<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 JUNE 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
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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 August 7, 1997 16,626,716
</TABLE>
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- -------------------------------------------------------------------------------
<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
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 8-11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders......... 11
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>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 11,852 $ 38,226
Short-term investments............................... 8,220 4,941
Accounts receivable, net............................. 34,130 33,953
Inventories:
Finished goods..................................... 5,781 5,965
Work in process.................................... 3,774 3,712
Raw materials...................................... 7,810 6,743
LIFO reserve....................................... (1,704) (1,740)
-------- --------
Total inventories.................................... 15,661 14,680
Prepaid expenses..................................... 1,675 959
Deferred tax assets.................................. 3,572 3,612
-------- --------
Total current assets............................. 75,110 96,371
-------- --------
Property, plant and equipment, at cost................. 121,381 113,347
Less accumulated depreciation.......................... (54,566) (51,309)
-------- --------
66,815 62,038
Other assets, at cost, less amortization............... 22,900 23,710
-------- --------
Total assets........................................... $164,825 $182,119
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................... $ 3,450 $ 4,450
Notes payable........................................ -- 8,000
Accounts payable..................................... 17,614 15,758
Accrued taxes........................................ 423 1,322
Accrued payroll and other compensation............... 3,859 6,014
Other accrued liabilities............................ 6,111 7,469
-------- --------
Total current liabilities........................ 31,457 43,013
Long-term debt......................................... 2,100 5,050
Deferred tax liabilities............................... 12,516 12,667
Other long-term liabilities............................ 3,574 3,545
Stockholders' equity:
Preferred stock...................................... -- --
Common stock......................................... 2,138 2,112
Capital in excess of par value....................... 35,874 34,235
Foreign currency translation adjustment.............. 269 1,425
Equity adjustments................................... (2) 39
Retained earnings.................................... 114,538 103,197
-------- --------
152,817 141,008
Less: treasury stock, at cost........................ (37,639) (23,164)
-------- --------
Total stockholders' equity....................... 115,178 117,844
-------- --------
Total liabilities and stockholders' equity............. $164,825 $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
JUNE 30,
--------------------
1997 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
Net sales................................................ $ 64,019 $ 67,669
Cost of sales............................................ 43,983 46,147
--------- ---------
Gross margin............................................. 20,036 21,522
Selling, product development and administrative expenses. 11,182 10,478
--------- ---------
Operating income......................................... 8,854 11,044
Other (income) expense
Investment income...................................... (554) (275)
Interest expense....................................... 119 132
Other.................................................. 101 96
--------- ---------
(334) (47)
--------- ---------
Income before income taxes............................... 9,188 11,091
Income tax expense....................................... 3,472 4,220
--------- ---------
Net income............................................... $ 5,716 $ 6,871
========= =========
Net income per share..................................... $ .33 $ .38
========= =========
Weighted average common stock and equivalents outstand-
ing..................................................... 17,305 18,081
========= =========
</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>
SIX MONTHS ENDED
JUNE 30,
------------------
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
Net sales................................................... $125,990 $133,463
Cost of sales............................................... 86,691 91,150
-------- --------
Gross margin................................................ 39,299 42,313
Selling, product development and administrative expenses.... 21,678 21,694
-------- --------
Operating income............................................ 17,621 20,619
Other (income) expense
Investment income......................................... (919) (599)
Interest expense.......................................... 277 314
Other..................................................... 58 221
-------- --------
(584) (64)
-------- --------
Income before income taxes.................................. 18,205 20,683
Income tax expense.......................................... 6,864 7,847
-------- --------
Net income.................................................. $ 11,341 $ 12,836
======== ========
Net income per share........................................ $ .65 $ .71
======== ========
Weighted average common stock and equivalents outstanding... 17,561 18,195
======== ========
</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>
SIX MONTHS ENDED
JUNE 30,
-----------------
1997 1996
-------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................. $ 11,341 $12,836
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 4,098 4,039
Amortization.............................................. 876 713
Changes in operating assets and liabilities, excluding ef-
fects from acquisitions:
Accounts receivable...................................... (564) (2,307)
Inventories.............................................. (1,234) (912)
Other assets............................................. (734) (424)
Accounts payable......................................... 2,182 1,770
Accrued taxes............................................ (861) 355
Accrued payroll and other compensation................... (2,125) (804)
Deferred income taxes.................................... 185 (183)
Other long-term liabilities.............................. 212 (537)
Other accrued liabilities................................ (1,244) 523
-------- -------
Total adjustments.......................................... 791 2,233
-------- -------
Net cash provided by operating activities................... 12,132 15,069
-------- -------
Cash flows from investing activities:
Acquisitions............................................... (75) --
Additions of property, plant & equipment................... (10,312) (4,708)
Purchase of investments, net............................... (3,320) (1,484)
Disposals of property, plant & equipment, net.............. 64 597
-------- -------
Net cash used for investing activities...................... (13,643) (5,595)
-------- -------
Cash flows from financing activities:
Long-term debt payments.................................... (3,950) (2,780)
Payment of current note payable............................ (8,000) --
Issuance of common stock................................... 1,665 883
Acquisition of common stock................................ (14,475) (6,937)
-------- -------
Net cash used for financing activities...................... (24,760) (8,834)
-------- -------
Effect of exchange rate changes on cash..................... (103) (20)
-------- -------
(Decrease) Increase in cash and cash equivalents............ (26,374) 620
Cash and cash equivalents at beginning of period............ 38,226 27,820
-------- -------
Cash and cash equivalents at end of period.................. $ 11,852 $28,440
======== =======
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest................................................... $ 484 $ 658
Income taxes............................................... 8,042 7,485
Non-Cash transactions:
Unrealized gains/losses on available-for-sale securities... 41 138
Reduction of payable for acquired operations............... 24 --
</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 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 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.
