Reportable Segments

6 Months Ended

Jun. 30, 2015

Reportable Segments [Abstract]

Reportable Segments

3. Reportable Segments

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

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2015			2014			2015			2014
Net sales
Machine Clothing	$	150,561		$	172,809		$	309,055		$	336,897
Albany Engineered Composites		21,728			20,709			44,558			36,928
Consolidated total	$	172,289		$	193,518		$	353,613		$	373,825
Operating income/(loss)
Machine Clothing	$	33,323		$	33,879		$	69,013		$	70,022
Albany Engineered Composites		(18,633	)		(3,545	)		(22,444	)		(7,021	)
Corporate expenses		(11,652	)		(11,357	)		(23,382	)		(23,423	)
Operating income before reconciling items		3,038			18,977			23,187			39,578
Reconciling items:
Interest income		(437	)		(356	)		(777	)		(552	)
Interest expense		3,139			3,073			6,155			6,187
Other expense/(income), net		2,820			(2,133	)		(465	)		(2,600	)
Income/(loss) before income taxes	$	($2,484	)	$	18,393		$	18,274		$	36,543

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

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2015		2014		2015		2014
Restructuring expense
Machine Clothing	$	1,211	$	1,297	$	10,212	$	2,159
Albany Engineered Composites		-		660		-		980
Consolidated total	$	1,211	$	1,957	$	10,212	$	3,139

In the second quarter of 2015, the Company recorded a charge of $14.0 million associated with a revision in the profitability of a contract in the AEC segment. AEC has a long-term contract for the manufacture of composite components for the Rolls-Royce BR 725 engine (BR 725), which powers the Gulfstream G-650 business jet. These components are manufactured in AEC's Boerne, Texas, facility. The contract for this program was signed in 2007 and contains a very aggressive approach to pricing compared to AEC's other contracts. AEC was required to fund certain development costs for nonrecurring engineering and tooling and expected to recover those costs over the duration of the contract, which is anticipated to be more than 20 years. The deferred costs were included in Other assets on the Company's Consolidated Balance Sheets and, as of June 30, 2015, the Company had accumulated deferred contract expenses of approximately $10.9 million. The Company tests the recoverability of these deferred costs each quarter. During the second quarter of 2015, the Company revised its estimate of the profitability of this contract and determined that the entire balance of these deferred costs should be written off. Additionally, the Company has determined that an additional charge of approximately $3.1 million should be recorded as a provision for anticipated contract losses. The total charge of $14.0 million is included in Cost of goods sold. In the Consolidated Statements of Cash Flows, the write-off of previously deferred costs is included in Other, net.

2015 Machine Clothing restructuring expense was principally related to the discontinuation of manufacturing operations at its press fabric manufacturing facility in Germany in April. Machine Clothing restructuring costs in 2014 were principally related to restructuring actions in France.  Albany Engineered Composites restructuring expense in 2014 was related to organizational changes.

Land and building related to the former manufacturing facility in Germany has been reclassified as Asset held for sale in the accompanying Consolidated Balance Sheets. We reclassified to Asset held for sale the net book value of $8.3 million and $9.1 million as of June 30, 2015 and December 31, 2014, respectively. There were no other material changes in the total assets of the reportable segments during this period.