<PAGE>
===============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-7665
----------------
LYDALL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-0865505
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE COLONIAL ROAD, MANCHESTER, 06045-0151
CONNECTICUT (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (860) 646-1233
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $.10 par value New York Stock Exchange
----------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
On March 18, 1996, the aggregate market value of the Registrant's voting
stock held by nonaffiliates was $356,743,387.
On March 18, 1996, there were 17,393,626 shares of Common Stock outstanding,
exclusive of treasury shares.
----------------
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II incorporate certain information by reference from the Annual
Report to Stockholders for the year ended December 31, 1995. Part III
incorporates information by reference from the definitive Proxy Statement to
be distributed in connection with the Registrant's Annual Meeting of
Stockholders to be held on May 15, 1996.
===============================================================================
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(3) Exhibits
Exhibit No. Exhibit Where Located
- ----------- ------- -------------
13.1 Annual Report to Stockholders Filed herewith
for the year ended December
31, 1995
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, LYDALL, INC. HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
LYDALL, INC.
/s/ Leonard R. Jaskol
Date: April 2, 1996 By __________________________________
LEONARD R. JASKOL
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF LYDALL, INC. IN
THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Leonard R. Jaskol Chairman, Chief April 2, 1996
- ------------------------------------- Executive Officer
LEONARD R. JASKOL and Director
/s/ John E. Hanley Vice President--Finance April 2, 1996
- ------------------------------------- and Treasurer
JOHN E. HANLEY (Principal Financial
and Accounting Officer)
/s/ John E. Hanley April 2, 1996
- -------------------------------------
JOHN E. HANLEY
ATTORNEY-IN-FACT FOR:
/s/ Lee A. Asseo Director* April 2, 1996
- -------------------------------------
LEE A. ASSEO
/s/ Paul S. Buddenhagen Director* April 2, 1996
- -------------------------------------
PAUL S. BUDDENHAGEN
/s/ Carole F. Butenas Director* April 2, 1996
- -------------------------------------
CAROLE F. BUTENAS
/s/ Samuel P. Cooley Director* April 2, 1996
- -------------------------------------
SAMUEL P. COOLEY
/s/ W. Leslie Duffy Director* April 2, 1996
- -------------------------------------
W. LESLIE DUFFY
/s/ William P. Lyons Director* April 2, 1996
- -------------------------------------
WILLIAM P. LYONS
/s/ William J. Rankin Director* April 2, 1996
- -------------------------------------
WILLIAM J. RANKIN
/s/ Joel Schiavone Director* April 2, 1996
- -------------------------------------
JOEL SCHIAVONE
/s/ Roger M. Widmann Director* April 2, 1996
- -------------------------------------
ROGER M. WIDMANN
/s/ Albert E. Wolf Director* April 2, 1996
- -------------------------------------
ALBERT E. WOLF
*(constituting in excess of a majority of the full Board of Directors)
<PAGE>
EXHIBIT 13.1
THIS DOCUMENT IS A COPY OF THE EXHIBIT 13.1 OF FORM 10-K (ANNUAL REPORT TO
STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1995). FILED ON APRIL 2, 1996
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
lydall,inc
Annual
Report
95
<PAGE>
FINANCIAL HIGHLIGHTS
Percent
In thousands except per-share data 1995 1994 Increase
- --------------------------------------------------------------------------
Net sales $252,128 $213,072 18
Net income 22,438 15,503 45
Net income per common share 1.23 .86 43
Stockholders' equity 101,811 76,227 34
Stockholders' equity per share 5.88 4.57 29
Market capitalization at December 31, 394,036 271,010 45
Closing price NYSE on December 31, 22.75 16.25 40
Weighted average common
stock and equivalents outstanding 18,313 17,953 2
- --------------------------------------------------------------------------
Prior-year share figures restated to reflect a two-for-one stock split
distributed in 1995.
Lydall has extensive fiber and
fiber composite knowledge as
well as manufacturing
capabilities in both wet-laid
and needle-punched processes. As
one of the top U. S. nonwoven
companies, Lydall's core
competence is designing and
producing technologically
advanced, unique materials for
critical, high-performance
applications.
Through a partnership approach
with its customer base, the
Company manufactures highly
engineered, specialty products
primarily in the areas of air
and liquid filtration, thermal
barriers and insulation,
electrical insulation, and
materials handling. Lydall
concentrates in niche markets on
products whose technologies are
continuously being upgraded. A
customer-driven company, Lydall
places its highest priorities on
service, quality, and innovative
product solutions.
<PAGE>
95
HIGHLIGHTS
11th Consecutive
Year of Record
Earnings
Earnings Per Share
Up 43%
5th Consecutive
Year of Record Sales
-- Up 18%
Return on Sales
Record -- 8.9%
Record Operating
Cash Flow
Two-for-One
Stock Split
<PAGE>
Operating Cash Flow
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
$ Millions
<S> <C>
1991 19.7
1992 21.8
1993 23.9
1994 35.1
1995 45.2
</TABLE>
Return on Sales
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Percent
<S> <C>
1991 6.3
1992 6.0
1993 6.5
1994 7.3
1995 8.9
</TABLE>
Total Capitalization
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
$ Millions
DEBT EQUITY
<S> <C> <C>
1991 25.7 39.1 64.8
1992 19.2 50.1 64.3
1993 13.8 60.1 73.9
1994 13.5 76.2 89.7
1995 10.6 101.8 112.4
</TABLE>
Net Sales
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
$ Millions
<S> <C>
1991 135.5
1992 151.1
1993 157.4
1994 213.1
1995 252.1
</TABLE>
Net Income
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
$ Millions
<S> <C>
1991 8.5
1992 9.0
1993 10.2
1994 15.5
1995 22.4
</TABLE>
Net Income per Common Share
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Dollars
<S> <C>
1991 .47
1992 .52
1993 .58
1994 .86
1995 1.23
</TABLE>
Closing Market Price per Share
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Dollars
<S> <C>
1991 8.21
1992 9.92
1993 10.69
1994 16.25
1995 22.75
</TABLE>
Lydall, Inc. Annual Report 1995
2
<PAGE>
TO OUR STOCKHOLDERS AND EMPLOYEES
Lydall's dynamic performance record continues unabated. We posted our eleventh
year of earnings growth in 1995, reaching record net income of $22.4 million, a
45-percent increase from 1994. Earnings per share increased 43 percent to $1.23,
sustaining a ten-year average compound annual growth rate of 23 percent. In
1995, Lydall's return on sales reached a new high of 8.9 percent, a strong
indicator of the quality of our performance.
We posted our fifth consecutive year of record sales, reaching $252.1 million,
an 18-percent increase over 1994. Growth came primarily from our high-efficiency
air filtration, automotive and cryogenic thermal barrier, and materials-handling
businesses. Also, international growth (including both export and foreign sales)
continued to outpace domestic growth in 1995. Our international business grew by
25 percent during the year to represent 22 percent of total 1995 sales. Pricing
and raw material costs played a role in 1995's performance as well. We raised
prices on average between 5 and 6 percent in order to recover major raw material
cost increases.
PRODUCTS AND MARKETS
Thermal barrier products continue to be a major contributor to Lydall's
business, increasing by 27 percent in 1995 to represent 36 percent of total
sales. Growth in this area is mainly attributable to the mid-temperature heat-
shield products that we supply to the automotive market. In addition, demand for
our air-bag inflator components, battery insulators, and undercarpet insulation
continued to grow.
Companywide, sales to automotive applications were 33 percent of total sales.
Excluding our offshore battery separator sales and other aftermarket sales, 28
percent of total sales were to the OEM's. Lydall's growth in this area stems
from increased penetration -- increasing applications within vehicles already
containing our components, as well as more and more types of vehicles being
identified as needing thermal insulators. Lydall's business grew substantially
in 1995 despite Detroit's production being down close to 3 percent.
The significant portion of our heat-shield business used in sport-utility
vehicles, vans, and light-duty trucks, all very popular models, particularly
benefits us. According to an article by Paul A. Eisenstein in the April/May 1995
issue of BuySide, ten years ago minivans, sport-utility and other light trucks
accounted for barely 20 percent of the American motor vehicle market. In 1994,
the share for these vehicles surged to a record 40 percent and, by some
estimates, could hit the 50-percent mark before the end of the decade.
3 | Lydall, Inc. Annual Report 1995
<PAGE>
Lydall's battery insulator program met with great success in 1995 as well. At
year-end our battery insulators were approved for every Ford vehicle except two.
These approvals included both 1996 and 1997 models. We continue to work with
General Motors and Chrysler to initiate battery insulator programs.
In addition to automotive applications, we saw healthy sales growth of the
thermal barrier and insulation products to industrial applications. Increased
sales of commercial building materials and architectural components were
particularly notable. Demand for our cryogenic insulating products also set a
strong pace. Use of cryogenic vessels is growing, and we are gaining market
share as insulating technology moves away from less sophisticated methods toward
Lydall's lightweight, multilayered materials. Also, we have been working closely
with our customers to provide a cryogenic insulating "system" versus media
alone. We have begun to form our materials into collated, ready-to-install
systems and insulating blankets, customized to the customer's specified size and
shape.
Filtration media sales were exceptional around the world, growing by 27 percent
in 1995 to 22 percent of total sales. Fabrication of new clean rooms was at an
all-time high -- a pace that is forecast to continue for the foreseeable future.
In addition to the proliferation of semiconductor chips in everything from cars
to washing machines, the growing use of personal computers in the U.S. and
Europe is expected to spread to developing nations. Also, more and more
industrial processes are requiring varying degrees of clean-room conditions. The
growth of the home air purification market has also benefited us.
The majority of our export growth in 1995 came from robust worldwide demand for
high-efficiency air filtration products. Adding to this momentum was increased
production (both for consumption in Europe and for export to the United States)
of air filtration media at our facility in France, the Axohm Division. Global
capacity is particularly significant to Lydall in the air filtration market, a
primary strategic focus of the Company. The Axohm operation, acquired in 1991,
has proven its strategic importance from the standpoint of added capacity as
well as of having a "bricks and mortar" presence in Europe. Our filtration
business has been the strongest it's ever been, and the added capacity has been
invaluable.
In the liquid filtration area, Lydall's participation in the leukocyte depletion
(blood component separation) market was reactivated during 1995 with the
establishment of a close working relationship
<TABLE>
<CAPTION>
Sales In millions 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$70.7 $75.9 $98.5 $114.7 $128.4 $123.1 $135.5 $151.1 $157.4 $213.1 $252.1
</TABLE>
4 | Lydall, Inc. Annual Report 1995
<PAGE>
I describe 1995 as a year of consolidation. I define this consolidation as
having two key components -- securing new product positions and market gains
attained within the past two years and integrating acquisitions made in 1994.
with HemaSure, Inc., a medical filtration device manufacturer. HemaSure
announced early in 1995 that its LeukoNet pre-stage leukoreduction filtration
system, which contains Lydall's leukocyte filtration media, had been cleared for
marketing by the U.S. Food and Drug Administration. HemaSure is marketing its
LeukoNet filter to U.S. and foreign blood centers and was recently awarded a
contract with the American Red Cross Biomedical Services. We look forward to a
mutually beneficial alliance between Lydall and HemaSure.
Materials-handling products represented 15 percent of total sales in 1995, an
increase of 29 percent over 1994. Several factors contributed to this high rate
of growth: acquired sales, price increases, and expanding export markets. Growth
of these products slowed in the latter part of 1995 from the torrid pace set in
the past few years. Although this slower pace has continued into early 1996, we
expect good growth in this market in the long run, particularly overseas.