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. In January 1997, the
insurer made a settlement demand of $133,925 to the Company in exchange for
a release of the Company's liability at the site. Although the Company
believes it has several defenses to the action, it is evaluating the
demand.
Management believes the ultimate disposition of this matter will not have a
material adverse effect upon the Company's consolidated financial position
or 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. The parties are currently in the brief
filing phase of the appeal. Management believes the ultimate disposition of
this matter will not have a material adverse effect upon the Company's
consolidated financial position or 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 previously found 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.
The adoption will have no effect on the consolidated financial position or
results of operations 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, there is 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 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 second quarter ended June 30, 1997, sales were $64.0 million
compared with $67.7 million for the 1996 second quarter. Net income was $5.7
million, or $.33 per share, compared with $6.9 million, or $.38 per share, in
the comparable quarter of 1996. Gross margin for the second quarter of 1997
was $20.0 million, or 31.3 percent of sales, compared with $21.5 million, or
31.8 percent of sales, for the second quarter of 1996. After-tax return on
sales was 8.9 percent for the second quarter of 1997 compared with 10.2
percent for the same quarter of 1996.
Sales for the six months ended June 30, 1997 were $126.0 million compared
with $133.5 million for the same period in 1996. Net income was $11.3 million,
or $.65 per share, compared with $12.8 million, or $.71 per share, for the
1996 first half. Gross margin was $39.3 million, or 31.2 percent of sales, for
the six months ended June 30, 1997, and the after-tax return on sales was 9.0
percent. For the six-month period ended June 30, 1996, gross margin was $42.3
million, or 31.7 percent of sales, and the after-tax return on sales was 9.6
percent.
Selling, product development and administrative expenses (SG&A) amounted to
$11.2 million and $10.5 million for the second quarter of 1997 and 1996,
respectively. On a year to date basis, SG&A amounted to $21.7 million for both
1997 and 1996. The 1997 incentive compensation expenses are much lower than
1996, while the 1996 figures include extraordinary legal fees to successfully
defend a lawsuit alleging patent infringement. Product development expenses
increased 36% and 30% in 1997 for the quarter and year-to-date, respectively,
which partially offset the decreases in incentive compensation and legal
expense.
8
<PAGE>
Demand for high-efficiency air filtration media used in clean room
filtration systems is showing signs of renewed strength after a slowdown late
in 1996. Although business was good in the second quarter of 1997--the Company
posted its third-highest quarterly filtration sales ever--it has not returned
to the robust levels experienced in the first half of last year. This slower
sales growth is primarily attributable to a decline in the semiconductor
industry and resultant postponements of clean room fabrications. Roughly one-
third of Lydall's air filtration media sales is attributable to semiconductor
applications. In this business, Lydall typically lags market recoveries in the
same manner that it lags market declines, and signs of a pickup in the
semiconductor industry have been increasingly positive.
Sales of thermal barrier materials were off 12 percent for the quarter
primarily related to automotive applications. The Company was affected as a
result of decreased demand due to strikes at GM and Chrysler as well as delays
and postponements of new programs by the OEMs. These market circumstances have
also hampered efforts to replace a large piece of business lost in the third
quarter of 1996. There are, however, many programs in the development
pipeline.
Materials handling revenues were about even with the same quarter last year;
however, unit volume growth was up 24 percent. This business, which
represented 13 percent of Lydall's total sales for 1996, was affected by the
deflationary pricing of linerboard, its principal raw material, during 1996.
At this point, linerboard prices have stabilized, and the outlook for the next
six months is good.
The effective tax rate for the Company's domestic operations was 37.7
percent for the second quarter and year-to-date 1997. This compares to 38.1
percent for the second quarter of 1996 and 38.0 percent year to date in 1996.
Had the Company not invested cash balances in a variety of tax exempt or tax
advantaged investments, the rate would have been 38.8 percent in both 1997 and
1996. The tax rate at the Axohm Division in France remained unchanged at 36.6
percent in 1997 and 1996 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 determining any forward-looking statements made in its Form
10-Q for the second quarter ended June 30, 1997.
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. Twenty-six percent of Lydall's total sales in 1997
were to the U.S. automotive market, excluding aftermarket 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 its 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 in 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. 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 knowledge. Lydall's forward-looking statements
are based in part on the belief that the strength of the industry will
continue for the foreseeable future; 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
9
<PAGE>
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. Since the materials-handling business is one area where the
market pushes for price reductions that directly track decreases in raw
materials, significant changes in the pricing of linerboard affect this
portion of Lydall's business.
