 345,781 
Total revenue$471,123 $325,331 $796,454 

The following table disaggregates MC segment revenue by significant product groupings (paper machine clothing (PMC) and engineered fabrics), and, for PMC, the geographical region to which the paper machine clothing was sold:
Three months ended September 30,Nine months ended September 30,
(in thousands)2020201920202019
Americas PMC$70,663 $82,763 $225,565 $239,686 
Eurasia PMC50,923 50,330 150,220 155,849 
Engineered Fabrics17,161 18,231 52,997 55,138 
Total Machine Clothing Net sales$138,747 $151,324 $428,782 $450,673 

In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contracts in the MC segment are generally for periods of less than a year. Most contracts in the AEC segment are short duration firm-fixed-price orders representing performance obligations with an original maturity of less than one year. Remaining performance obligations on contracts that had an original duration of greater than one year totaled $81 million as of both September 30, 2020 and 2019 and related primarily to firm contracts in the AEC segment. Of the remaining performance obligations as of September 30, 2020, we expect to recognize as revenue approximately $36 million during 2020 and the remainder during 2021.