Reportable Segments and Geographic Data

12 Months Ended

Dec. 31, 2013

Reportable Segments and Geographic Data [Abstract]

Reportable Segments and Geographic Data

4. 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 have not allocated research costs and other Unallocated expenses to the segments because the decision-making for the majority of these expenses did 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)	2013		2012		2011
Net sales
Machine Clothing	$674,747		$693,176		$739,211
Engineered Composites	82,667		67,765		48,076
Consolidated total	$757,414		$760,941		$787,287
Depreciation and amortization
Machine Clothing	$45,237		$46,843		$48,181
Engineered Composites	7,640		5,920		4,959
Research expense	2,104		1,252		1,314
Unallocated expenses	8,808		9,052		9,358
Consolidated total	$63,789		$63,067		$63,812
Operating income/(loss)
Machine Clothing	$136,698		$163,873		$176,759
Engineered Composites	(2,974	)	(840	)	(4,204	)
Research expense	(30,220	)	(27,616	)	(29,007	)
Unallocated expenses	(51,413	)	(179,553	)	(68,940	)
Operating income/(loss) before reconciling items	52,091		(44,136	)	74,608
Reconciling items:
Interest income	(1,468	)	(1,517	)	(2,027	)
Interest expense	15,227		18,118		20,148
Other expense/ (income), net	7,256		7,629		2,639
Income/(loss) from continuing operations before income taxes	$31,076		($68,366	)	$53,848

The table below presents pension settlement and restructuring costs by reportable segment (also see Note 6):

(in thousands)	2013	2012		2011
Pension settlement
Unallocated expenses	$ -	$119,735		$ -
Restructuring expense
Machine Clothing	$24,568	$7,386		$5,680
Engineered Composites	540	-		57
Unallocated expenses	-	(325	)	3,580
Consolidated total	$25,108	$7,061		$9,317

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)	2013	2012	2011
Segment assets
Machine Clothing	$624,388	$660,595	$713,142
Engineered Composites	147,104	109,717	80,916
Reconciling items:
Cash	222,666	190,718	118,909
Income taxes receivable and deferred	133,485	144,480	164,654
Other assets	39,245	51,187	34,670
Assets of discontinued operations	-	-	118,637
Consolidated total assets	$1,166,888	$1,156,697	$1,230,928
Capital expenditures and purchased software
Machine Clothing	$14,881	$14,717	$11,141
Engineered Composites	36,928	18,979	9,684
Research expenses	8,011	1,493	2,052
Unallocated expenses	4,637	2,018	4,551
Consolidated total	$64,457	$37,207	$27,428

The decrease in Other assets in the above table includes $16.6 million of receivables related to the sale of discontinued operations which were received during 2013. Capital expenditures in the discontinued operations were $1.3 million in 2011.

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)	2013	2012	2011
Net sales
United States	$338,729	$324,764	$306,371
Switzerland	190,035	203,478	245,562
Brazil	62,076	58,755	61,493
China	43,265	39,929	34,977
Canada	31,167	36,182	40,422
Other countries	92,142	97,833	98,462
Consolidated total	$757,414	$760,941	$787,287
Property, plant and equipment, at cost, net
United States	$162,380	$137,405	$133,651
China	103,109	114,037	126,072
Korea	35,542	38,266	34,102
United Kingdom	25,246	26,269	27,196
Canada	22,434	27,396	29,650
Sweden	19,508	23,397	26,210
Other countries	50,611	53,384	62,072
Consolidated total	$418,830	$420,154	$438,953