LIQUIDITY AND CAPITAL RESOURCES:
Lydall generated operating cash flow (earnings before taxes, interest
expense and investment income or expense plus depreciation and amortization)
of $22.5 million in the first six months of 1997. At June 30, 1997, cash, cash
equivalents and short-term investments were $20.1 million compared with $43.2
million at year-end 1996. The decline, partially offset by other operating
changes, reflects a payment of $8.0 million on January 2, 1997 in connection
with the acquisition of the Hatboro Operation, $14.5 million to acquire Lydall
stock, and increased capital expenditures, primarily related to Lydall 2000, a
companywide information technology project. Working capital was $43.7 million
at June 30, 1997, compared with $53.4 million at the end of last year.
The Company's current ratio improved to 2.39 at June 30, 1997 compared with
2.24 at the end of 1996, and total debt to total capitalization was 5 percent
reduced from 13 percent at December 31, 1996.
On April 16, 1997, Lydall's Board of Directors approved the purchase by the
Company of up to one million shares of Lydall Common Stock on the open market
from time to time as conditions permit and opportunities arise. This
authorization is in addition to a program already in place which is tied to
Lydall's stock option plans. During the first six months of 1997, the Company
purchased 687,900 shares under the two programs.
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 to 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 previously found 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. The
adoption will have no effect on the Company's consolidated financial position
or results of operation.
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, there is 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.
10
<PAGE>
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 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 14, 1997. In
addition to electing 11 Directors to serve for one-year terms, until the next
Annual Meeting to be held in 1998, stockholders approved the amendment and
restatement of the Lydall, Inc. Stock Incentive Compensation Plan.
1.) Approval of the amended and restated 1992 Stock Incentive Compensation
Plan.
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTENTIONS NONVOTES
---------- --------- ----------- --------
<S> <C> <C> <C> <C>
12,136,633 2,541,767 172,457 93,231
</TABLE>
2.) Election of Nominees to the Board of Directors
<TABLE>
<CAPTION>
AUTHORITY BROKER
FOR AGAINST ABSTENTIONS WITHHELD NONVOTES
---------- ------- ----------- --------- --------
<S> <C> <C> <C> <C> <C>
Lee A. Asseo.................. 14,506,796 -- -- 437,292 --
Paul S. Buddenhagen........... 14,515,276 -- -- 428,812 --
James P. Carolan.............. 14,520,027 -- -- 424,061 --
Samuel P. Cooley.............. 14,519,227 -- -- 424,861 --
W. Leslie Duffy............... 14,512,413 -- -- 431,675 --
Leonard R. Jaskol............. 14,520,027 -- -- 424,061 --
William P. Lyons.............. 14,516,568 -- -- 427,520 --
Joel Schiavone................ 14,515,862 -- -- 428,226 --
Elliott F. Whitely............ 14,520,027 -- -- 424,061 --
Roger M. Widmann.............. 14,514,818 -- -- 429,270 --
Albert E. Wolf................ 14,188,984 -- -- 755,104 --
</TABLE>
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 June 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 Financial and
Accounting Officer)
August 8, 1997
12
<PAGE>
LYDALL, INC.
Index to Exhibits
Exhibit
No. Page
- ------- ----
11.1 Schedule of Computation of Weighted Average
Shares Outstanding
<PAGE>
LYDALL, INC.
Exhibit 11.1
Schedule of Computation of Weighted Average Shares Outstanding
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
------------- ------------
1997 1996 1997 1996
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Primary
- -------
Weighted average number
of common shares 16,713 17,098 16,882 17,184
Additional shares assuming
conversion of stock
options and warrants 592 983 679 1,011
------ ------ ------ ------
Weighted average common
shares and equivalents
outstanding 17,305 18,081 17,561 18,195
====== ====== ====== ======
Fully Diluted
- -------------
Weighted average number
of common shares 16,713 17,098 16,882 17,184
Additional shares assuming
conversion of stock
options and warrants 593 983 677 1,030
------ ------ ------ ------
Weighted average common
shares and equivalents
outstanding 17,306 18,081 17,559 18,214
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,852
<SECURITIES> 8,220
<RECEIVABLES> 34,917
<ALLOWANCES> 1,518
<INVENTORY> 15,661
<CURRENT-ASSETS> 75,110
<PP&E> 121,381
<DEPRECIATION> 54,566
<TOTAL-ASSETS> 164,825
<CURRENT-LIABILITIES> 31,457
<BONDS> 5,550
0
0
<COMMON> 2,138
<OTHER-SE> 113,040
<TOTAL-LIABILITY-AND-EQUITY> 164,825
<SALES> 125,990
<TOTAL-REVENUES> 125,990
<CGS> 86,691
<TOTAL-COSTS> 86,691
<OTHER-EXPENSES> (584)
<LOSS-PROVISION> (148,508)
<INTEREST-EXPENSE> 277
<INCOME-PRETAX> 18,205
<INCOME-TAX> 6,864
<INCOME-CONTINUING> 11,341
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,341
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>