ACQUISITIONS
Two acquisitions made in 1994 were a dominant focus of our "year of
consolidation." We are pleased with the progress that's been made, particularly
at the Jacksonville Operation. However, the pace of efforts at the Columbus
Operation, the larger of the two, was slower than initially expected. The
operation is stabilizing after a year of "planned" disruption and a complete
reconfiguration of manufacturing operations. We saw significant improvements in
the fourth quarter of 1995 which are continuing into 1996. The Columbus
Operation is very important strategically and has added an entire new dimension
to our heat-shield product offerings.
As far as additional acquisitions are concerned, I'm disappointed that we did
not complete any in 1995 despite extensive efforts worldwide. Growth by
acquisition is an important element of our strategy and will continue to be a
major focus in 1996.
<TABLE>
<CAPTION>
Net Income In millions 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$2.9 $3.0 $4.1 $5.1 $7.9 $8.3 $8.5 $9.0 $10.2 $15.5 $22.4
</TABLE>
5
<PAGE>
QUALITY PROGRAM
In conjunction with our focus on integrating our 1994 acquisitions, we continued
to drive our Cost of Quality efforts forward at existing operations. Our quality
initiatives have not only resulted in better service and products for our
customers, but have been instrumental to our producing continuous gross margin
improvement. Efforts to streamline operations and improve efficiencies under our
comprehensive quality programs yielded record savings of $3.7 million in 1995.
Since 1986, when we began reporting the "cost of quality," we have recognized
savings averaging $2.0 million a year.
We also made record capital investments in 1995 of $12.0 million, a majority of
which related to improving product quality, process efficiency, and
productivity. In addition, we have been working toward ISO 9000 certification at
all of our operations for the past few years, and we are very pleased that three
more facilities attained this distinction in 1995. We expect another facility to
be certified in 1996.
In 1995, gross margin rose to $77.7 million, or 30.8 percent of sales, from
$64.9 million, or 30.5 percent, in 1994. Removing the effect of recent
acquisitions -- which are in a state of transition due to the introduction of
Lydall's quality methods and procedures -- our gross margin in 1995 would have
been 33.4 percent. This is compelling evidence of the potential savings that can
be realized at acquired units.
FINANCIAL POSITION
We continue to strengthen our financial position. During 1995, Lydall businesses
generated operating cash flow of $45.2 million. As of December 31, we had cash,
cash equivalents and short-term investments of $28.7 million and working capital
of $52.7 million. Our current ratio was 2.77, and our total-debt-to-total-
capitalization ratio was 9 percent. Year-end inventory was up slightly (4
percent) on an 18-percent increase in sales, and inventory turnover increased to
11.1 times from 10.2 times, marking the fourth consecutive year of improvement.
STOCKHOLDER VALUE
The value of Lydall's stock increased by 40 percent in 1995 following a 52-
percent rise in 1994. A two-for-one stock split distributed midyear increased
our shares outstanding to approximately 17.3 million and served to bolster
Lydall's daily trading volume. Research coverage also increased; as of year-end,
nine firms were following the Company.
<TABLE>
<CAPTION>
Earnings Per Share 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$.16 $.18 $.24 $.31 $.45 $.47 $.47 $.52 $.58 $.86 $1.23
</TABLE>
6 Lydall, Inc. Annual Report
<PAGE>
LOOKING FORWARD
Lydall has experienced unprecedented growth over the past three years, and
barring any major economical setbacks, we look forward to setting additional
records in 1996. We continue to be strengthened by a focused strategy, strong
financial and market positions, and an active acquisition program. We will
continue to concentrate on growth through product innovations and market
expansions and will complement these efforts with strategic acquisitions. We
will be guided, as we have been in the past, by the following strategic product
and market determinants.
- -- A product or business must have a high technological component.
- -- The technology must be constantly advancing.
- -- Lydall's distinctive marketing and technical competence must fit.
- -- A leadership position must be attainable within the market.
- -- It must be a high-value, niche business with few competitors.
In closing, I'd like to particularly congratulate the employees of Lydall on
their impressive performance. They are hard working and dedicated. They make
Lydall what it is, and I commend them on their commitment and success.
/s/ Leonard R. Jaskol [PHOTO APPEARS HERE]
Leonard R. Jaskol
Chairman and Chief Executive Officer
7 Lydall, Inc. Annual Report 1995
<PAGE>
Lydall is a
leading
manufacturer
of high-efficiency glass microfiber air filtering media for rigid frame
filtration applications.
[PHOTO APPEARS HERE]
Lypore(R)
biomedical materials
perform as components of subassemblies in sophisticated blood filtration and
blood component separation devices.
8
<PAGE>
[PHOTO APPEARS HERE]
Lydair(R) high-efficiency
air filtration media
filter the air in clean rooms of hospitals,
industrial coating facilities, pharmaceutical
processing plants, research laboratories, and
semiconductor manufacturing sites around the
world.
Lydall
development
researchers
continuously work to achieve the next level of filtering technology in direct
response to customers' critical needs.
9
<PAGE>
[PHOTO APPEARS HERE]
As a component
of the inflator
filter system,
Lydall's custom-designed media assist in heat reduction and
filtration of the pyrotechnic reaction which takes place to inflate an
automotive air bag.
10
<PAGE>
[PHOTO APPEARS HERE]
Cryotherm(R)
cryogenic
materials
insulate at temperatures approaching absolute
zero. Applications include tanker trucks which
transport liquid gases, fleet vehicles and buses
fueled by liquid natural gas, and a wide variety
of commercial, supercooled storage containers.
Lytherm(R)
automotive
thermal
barriers
are employed as heat shields and specialty insulating components in medium- and
light-duty trucks, vans, sport-utility vehicles, and cars.
11
<PAGE>
LYDALL PRODUCTS AND MARKETS
[PHOTO APPEARS HERE] Thermal Barriers and Insulation Lydall's thermal
barriers and insulating products include a range of
fiber-based materials and fiber and metal combinations
that protect and insulate within temperature
requirements from -459 degrees F (-273 degrees C) to
+3000 degrees F (+1649 degrees C).
Air Filtration Media Lydall is a leading manufacturer [PHOTO APPEARS HERE]
of high-efficiency, glass microfiber air filtering
media for rigid frame applications which serve a wide
range of performance efficiencies.
[PHOTO APPEARS HERE] Liquid Filtration Materials Lydall's liquid filtration
expertise encompasses a variety of specialty
applications which include blood filtration and
separation, water purification, and specialty hydraulic
and lubrication oil filtration.
Materials-Handling Products Lydall produces solid [PHOTO APPEARS HERE]
fiber "push-pull" slip sheets which replace wooden
pallets and provide significant cost reductions
and greater efficiency for shippers.
[PHOTO APPEARS HERE] Electrical Insulation Lydall's electrical barrier
products are used in many applications including durable
consumer goods, electronic products, transformers,
motors, electrical fixtures, and automotive batteries.
Other Other Lydall products include specialty [PHOTO APPEARS HERE]
shoeboard composites, a wood-replacement material,
high-performance gasket products, and paperboard. The
Company also operates a contract motor carrier that
services Lydall operations as well as outside customers.
12
<PAGE>
FINANCIAL
REVIEW
14 Analysis of Results
22 Key Financial Items
23 Income Statements
24 Balance Sheets
26 Statements of Cash Flows
27 Statements of Changes in
Stockholders' Equity
28 Notes to Consolidated
Financial Statements
39 Report of Independent
Accountants
39 Management's Report
40 Five-Year Statistical
Review
41 Officers, Directors, and
Stockholder Information
42 Directory of Locations
13
<PAGE>
ANALYSIS OF RESULTS
SALES
- --------------------------------------------------------------------------------
OVERVIEW Lydall's sales rose by 18 percent in 1995 to $252.1 million from
$213.1 million in 1994. This marked the fifth consecutive year
of record sales for the Company. During the years 1993 through
1995, sales have increased by more than $100 million with annual
increases amounting to 4 percent in 1993, 35 percent in 1994,
and 18 percent in 1995. Most of Lydall's growth in the past
three years has been internally generated. Acquisitions during
this period provided almost $35 million of Lydall's 1995
revenues.
ACQUISITIONS - The 1994 acquisitions of an automotive thermal
barrier fabricator (the Columbus Operation) and a materials-
handling product manufacturer (the Jacksonville Operation) added
significantly to revenues in 1994 and provided incremental
growth in 1995, the first full year under Lydall.
INTERNAL MARKETING ACTIONS - Lydall succeeded in building market
share in key markets and enjoyed a strong position in growing
markets such as high-efficiency air filtration. Also, the
Company instituted price increases greater than it has in recent
years to offset rising raw material costs.
ACQUISITIONS The Company reports results from acquired companies or product
lines as acquisitions for three fiscal years. Results captured
under 1995 and 1994 relate to the Columbus and Jacksonville
Operations, while the amounts in 1993 relate to the acquisitions
of the Axohm Division and Rockwell Operation in 1991.
The Columbus and Jacksonville Operations produced incremental
growth in 1995 of $8.6 million, or 22 percent of Lydall's sales
growth for the year. This increase was the result of Lydall's
ownership of these two facilities for all of 1995. In 1994, the
Columbus Operation was operated by Lydall for ten months, and
the Jacksonville Operation was operated for six months;
together, these facilities produced $26.1 million of revenue for
the year.
The Columbus Operation designs and fabricates automotive thermal
and acoustical barriers. During 1995, plant management
successfully instituted major process changes and improvements
in material flow that improved product quality and consistency.
The Jacksonville Operation, which manufactures materials-
handling products, has been smoothly integrated into Lydall's
Southern Products Division. The combined sales of Columbus and
Jacksonville amounted to $34.7 million in 1995, or 14 percent of
Lydall's total sales.
During 1993, combined sales from Axohm and Rockwell declined by
$2.6 million from 1992 as a result of poor economic conditions
in Europe and further adverse effects at Axohm from technology
shifts in the battery separator marketplace. The Rockwell
Operation registered sales growth of domestic automotive thermal
barriers which partially offset the Axohm decline.
INTERNAL MARKETING
ACTIONS Record incremental sales gains of $33 million were generated
from aggressive internal marketing programs during 1995. This
surge in revenues followed an equally notable sales increase of
$24.9 million in 1994. Sales advanced $7.5 million from internal
marketing actions in 1993. The successes in 1995 and 1994 came
largely from commercialization of new products developed within
the past three years. Pricing actions to recover major raw
material cost increases were also a factor in 1995.
New-product successes were realized in the areas of high-alpha
air filtration products and automotive thermal barriers,
including battery insulators and external heat shields. The air
filtration gains were achieved in part because of the successful
transfer of production of certain grades to the Axohm Division.
Market-share gains, other than those stemming solely from new
products, were $5.4 million in 1995, $10.9 million in 1994, and
$2.7 million in 1993.
14 Lydall, Inc. Annual Report 1995
<PAGE>
For the past three years, product discontinuations have averaged
$4.4 million per year, while new-product introductions have
averaged $14.2 million. In 1995, Lydall discontinued
approximately $3.1 million of products, mostly as a result of
displacement by new products. This follows discontinuations of
$4.8 million in 1994 and $5.3 million in 1993.
Price increases, averaging between 5 and 6 percent, generated
$13.1 million in 1995. Increases were greatest in materials-
handling, battery-separator, and recycled paperboard markets,
areas subject to rising costs of wood pulp and substitute
materials such as recycled fiber. These three markets weakened
late in 1995, slowing Lydall's revenue growth. This weakness has
carried over into 1996. In 1994 and 1993, minimal price
increases were related primarily to rising raw material costs of
wood pulp and pulp substitutes and averaged 2.3 percent and less
than 1.0 percent, respectively.
EXTERNAL MARKET
FORCES External forces, defined as the effects of economic and market
growth beyond the influence of Lydall less the effects of market
decay, produced negative results in 1995. Despite growth of $5.7
million in air filtration products and thermal barrier
materials, the Company experienced market decay in mature
markets such as battery-separator materials and footwear
products. These declines, coupled with several other forces,
amounted to $8.1 million and more than offset the positive
effects of expansion in Lydall's markets, the benefit of a take-
or-pay contract, and modest macroeconomic growth. These external
effects produced net positive impacts of $4.7 million in 1994
and $1.4 million in 1993.
