Reportable Segments and Geographic Data

12 Months Ended

Dec. 31, 2016

Segment Reporting [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. Corporate 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. These costs are not allocated to the reportable segments because the decision-making for these functions lies outside of the segments.

Machine Clothing:

The Machine Clothing segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, nonwovens, fiber cement and several other industrial applications. The Machine Clothing segment also supplies customized, consumable fabrics used in the manufacturing process in the pulp, corrugator, nonwovens, fiber cement, building products, and tannery and textile industries. We sell our Machine Clothing products directly to customer end-users in countries across the globe. 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 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.

Albany Engineered Composites:

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 aerospace and defense 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. AEC net sales to Safran were $88.9 million in 2016, $58.1 million in 2015, and $46.9 million in 2014. The total of invoiced receivables, unbilled receivables and contract receivables due from Safran amounted to $68.5 million and $29.7 million as of December 31, 2016 and 2015, respectively. Other significant AEC programs include components for the F-35 Joint Strike Fighter, fuselage frame components for the Boeing 787, and the fan case for the GE9X engine. In 2016, approximately 30 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:

(in thousands)	2016		2015		2014
Net Sales
Machine Clothing	$582,190		$608,581		$655,026
Albany Engineered Composites	197,649		101,287		90,319
Consolidated total	$779,839		$709,868		$745,345
Depreciation and amortization
Machine Clothing	36,428		39,503		45,066
Albany Engineered Composites	24,211		12,140		10,880
Corporate expenses	6,822		8,471		8,346
Consolidated total	$67,461		$60,114		$64,292
Operating income/(loss)
Machine Clothing	$152,529		$141,311		$136,450
Albany Engineered Composites	(15,363	)	(28,478	)	(10,483	)
Corporate expenses	(45,390	)	(48,938	)	(54,607	)
Operating income	91,776		63,895		71,360
Reconciling items:
Interest income	(2,077	)	(1,857	)	(1,541	)
Interest expense	15,541		11,841		12,254
Other expense/(income),net	46		2,433		(6,853	)
Income before income taxes	$78,266		$51,478		$67,500

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

(in thousands)	2016		2015	2014
Pension settlement expense
Corporate expenses	$  -		$  -	$8,190
Restructuring expenses, net
Machine Clothing	$6,069		$22,211	$4,828
Albany Engineered Composites	2,314		-	931
Corporate expenses	(7	)	1,635	-
Consolidated total	$8,376		$23,846	$5,759

In the measurement of assets utilized by each reportable segment, we include accounts and contract receivables, inventories, net property, plant and equipment, intangibles and goodwill. Excluded from segment assets are cash, tax related assets, prepaid and other current assets, and certain other assets not directly associated with segment operations.

The following table presents assets and capital expenditures by reportable segment:

(in thousands)	2016	2015	2014
Segment assets
Machine Clothing	$454,010	$494,347	$565,853
Albany Engineered Composites	514,527	181,825	175,338
Reconciling items:
Cash	181,742	185,113	179,802
Asset held for sale	-	4,988	-
Income taxes prepaid, receivable and deferred	74,078	111,872	76,283
Other assets	39,076	31,417	32,028
Consolidated total assets	$1,263,433	$1,009,562	$1,029,304
Capital expenditures and purchased software
Machine Clothing	$16,158	$16,010	$23,202
Albany Engineered Composites	59,195	30,378	32,141
Corporate expenses	3,163	4,207	3,530
Consolidated total	$78,516	$50,595	$58,873

Total capital expenditures for 2016 includes an increase from 2015 of $5.0 million of purchases that were included in Accounts payable at year-end. The Consolidated Statements of Cash Flows has been adjusted to remove the non-cash transactions. Non-cash transactions for 2015 and 2014 were negligible.

In 2016, the Company recorded expense of $5.4 million for cost directly related to the acquisition. These costs are included in Selling, general and administrative expenses of AEC segment.

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. Net sales recorded by our entity in Switzerland are derived from products sold throughout Europe and Asia, and are invoiced in various currencies.

(in thousands)	2016	2015	2014
Net sales
United States	$396,238	$323,399	$324,750
Switzerland	145,479	159,804	184,022
Brazil	60,287	58,846	59,332
China	48,043	48,490	52,822
France	42,862	26,081	26,654
Mexico	27,526	30,581	27,431
Other countries	59,404	62,667	70,334
Consolidated total	$779,839	$709,868	$745,345
Property, plant and equipment, at cost, net
United States	$245,626	$172,372	$168,848
China	65,987	80,786	93,182
France	42,272	28,539	25,091
Korea	15,585	19,095	23,473
United Kingdom	14,591	19,029	22,222
Canada	11,455	12,861	18,236
Other countries	27,048	24,788	44,061
Consolidated total	$422,564	$357,470	$395,113