Segment and Geographic Information

12 Months Ended

Dec. 31, 2018

22.	SEGMENT AND GEOGRAPHIC INFORMATION

The following tables set forth profitability and other information by business unit:

For the year ended December 31, 2018	Composite		Advanced Airlaid		Other and
In millions	Fibers		Materials		Unallocated			Total
Net sales	$	554.9	$	311.4	$	—		$	866.3
Cost of products sold		462.3		269.3		4.3			735.9
Gross profit (loss)		92.6		42.1		(4.3	)		130.4
SG&A		44.2		12.2		55.3			111.7
Gains on dispositions of plant, equipment and timberlands, net		—		—		(3.3	)		(3.3	)
Total operating income (loss)		48.4		29.9		(56.3	)		21.9
Non-operating expense		—		—		(14.7	)		(14.7	)
Income (loss) before income taxes	$	48.4	$	29.9	$	(71.0	)	$	7.3
Supplementary Data
Plant, equipment and timberlands, net	$	233.2	$	298.2	$	24.6		$	556.0
Depreciation, depletion and amortization		28.3		14.9		4.3			47.5
Capital expenditures		15.7		21.6		4.8			42.1

For the year ended December 31, 2017	Composite		Advanced Airlaid		Other and
In millions	Fibers		Materials		Unallocated			Total
Net sales	$	544.3	$	256.1	$	—		$	800.4
Cost of products sold		437.6		216.7		2.5			656.8
Gross profit (loss)		106.7		39.4		(2.5	)		143.6
SG&A		44.4		9.3		56.8			110.5
Gains on dispositions of plant, equipment and timberlands, net		—		—		(0.2	)		(0.2	)
Total operating income (loss)		62.3		30.1		(59.1	)		33.3
Non-operating expense		—		—		(13.8	)		(13.8	)
Income (loss) before income taxes	$	62.3	$	30.1	$	(72.9	)	$	19.5
Supplementary Data
Plant, equipment and timberlands, net	$	254.0	$	235.6	$	25.6		$	515.2
Depreciation, depletion and amortization		28.3		9.6		4.2			42.1
Capital expenditures		15.9		50.6		14.3			80.8

For the year ended December 31, 2016	Composite		Advanced Airlaid		Other and
In millions	Fibers		Materials		Unallocated			Total
Net sales	$	517.0	$	244.3	$	—		$	761.2
Cost of products sold		416.4		209.5		3.6			629.5
Gross profit (loss)		100.6		34.8		(3.6	)		131.7
SG&A		46.3		8.4		98.4			153.2
Loss on dispositions of plant, equipment and timberlands, net		—		—		0.1			0.1
Total operating income (loss)		54.3		26.4		(102.1	)		(21.5	)
Non-operating expense		—		—		(21.1	)		(21.1	)
Income (loss) before income taxes	$	54.3	$	26.4	$	(123.2	)	$	(42.6	)
Supplementary Data
Plant, equipment and timberlands, net	$	235.1	$	179.3	$	14.4		$	428.8
Depreciation, depletion and amortization		27.8		9.0		2.5			39.3
Capital expenditures		18.8		36.8		5.6			61.2

The sum of individual amounts set forth above may not agree to the consolidated financial statements included herein due to rounding.

Results of individual business units are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual business units are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the business units. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not directly aligned with the business unit are allocated primarily based on an estimated utilization of support area services.

Management evaluates results of operations of the business units before pension expense, certain corporate level costs, and the effects of certain gains or losses not considered to be related to the core business operations. Management believes that this is a more meaningful representation of the operating performance of its core businesses, the profitability of business units and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of business unit results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

Our Composite Fibers business unit serves customers globally and focuses on higher value-added products in the following markets:

•

Food & Beverage filtration paper primarily used for single-serve coffee and tea products;

•

Wallcovering base materials used by the world’s largest wallpaper manufacturers;

•

Technical Specialties a diverse line of special paper products used in applications such as electrical energy storage, transport and transmission, wipes, and other highly-engineered fiber-based applications;

•

Composite Laminate paper used in production of decorative laminates, furniture, and flooring applications; and

•

Metallized products used in labels, packaging liners, gift wrap, and other consumer product applications.

The Advanced Airlaid Materials business unit is a leading global supplier of highly absorbent cellulose-based airlaid nonwoven materials used in:

•

feminine hygiene;

•

specialty wipes;

•

table top;

•

adult incontinence;

•

home care; and

•

other consumer products.

Disaggregated revenue by market segment and geographic region for Composite Fibers and Advanced Airlaid Materials is presented in Item 8 Financial Statements and Supplementary Data, Note 6 – Revenue.

Approximately 16% of our consolidated net revenue in 2018, 2017 and 2016, were from sales to Procter & Gamble Company, a customer of the Advanced Airlaid Materials business unit.

Our net sales to external customers and location of net plant, equipment and timberlands are summarized below. Net sales are attributed to countries based upon origin of shipment.

	2018				2017				2016
In thousands	Net sales		Plant, Equipment and Timberlands – Net		Net sales		Plant, Equipment and Timberlands – Net		Net sales		Plant, Equipment and Timberlands – Net
United States	$	124,690	$	109,797	$	89,773	$	105,663	$	74,986	$	44,851
Germany		483,628		286,839		450,668		240,932		427,520		220,380
United Kingdom		76,053		50,483		76,594		55,494		78,759		51,903
Canada		114,877		74,448		120,433		78,220		115,901		79,727
Other		67,038		34,477		62,894		34,874		64,050		31,911
Total	$	866,286	$	556,044	$	800,362	$	515,183	$	761,216	$	428,772