<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
(I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
ONE COLONIAL ROAD, P.O.BOX 151, MANCHESTER, CONNECTICUT, 06045-0151
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(860) 646-1233
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<S> <C>
Common stock $.10 par value per share.
Total shares outstanding November 7, 1997 16,380,736
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
LYDALL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets............................. 3
Consolidated Condensed Statements of Income....................... 4-5
Consolidated Condensed Statements of Cash Flows................... 6
Notes to Consolidated Condensed Financial Statements.............. 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 8-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................ 11
Signature............................................................. 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 13,638 $ 38,226
Short-term investments............................. 9,227 4,941
Accounts receivable, net........................... 34,649 33,953
Inventories:
Finished goods................................... 6,196 5,965
Work in process.................................. 3,635 3,712
Raw materials.................................... 7,596 6,743
LIFO reserve..................................... (1,763) (1,740)
-------- --------
Total inventories.................................. 15,664 14,680
Prepaid expenses................................... 1,463 959
Deferred tax assets................................ 3,505 3,612
-------- --------
Total current assets........................... 78,146 96,371
-------- --------
Property, plant and equipment, at cost............... 123,986 113,347
Less accumulated depreciation........................ (55,391) (51,309)
-------- --------
68,595 62,038
Other assets, at cost, less amortization............. 22,535 23,710
-------- --------
Total assets......................................... $169,276 $182,119
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................. $ 3,450 $ 4,450
Notes payable...................................... -- 8,000
Accounts payable................................... 18,448 15,758
Accrued taxes...................................... 1,242 1,322
Accrued payroll and other compensation............. 3,447 6,014
Other accrued liabilities.......................... 5,291 7,469
-------- --------
Total current liabilities...................... 31,878 43,013
Long-term debt....................................... 2,100 5,050
Deferred tax liabilities............................. 12,119 12,667
Other long-term liabilities.......................... 3,220 3,545
Stockholders' equity:
Preferred stock.................................... -- --
Common stock....................................... 2,141 2,112
Capital in excess of par value..................... 35,989 34,235
Foreign currency translation adjustment............ 212 1,425
Equity adjustments................................. 127 39
Retained earnings.................................. 120,053 103,197
-------- --------
158,522 141,008
Less: treasury stock, at cost...................... (38,563) (23,164)
-------- --------
Total stockholders' equity..................... 119,959 117,844
-------- --------
Total liabilities and stockholders' equity........... $169,276 $182,119
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------
1997 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
Net sales................................................ $ 59,377 $ 59,707
Cost of sales............................................ 40,504 40,308
--------- ---------
Gross margin............................................. 18,873 19,399
Selling, product development and administrative expenses. 10,888 10,270
--------- ---------
Operating income......................................... 7,985 9,129
Other (income) expense
Investment income...................................... (442) (380)
Interest expense....................................... 83 143
Other.................................................. (219) 62
--------- ---------
(578) (175)
--------- ---------
Income before income taxes............................... 8,563 9,304
Income tax expense....................................... 3,048 3,524
--------- ---------
Net income............................................... $ 5,515 $ 5,780
========= =========
Net income per share..................................... $ .32 $ .32
========= =========
Weighted average common stock and equivalents
outstanding............................................. 17,273 18,049
========= =========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
Net sales................................................... $185,367 $193,170
Cost of sales............................................... 127,195 131,458
-------- --------
Gross margin................................................ 58,172 61,712
Selling, product development and administrative expenses.... 32,566 31,964
-------- --------
Operating income............................................ 25,606 29,748
Other (income) expense
Investment income......................................... (1,361) (979)
Interest expense.......................................... 360 457
Other..................................................... (161) 283
-------- --------
(1,162) (239)
-------- --------
Income before income taxes.................................. 26,768 29,987
Income tax expense.......................................... 9,912 11,371
-------- --------
Net income.................................................. $ 16,856 $ 18,616
======== ========
Net income per share........................................ $ .97 $ 1.03
======== ========
Weighted average common stock and equivalents outstanding... 17,455 18,147
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
5
<PAGE>