STATEMENTS OF CHANGES
IN SALES
In thousands 1995 1994 1993
===========================================================
Prior year's net sales $213,100 $157,400 $151,100
-----------------------------------------------------------
Acquisitions 8,600 26,100 (2,600)
Internal marketing actions 33,000 24,900 7,500
External market forces (2,600) 4,700 1,400
-----------------------------------------------------------
Total change 39,000 55,700 6,300
-----------------------------------------------------------
Current year's net sales $252,100 $213,100 $157,400
===========================================================
GROSS MARGIN
- --------------------------------------------------------------------------------
OVERVIEW In 1995, gross margin rose to a record $77.7 million, or 30.8
percent of sales, compared with $64.9 million, or 30.5 percent,
in 1994 and $48.5 million, or 30.8 percent, in 1993. Two
acquisitions made in 1994, while profitable, served to depress
margins considerably in 1995 and 1994. Although progress in
improving profit margins at acquired operations was
disappointing during 1995, fourth quarter results were the best
quarterly results of the year, and the outlook for 1996 is
positive.
Established operations continued to improve margins through
increased sales volume and exceptional achievements in plant
cost reductions. Price-cost performance (defined as pure price
increases in relation to vendor-imposed cost increases) was the
best in three years with a net surplus of $900 thousand in 1995
compared with small losses in 1994 and 1993.
ACQUISITIONS Operating results and gross margins at the Columbus and
Jacksonville Operations expanded largely because of the full-
year effect in 1995 versus the partial-year effect in 1994.
Acquired operations generated incremental gross margin of $1.3
million in 1995 compared with $3.8 million in 1994. Both
operations have undergone major process reconfigurations that
were disruptive in the short-term but that have begun to produce
meaningful gains in productivity and process efficiency. In
1994, Lydall's first year of operating these
15 Lydall, Inc. Annual Report 1995
<PAGE>
ANALYSIS OF RESULTS CONTINUED
two plants, gross margins averaged 14.6 percent of sales. For
most of 1995, the average declined slightly. However, meaningful
gains were made toward the end of the year, with the average
margin from acquired units increasing to 18.0 percent for the
fourth quarter. Management expects continued margin improvement
during 1996.
During 1993, the combined effects of the Axohm Division and
Rockwell Operation, both acquired in 1991, produced a net
reduction in margins of $1.6 million. In that year, Axohm,
located in France, was affected by the poor economy in Europe
and the further decay, as expected, of its battery-separator
business. The strong performance of Rockwell partially offset
these negative influences.
EFFECTS OF CHANGES
IN SALES
VOLUME The Company generated the largest volume of new-product sales in
its history in 1995. Excluding acquisitions, significant market-
share gains helped to offset decay in several mature markets to
produce $17.7 million in additional sales volume, which in turn
resulted in $6.9 million of incremental gross margin.
Incremental margins have declined over the past two years as a
percent of incremental sales, mostly due to the impact of
acquisitions. In 1994, volume increases at operations other than
acquisitions produced a gross margin of $11.6 million on sales
of $26.0 million. In 1993, increased sales volume, excluding
acquisitions, of $8.3 million contributed $4.2 million in gross
margins. In all three years, incremental margin gains on
additional sales volume have exceeded Lydall's average gross
margins for the period.
PRICE INCREASES
IN RELATION TO
COST INCREASES Price inflation in pulp and paper markets worsened in 1995.
Industrial commodities and specialty chemicals followed suit,
putting greater pressure on Lydall's profit margins. The Company
responded by raising prices more aggressively which resulted in
a net surplus of $900 thousand in 1995. This compares with
vendor-imposed cost increases exceeding price increases by $500
thousand and $300 thousand in 1994 and 1993, respectively. In
the latter part of 1995, cost pressures began to ease, but raw
material costs remained high by historical standards. Lydall
attempts to pass through all of its vendor-imposed cost
increases to customers whenever practical.
COST
REDUCTIONS For the second consecutive year, Lydall extracted record savings
from its cost-reduction efforts. Savings amounted to $3.7
million in 1995 compared with $3.2 million in 1994. Lydall's
relentless focus on process efficiency resulted in a drop in
Cost of Quality, an internal program which measures the cost of
process inefficiency. This measurement program helps identify
and target areas for cost reduction through management actions
and capital spending. Both aspects of the program were very
successful. Capital projects aimed at increased productivity and
energy savings were particularly effective in 1995 as were
management actions focused on raw-material yield improvements.
Savings of $2.0 million were generated in 1993.
Over the past three years, the Company has generated incremental
gross margin improvements of $8.9 million from operational cost
reductions. Without these cumulative improvements, gross margin
in 1995 would have been 27.3 percent of sales.
INVENTORY
EFFECTS During 1995 and 1994, LIFO reserves increased principally due to
raw material price increases, while the net effect of
fluctuating levels of inventory and any obsolescence was
negligible. Accounting for inventories resulted in negative
impacts on gross margin of $500 thousand in 1995, $800 thousand
in 1994, and $200 thousand in 1993.
OTHER EFFECTS In 1995, other effects, including depreciation, the favorable
consequences of a take-or-pay contract, and manufacturing
overhead changes, resulted in an increase in gross margin of
$500 thousand. Other effects accounted for reductions in gross
margin of $900 thousand in 1994 and $1.9 million in 1993.
16 Lydall, Inc. Annual Report 1995
<PAGE>
STATEMENTS OF
CHANGES IN GROSS
MARGIN
<TABLE>
<CAPTION>
$ thousands 1995 1994 1993
============================================================================
<S> <C> <C> <C>
Prior year's gross margin $64,900 $48,500 $46,300
- ----------------------------------------------------------------------------
Acquisitions 1,300 3,800 (1,600)
Effects of changes in sales volume 6,900 11,600 4,200
Price increases in relation to cost increases 900 (500) (300)
Cost reductions 3,700 3,200 2,000
Inventory effects (500) (800) (200)
Other effects 500 (900) (1,900)
- ----------------------------------------------------------------------------
Total change 12,800 16,400 2,200
- ----------------------------------------------------------------------------
Current year's gross margin $77,700 $64,900 $48,500
- ----------------------------------------------------------------------------
As a percent of net sales 30.8 30.5 30.8
============================================================================
</TABLE>
PRETAX INCOME
- --------------------------------------------------------------------------------
OVERVIEW Pretax income increased by $10.4 million, or 39 percent, to
$36.9 million in 1995. This result compares with a 57-percent
increase in 1994 and a 16-percent increase in 1993. Over the
past three years, acquisitions contributed modest pretax
profits, while existing operations generated most of the
significant gains. Since 1992, total sales grew by 67 percent
and pretax income, by 153 percent. The major dynamics creating
the disproportionately large increase in profits included the
effect of improved operating leverage from increasing new-
product sales and the impact of aggressive continuous
improvement programs that dramatically reduced factory operating
costs.
ACQUISITIONS Lydall measures the impact of acquisitions separately for the
first three years, after which the results are included under
operations. In the accompanying Statements of Changes in Pretax
Income, amounts listed in the 1994 Annual Report have been
reclassified from Acquisitions to Operations to more accurately
reflect the incremental profits and costs associated with
acquisitions.
Acquired operations contributed pretax profits of $600 thousand
and $1.7 million in 1995 and 1994, respectively. In 1993,
acquired units actually produced lower profits than in the
previous year for reasons cited earlier. Historically, the most
significant profit gains occur after the first three years of
Lydall's ownership and continue to grow as management practices
become more fully integrated.
OPERATIONS Strong new-product sales and market-share gains provided
significant operating leverage in 1995, similar to 1994. Record-
breaking cost reductions were also a significant factor in the
gross margin improvement. Incremental selling, product
development, and administrative expenses were proportionately
lower despite legal fees of $1.9 million during the year related
to the defense of a patent infringement suit.
Other expense decreased by $600 thousand in 1995 compared with
an increase of $1.1 million in 1994 and a drop of $900 thousand
in 1993. During 1995, Lydall recorded the favorable settlement
of a materials contract producing substantially all of the net
drop in other expense. Expenses in 1994 reflected the normal
level of asset disposals caused by ongoing capital programs and
process upgrades. In 1993, Lydall recovered environmental
remediation costs from former owners of a Company property which
created a favorable swing in expenses that year.
17 | Lydall, Inc. Annual Report 1995
<PAGE>
ANALYSIS OF RESULTS CONTINUED
INVESTMENTS AND
FINANCING The net impact of changes in investment income and interest
expense in 1995 was a positive $1.5 million. Accumulated cash
balances have been conservatively invested to produce current
income, and the change was primarily due to increases in cash
and investment levels. Lydall also recorded lower interest
expenses as debt levels declined according to scheduled payment
of principal. The change in 1994 was negligible. In 1993,
changes in investment income and interest expense produced a
positive $800 thousand, mostly as a result of lower levels of
debt and a reduction in the interest rate charged on the Note
Purchase Agreement.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES
IN PRETAX INCOME
In thousands 1995 1994 1993
===============================================================
<S> <C> <C> <C>
Prior year's pretax income $26,500 $16,900 $14,600
- ---------------------------------------------------------------
Acquisitions -- change in:
Gross margin 1,300 3,800 (1,600)
Selling, product development,
and administrative expenses (700) (2,100) --
- ---------------------------------------------------------------
Total change from acquisitions 600 1,700 (1,600)
- ---------------------------------------------------------------
Operations -- change in:
Gross margin 11,500 12,600 3,800
Selling, product development,
and administrative expenses (3,800) (3,600) (1,600)
Other expense, net 600 (1,100) 900
- ---------------------------------------------------------------
Total change from operations 8,300 7,900 3,100
- ---------------------------------------------------------------
Nonoperating investments and
financing -- change in:
Investment income 900 (100) 200
Interest expense 600 100 600
- ---------------------------------------------------------------
Total change from nonoperating
investments and financing 1,500 -- 800
- ---------------------------------------------------------------
Total change 10,400 9,600 2,300
- ---------------------------------------------------------------
Current year's pretax income $36,900 $26,500 $16,900
===============================================================
</TABLE>
ACCOUNTING STANDARDS
- --------------------------------------------------------------------------------
The Company will adopt SFAS 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," for the year ending December 31, 1996. The Company
estimates that the adoption will not have a material effect on
the Company's consolidated financial position or results of
operations.
The Company will adopt the disclosure requirements of SFAS 123,
"Accounting for Stock-Based Compensation," for the year ending
December 31, 1996. As permitted under SFAS 123, the Company has
elected not to adopt the fair-value-based method of accounting
for its stock-based compensation plans, but will continue to
account for such compensation under the provisions of APB
Opinion No. 25. The adoption will have no effect on the
Company's consolidated financial position or results of
operations.
18 Lydall, Inc. Annual Report 1995
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------
LIQUIDITY
OVERVIEW During 1995, Lydall produced significant cash in excess of its
operating and investment needs and effectively doubled cash and
investment balances. The Company emerged from 1995 with $28.7
million in cash, cash equivalents, and short-term investments
compared with $14.6 million at the end of 1994. In addition,
debt capacity expanded further to a level conservatively
estimated by management to be $60 million.
Lydall's increased liquidity also resulted from the absence of
strategic acquisitions in 1995. The purchase of two operating
companies in 1994 consumed $16.8 million, and both companies
have contributed to earnings from the outset. Lydall has
significant resources to finance additional acquisitions and
continues to actively search for companies and product lines to
complement existing markets and technologies.
