Segment Information

On February 20, 2014, the Company acquired the Industrial Filtration business from Andrew Industries Limited, which is being reported as a separate reportable segment since the acquisition date. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance.

The Company’s reportable segments are Performance Materials, Industrial Filtration, Thermal/Acoustical Metals, and Thermal/Acoustical Fibers. Other Products and Services (“OPS”) included Life Sciences Vital Fluids, which was sold on January 30, 2015.

Performance Materials Segment

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

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 series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes and diesel fuel filtration.

Thermal Insulation products are high performance non-woven veils, papers, mats and specialty composites for the building products, appliance, and energy and industrial 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. The 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 have been 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 incorporate a unique combination of mechanical strength, chemical inertness, and high porosity in a unique open structure.

Industrial Filtration Segment

The Industrial Filtration segment includes non-woven felt media and filter bags used primarily in industrial air and liquid filtration applications. Non-woven filter media is the most commonly used filter technology to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, mining, food, and pharmaceutical. The business also produces non-woven rolled-good media that is used in other commercial applications and media for automotive applications is supplied to the Company's Thermal/Acoustical Fibers segment.

Industrial Filtration segment products include air and liquid filtration media sold under the brand names Fiberlox® high performance filtration felts, Checkstatic™ conductive filtration felts, Microfelt® high efficiency filtration felts, Pleatlox® pleatable filtration felts, Ultratech™ PTFE filtration felts, Powertech® and Powerlox® power generation filtration felts, Microcap® high efficiency liquid filtration felts, Duotech membrane composite filtration felts, along with traditional scrim supported filtration felts. Industrial Filtration also offers extensive finishing and coating capabilities which provide custom engineered properties tailored to meet the most demanding filtration applications. The business leverages a wide range of fiber types and extensive technical capabilities to provide products that meet our customers’ needs across a variety of applications providing both high performance and durability.

Thermal/Acoustical Metals Segment

The Thermal/Acoustical Metals segment offers a full range of innovative engineered products for the transportation sector to assist primarily in the reduction of powertrain and road noise as well as thermally shield sensitive components from high heat. Lydall products are found in the underbody (tunnel, fuel tank, exhaust, rear muffler and spare tire) and under hood (engine compartment, turbo charger, and manifolds) of cars, trucks, SUVs, heavy duty trucks and recreational vehicles.

Thermal/Acoustical Metals segment products are formed on production lines capable of combining multiple layers of metal and thermal or acoustical media to provide an engineered thermal and acoustical shielding solution for an array of application areas in the global automotive and truck markets. The flux® product family in Thermal/Acoustical Metals includes several patented or IP-rich products that address applications which include: Direct Exhaust Mount heat shields, which are mounted to high temperature surfaces like exhaust down-pipes, turbochargers or engine manifolds using aluminized and stainless steel with high performance heat insulating materials; Powertrain heat shields that absorb noise at the source or are acoustically transparent and do not contribute to the engine’s noise budget; and Durable and thermally robust solutions for sensitive plastic components such as fuel tanks that are in proximity to high temperature heat sources.

Thermal/Acoustical Fibers Segment

The Thermal/Acoustical Fibers segment offers innovative engineered products to assist primarily in noise vibration and harshness (NVH) abatement within the transportation sector. Lydall products are found in the interior (dash insulators, cabin flooring), underbody (wheel well, aerodynamic belly pan, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUVs, heavy duty trucks and recreational vehicles.

Thermal/Acoustical Fibers segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites for the automotive and truck markets primarily in North America. Lydall’s dBCore® is a lightweight acoustical composite that emphasizes absorption principles over heavy-mass type systems. Lydall’s dBLyte® is a high-performance acoustical barrier with sound absorption and blocking properties and can be used throughout a vehicle’s interior to minimize intrusive noise from an engine compartment and road. Lydall’s ZeroClearance® is an innovative thermal solution that utilizes an adhesive backing for attachment and is used to protect vehicle components from excessive heat. Lydall’s specially engineered products provide a solution that provides weight reduction, superior noise suppression, and increased durability over conventional designs.

Thermal/Acoustical Metals segment and Thermal/Acoustical Fibers segment operating results include allocations of certain costs shared between the segments.

Other Products and Services

The Life Sciences Vital Fluids business offered specialty products for blood filtration devices, blood transfusion single-use containers and the design and manufacture of single-use solutions for cell growth, frozen storage and fluid handling, as well as equipment for bioprocessing applications.

On January 30, 2015, the Company sold all of the outstanding shares of common stock of its Life Sciences Vital Fluids business for a cash purchase price of $30.1 million. The disposition was completed pursuant to a Stock Purchase and Sale Agreement, dated January 30, 2015, by and among the Company, and the buyer. The Company recognized an after-tax gain on the sale of this business of approximately $11.8 million in the first quarter of 2015.

Net sales by segment and for OPS, as well as reconciling items, to equal consolidated net sales for the years ended December 31, 2015, 2014, and 2013 were as follows:



Consolidated Net Sales	For the Years Ended December 31,
	(2)			(3)
In thousands	2015			2014			2013
Performance Materials Segment:
Filtration	$	62,716		$	71,648		$	64,752
Thermal Insulation	28,311			31,404			36,929
Life Sciences Filtration	10,451			12,814			10,320
Performance Materials Segment net sales	101,478			115,866			112,001
Industrial Filtration Segment:
Industrial Filtration (1)	139,133			112,220			—
Industrial Filtration net sales	139,133			112,220			—
Thermal/Acoustical Metals Segment:
Metal parts	141,117			145,135			135,833
Tooling	19,815			19,130			22,573
Thermal/Acoustical Metals Segment net sales	160,932			164,265			158,406
Thermal/Acoustical Fibers Segment:
Fiber parts	135,595			124,458			105,876
Tooling	3,152			4,133			8,444
Thermal/Acoustical Fibers Segment net sales	138,747			128,591			114,320
Other Products and Services:
Life Sciences Vital Fluids	1,671			19,682			17,175
Other Products and Services net sales	1,671			19,682			17,175
Eliminations and Other (1)	(17,456		)	(4,795		)	(3,933		)
Consolidated Net Sales	$	524,505		$	535,829		$	397,969


(1)	Included in the Industrial Filtration segment and Eliminations and Other is $13.8 million and $1.0 million in intercompany sales to the T/A Fibers segment for the years ended December 31, 2015 and 2014, respectively.