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 16,856 $ 18,616
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation............................................. 6,039 6,088
Amortization............................................. 1,317 1,050
Changes in operating assets and liabilities, excluding
effects from acquisitions:
Accounts receivable..................................... (1,082) 750
Inventories............................................. (1,240) (337)
Other assets............................................ (574) (280)
Accounts payable........................................ 3,016 930
Accrued taxes........................................... (46) 632
Accrued payroll and other compensation.................. (2,538) (21)
Deferred income taxes................................... (128) 30
Other long-term liabilities............................. (144) (440)
Other accrued liabilities............................... (2,081) 40
-------- --------
Total adjustments......................................... 2,539 8,442
-------- --------
Net cash provided by operating activities.................. 19,395 27,058
Cash flows from investing activities:
Acquisitions............................................. (76) --
Additions of property, plant & equipment................. (14,429) (7,684)
Purchase of investments, net............................. (4,198) (1,647)
Disposals of property, plant & equipment, net............ 394 693
-------- --------
Net cash used for investing activities..................... (18,309) (8,638)
-------- --------
Cash flows from financing activities:
Long-term debt payments................................... (3,950) (2,821)
Payment of note payable................................... (8,000) --
Issuance of common stock.................................. 1,783 1,167
Acquisition of common stock............................... (15,399) (9,265)
-------- --------
Net cash used for financing activities..................... (25,566) (10,919)
-------- --------
Effect of exchange rate changes on cash.................... (108) (23)
-------- --------
Increase (Decrease) in cash and cash equivalents........... (24,588) 7,478
Cash and cash equivalents at beginning of period........... 38,226 27,820
-------- --------
Cash and cash equivalents at end of period................. $ 13,638 $ 35,298
======== ========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest.................................................. $ 640 $ 661
Income taxes.............................................. 10,767 10,627
Non-cash transactions:
Unrealized gains/losses on available-for-sale securities.. 88 47
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
6
<PAGE>
LYDALL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying consolidated condensed financial statements include the
accounts of Lydall, Inc. and its wholly owned subsidiaries. All financial
information is unaudited for interim periods reported. All significant
intercompany transactions have been eliminated in the consolidated
condensed financial statements. Management believes that all adjustments,
which include only normal recurring accruals, necessary to present a fair
statement of the financial position and results of the periods have been
included. The year-end condensed balance sheet data was derived from
audited financial statements, but does not include all disclosures required
by generally accepted accounting principles.
2. Earnings per common share are based on the weighted average number of
common shares outstanding during the period, including the effect of stock
options, stock awards and warrants where such effect would be dilutive.
Fully diluted earnings per share are not presented since the dilution is
not material.
3. 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 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. The EPA has completed its Record of Decision for the 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.
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 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 Dun &
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.
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. In October 1997, the insurer and the
current operator made a settlement offer of $150,591 to the Company in
exchange for a release of the Company's liability at the site and
indemnification from the current operator against site related claims.
Although the Company believes it has several defenses to the action, it is
evaluating the offer.
Management believes the ultimate disposition of this matter will not have a
material adverse effect upon the Company's consolidated financial position,
results of operations, or cash flows.
4. On March 19, 1996, patent litigation brought by ATD Corporation (ATD)
against Lydall in the U.S. District Court for the Eastern District of
Michigan was concluded with the jury finding in favor of Lydall and with
all of ATD's claims for damages being denied. A notice of appeal to the
U.S. Court of Appeals for the Federal Circuit regarding this litigation was
filed by ATD on March 28, 1997. All briefs have now been filed in the
appeal and the parties are awaiting oral arguments. Management believes the
ultimate disposition of this matter will not have a material adverse effect
upon the Company's consolidated financial position, results of operations,
or cash flows.
7
<PAGE>
5. The Company will adopt Statement of Financial Accounting Standards No. 128,
Earnings per Share (SFAS 128) for the year ending December 31, 1997. SFAS
128 is required to be adopted in the fourth quarter of 1997 and will
include restatement of all prior periods presented. The Statement
establishes standards for computing and presenting earnings per share (EPS)
through simplification of the standards in APB Opinion No. 15, and makes
them comparable to international EPS standards. The change in the
computation will not have a material effect on the EPS of the Company.