CASH FLOW
OVERVIEW Strong cash flow from operating activities continued to fund
healthy capital spending, support an active acquisition search,
and add to cash and short-term investment balances. Total cash
flow from operations of $25.8 million in 1995 approached the
record $26.8 million generated in 1994. An 18-percent growth in
revenues and significant raw material inflation put upward
pressure on working capital levels in 1995. This pressure was
somewhat offset by improved working capital productivity
(turnover) during the year. In 1994 and 1993, Lydall produced
positive cash flow from working capital changes during a period
of substantial growth due to significant improvement in working
capital turnover. Total cash flow from operations generated in
1993 was $18.2 million.
The following table summarizes major components of Lydall's
after-tax cash flow from operating activities:
<TABLE>
<CAPTION>
$ thousands 1995 1994 1993
==================================================================================================
<S> <C> <C> <C>
Net income $ 22,400 $ 15,500 $10,200
Depreciation and amortization 8,600 7,500 5,900
Working capital changes (6,300) 4,900 2,600
Other changes 1,100 (1,100) (500)
- --------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 25,800 $ 26,800 $18,200
- --------------------------------------------------------------------------------------------------
Change from previous year (4%) 47% 3%
==================================================================================================
SUMMARY STATEMENTS
OF CASH FLOWS The following table summarizes cash flows for the years 1995, 1994, and 1993:
In thousands 1995 1994 1993
==================================================================================================
Net cash provided by operating activities $ 25,800 $ 26,800 $18,200
Key investing activities:
Acquisitions of operating companies -- (16,800) --
Capital additions and disposals, net (11,400) (7,300) (5,900)
Sale (purchase) of investments, net 2,500 (1,900) 2,700
- --------------------------------------------------------------------------------------------------
Net cash used for investing activities (8,900) (26,000) (3,200)
- --------------------------------------------------------------------------------------------------
Key financing activities:
Payment of debt (2,900) (2,700) (5,200)
Issuance of common stock 2,100 500 800
Acquisition of common stock -- (800) --
- --------------------------------------------------------------------------------------------------
Net cash used for financing activities (800) (3,000) (4,400)
- --------------------------------------------------------------------------------------------------
Other increase (decrease), net -- 100 (100)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents $ 16,100 $ (2,100) $10,500
==================================================================================================
</TABLE>
19 Lydall, Inc. Annual Report 1995
<PAGE>
ANALYSIS OF RESULTS CONTINUED
WORKING CAPITAL
PRODUCTIVITY In recent years, Lydall has begun to track working capital
productivity as a measure of financial performance. This
measurement helps management monitor its commitment to improve
processes and resource utilization companywide. Working capital
productivity is defined as annual sales divided by the quarterly
average of all receivables and inventory, less accounts payable.
Lydall has made huge strides in improving working capital
productivity and, in the past five years, has increased this
ratio by 43 percent. The most recent three years of data
indicate the following:
<TABLE>
<CAPTION>
$ thousands 1995 1994 1993
=========================================================================================
<S> <C> <C> <C>
Net sales $252,100 $213,100 $157,400
Average working capital 34,200 29,700 24,500
Working capital productivity (turnover) 7.37 7.17 6.41
Change from previous year 3% 12% 14%
=========================================================================================
</TABLE>
INVENTORY
TURNOVER A meaningful by-product of Lydall's continuous improvement
programs has been more efficient utilization of assets,
particularly inventory turnover. Turnover reached 11.1 times in
1995, an increase from 10.2 times in 1994 and 8.9 times in 1993.
Measured against results from five years ago, when Lydall's
inventory turnover was 6.6 times, turnover has improved by 68
percent.
Customer satisfaction, process efficiency, and product
development continued to be major beneficiaries of Lydall's
continuous improvement program in 1995. Management's long-range
goals include steady, ongoing emphasis on these critical
performance indicators.
FUTURE CASH
REQUIREMENTS Cash requirements for 1996 will include the funding of ongoing
operations, capital expenditures, and acquisitions. Lydall has
$13.0 million of capital commitments planned for 1996 to be
focused on key strategic areas including:
-- process improvements that lower the Company's Cost of
Quality
-- incremental capacity expansion in several important markets
Management expects to finance all capital spending and ongoing
operating cash needs from cash on hand and cash generated from
operations.
As of early 1996, no material acquisitions were planned that
would require significant funds. Lydall continues to seek
companies and product lines that complement existing businesses
and offer attractive growth opportunities.
CREDIT
ARRANGEMENTS Lydall maintains domestic and foreign bank credit arrangements
totaling over $15 million which are renewed annually. Lydall
primarily pays interest at the lower of prime or money-market
rates and compensates its banks for services on a fee basis. At
December 31, 1995, no amounts were outstanding on the domestic
or foreign lines of credit. At December 31, 1994, there were no
amounts outstanding on domestic lines of credit and $187
thousand on the foreign line of credit.
20 Lydall, Inc. Annual Report 1995
<PAGE>
CAPITAL
STRUCTURE Over the past five years, Lydall has steadily reduced its debt
to very conservative levels. Strong cash flow from operations
has significantly exceeded capital spending needs, debt
payments, and capital to acquire four operating companies.
Lydall seeks strategic acquisitions of high quality companies
that fit the Company's defined technology and product profiles
and offer attractive growth opportunities.
The Company monitors its borrowing capacity under a long-term,
total-debt-to-total-capitalization target of 40 percent. Lydall
has the financial wherewithal to acquire companies that are much
larger than it has acquired in the past while still remaining
within its long-term target capital structure. At the end of
1995, under this target, Lydall could have borrowed
approximately $60 million. In addition, accumulated cash and
investment balances provide Lydall with significant capacity for
external growth.
The following chart summarizes year-end leverage ratios over the
past five years:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
============================================================
<S> <C> <C> <C> <C> <C>
Debt to equity .10 .18 .23 .38 .66
Debt to total capitalization .09 .15 .19 .28 .40
============================================================
</TABLE>
21 Lydall, Inc. Annual Report 1995
<PAGE>
KEY FINANCIAL ITEMS
CASH AND CASH EQUIVALENTS Cash and cash equivalents increased to $27.8 million
in 1995 from $11.7 million in 1994.
SHORT-TERM INVESTMENTS Lydall invests in highly liquid short-term investments
with maturities greater than three months at the time the investments are made.
The Company had short-term investments of $913 thousand and $2.9 million at
December 31, 1995 and 1994, respectively.
RECEIVABLES Receivables were $34.2 million in 1995 and $31.8 million in 1994, of
which trade receivables were $32.9 million and $31.1 million for 1995 and 1994,
respectively. Days of sales outstanding in trade receivables were 49 in 1995 and
47 in 1994. Foreign and export sales were approximately 22 percent of total
sales in 1995, and 21 percent in 1994 and in 1993. These sales are concentrated
primarily in Europe, the Far East, Mexico, and Canada.
INVENTORIES Inventories were $14.1 million at December 31, 1995 and $13.5
million at December 31, 1994. Inventory levels were reduced by $2.5 million and
$1.7 million at the end of 1995 and 1994, respectively, to reflect the LIFO
method of inventory valuation.
WORKING CAPITAL Working capital increased to $52.7 million on December 31, 1995
from $30.8 million on December 31, 1994. The ratio of current assets to current
liabilities increased to 2.77 from 1.93.
CAPITAL ASSET EXPENDITURES Capital asset expenditures were $12.0 million in
1995, $8.0 million in 1994, and $6.3 million in 1993. Depreciation was $7.1
million in 1995, $6.1 million in 1994, and $5.0 million in 1993. The Company's
1996 Capital Plan calls for commitments of $13.0 million with spending focused
in two critical areas -- process improvements that lower the Company's Cost of
Quality and incremental capacity expansion in several important markets.
Expenditures in 1996 are expected to be financed from cash balances or cash
generated from operations.
DEBT TO TOTAL CAPITALIZATION Debt to total capitalization decreased to .09
in 1995 from .15 in 1994.
COMMON STOCKHOLDERS' EQUITY Common stockholders' equity increased to $101.8
million at December 31, 1995, an increase of 33.6 percent from $76.2 million
last year. On a per-share basis, common stockholders' equity increased to $5.88
in 1995 from $4.57 in 1994.
DIVIDEND POLICY The Company does not pay a cash dividend on its common stock and
does not anticipate doing so for the foreseeable future. Cash will be reinvested
into core businesses which should continue to earn Lydall stockholders an
excellent overall return on their common stock investment.
RESEARCH AND DEVELOPMENT Research and development investment was $6.2 million in
1995, $5.5 million in 1994, and $4.8 million in 1993.
22 Lydall, Inc. Annual Report 1995
<PAGE>
INCOME STATEMENTS
<TABLE>
<CAPTION>
In thousands except per-share data For the years ended December 31, 1995 1994 1993
=======================================================================================================================
<S> <C> <C> <C>
NET SALES $252,128 $213,072 $157,431
Cost of sales 174,430 148,188 108,977
- -----------------------------------------------------------------------------------------------------------------------
Gross margin 77,698 64,884 48,454
Selling, product
development,
and administrative
expenses 40,668 36,211 30,492
- -----------------------------------------------------------------------------------------------------------------------
Operating income 37,030 28,673 17,962
- -----------------------------------------------------------------------------------------------------------------------
Other (income) expense:
Investment income (1,113) (231) (355)
Interest expense 778 1,335 1,474
Other 490 1,033 (58)
- -----------------------------------------------------------------------------------------------------------------------
155 2,137 1,061
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes
and cumulative
effect of accounting
change 36,875 26,536 16,901
Income tax expense 14,437 11,033 6,888
- -----------------------------------------------------------------------------------------------------------------------
Income before cumulative
effect of accounting change 22,438 15,503 10,013
Cumulative effect of
accounting change/1/ -- -- 235
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 22,438 $ 15,503 $ 10,248
=======================================================================================================================
Per-share amounts:/2/
Income per share before
cumulative effect of
accounting change $1.23 $.86 $.57
Cumulative effect of
accounting change/1/ -- -- .01
=======================================================================================================================
Net income per common share $1.23 $.86 $.58
=======================================================================================================================
Weighted average common
stock and
equivalents outstanding/2/ 18,313 17,953 17,582
=======================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
/1/ Cumulative effect of adoption of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes."
/2/ Prior years restated to reflect a two-for-one stock split distributed in
1995.
23 | Lydall, Inc. Annual Report 1995
<PAGE>
BALANCE SHEETS
In thousands except share data December 31, 1995 1994
==========================================================================
Assets
Current assets:
Cash and cash equivalents $ 27,820 $ 11,684
Short-term investments 913 2,904
Accounts receivable (less
allowance for doubtful
receivables of $1,938 in 1995 and
$1,724 in 1994) 34,202 31,825
Inventories:
Finished goods 6,033 5,423
Work in process 3,367 2,941
Raw materials and
supplies 7,217 6,822
LIFO reserve (2,493) (1,659)
- --------------------------------------------------------------------------
Total inventories 14,124 13,527
- --------------------------------------------------------------------------
Prepaid expenses 820 662
- --------------------------------------------------------------------------
Deferred tax assets 4,590 3,485
- --------------------------------------------------------------------------
Total current assets 82,469 64,087
- --------------------------------------------------------------------------
Property, plant, and equipment, at cost:
Land 874 870
Buildings and improvements 19,143 16,849
Machinery and equipment 77,090 69,753
Office equipment 7,189 5,685
Vehicles 1,171 1,274
- --------------------------------------------------------------------------
105,467 94,431
Less accumulated depreciation (45,393) (39,660)
- --------------------------------------------------------------------------
60,074 54,771
- --------------------------------------------------------------------------
Other noncurrent assets:
Goodwill, at cost (net of accumulated
amortization of $1,103 in 1995 and
$516 in 1994) 10,584 11,171
Other assets, at cost (net
of accumulated amortization
of $8,446 in 1995 and $7,524 in 1994) 4,945 6,584
- --------------------------------------------------------------------------
15,529 17,755
- --------------------------------------------------------------------------
$158,072 $136,613
==========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
24 | Lydall, Inc. Annual Report 1995
<PAGE>
In thousands except share data December 31, 1995 1994
==========================================================================
Liabilities and
stockholders' equity
Current liabilities:
Current portion of
long-term debt $ 2,871 $ 2,843
Accounts payable 14,770 17,032
Accrued taxes 263 2,196
Accrued payroll and other
compensation 5,426 5,420
Other accrued liabilities 6,409 5,773
- --------------------------------------------------------------------------
Total current liabilities 29,739 33,264
- --------------------------------------------------------------------------
Long-term debt 7,750 10,607
- --------------------------------------------------------------------------
Deferred tax liabilities 14,207 11,752
- --------------------------------------------------------------------------
Other long-term liabilities 4,565 4,763
- --------------------------------------------------------------------------
Contingencies -- --
- --------------------------------------------------------------------------
Stockholders' equity:
Preferred stock -- -
Common stock, par value
$.10 per share,
authorized 30,000,000
and 15,000,000 shares,
issued 20,893,954 and
10,125,613 shares in
1995 and 1994,
respectively 2,089 1,013
Capital in excess of par
value 32,448 31,419
Foreign currency
translation adjustment 2,091 1,138
Pension liability
adjustment (459) (547)
Retained earnings 78,461 56,023
- --------------------------------------------------------------------------
114,630 89,046
Less cost of 3,573,702
shares of common stock in
treasury in 1995 and 1,786,851 in 1994 (12,819) (12,819)
- --------------------------------------------------------------------------
Total stockholders' equity 101,811 76,227
- --------------------------------------------------------------------------
$158,072 $136,613
The accompanying notes are an integral part of these consolidated financial
statements.
