Reportable Segments

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Reportable Segments

3. Reportable Segments

As described in Note 2, the Company adopted the provisions of ASC 606, “Revenue from contracts with customers”, effective January 1, 2018, using the cumulative effect method for transition. Periods prior to 2018 have not been restated. The following tables show data by reportable segment, reconciled to consolidated totals, and the impact that ASC 606 had on first-quarter results, included in the consolidated financial statements:

	Three months ended March 31,				Three months ended March 31, 2018
(in thousands)	2018		2017		Increase/(decrease) attributable to application of ASC 606
Net sales
Machine Clothing	$148,151		$142,827		$4,211
Albany Engineered Composites	81,830		56,450		4,223
Consolidated total	$229,981		$199,277		$8,434
Operating income/(loss)
Machine Clothing	$30,769		$38,263		$979
Albany Engineered Composites	2,275		(5,114	)	869
Corporate expenses	(12,213	)	(10,471	)	-
Operating income	20,831		22,678		1,848
Reconciling items:
Interest income	(382	)	(107	)	-
Interest expense	4,670		4,435		-
Other expense, net	1,452		826		-
Income before income taxes	$15,091		$17,524		$1,848

At the January 1, 2018 date of adoption of ASC 606, Machine Clothing assets increased by $22 million, and AEC assets decreased by $13 million. Except for the effect of adopting ASC 606, there were no material changes in the total assets of the reportable segments for the three months ended March 31, 2018.

As described in Note 4, effective January 1, 2018, the Company adopted an accounting update that affects the classification of components of pension and postretirement benefit costs. Some costs that were previously included in operating expenses shall now be included in Other expense, net. Periods prior to 2018 have been restated to conform to the current year presentation.

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 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 $40.8 and $25.4 million in the first quarter of 2018 and 2017, respectively. The total of Accounts receivables, Contract assets and Noncurrent receivables due from Safran amounted to $90.0 million and $58.6 million as of March 31, 2018 and December 31, 2017, respectively.

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

	Three months ended March 31,
(in thousands)	2018	2017
Restructuring expenses, net
Machine Clothing	$8,352	$110
Albany Engineered Composites	221	2,571
Consolidated total	$8,573	$2,681