In February 1997, Statement of Financial Accounting Standards No. 129,
Disclosure of Information about Capital Structure (SFAS 129) was issued. SFAS
129 establishes standards for disclosing information about an entity's
capital structure and is effective for financial statements for periods
ending after December 15, 1997. The disclosure requirements are the same as
those currently being followed by the Company. Accordingly, the adoption of
SFAS 129 will have no effect on the Company's financial statements.
The Company will adopt Statement of Financial Accounting Standards No. 130
and No. 131, Reporting Comprehensive Income (SFAS 130) and Disclosures about
Segments of an Enterprise and Related Information (SFAS 131), both of which
are effective for the fiscal year beginning after December 15, 1997.
SFAS 130 requires an enterprise to classify items of other comprehensive
income by their nature in a financial statement and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of financial
position. There will be no effect on the Company's consolidated financial
position or results of operations.
SFAS 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. SFAS 131 is
based on the management approach to segment reporting and includes
requirements to report selected segment information quarterly and to include
entity-wide disclosures about products and services, major customers, and the
countries in which the entity holds material assets and reports revenues. The
Company is currently evaluating the impact of the disclosure requirements.
There will be no effect on the Company's consolidated financial position or
results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
For the third quarter ended September 30, 1997 net income was $5.5 million,
or $.32 per share, compared with $5.8 million, or $.32 per share, for the
comparable prior-year quarter. Sales in the third quarter of 1997 were $59.4
million compared with $59.7 million in the same quarter of 1996. Gross margin
for the third quarter of 1997 was $18.9 million, or 31.8 percent of sales,
compared with $19.4 million, or 32.5 percent of sales, in the third quarter of
1996. After-tax return on sales was 9.3 percent compared with 9.7 percent for
the same period last year.
Net income for the nine months ended September 30, 1997 was $16.9 million,
or $.97 per share, compared with $18.6 million, or $1.03 per share, for the
corresponding period of 1996. Sales for the first nine months of 1997 were
$185.4 million compared with $193.2 million for the same period in 1996. Gross
margin was $58.2 million, or 31.4 percent of sales, for the nine months ended
September 30, 1997, and the after-tax return on sales was 9.1 percent. For the
same nine-month period in 1996, gross margin was $61.7 million, or 31.9
percent of sales, and the after-tax return on sales was 9.6 percent.
Selling, product development and administrative expenses (SG&A) amounted to
$10.9 million and $10.3 million for the third quarter of 1997 and 1996,
respectively. On a year to date basis, SG&A amounted to $32.6 million and
$32.0 million for 1997 and 1996, respectively. Incentive compensation expense
and legal expense continued to be lower than the prior year, while product
development costs increased 30 percent for both the quarter and year-to-date
periods.
8
<PAGE>
Third quarter 1997 results were about equal to the comparable quarter last
year. Although business has been relatively stable, the Company has yet to
return to the robust levels experienced in 1995 and early 1996. There are
several factors contributing to this performance, many are considered to be
temporary. The fundamentals of the Company are sound: Lydall continues to
produce excellent cash flow; a strong balance sheet with virtually no debt;
and is aggressively pursuing new products and acquisitions to promote growth.
High-efficiency filtration sales were up 7 percent in the quarter compared
with the same quarter last year. This increase was predominantly from
industrial clean-room applications and home air purification units. The
Company began to see limited resumption of smaller semiconductor related
clean-room projects, but the large fabrications, which were put on hold at the
end of last year, have not yet resumed.
Sales of material handling products were up reflecting the partial benefit
of price increases effective late in the quarter and a 19 percent gain in unit
volume.
Lydall's thermal barrier businesses were less robust. Automotive thermal and
heat shield sales were down for the quarter primarily related to the loss of a
particular shielding part in late 1996-business which has not yet been
replaced. The Company has also been affected by several program delays by its
OEM customers in the automotive market. Sales of thermal products other than
automotive declined during the quarter also. This decline was mostly
attributable to a decrease in the sales of flame barriers used in office
panels.