25 | Lydall, Inc. Annual Report 1995
<PAGE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
In thousands For the years ended December 31, 1995 1994 1993
================================================================================
<S> <C> <C> <C>
Cash flows from operating
activities:
Net Income $ 22,438 $ 15,503 $ 10,248
- --------------------------------------------------------------------------------
Adjustments to reconcile
net income to net
cash provided by
operating activities:
Depreciation 7,122 6,101 4,997
Amortization 1,510 1,403 924
Changes in operating
assets and liabilities,
excluding effects from
acquisitions:
Accounts receivable (2,015) (5,503) 1,141
Inventories (376) 645 1,600
Other assets 170 93 (276)
Accounts payable (2,503) 5,465 (468)
Accrued taxes (1,986) 1,532 24
Accrued payroll and other accrued liabilities 594 2,729 275
Deferred income taxes 1,068 (954) 380
Other long-term liabilities (263) (171) (627)
- --------------------------------------------------------------------------------
Total adjustments 3,321 11,340 7,970
- --------------------------------------------------------------------------------
Net cash provided by
operating activities 25,759 26,843 18,218
- --------------------------------------------------------------------------------
Cash flows from investing
activities:
Purchase of assets of Columbus and
Jacksonville Operations -- (16,846) --
Additions of property, plant and
equipment (12,006) (7,979) (6,253)
Disposals of property, plant and
equipment, net 632 687 356
Sale (purchase) of investments, net 2,451 (1,863) 2,741
- --------------------------------------------------------------------------------
Net cash used for investing activities (8,923) (26,001) (3,156)
- --------------------------------------------------------------------------------
Cash flows from financing
activities:
Long-term debt payments (2,856) (2,724) (5,235)
Issuance of common stock 2,105 519 775
Acquisition of common stock -- (855) --
Proceeds from line of credit agreements -- -- 3,820
Payments under line of credit agreements -- -- (3,820)
- --------------------------------------------------------------------------------
Net cash used for financing activities (751) (3,060) (4,460)
- --------------------------------------------------------------------------------
Effect of exchange rate changes on cash 51 82 (104)
- --------------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents 16,136 (2,136) 10,498
Cash and cash equivalents at beginning
of year 11,684 13,820 3,322
Cash and cash equivalents at end of year $ 27,820 $ 11,684 $ 13,820
================================================================================
================================================================================
Supplemental Schedule of Cash Flow Information
Cash paid during the year for:
Interest $ 875 $ 1,339 $ 1,644
Income taxes 14,959 10,894 6,521
Noncash transactions:
Stock split effected in the form of a
stock dividend 1,041 -- 333
Reclassification between short-term
and long-term investments, net 447 1,984 --
Additional minimum pension liability 88 -- 574
Note issued to purchase assets of Columbus
Operation -- 2,250 --
SFAS 109 cumulative effect of fixed asset
step-up -- -- 2,912
Issuance/receipt of treasury stock -- -- 4
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
26 | Lydall, Inc. Annual Report 1995
<PAGE>
Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Foreign
Capital in Currency Pension Cost of Total
Preferred Common Excess of Translation Liability Retained Stock in Stockholders'
In thousands Stock Stock Par Value Adjustment Adjustment Earnings Treasury Equity
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 $ -- $ 659 $ 30,142 $ 794 $ (169) $30,605 $(11,960) $ 50,071
Three-for-two stock split
in the form of a stock
dividend 333 (333) --
Stock options exercised 11 768 (4) 775
Foreign currency
translation
adjustment (677) (677)
Pension liability
adjustment (360) (360)
Net income 10,248 10,248
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 -- 1,003 30,910 117 (529) 40,520 (11,964) 60,057
Stock options exercised 10 509 519
Purchase of treasury shares (855) (855)
Foreign currency
translation
adjustment 1,021 1,021
Pension liability
adjustment (18) (18)
Net income 15,503 15,503
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 -- 1,013 31,419 1,138 (547) 56,023 (12,819) 76,227
Two-for-one stock split in
the form of a stock dividend 1,041 (1,041) --
Stock options exercised 35 2,070 2,105
Foreign currency
translation
adjustment 953 953
Pension liability
adjustment 88 88
Net income 22,438 22,438
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ -- $ 2,089 $ 32,448 $ 2,091 $ (459) $78,461 $(12,819) $101,811
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27 | Lydall, Inc. Annual Report 1995
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNIFICANT
ACCOUNTING
POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial
statements include the accounts of Lydall, Inc. and its wholly
owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
USE OF ESTIMATES The preparation of the consolidated financial
statements, in conformity with generally accepted accounting
principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from estimates.
CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash
on hand and highly liquid investments with a maturity of three
months or less at the date of purchase. The investments are
stated at cost plus accrued interest which approximates market
value.
SHORT-TERM INVESTMENTS Lydall invests in highly liquid short-
term investments with maturities greater than three months at
the time the investments are made. The investments are recorded
at the lower of cost or market, plus accrued interest.
CONCENTRATION OF RISK Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of cash, cash equivalents, short-term investments,
and trade receivables. The Company places its cash, cash
equivalents and short-term investments in high-quality financial
institutions and instruments. Concentrations of credit risk with
respect to trade receivables are limited by the large number of
customers comprising the Company's customer base and their
dispersion across many different industries and geographies. The
Company performs ongoing credit evaluations of its customers'
financial conditions and generally does not require collateral.
Sales to the automotive market were 33 percent of the Company's
1995 total sales compared with 31 percent in 1994. Sales to the
Ford Motor Co. represented 13.7 percent of Lydall's total sales
in 1995, and no other single customer accounted for more than 10
percent of total sales. As of December 31, 1995, the Company had
no other significant concentrations of risk.
INVENTORIES Approximately 68 percent of 1995 and 63 percent of
1994 inventories were valued on a last-in, first-out (LIFO)
method, and the balance, on a first-in, first-out (FIFO) method
at the lower of cost or market.
DEPRECIATION AND AMORTIZATION Property, plant and equipment are
depreciated over their estimated useful lives on the straight-
line method for financial statement purposes. Leasehold
improvements are depreciated on a straight-line basis over the
term of the lease or the life of the asset, whichever is
shorter.
INTANGIBLES Goodwill and other intangibles are being amortized
on a straight-line basis over periods not exceeding 25 years.
The carrying amount of the cost in excess of the net assets
acquired is evaluated for future recoverability on a recurring
basis. The Company will adopt SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," for the year ending December 31, 1996. The Company
estimates that the effect of the adoption will not have a
material effect on the Company's consolidated financial position
or results of operations.
RESEARCH AND DEVELOPMENT Costs are charged to expense as
incurred.
REVENUE RECOGNITION Lydall recognizes revenues when the product
is shipped.
28 | Lydall, Inc. Annual Report 1995
<PAGE>
EARNINGS PER SHARE Earnings per common share are based on net
income divided by the weighted average number of common shares
outstanding during the period, including the effect of stock
options, stock awards and warrants where such effect is
dilutive. Fully diluted earnings per share are not presented
since the dilution is negligible.
INCOME TAXES The provision for income taxes is based upon income
reported in the accompanying financial statements. Deferred
income taxes reflect the impact of temporary differences between
the amounts of assets and liabilities recognized for financial
reporting purposes and such amounts recognized for tax purposes.
In accordance with SFAS 109, these deferred taxes are measured
by applying currently enacted tax laws.
FOREIGN OPERATIONS The Company operates a nonwovens
manufacturing plant located in Saint-Rivalain, Melrand, France.
Foreign sales were $17.0 million, $14.4 million and $12.3
million, for the years ended December 31, 1995, 1994, and 1993,
respectively. For the year ended December 31, 1995, the French
operation earned $127 thousand excluding the effect of a
statutory tax rate increase on deferred tax balances which
negatively impacted income by $292 thousand. For the years ended
December 31, 1994 and 1993, net income was $192 thousand and $57
thousand, respectively. Total foreign assets were $20.4 million
and $19.5 million at December 31, 1995 and 1994, respectively.
TRANSLATION OF FOREIGN CURRENCIES Assets and liabilities of the
foreign subsidiary are translated at exchange rates prevailing
on the balance sheet date; revenues and expenses are translated
at average exchange rates prevailing during the period; and
elements of stockholders' equity are translated at historical
rates. Any resulting translation gains and losses are reported
separately in Stockholders' Equity.
RESTATEMENT Where appropriate, prior-year share amounts and per-
share figures have been restated to reflect a two-for-one stock
split distributed in 1995 and a three-for-two stock split
distributed in 1993.
INVESTMENTS On November 15, 1995, the Financial Accounting Standards Board
issued enhanced guidance allowing the reclassification of
investments through the end of the year under SFAS 115,
"Accounting for Certain Investments in Debt and Equity
Securities", which the Company initially adopted in 1994. Based
on the new guidance, management reevaluated all investments, and
as a result, transferred held-to-maturity investments with an
amortized cost of $1.5 million to available-for-sale. As a
result, at December 31, 1995, all securities were classified as
available-for-sale.
In 1994, in connection with the implementation of SFAS 115,
approximately $2 million of securities were transferred from
short-term investments to other long-term assets. Investments on
December 31, 1994 consisted of held-to-maturity securities and
available-for-sale securities.
Available-for-sale securities, which included debt and equity
securities, had an amortized cost of $28.7 million in 1995 and
$15.2 million in 1994, both of which approximated fair market
value. For 1995, $26.8 million was classified in cash
equivalents, $913 thousand in short-term investments, and $1.0
million in long-term investments. Investments classified as
held-to-maturity in 1994 consisted of obligations of state and
local governments and had an amortized cost, which approximated
fair value, of $2.4 million at December 31, 1994.
29 | Lydall, Inc. Annual Report 1995
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The amortized costs of investments in debt securities by contractual maturity
are shown below.
<TABLE>
<CAPTION>
In thousands December 31, 1995 AVAILABLE-FOR-SALE SECURITIES
================================================================================
<S> <C>
Due in one year or less $5,853
Due after one year through five years 1,188
Due after five years through ten years 252
Due after ten years --
- --------------------------------------------------------------------------------
$7,293
================================================================================
</TABLE>
The net unrealized loss on the available-for-sale portfolio was immaterial at
December 31, 1995 and 1994. The gross realized gains and losses on sales of
available-for-sale securities were immaterial to the consolidated financial
statements during both years. Realized gains or losses are based on specific
identification of the security being sold.