Operating income by segment and for OPS and Corporate Office Expenses for the years ended December 31, 2015, 2014, and 2013 were as follows:



Operating Income	For the Years Ended December 31,
	(2)			(3)
In thousands	2015			2014			2013
Performance Materials Segment	$	6,790		$	9,706		$	9,462
Industrial Filtration Segment	13,431			6,412			—
Thermal/Acoustical Metals Segment	15,517			13,823			14,088
Thermal/Acoustical Fibers Segment	37,086			29,167			21,486
Other Products and Services:
Life Sciences Vital Fluids	118			1,582			778
Corporate Office Expenses	(20,465		)	(26,642		)	(17,101		)
Consolidated Operating Income	$	52,477		$	34,048		$	28,713

Operating results in 2015 were negatively impacted by a $1.4 million long-lived asset impairment charge within the Performance Materials segment and unfavorable foreign currency translation of $2.0 million impacting the Performance Materials, T/A Metals and Industrial Filtration segments. Operating results in 2014 were negatively impacted by $2.1 million of purchase accounting adjustments relating to inventory step-up for the Industrial Filtration segment and a $2.9 million sales commission settlement within the T/A Metals segment. Corporate Office Expenses in 2014 were negatively impacted by a $4.9 million non-cash pension plan settlement charge and $2.6 million of transaction related costs. Corporate Office Expenses in 2013 were impacted by $1.2 million of transaction related costs.

Total assets by segment and for OPS and the Corporate Office were as follows at December 31, 2015, 2014, and 2013:



Total Assets	December 31,
	(2)		(3)
In thousands	2015		2014		2013
Performance Materials Segment	$	66,706	$	71,325	$	74,838
Industrial Filtration Segment	89,566		100,201		—
Thermal/Acoustical Metals Segment	111,195		106,210		104,908
Thermal/Acoustical Fibers Segment	38,881		33,109		30,176
Other Products and Services	—		11,580		11,866
Corporate Office	51,912		39,345		52,897
Total Assets	$	358,260	$	361,770	$	274,685

Total capital expenditures and depreciation and amortization by segment and for OPS and the Corporate Office for the years ended December 31, 2015, 2014, and 2013 were as follows:



	Capital Expenditures						Depreciation and Amortization
	(2)		(3)				(2)		(3)
In thousands	2015		2014		2013		2015		2014		2013
Performance Materials Segment	$	3,519	$	4,124	$	4,604	$	4,499	$	4,654	$	4,667
Industrial Filtration Segment	968		1,804		—		4,996		4,536		—
Thermal/Acoustical Metals Segment	11,494		8,544		6,027		4,233		4,578		4,777
Thermal/Acoustical Fibers Segment	4,807		3,296		1,887		2,400		2,166		2,217
Other Products and Services	22		574		243		45		804		588
Corporate Office	745		659		1,065		1,102		908		454
Total	$	21,555	$	19,001	$	13,826	$	17,275	$	17,646	$	12,703


(2)	Other Products and Services reports results for the period preceding the date of disposition of the Vital Fluids Life Sciences business on January 30, 2015.


(3)	Industrial Filtration segment reports results for the period following the date of acquisition of February 20, 2014 through December 31, 2014.

Net sales by geographic area for the years ended December 31, 2015, 2014 and 2013 and long-lived asset information by geographic area as of December 31, 2015, 2014, and 2013 were as follows:



	Net Sales						Long-Lived Assets

In thousands	2015		2014		2013		2015		2014		2013
United States (4),(5)	$	344,950	$	345,864	$	269,989	$	76,502	$	72,832	$	48,787
France	47,495		52,534		47,831		12,899		13,861		16,436
Germany	68,861		77,896		77,229		10,149		12,366		13,287
United Kingdom (5)	26,598		26,387		—		6,399		7,601		—
China (5)	33,885		29,401		—		9,953		11,225		—
Other	2,716		3,747		2,920		815		795		1,815
Total	$	524,505	$	535,829	$	397,969	$	116,717	$	118,680	$	80,325


(4)	Other Products and Services reports results for the period preceding the date of disposition of the Vital Fluids Life Sciences business on January 30, 2015.


(5)	Industrial Filtration segment reports results for the period following the date of acquisition of February 20, 2014 through December 31, 2014.

Foreign sales are based on the country in which the sales originated (i.e., where the Company’s legal entity is domiciled). Sales to Ford Motor Company in 2015, 2014, and 2013 were $95.4 million, $88.4 million, and $79.7 million, respectively, and accounted for 18.2%, 16.5%, and 20.0% of Lydall’s net sales in the years ended December 31, 2015, 2014, and 2013, respectively. Sales to Chrysler Group LLC in 2013 were $43.5 million and accounted for 10.9% of Lydall's net sales in the year ended 2013. These sales were reported in the Thermal/Acoustical Metal and Thermal/Acoustical Fiber segments. No other customers accounted for more than 10.0% of total net sales in 2015, 2014, and 2013.