12. Segment Information

On June 29, 2011, the Company sold its Affinity business (see Note 8), which had been included in OPS. Affinity designed and manufactured high precision, specialty engineered temperature-control equipment for semiconductor, pharmaceutical, life sciences and industrial applications. As a result of the sale, the Consolidated Financial Statements have been retroactively restated to reflect Affinity as a discontinued operation and the following segment information excludes Affinity’s net sales and operating income for all periods presented.

The Company’s reportable segments are Performance Materials and Thermal/Acoustical. The Performance Materials segment reports the results of the Industrial Filtration, Industrial Thermal Insulation and Life Sciences Filtration businesses. The Thermal/Acoustical segment reports the results of Lydall’s automotive business, which includes Metal parts, Fiber parts and related Tooling. OPS includes Life Sciences Vital Fluids.

In the first quarter of 2012, the Thermal/Acoustical segment continues to implement a comprehensive improvement plan in its fibers business. Internal organizational changes were made in the Company’s Thermal/Acoustical segment to better align the Company’s structure with its strategic direction. As a result, the Company is evaluating the impact of these changes on its reportable segments.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions for air, fluid power, and industrial applications (“Industrial Filtration”), air and liquid life science applications (“Life Sciences Filtration”), and industrial thermal insulation solutions for building products, appliances, and energy and industrial markets (“Industrial Thermal Insulation”).

Industrial Filtration products include LydAir® MG (Micro-Glass) Air Filtration Media, LydAir® MB (Melt Blown) Air Filtration Media, LydAir® SC (Synthetic Composite) Air Filtration Media, and Arioso™ Membrane Composite Media. These products constitute the critical media component of clean-air systems for applications in clean-space, commercial, industrial and residential HVAC, power generation, and industrial processes. Lydall has leveraged its extensive technical expertise and applications knowledge into a suite of media products covering the vast liquid filtration landscape across the engine and industrial fields. The LyPore® Liquid Filtration Media and activated carbon containing ActiPure® Filtration Media series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes, diesel filtration and fuel filtration.

Industrial Thermal Insulation products are high performance nonwoven veils, papers, mats and specialty composites for the cryogenic, building products, appliance, and high temperature insulation markets. The Manniglas® Thermal Insulation brand is diverse in its product application ranging from high temperature seals and gaskets in ovens and ranges to specialty veils for HVAC and cavity wall insulation. appLY® Mat Needled Glass Mats have been developed to expand Lydall’s high temperature technology portfolio for broad application into the appliance market and supplements the Lytherm® Insulation Media product brand, traditionally utilized in the industrial market for kilns and furnaces used in metal processing. Lydall’s Cryotherm® Super-Insulating Media, CRS-Wrap® Super-Insulating Media and Cryo-Lite™ Cryogenic Insulation products are industry standards for state-of-the-art cryogenic insulation designs used by manufacturers of cryogenic equipment for liquid gas storage, piping, and transportation.

Life Sciences Filtration products include the LyPore® and ActiPure® Filtration Media developed to meet the requirements of life science applications including biopharmaceutical pre-filtration and clarification, diagnostic and analytical testing, respiratory protection, life protection, medical air filtration, drinking water filtration and high purity process filtration such as that found in food and beverage and medical applications. Lydall also offers Solupor® Membrane specialty microporous membranes that are utilized in various markets and applications including air and liquid filtration and transdermal drug delivery. Solupor® membranes are based on ultra-high molecular weight polyethylene and incorporate a unique combination of mechanical strength, chemical inertness, and high porosity in a unique open structure.

Thermal/Acoustical Segment

The Thermal/Acoustical segment offers a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the interior (dash insulators), underbody (wheel well, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUV’s, heavy duty trucks and recreational vehicles. Lydall’s patented products include ZeroClearance^®, AMS^®, Flexshield^® and dBCore^® comprised of organic and inorganic fiber composites (fiber parts) as well as metal combinations (metal parts).

Other Products and Services

The Life Sciences Vital Fluids business offers specialty products for blood filtration devices, blood transfusion single-use containers and bioprocessing single-use containers and products for containment of media, buffers and bulk intermediates used in biotech, pharmaceutical and diagnostic reagent manufacturing processes.