<TABLE>
<CAPTION>
LONG-TERM DEBT
In thousands December 31, 1995 1994
================================================================================
<S> <C> <C>
7.25% Note Purchase Agreement, payable
annually to 1999 $ 8,700 $10,900
5% Promissory Note, $500,000 payable
in 1996; balance due in full in 1997 1,750 2,250
French money market rate plus 0.8% bank
loan, payable quarterly through 1996;
machinery and equipment of the Axohm
Division serve as collateral 171 300
- --------------------------------------------------------------------------------
10,621 13,450
Less portion due within one year (2,871) (2,843)
- --------------------------------------------------------------------------------
$ 7,750 $10,607
================================================================================
</TABLE>
The Note Purchase Agreement is restricted by a debt covenant, among others,
that requires a debt-to-capital ratio of no more than .45 in order to borrow
under long-term debt agreements in the future. While by commonly used methods
Lydall's current debt-to-capital ratio is .09, it is .14 as defined by the terms
of this agreement as of December 31, 1995.
Lydall guarantees a $975 thousand industrial revenue bond of an unrelated
party. At the time of the guarantee and at December 31, 1995, this issue was not
in default as to principal or interest, and management has no reason to believe
that the debtor will subsequently permit the issue to go into default. In such
an unlikely event, Lydall's exposure on its guarantee of the bond issue is
collateralized by tangible assets and real property which Lydall management
believes have a market value in excess of the obligation.
Long-term debt payment requirements:
In thousands 1996 1997 1998 1999 Total
====================================================================
Long-term debt payments $2,871 $3,450 $2,200 $2,100 $10,621
====================================================================
30 | Lydall, Inc. Annual Report 1995
<PAGE>
CREDIT
ARRANGEMENTS Lydall maintains domestic and foreign bank credit arrangements
totaling over $15 million which are renewed annually. Lydall
primarily pays interest at the lower of prime or money market
rates and compensates its banks for services on a fee basis. At
December 31, 1995, no amounts were outstanding on the domestic
or foreign lines of credit. At December 31, 1994, there were no
amounts outstanding on domestic lines of credit and $187
thousand on the foreign line of credit.
LONG-TERM
OPERATING
LEASES Lydall has over 100 leases which cost the Company $1.8 million
in 1995, $1.9 million in 1994, and $1.3 million in 1993. These
contracts range from vehicle leases to building leases which
require payment of property taxes, insurance, repairs and other
operating costs.
Future net lease commitments under noncancelable operating
leases are:
<TABLE>
<CAPTION>
In thousands 1996 1997 1998 1999 2000 Thereafter Total
================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net lease payments $1,394 $1,366 $1,275 $1,126 $784 $2,710 $8,655
================================================================================
</TABLE>
ACQUISITIONS
AND OTHER
INVESTMENTS During 1994, Lydall made two strategic acquisitions. On February
28, 1994, the Company acquired for $15 million in cash and a
note payable of $2.25 million, certain assets and liabilities of
the Clecon Molding Division of Standard Packaging, Inc.
("Columbus Operation"). As a result of this purchase, the
Company recorded goodwill and other intangible assets of
approximately $11.4 million. The Columbus Operation is a
designer and manufacturer of thermal and acoustical insulation
products sold to the automotive market. The results of the
Columbus Operation since the date of acquisition have been
included in the Company's consolidated results.
On June 30, 1994, the Company acquired the laminates operation
of Riverwood International Georgia, Inc. located in
Jacksonville, Florida ("Jacksonville Operation"). The Company
purchased certain assets for approximately $1.8 million. This
operation, which manufactures materials-handling slipsheets,
directly complemented Lydall's existing slipsheet business in
Richmond, Virginia. The results of the Jacksonville Operation
since the date of acquisition have been included in the
Company's consolidated results.
The following pro forma consolidated information of Lydall, Inc.
reflects the acquisitions described above as if the acquisitions
had occurred at the beginning of each period presented.
<TABLE>
<CAPTION>
$ thousands except per-share data 1994 1993
=======================================================
<S> <C> <C>
Sales $220,968 $186,450
Net income 16,020 12,628
Net income per common share .89 .72
=======================================================
</TABLE>
The pro forma consolidated information is presented for informational
purposes only and does not purport to be indicative of results that would
actually have been obtained if the acquisitions had been in effect for the
periods indicated or of results that may be obtained in the future.
CAPITAL STOCK PREFERRED STOCK The Company has a class of Serial Preferred
Stock with a par value of $1. None of the 500,000 authorized
shares has been issued.
COMMON STOCK At the end of 1995, 1,918 Lydall stockholders of
record held 17,320,252 shares of Common Stock. Approximately 10
percent of the Company's Common Stock was owned by Lydall's
officers and directors and their immediate families. Other
Lydall employees, their families and Lydall associates owned an
additional 9 percent either directly or through participation in
the Company's Employee Stock Ownership Trust.
31 | Lydall, Inc. Annual Report 1995
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
On May 10, 1995, the Company increased its authorized shares to
30,000,000 from 15,000,000. Also on that date, Lydall's Board of
Directors declared a two-for-one stock split in the form of a
stock dividend which resulted in the issuance of 10,413,216
shares of previously unissued Common Stock. December 31, 1995
balances reflect the split with an increase in Common Stock and
a reduction in Capital in Excess of Par Value of $1.0 million.
The distribution was made on June 21, 1995 to stockholders of
record on May 24, 1995. All earnings-per-share information in
this report prior to the distribution date has been adjusted to
reflect the 1995 stock split.
During 1993, Lydall's Board of Directors declared a three-for-
two stock split in the form of a stock dividend which resulted
in the issuance of 3,332,175 shares of previously unissued
Common Stock. December 31, 1993 balances reflect the split with
an increase in Common Stock and a reduction in Retained Earnings
of $333 thousand. The distribution was made on September 15,
1993 to stockholders of record on August 18, 1993.
STOCK PLANS The Company has three stock option plans under which
key employees and directors are granted options or warrants to
purchase Lydall Common Stock. Under these plans -- the 1984
Outside Directors' Warrant Plan, the 1982 Stock Incentive
Compensation Plan, and the 1992 Stock Incentive Compensation
Plan -- options are granted at fair market value on the grant
date and expire ten years after the grant date. The Warrant and
1982 Plans have expired, and no further options can be granted
under these plans. The 1992 Plan provides for automatic
acceleration of vesting in the event of a change in control of
the Company. The Plan also provides for the use of shares of
Lydall Common Stock in lieu of cash to exercise options if the
shares are held for more than six months and if the Compensation
and Stock Option Committee of the Board of Directors approves
this form of exercise.
A summary of option transactions under the plans follows:
<TABLE>
<CAPTION>
In thousands except per-share data For the years ended December 31, 1995 1994 1993
===================================================================================================================
<S> <C> <C> <C>
Options outstanding at the beginning of the year 2,323 2,285 2,003
Options granted during the year 142 236 611
Options exercised during the year (643) (192) (299)
Options canceled during the year -- (6) (30)
- -------------------------------------------------------------------------------------------------------------------
Options outstanding at end of the year 1,822 2,323 2,285
Options exercisable at end of the year 1,115 1,421 1,310
Shares reserved for option grants 603 745 176
Option price range per share $1.76-$26.00 $1.55-$16.75 $1.47-$10.67
===================================================================================================================
</TABLE>
The Company will adopt the disclosure requirement of SFAS 123,
"Accounting for Stock-Based Compensation," for the year ending
December 31, 1996. As permitted under SFAS 123, the Company has
elected not to adopt the fair-value-based method of accounting
for its stock-based compensation plans, but will continue to
account for such compensation under the provisions of APB
Opinion No. 25. The adoption will have no effect on the
Company's consolidated financial position or results of
operations.
EMPLOYER-SPONSORED
BENEFIT PLANS The Company contributes to four defined benefit pension plans
which cover substantially all domestic Lydall employees. The
pension plans are noncontributory, and benefits are based on
either years of service or eligible compensation paid while a
participant in a plan. The Company's funding policy is to fund
not less than the ERISA minimum funding standard nor more than
the maximum amount which can be deducted for federal income tax
purposes.
32 | Lydall, Inc. Annual Report 1995
<PAGE>
The following items are the components of net pension cost:
<TABLE>
<CAPTION>
In thousands For the years ended December 31, 1995 1994 1993
==============================================================================
<S> <C> <C> <C>
Service cost -- benefits earned during the year $ 850 $ 851 $ 649
Interest cost on projected benefit obligations 1,125 1,025 946
Actual (return) loss on plan assets (2,081) 75 (1,042)
Net amortization and deferral 1,083 (1,020) 169
- ------------------------------------------------------------------------------
Net pension cost $ 977 $ 931 $ 722
==============================================================================
</TABLE>
Plan assets include investments in bonds and equity securities.
Actuarial computations, using the "projected unit credit" and
"unit credit" methods, assumed the following: discount rates on
benefit obligations of 7.25 percent for 1995, 7.75 percent for
1994, and 7.25 percent for 1993; expected long-term rates of
return on plan assets of 9.25 percent for 1995 and 9.5 percent
for 1994 and 1993; and annual compensation increases of 5
percent for 1995, 5.25 percent for 1994, and 4.75 percent for
1993. The Company determines the assumed discount rate, long-
term rate, and annual compensation increase rate for each year.
The following table presents a reconciliation of the funded
status of the plans:
<TABLE>
<CAPTION>
1995 1994
----------------------------------------- ------------------------------------------
Plans in Which Plans in Which Plans in Which Plans in Which
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
In thousands December 31, Benefits Exceed Assets Total Benefits Exceed Assets Total
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested $9,384 $ 4,069 $13,453 $ 7,481 $ 3,661 $11,142
Nonvested 249 103 352 251 94 345
- ----------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligations 9,633 4,172 13,805 7,732 3,755 11,487
Additional benefits
related to assumed future
compensation levels 2,805 -- 2,805 2,363 -- 2,363
- ----------------------------------------------------------------------------------------------------------------------
Projected benefit obligations 12,438 4,172 16,610 10,095 3,755 13,850
- ----------------------------------------------------------------------------------------------------------------------
Plan assets at fair
market value 9,900 3,622 13,522 7,791 2,840 10,631
- ----------------------------------------------------------------------------------------------------------------------
Projected benefit
obligations in excess of
the plan assets (2,538) (550) (3,088) (2,304) (915) (3,219)
Unrecognized net assets (579) (155) (734) (662) (176) (838)
Unrecognized prior service cost (159) 334 175 (171) 318 147
Unrecognized net losses 2,779 860 3,639 2,644 937 3,581
Additional minimum liability -- (1,039) (1,039) -- (1,079) (1,079)
- ----------------------------------------------------------------------------------------------------------------------
Accrued pension cost
included in Other
Long-term Liabilities $ (497) $ (550) $(1,047) $ (493) $ (915) $(1,408)
======================================================================================================================
</TABLE>
The Company sponsors a Stock Purchase Plan, Profit Sharing Plan,
and 401(k) Plan. Contributions are determined under various
formulas. Employer contributions to these plans amounted to $1.7
million in 1995, $1.4 million in 1994, and $1.3 million in 1993.
33 | Lydall, Inc. Annual Report 1995
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
POSTEMPLOYMENT,
POSTRETIREMENT,
AND DEFERRED
COMPENSATION While it is not Lydall's practice to provide health care or life
insurance for retired employees, it does so for some retired
employees of certain units acquired before 1990. These benefits
are unfunded. The plan participants are primarily retirees;
therefore, the postretirement benefit transition obligation of
$691 thousand is being amortized over the actuarially determined
average remaining future lifetime of the plan participants.