Efforts to integrate the Company's most recent acquisition, a producer of
woven specialty materials, continued during the quarter. In addition to the
upheaval of implementing Lydall's programs and standards, which tends to
temporarily lower margins, a number of lower margin products have been
dropped. This action has initially lowered total sales. Sales year-to-date of
the acquisition were $8.6 million.
The effective tax rate for the Company's domestic operations was 34.8
percent for the third quarter of 1997 and 36.8 percent on a year to date
basis. This compares to 37.8 percent for the third quarter and 37.9 percent
year to date in 1996. Had the Company not invested cash balances in a variety
of tax exempt or tax advantaged investments, the year to date rates would have
been 37.8 percent in 1997 and 38.8 percent in 1996. This 1 percent reduction
on year-to-date income, taken in the third quarter of 1997, led to the lower
third quarter tax rate. The effective rate for the quarter was adjusted to
reflect the expected annualized effective tax rate. The tax rate at the
Company's Axohm Division in France remained unchanged at 36.6 percent in 1997
and 1996 on a year to date basis but the effect on Lydall's consolidated
results was minimal.
Lydall desires to take advantage of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995. In addition to economic
conditions and market trends, the Company considered the following market
circumstances in evaluating any forward-looking statements made in this
report.
A Major Downturn of the U.S. Automotive Market. Although Lydall's automotive
sales are not solely contingent on the strength of the automotive market, a
significant downturn of the U.S. automotive industry could have a substantial
impact on Lydall's results. Automotive sales account for about 27 percent of
Lydall's total sales, excluding foreign and after-market sales. Lydall's
primary automotive products are thermal barriers and heat shields employed
both inside and outside of vehicles. Most of Lydall's products are supplied to
meet unique niche applications. There is no direct correlation between the
number of Lydall parts on a vehicle and the number of units built, as with
tires or steering wheels for example. Slight fluctuations in U.S. automotive
production have relatively little effect on Lydall's business; however, a
major downward shift could prevent Lydall from achieving it projected results.
A Significant Change in the Number of Clean Rooms Being Built. Lydall's
high-efficiency air filtration business is linked to the fabrication of clean
rooms around the world. In 1995 and 1994, the demand for these air filtration
media was the strongest the Company has ever seen. In the second half of 1996,
the demand curve began to level off. Various independent industry-published
forecasts project excellent long-term growth for clean room fabrications.
Lydall relies on these forecasts, feedback from its filtration customers, and
its own market
9
<PAGE>
knowledge. Lydall's forward-looking statements are based in part on the
expected return of the industry to its historical high growth rates; however,
if a significant decline in this market were to occur, it would have a
negative impact on Lydall's results.
Raw-Material Pricing. Raw-material pricing affects all of Lydall's
businesses; however, it particularly impacts the Company's materials-handling
products. These products are made from laminated virgin kraft paperboard, also
known as linerboard. In 1995, costs of linerboard were extremely high, and
Lydall, in turn, raised prices, partially accounting for the higher than
average sales growth in 1995. In 1996, as raw-material costs declined, Lydall
lost sales dollars. Linerboard prices began to stabilize at the end of 1996.
In the third quarter ended September 30, 1997, liner board prices began to
increase and Lydall, in turn instituted price increases. Since the materials-
handling business is one area where the market pushes for price reductions
that directly track decreases in raw material, significant changes in the
pricing of linerboard affect this portion of Lydall's business.
LIQUIDITY AND CAPITAL RESOURCES:
The Company generated operating cash flow of $10.6 million in the third
quarter of 1997, bringing operating cash flow year-to-date to $33.1 million.
At September 30, 1997, cash, cash equivalents and short-term investments were
$22.9 million compared with $43.2 million at the end of 1996. The decline,
partially offset by other operating changes, reflects the payment of $8.0
million of debt on January 2, 1997 in connection with an acquisition, $15.4
million to acquire 731,800 shares of Lydall stock, and increased capital
expenditures, primarily related to Lydall 2000, a companywide upgrade of
information systems. Working capital was $46.3 million at September 30, 1997,
compared with $53.4 million at the end of last year.
The Company expects to finance its day to day operating needs and the
purchase of Lydall Common Stock from accumulated cash, sales of short term
investments, cash from operations and short-term lines of credit.
