Reportable Segments and Geographic Data

12 Months Ended

Dec. 31, 2012

Reportable Segments and Geographic Data [Abstract]

Reportable Segments and Geographic Data

3. Reportable Segments and Geographic Data

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 accounting policies of the segments are the same as those described in Note 1. We do not allocate research costs and other Unallocated expenses to the segments because the decision-making for the majority of these expenses does not reside within the segments. Unallocated expenses include wages and benefits for Corporate headquarters personnel, costs related to information systems development and support, and professional fees related to legal, audit, and other activities.

Machine Clothing:

The Machine Clothing segment includes paper machine clothing - engineered fabrics and belts used in the manufacture of paper and paperboard - as well as engineered fabrics and belts used in many other industrial applications. We sell our Machine Clothing products directly to customer end-users, which include paper industry companies, nonwovens manufacturers, and building products companies, some of which operate in multiple regions of the world. Our products, manufacturing processes, and distribution channels for Machine Clothing are substantially the same in each region of the world in which we operate.

We design, manufacture, and market paper machine clothing for each section of the paper machine. We manufacture and sell more paper machine clothing worldwide than any other company. Paper machine clothing consists of large permeable and non-permeable continuous belts of custom-designed and custom-manufactured engineered fabrics that are installed on paper machines and carry the paper stock through each stage of the paper production process. Paper machine clothing products are consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure.

The Machine Clothing segment also supplies consumable fabrics used to process paper pulp, as well as engineered fabrics used in a range of industries other than papermaking. These other products include belts used to make nonwovens, fiber cement building products, roofing shingles, and corrugated sheets used in boxboard, as well as belts used in tannery and textile applications.

Engineered Composites:

The Engineered Composites segment (AEC) 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 is developing a family of composite parts, including fan blades, to be incorporated into the LEAP engine under a long-term supply contract.

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

(in thousands)	2012		2011		2010
Net sales
Machine Clothing	$693,176		$739,211		$701,020
Engineered Composites	67,765		48,076		41,867
Consolidated total	$760,941		$787,287		$742,887
Depreciation and amortization
Machine Clothing	$46,843		$48,181		$49,036
Engineered Composites	5,920		4,959		4,277
Research expense	1,252		1,314		1,226
Unallocated expenses	9,052		9,358		5,905
Consolidated total	$63,067		$63,812		$60,444
Operating income/(loss)
Machine Clothing	$163,873		$176,759		$165,662
Engineered Composites	(840	)	(4,204	)	(9,176	)
Research expense	(27,616	)	(29,007	)	(26,064	)
Unallocated expenses	(179,553	)	(68,940	)	(65,713	)
Operating (loss)/income before reconciling items	(44,136	)	74,608		64,709
Reconciling items:
Interest income	(1,517	)	(2,027	)	(1,165	)
Interest expense	18,118		20,148		18,405
Other expense/ (income), net	7,629		2,639		(976	)
(Loss)/income from continuing operations before income taxes	($68,366	)	$53,848		$48,445

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

(in thousands)	2012		2011	2010
Pension settlement
Unallocated expenses	$119,735		$0	$0
Restructuring expense
Machine Clothing	$7,386		$5,680	$4,762
Engineered Composites	-		57	930
Unallocated expenses	(325	)	3,580	(1,945	)
Consolidated total	$7,061		$9,317	$3,747

In the measurement of assets utilized by each reportable segment, we include accounts receivable, inventories, net property, plant and equipment, intangibles and goodwill. Excluded from segment assets are cash, tax related assets, prepaid and other current assets, other assets, and assets from discontinued businesses. The following table presents assets and capital expenditures by reportable segment:

(in thousands)	2012	2011	2010
Sement assets
Machine Clothing	$660,595	$713,142	$773,135
Engineered Composites	109,717	80,916	74,332
Reconciling items:
Cash	190,718	118,909	117,925
Income taxes receivable and deferred	144,480	164,654	179,535
Other assets	51,187	34,670	30,771
Assets of discontinued operations	-	118,637	102,595
Consolidated total assets	$1,156,697	$1,230,928	$1,278,293
Capital expenditures and purchased software
Machine Clothing	$14,717	$11,141	$19,234
Engineered Composites	18,979	9,684	6,559
Research expenses	1,493	2,052	1,084
Unallocated expenses	2,018	4,551	4,080
Consolidated total	$37,207	$27,428	$30,957

The increase in Other assets in the above table includes $16.6 million of receivables related to the sale of discontinued operations.

Additionally, capital expenditures in the discontinued operations were $1.3 million in 2011 and $0.7 million in 2010. The following table shows data by geographic area. Net sales are based on the location of the operation recording the final sale to the customer.

(in thousands)	2012	2011	2010
Net sales
United States	$324,764	$306,371	$296,265
Switzerland	203,478	245,562	223,443
Brazil	58,755	61,493	61,410
China	39,929	34,977	25,171
Canada	36,182	40,422	36,804
Other countries	97,833	98,462	99,794
Consolidated total	$760,941	$787,287	$742,887
Property, plant and equipment, at cost, net
United States	$137,405	$133,651	$140,601
China	114,037	126,072	133,851
Korea	38,266	34,102	40,473
Canada	27,396	29,650	34,149
United Kingdom	26,269	27,196	28,425
Sweden	23,397	26,210	32,630
Other countries	53,384	62,072	70,582
Consolidated total	$420,154	$438,953	$480,711