Reportable Segments and Geographic Data

12 Months Ended

Dec. 31, 2017

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 $119.2 million in 2017, $88.9 million in 2016, and $58.1 million in 2015. The total of invoiced receivables, unbilled receivables and contract receivables due from Safran amounted to $58.6 million and $37.1 million as of December 31, 2017 and 2016, 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 2017, 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)	2017		2016		2015
Net Sales
Machine Clothing	$590,357		$582,190		$608,581
Albany Engineered Composites	273,360		197,649		101,287
Consolidated total	$863,717		$779,839		$709,868
Depreciation and amortization
Machine Clothing	33,527		36,428		39,503
Albany Engineered Composites	33,533		24,211		12,140
Corporate expenses	4,896		6,822		8,471
Consolidated total	$71,956		$67,461		$60,114
Operating income/(loss)
Machine Clothing	153,936		152,529		141,311
Albany Engineered Composites	(31,657	)	(15,363	)	(28,478	)
Corporate expenses	(46,128	)	(45,390	)	(48,938	)
Operating income	$76,151		$91,776		$63,895
Reconciling items:
Interest income	(1,511	)	(2,077	)	(1,857	)
Interest expense	18,602		15,541		11,841
Other expense, net	4,352		46		2,433
Income before income taxes	$54,708		$78,266		$51,478

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

(in thousands)	2017	2016		2015
Restructuring expenses, net
Machine Clothing	$3,429	$6,069		$22,211
Albany Engineered Composites	10,062	2,314		-
Corporate expenses	-	(7	)	1,635
Consolidated total	$13,491	$8,376		$23,846

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)	2017	2016	2015
Segment assets
Machine Clothing	$464,468	$454,010	$494,347
Albany Engineered Composites	584,076	514,527	181,825
Reconciling items:
Cash	183,727	181,742	185,113
Asset held for sale	-	-	4,988
Income taxes prepaid, receivable and deferred	74,914	74,078	111,872
Other assets	54,013	39,076	31,417
Consolidated total assets	$1,361,198	$1,263,433	$1,009,562
Capital expenditures and purchased software
Machine Clothing	$20,522	$15,651	$16,010
Albany Engineered Composites	63,865	54,678	30,378
Corporate expenses	3,250	3,163	4,207
Consolidated total	$87,637	$73,492	$50,595

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 the 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)	2017	2016	2015
Net sales
United States	$459,525	$396,238	$323,399
Switzerland	147,601	145,479	159,804
Brazil	60,535	60,287	58,846
China	48,920	48,043	48,490
France	57,195	42,862	26,081
Mexico	31,902	27,526	30,581
Other countries	58,039	59,404	62,667
Consolidated total	$863,717	$779,839	$709,868
Property, plant and equipment, at cost, net
United States	$252,639	$245,626	$172,372
China	61,840	65,987	80,786
France	58,196	42,272	28,539
Mexico	22,981	7,781	5,264
Korea	14,558	15,585	19,095
United Kingdom	14,256	14,591	19,029
Canada	10,230	11,455	12,861
Other countries	19,602	$19,267	19,524
Consolidated total	$454,302	$422,564	$357,470