Lydall continues to actively seek strategic acquisitions and reinvest in the
Company with the primary focus on the ongoing comprehensive quality program.
ACCOUNTING STANDARDS:
The Company will adopt Statement of Financial Accounting Standards No. 128,
Earnings per Share (SFAS 128) for the year ending December 31, 1997. SFAS 128
is required to be adopted in the fourth quarter of 1997 and will include
restatement of all prior periods presented. The Statement establishes
standards for computing and presenting earnings per share (EPS) through
simplification of the standards in APB Opinion No. 15, and makes them
comparable to international EPS standards. The change in the computation will
not have a material effect on the EPS of the Company.
In February 1997, Statement of Financial Accounting Standards No. 129,
Disclosure of Information about Capital Structure (SFAS 129) was issued. SFAS
129 establishes standards for disclosing information about an entity's capital
structure and is effective for financial statements for periods ending after
December 15, 1997. The disclosure requirements are the same as those currently
being followed by the Company. Accordingly, the adoption of SFAS 129 will have
no effect on the Company's financial statements.
The Company will adopt Statement of Financial Accounting Standards No. 130
and No. 131, Reporting Comprehensive Income (SFAS 130) and Disclosures about
Segments of an Enterprise and Related Information (SFAS 131), both of which
are effective for the fiscal year beginning after December 15, 1997.
SFAS 130 requires an enterprise to classify items of other comprehensive
income by their nature in a financial statement and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of financial
position. There will be no effect on the Company's consolidated financial
position or results of operations.
SFAS 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. SFAS 131 is
based on the management approach to segment reporting and
10
<PAGE>
includes requirements to report selected segment information quarterly and to
include entity-wide disclosures about products and services,major customers,
and the countries in which the entity holds material assets and reports
revenues. The Company is currently evaluating the impact of the disclosure
requirements. There will be no effect on the Company's consolidated financial
position or results of operations.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1--Schedule of Computation of Weighted Average Shares Outstanding
27.1--Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three months
ended September 30, 1997.
11
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
Lydall, Inc.
(Registrant)
By /s/ John E. Hanley
----------------------------------
JOHN E. HANLEY
Vice President-Finance and
Treasurer
(Principal Accounting and
Financial Officer)
November 7, 1997
12
<PAGE>
LYDALL, INC.
Index to Exhibits
Exhibit No. Page No.
- ----------- ---------
11.1 Schedule of Computation of Weighted Average
Shares Outstanding
27.1 Financial Data Schedule
<PAGE>
LYDALL, INC. Exhibit 11.1
Schedule of Computation of Weighted Average Shares Outstanding
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- --------------
1997 1996 1997 1996
------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Primary
-------
Weighted average number
of common shares 16,662 17,097 16,799 17,155
Additional shares assuming
conversion of stock
options and warrants 611 952 656 992
------ ------ ------ ------
Weighted average common
shares and equivalents
outstanding 17,273 18,049 17,455 18,147
====== ====== ====== ======
Fully Diluted
-------------
Weighted average number
of common shares 16,662 17,097 16,799 17,155
Additional shares assuming
conversion of stock
options and warrants 611 973 673 1,011
------ ------ ------ ------
Weighted average common
shares and equivalents
outstanding 17,273 18,070 17,472 18,166
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,638
<SECURITIES> 9,227
<RECEIVABLES> 35,645
<ALLOWANCES> 1,348
<INVENTORY> 15,664
<CURRENT-ASSETS> 78,146
<PP&E> 123,986
<DEPRECIATION> 55,391
<TOTAL-ASSETS> 169,276
<CURRENT-LIABILITIES> 31,878
<BONDS> 5,550
0
0
<COMMON> 2,141
<OTHER-SE> 117,818
<TOTAL-LIABILITY-AND-EQUITY> 169,276
<SALES> 185,367
<TOTAL-REVENUES> 185,367
<CGS> 127,195
<TOTAL-COSTS> 127,195
<OTHER-EXPENSES> (1,162)
<LOSS-PROVISION> (281,513)
<INTEREST-EXPENSE> 360
<INCOME-PRETAX> 26,768
<INCOME-TAX> 9,912
<INCOME-CONTINUING> 16,856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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