The discount rates used in determining the accumulated
postretirement benefit obligations were 7.75 percent at December
31, 1995 and 7.25 percent at December 31, 1994. The health-care
cost trend rate was 10 percent for 1995, gradually declining to
5.5 percent over a five-year period. The cost trend rate was 12
percent for 1994, gradually declining to 6 percent over an
eight-year period. A 1-percent increase in the health-care cost
trend rates would cause the accumulated benefit obligation to
increase by $19 thousand. The increase in the service and
interest components of the 1995 postretirement benefit cost is
immaterial. The total expense was $111 thousand for 1995, $136
thousand for 1994, and $143 thousand for 1993.
During the first quarter of 1994, the Company adopted SFAS 112,
"Employers' Accounting for Postemployment Benefits." SFAS 112
requires that postemployment benefits be accounted for under the
accrual method of accounting. The implementation of this
standard was immaterial to the consolidated results of
operations and the consolidated financial position of the
Company.
The Company provides deferred compensation to a small number of
former employees and has a deferred compensation plan that
provides the Company's outside directors and Chairman with
compensation upon their retirement from service with the Board.
In addition, in 1994, the Company adopted a Supplemental
Executive Retirement Plan ("SERP") which provides supplemental
income payments after retirement for senior executives. The
total net deferred compensation expense related to these three
plans was $203 thousand in 1995, $105 thousand in 1994, and $144
thousand in 1993.
QUARTERLY FINANCIAL
INFORMATION
(UNAUDITED) The following table summarizes quarterly financial information
for 1995 and 1994. In management's opinion, all adjustments
(which include only normal recurring adjustments) necessary to
present fairly the information for such quarters have been
reflected below:
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
In thousands except
per-share data 1995 1994 1995 1994 1995 1994 1995 1994
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $62,736 $48,116 $65,552 $53,556 $61,487 $54,446 $62,353 $56,954
- ------------------------------------------------------------------------------------------------------------------------------------
Gross margin 19,226 15,145 20,024 16,047 18,915 16,388 19,533 17,304
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 5,306 $ 3,528 $ 5,872 $ 3,758 $ 5,447 $ 3,878 $ 5,813 $ 4,339
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $.29 $.20 $.32 $ .21 $ .30 $ .21 $ .32 $ .24
====================================================================================================================================
</TABLE>
34 | Lydall, Inc. Annual Report 1995
<PAGE>
INCOME TAXES The provision (benefit) for income taxes consists of the
following:
<TABLE>
<CAPTION>
In thousands For the years ended December 31, 1995 1994 1993
================================================================================
<S> <C> <C> <C>
Current
Federal $11,278 $ 9,802 $ 5,207
State 1,893 2,057 910
Foreign (45) 142 60
- --------------------------------------------------------------------------------
Total current 13,126 12,001 6,177
Deferred
Federal 926 (895) 437
State (47) 7 356
Foreign 432 (80) (82)
- --------------------------------------------------------------------------------
Total deferred 1,311 (968) 711
- --------------------------------------------------------------------------------
Provision for income taxes $14,437 $11,033 $ 6,888
================================================================================
</TABLE>
The statutory tax rate in France increased from 33.3 percent to
36.6 percent retroactive to January 1, 1995. The provision for
income taxes for 1995 includes $292 thousand for the impact of
the higher tax rate on the deferred tax balances.
The Company implemented SFAS 109 effective January 1, 1993. This
statement requires the adoption of an asset and liability
approach in accounting for income taxes. The cumulative effect
of this change on 1993 income was $235 thousand, or $.01 per
share. Additionally, SFAS 109 requires that the Company restate
certain assets and the related deferred taxes payable acquired
in prior business combinations to a pretax basis versus the
after-tax approach required under the prior accounting standard.
Accordingly, Property, Plant, and Equipment and Deferred Taxes
were increased by a total of $2.9 million as a result of this
implementation. The income statement effect of this change was
immaterial. Additionally, under SFAS 109, the Company is
permitted to recognize deferred tax assets if it is more likely
than not that a benefit will be realized. The Company has
determined that a valuation allowance is not required for the
deferred tax assets. As a result of the implementation of SFAS
109, the Company recognized deferred tax assets totaling $1.1
million at January 1, 1993, which are expected to be realized
upon the reversal of taxable, temporary differences related to
existing deferred tax liabilities.
Under the Omnibus Budget Reconciliation Act enacted during 1993,
the statutory federal income tax rate was increased to 35
percent retroactive to January 1, 1993. The provision for income
taxes for 1993 includes $112 thousand for the impact of the
higher tax rate on the deferred tax liability balance and $126
thousand for the impact on 1993 results.
35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The following is a reconciliation of the difference between the
actual provision for income taxes and the provision computed by
applying the federal statutory tax rate on earnings before the
cumulative effect of the change in accounting principle:
<TABLE>
<CAPTION>
For the years ended December 31, 1995 1994 1993
==========================================================
<S> <C> <C> <C>
Statutory federal income tax rates 35% 35% 34.75%
- ----------------------------------------------------------
State income taxes, net of federal
tax deduction 3.3 5.1 4.9
- ----------------------------------------------------------
Exempt FSC foreign trade income (1.5) (1.1) (1.8)
Tax on income of foreign subsidiary -- (.1) (.2)
Other 1.7 2.7 2.4
Tax rate changes .7 -- .7
- ----------------------------------------------------------
Effective income tax rates 39.2% 41.6% 40.75%
==========================================================
</TABLE>
The following is a schedule of the net current deferred tax assets and
long-term deferred tax liability accounts by tax jurisdiction as of December 31:
<TABLE>
<CAPTION>
1995 1994
------------------------ ------------------------
Current Long-term Current Long-term
Deferred Deferred Tax Deferred Deferred Tax
In thousands Tax Assets Liabilities Tax Assets Liabilities
================================================================================
<S> <C> <C> <C> <C>
Federal $2,195 $ 7,267 $2,626 $ 6,732
State 2,277 3,679 776 2,225
Foreign 118 3,261 83 2,795
- --------------------------------------------------------------------------------
Total $4,590 $14,207 $3,485 $11,752
================================================================================
1995 1994
--------------------------- -------------------------
Deferred Tax Deferred Tax Deferred Tax Deferred Tax
In thousands Assets Liabilities Assets Liabilities
================================================================================
<S> <C> <C> <C> <C>
Accounts receivable $ 827 $ -- $ 833 $ --
Inventory 580 -- 814 --
Plant and equipment -- 10,412 -- 10,600
Other accrued expenses 1,257 -- 1,838 --
Retirement accounts 498 -- 742 --
Other, net -- 2,367 -- 1,894
- --------------------------------------------------------------------------------
Total $3,162 $12,779 $4,227 $12,494
================================================================================
</TABLE>
The Internal Revenue Service is currently examining the Company's federal
income tax returns for the years 1990 through 1992. Lydall's management believes
any potential issues resulting from this examination will be immaterial to the
consolidated financial position or results of operations of the Company.
36 | Lydall, Inc. Annual Report 1995
<PAGE>
The Internal Revenue Service conducted its examination of the
Company's federal income tax returns for the years 1987, 1988,
and 1989 and proposed various adjustments which increased
federal taxable income in those years. During December 1994,
Lydall settled all but one issue raised during the examination
and paid approximately $600 thousand in taxes and $400 thousand
in interest. The final issue was resolved in January of 1996.
Lydall paid approximately $277 thousand in taxes and $251
thousand in interest which had been accrued at December 31,
1995.
Unremitted earnings of foreign subsidiaries which are deemed to
be permanently invested amounted to $1.7 million at December 31,
1995. The unrecognized deferred tax liability on those earnings
is not practical to calculate.
CONTINGENCIES In the mid-1980's, the United States Environmental Protection
Agency ("EPA") notified a former subsidiary of the Company that
it and other entities may be potentially responsible in
connection with the release of hazardous substances at a
landfill and property located adjacent to a landfill located in
Michigan City, Indiana. The two sites have been combined and are
viewed by the EPA as one site. The preliminary indication, based
on the Site Steering Committee's volumetric analysis, is that
the alleged contribution to the waste volume at the site of the
plant once owned by a former subsidiary is approximately 0.434
percent of the total volume. The portion of the 0.434 percent
specifically attributable to the former subsidiary by the
current operator of the plant is approximately 0.286 percent.
There are over 800 potentially responsible parties ("prp") which
have been identified by the Site Steering Committee. Of these,
38, not including the Company's former subsidiary, are estimated
to have contributed over 80 percent of the total waste volume at
the site. These 38 prp's include Fortune 500 companies, public
utilities, and the State of Indiana. The Company believes that,
in general, these parties are financially solvent and should be
able to meet their obligations at the site. The Company has
reviewed the financial statements and Dun and Bradstreet reports
on several of these prp's, and based on these financial reports,
does not believe Lydall will have any material additional volume
attributed to it for reparation of this site due to insolvency
of other prp's.
During the quarter ended September 30, 1994, the Company learned
that the EPA had completed its Record of Decision ("ROD") for
the Michigan site and has estimated the total cost of
remediation to be between $17 million and $22 million. Based on
the alleged volumetric contribution of its former subsidiary to
the site, and on the EPA's estimated remediation costs, Lydall's
alleged total exposure would be less than $100 thousand, which
has been accrued. In June 1995, the Company and its former
subsidiary were sued in the Northern District of Indiana by the
insurer of the current operator of the former subsidiary's plant
seeking contribution. No demand has been formally made in this
matter; however, the Company believes it has several defenses to
the action.
Management believes the ultimate disposition of the claim will
not have a material adverse effect upon the Company's
consolidated financial position or results of operations.
SUBSEQUENT
EVENT On March 19,1996, patent litigation brought by ATD Corporation
("ATD") against Lydall in the United States District Court for
the Eastern District of Michigan Southern Division was concluded
with all of ATD's claims for damages being denied. An eight-
member jury decided in favor of Lydall in the lawsuit filed by
ATD alleging patent infringement of two ATD patents for all-
metal insulators by Lydall's all-metal automotive heat shields.
37 | Lydall, Inc. Annual Report 1995
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
In June 1995, ATD filed an amended complaint against Lydall,
Inc. alleging that the Company willfully infringed ATD's
patents, both literally and under the Doctrine of Equivalents.
ATD sought as relief for Lydall's alleged infringement both an
injunction and damages. Lydall vigorously contested this action
and filed a counterclaim to invalidate ATD's patents.
On January 9, 1996, a decision on the parties' cross motions for
summary judgment was entered. The Court ruled that Lydall's all-
metal shield products did not literally infringe ATD's patents
and gave the issue of equivalency, i.e., the degree to which
Lydall's products are different from ATD's products, to a jury
to decide. The Court also gave the issue of validity of ATD's
patents to the jury. Shortly before the trial began, the Court
ruled that Lydall did not willfully infringe.
The trial began on February 21, 1996 and concluded on March
19, 1996. The jury decided in favor of Lydall on the issue of
infringement of the patents involved in the suit on all but one
claim of one of the two patents. With respect to that claim, the
jury had voted seven to one for noninfringement, but because a
unanimous vote was required, the judge declared the jury
deadlocked. The jury found that key claims which formed the
basis of both of ATD's patents to be invalid. In view of the
jury's decisions in Lydall's favor, ATD's claim for damages was
denied.
38 | Lydall, Inc. Annual Report 1995
<PAGE>
REPORT OF
INDEPENDENT
ACCOUNTANTS To the Board of Directors and Stockholders of Lydall, Inc.:
We have audited the accompanying consolidated balance sheets of
Lydall, Inc. and Subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Lydall, Inc. and Subsidiaries as of
December 31, 1995 and 1994, and the consolidated results of
their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in the notes to the consolidated financial
statements, the Company has changed its methods of accounting
for postretirement benefits other than pensions and income taxes
in 1993.
Hartford, Connecticut
February 9, 1996, except as to the information
presented in the Subsequent Event footnote,
for which the date is March 19, 1996
Coopers & Lybrand L.L.P.