Net sales by segment and for OPS, as well as reconciling items, to equal to consolidated net sales for the years ended December 31, 2011, 2010, and 2009 were as follows:

Consolidated Net Sales	For the Years Ended December 31,
In thousands	2011			2010			2009
Performance Materials Segment:
Industrial Filtration	$	72,888		$	71,480		$	55,223
Industrial Thermal Insulation		47,299			38,951			32,217
Life Sciences Filtration		13,872			12,704			10,575
Performance Materials Segment net sales		134,059			123,135			98,015
Thermal/Acoustical Segment:
Metal parts	$	142,646		$	110,085		$	76,263
Fiber parts		78,722			48,329			30,472
Tooling		15,406			20,637			21,058
Thermal/Acoustical Segment net sales		236,774			179,051			127,793
Other Products and Services:
Life Sciences Vital Fluids	$	14,670		$	15,562		$	14,600
Other Products and Services net sales		14,670			15,562			14,600
Eliminations and Other		(1,915	)		(1,635	)		(676	)
Consolidated Net Sales	$	383,588		$	316,113		$	239,732

Operating income (loss) from continuing operations by segment and for OPS and Corporate Office Expenses for the years ended December 31, 2011, 2010, and 2009 were as follows:

Operating Income (Loss) from Continuing Operations	For the Years Ended December 31,
In thousands	2011			2010			2009
Performance Materials Segment	$	18,194		$	17,247		$	7,593
Thermal/Acoustical Segment		12,860			446			(10,337	)
Other Products and Services:
Life Sciences Vital Fluids		(1,040	)		(131	)		211
Corporate Office Expenses		(13,826	)		(14,047	)		(12,754	)
Consolidated Operating Income (Loss) from Continuing Operations	$	16,188		$	3,515		$	(15,287	)

Operating results in 2011 and 2010 were impacted by a net gain on sale of a product line in the Performance Materials segment of $1.6 million and $2.5 million, respectively. Operating results in 2009 for the Thermal/Acoustical segment were impacted by restructuring related charges of $5.8 million.

Total assets by segment and for OPS and the Corporate Office were as follows at December 31, 2011, 2010 and 2009:

Total Assets	December 31,
In thousands	2011		Revised 2010		Revised 2009
Performance Materials Segment	$	71,379	$	74,895	$	75,192
Thermal/Acoustical Segment		122,765		122,572		113,733
Other Products and Services		11,064		20,690		18,914
Corporate Office		29,977		12,581		15,244
Total Assets	$	235,185	$	230,738	$	223,083

Total capital expenditures and depreciation and amortization by segment and for OPS and the Corporate Office for the years ended December 31, 2011, 2010 and 2009 were as follows:

	Capital Expenditures						Depreciation and Amortization
In thousands	2011		2010		2009		2011		2010		2009
Performance Materials Segment	$	3,801	$	3,825	$	2,542	$	5,718	$	5,340	$	5,572
Thermal/Acoustical Segment		3,561		6,988		1,430		7,746		7,708		8,487
Other Products and Services		270		724		1,935		726		868		713
Corporate Office		1,252		464		14		288		491		1,118
Total	$	8,884	$	12,001	$	5,921	$	14,478	$	14,407	$	15,890

Included in the above figures for OPS are immaterial capital expenditures relating to the Affinity business for 2011, 2010, and 2009 respectively. Depreciation and amortization expense of $0.1 million, $0.2 million and $0.3 million relating to the Affinity business are also included in the above figures for 2011, 2010 and 2009, respectively.

Net sales by geographic area for the years ended December 31, 2011, 2010 and 2009 and long-lived asset information by geographic area as of December 31, 2011, 2010 and 2009 were as follows:

	Net Sales						Long-Lived Assets
In thousands	2011		2010		2009		2011		Revised 2010		Revised 2009
United States	$	239,101	$	196,628	$	144,924	$	48,803	$	54,945	$	54,856
France		58,974		51,079		37,779		17,621		18,757		22,780
Germany		81,424		65,019		53,813		14,065		16,158		18,349
Other		4,089		3,387		3,216		1,280		1,903		1,977
Total	$	383,588	$	316,113	$	239,732	$	81,769	$	91,763	$	97,962

Foreign sales are based on the country in which the sales originated (i.e., where the legal entity is domiciled).

Sales to Ford Motor Company in 2011, 2010 and 2009 were $62.2 million, $35.0 million and $24.1 million, respectively. These sales were reported in the Thermal/Acoustical segment. No other customers accounted for more than 10% of total net sales in 2011, 2010, or 2009.