MANAGEMENT'S
REPORT While Lydall's financial statements and the related financial
data contained in this Annual Report have been prepared in
conformity with generally accepted accounting principles, and
such financial statements have been audited by Coopers & Lybrand
L.L.P., the ultimate accuracy and validity of this information
is the responsibility of the Company's management. To carry out
this responsibility, Lydall maintains comprehensive financial
policies, procedures, accounting systems and internal controls
which management believes provide reasonable assurance that
accurate financial records are maintained and corporate assets
are safeguarded.
The Audit Committee of the Board of Directors, consisting of
three outside directors, meets regularly with Company management
and the internal auditors to review corporate financial policies
and internal controls. The Audit Committee also meets with the
independent auditors to review the scope of the annual audit and
any comments they may have regarding the Company's internal
accounting controls.
In management's opinion, Lydall's system of internal accounting
control is adequate to ensure that the financial information in
this report presents fairly the Company's operations and
financial condition.
John E. Hanley
Vice President-Finance and Treasurer
39 | Lydall, Inc. Annual Report 1995
<PAGE>
FIVE-YEAR STATISTICAL REVIEW
<TABLE>
<CAPTION>
$ thousands except per-share amounts 1995 1994 1993 1992 1991
====================================================================================================================
<S> <C> <C> <C> <C> <C>
Financial results
Net sales $ 252,128 $ 213,072 $ 157,431 $ 151,148 $ 135,487
Income before cumulative effect of
accounting change 22,438 15,503 10,013 9,038 8,486
Net income 22,438 15,503 10,248 9,038 8,486
- --------------------------------------------------------------------------------------------------------------------
Common stock per-share data
Income before cumulative effect of
accounting change $ 1.23 $ .86 $ .57 $ .52 $ .47
Net income 1.23 .86 .58 .52 .47
Common stockholders' equity 5.88 4.57 3.63 3.08 2.50
- --------------------------------------------------------------------------------------------------------------------
Financial position
Total assets $ 158,072 $ 136,613 $ 107,842 $ 99,353 $ 93,213
Working capital 52,730 30,823 31,791 24,614 19,743
Current ratio 2.77 1.93 2.48 2.11 1.96
Long-term debt, net of
current maturities 7,750 10,607 11,171 16,195 22,737
Total stockholders' equity 101,811 76,227 60,057 50,071 39,074
Debt to total capitalization 9.4% 15.0% 18.7% 27.7% 39.7%
- --------------------------------------------------------------------------------------------------------------------
Property, plant, and equipment
Net property, plant, and equipment $ 60,074 $ 54,771 $ 49,364 $ 46,269 $ 45,418
Capital additions from acquisitions -- 3,077 -- -- 8,120
Other capital additions 12,006 7,979 6,253 6,235 4,121
Capital divestments, net 632 687 356 487 221
Depreciation 7,122 6,101 4,997 4,347 3,784
- --------------------------------------------------------------------------------------------------------------------
Performance ratios and other items
Return on average assets 15.2% 12.7% 9.9% 9.4% 9.6%
Return on average common stockholders' equity 25.2% 22.8% 18.6% 20.3% 21.9%
Return on sales 8.9% 7.3% 6.5% 6.0% 6.3%
Days of inventory on hand (FIFO) 32 35 48 53 58
Days of receivables outstanding 49 47 52 57 56
Number of employees at year-end 1,227 1,306 944 945 947
- --------------------------------------------------------------------------------------------------------------------
Shares and stockholders
Weighted average common stock
and equivalents 18,313,000 17,953,000 17,582,000 17,421,000 18,101,000
Common shares outstanding at year-end 17,320,252 16,677,524 16,538,126 16,239,380 15,605,404
Stockholders at year-end 1,918 1,900 1,904 1,960 2,015
Market price per share of common stock
Highest close $ 28.50 $ 18.63 $ 10.69 $ 11.17 $ 8.21
Lowest close $ 14.75 $ 10.13 $ 9.50 $ 8.04 $ 4.29
====================================================================================================================
</TABLE>
Share figures adjusted to reflect a two-for-one stock split in 1995, a
three-for-two stock split in 1993, and a two-for-one stock split in 1991.
40 | Lydall, Inc. Annual Report 1995
<PAGE>
OFFICERS, DIRECTORS, AND STOCKHOLDER INFORMATION
OFFICERS
Leonard R. Jaskol
Chairman and Chief Executive Officer
John E. Hanley
Vice President-Finance and Treasurer
Carole F. Butenas
Vice President-Investor Relations
Alan J. Gnann
Vice President-Corporate Development
Mary Adamowicz
General Counsel and Secretary
Geoffrey W. Nelson
Assistant Secretary
DIRECTORS
Lee A. Asseo 2,6
Chairman and Chief Executive Officer
The Whiting Company
Paul S. Buddenhagen 1,6
Vice President
Mercer Management Consulting, Inc.
Carole F. Butenas 5
Vice President-Investor Relations
Lydall, Inc.
Samuel P. Cooley 3,4
Retired Executive Vice President
and Senior Credit Approval Officer
Fleet Bank
W. Leslie Duffy 3,5
Partner
Cahill Gordon & Reindel
Leonard R. Jaskol 1,5,6
Chairman and Chief Executive Officer
Lydall, Inc.
William P. Lyons 3,4
Chairman
JVL Corp.
William J. Rankin 3
President
Lydall & Foulds Division
Lydall Logistics Management Division
Joel Schiavone 1
President and Chief Executive Officer
The Schiavone Corporation
Roger M. Widmann 2,5
Senior Managing Director
Castle, Harlan & Widmann
Energy Partners L.L.C.
Albert E. Wolf 2,4
Chairman
Checkpoint Systems, Inc.
1 Executive Committee
2 Compensation and Stock Committee
3 Pension Committee
4 Audit Committee
5 Development Committee
6 Nominating Committee
ANNUAL MEETING
Lydall's annual meeting will be
held on Wednesday, May 15, 1996
at 11:00 a.m. at The Hartford Club
located at 46 Prospect Street in
Hartford, Connecticut.
Stockholders who are unable to attend
the meeting are invited to mail any
questions they might have about the
Company to any of Lydall's Officers.
Questions may also be directed to the
Audit Committee of Lydall's Board of
Directors. Such inquiries may be sent
to Samuel P. Cooley, Chairman of the Audit
Committee, in care of Lydall, Inc.
TRANSFER AGENT
American Stock Transfer &
Trust Company
New York, New York
AUDITORS
Coopers & Lybrand L.L.P.
Hartford, Connecticut
STOCKHOLDER INFORMATION
Lydall Common Stock is traded on
the New York Stock Exchange under the
symbol LDL. During 1995 and
1994, 3,748,500 and 2,765,600 shares,
respectively, were traded. The
closing price on December 31, 1995 was $22.75.
As of March 18, 1996, the record date of
Lydall's 1996 Annual Meeting, 1,910
stockholders of record held 17,393,626
shares of Common Stock.
The following are the high, low and
closing prices of Lydall Common Stock
for each quarter during the past two
years. Prior-period prices are restated
to reflect a two-for-one stock split
distributed in June of 1995.
<TABLE>
<CAPTION>
Quarters 1 2 3 4
====================================================
<S> <C> <C> <C> <C> <C>
1995 High $17.625 $22.000 $26.000 $28.500
Low 14.750 16.500 21.750 21.500
Close 16.875 22.000 24.875 22.750
1994 High $13.688 $14.375 $17.250 $18.625
Low 10.125 12.250 13.250 15.500
Close 12.563 13.125 17.250 16.250
====================================================
</TABLE>
Any stockholder correspondence
regarding change of address or
other recordkeeping matters
may be addressed to:
Isaac Kagan
American Stock Transfer &
Trust Company
40 Wall Street
New York, New York 10005
Telephone: 800-937-5449
All other stockholder correspondence --
questions about the Company and requests
for Lydall's Annual Report and Form 10-K
- -- may be directed to:
Carole F. Butenas
Vice President-Investor Relations
Lydall, Inc.
P.O. Box 151
Manchester, Connecticut 06045-0151
Lydall hires and promotes qualified
employees in accordance with the law
without regard to race, color, religion,
sex, national origin, age, sexual
preference, marital status, or physical
or mental disabilities except where, in
management's view, a disability interferes
with job performance or can not be
reasonably accommodated.
41 | Lydall, Inc. Annual Report 1995
<PAGE>
DIRECTORY
CORPORATE HEADQUARTERS
Lydall, Inc.
One Colonial Road
P.O. Box 151
Manchester, Connecticut 06045-0151
Telephone (860) 646-1233
Facsimile (860) 646-4917
Facsimile (860) 646-8847
AXOHM DIVISION
Division President
Elliot F. Whitely
Saint-Rivalain
56310 Melrand
France
Telephone 33-97-28-5300
Facsimile 33-97-39-5890
COMPOSITE MATERIALS DIVISION
Division President
John J. Worthington
12 Davis Street
P.O. Box 400
Hoosick Falls, New York 12090-0400
Telephone (518) 686-7313
Facsimile (518) 686-7205
Covington Operation
230 Industrial Park Road
P.O. Box 599
Covington, Tennessee 38019
Telephone (901) 476-7174
Facsimile (901) 476-9685
LOGISTICS MANAGEMENT, INC.
Division President
William J. Rankin
580 Parker Street
P.O. Box 151
Manchester, Connecticut 06045-0151
Telephone (860) 646-1233
Facsimile (860) 645-0822
LYDALL & FOULDS DIVISION
Division President
William J. Rankin
580 Parker Street
P.O. Box 151
Manchester, Connecticut 06045-0151
Telephone (860) 646-1233
Facsimile (860) 646-4448
LYDALL INTERNATIONAL, INC.
Saint-Rivalain
56310 Melrand
France
Telephone 33-97-28-8989
Facsimile 33-97-28-8980
Branch Office
Comodo Nishi-Azabu Building
25-22, Nishi-Azabu 2-Chome
Minato-ku, Tokyo 106 Japan
Telephone 81-3-3406-1575
Facsimile 81-3-3406-1577
MANNING NONWOVENS DIVISION
Division President
James P. Carolan
P.O. Box 328
Troy, New York 12181
Telephone (518) 273-6320
Facsimile (518) 273-6361
SOUTHERN PRODUCTS DIVISION
Division President
Raymond J. Lanzi
3021 Vernon Road
P.O. Box 9550
Richmond, Virginia 23228
Telephone (804) 266-9611
Facsimile (804) 266-3875
Jacksonville Operation
500-B North Ellis Road
Jacksonville, Florida 32254
Telephone (904) 783-1247
Facsimile (904) 783-8907
Sales Office
1300 West Lodi Avenue, Suite A9
Lodi, California 95242
Telephone (209) 333-0885
Facsimile (209) 333-0887
TECHNICAL PAPERS DIVISION
Division President
Elliott F. Whitely
Chestnut Hill Road
P.O. Box 1960
Rochester, New Hampshire 03866-1960
Telephone (603) 332-4600
Facsimile (603) 332-9602
Facsimile (603) 332-3734
WESTEX DIVISION
Division President
Christopher R. Skomorowski
Brooks Crossroads
P.O. Box 109
Hamptonville, North Carolina 27020
Telephone (910) 468-8522
Facsimile (910) 468-8555
Columbus Operation
6767 Huntley Road
Columbus, Ohio 43229
Telephone (614) 885-6379
Facsimile (614) 885-5967
Rockwell Operation
711 Palmer Road
Rockwell, North Carolina 28138
Telephone (704) 279-5031
Facsimile (704) 279-6104
Sales Office
4555 Corporate Drive
Suite 205
Troy, Michigan 48098
Telephone (810) 952-5570
Facsimile (810) 952-5575
42
<PAGE>
lydall,inc
lydall,inc
One Colonial Road
P.O. Box 151
Manchester, CT 06045-0151
