<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<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 March 31, 2001
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)
<TABLE>
<CAPTION>
Delaware 06-0865505
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
</TABLE>
One Colonial Road, P.O.B. 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.
Common stock $.10 par value per share.
Total Shares outstanding April 27, 2001 15,865,137
================================================================================
<PAGE>
LYDALL, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<C> <C> <S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets.................. 3
Consolidated Condensed Statements of Net Income and
Comprehensive Income................................... 4
Consolidated Condensed Statements of Cash Flows........ 5
Notes to Consolidated Condensed Financial Statements... 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 8-10
Item 3. Quantitative and Qualitative Disclosures about Market
Risk................................................... 10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K....................... 11
Signature........................................................... 12
</TABLE>
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
2001 2000
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 4,166 $ 2,220
Accounts receivable, net............................. 39,629 39,993
Inventories:
Finished goods..................................... 9,721 9,933
Work in progress................................... 7,624 5,820
Raw materials...................................... 7,646 6,272
LIFO reserve....................................... (555) (555)
-------- --------
Total inventories.................................... 24,436 21,470
Taxes receivable..................................... -- 2,705
Prepaid expenses..................................... 1,717 1,632
Net investment in discontinued operations............ 1,540 14,285
Assets held for sale................................. 4,824 6,200
Deferred tax assets.................................. 9,046 7,290
-------- --------
Total current assets............................... 85,358 95,795
Property, plant and equipment, at cost................. 127,954 126,711
Less: accumulated depreciation......................... (54,435) (52,291)
-------- --------
73,519 74,420
Other assets, at cost, less amortization............... 24,656 24,749
-------- --------
Total assets......................................... $183,533 $194,964
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................... $ 6,391 $ 7,101
Accounts payable..................................... 19,222 19,154
Accrued taxes........................................ 1,422 844
Accrued payroll and other compensation............... 3,685 7,244
Liabilities related to assets held for sale.......... 183 421
Other accrued liabilities............................ 7,640 6,481
-------- --------
Total current liabilities.......................... 38,543 41,245
Long-term debt......................................... 12,973 24,927
Deferred tax liabilities............................... 12,698 11,183
Other long-term liabilities............................ 6,002 5,856
Commitments and contingencies
Stockholders' equity:
Preferred stock...................................... -- --
Common stock......................................... 2,196 2,196
Capital in excess of par value....................... 40,337 40,335
Retained earnings.................................... 139,356 137,664
Accumulated other comprehensive loss................. (6,930) (6,800)
-------- --------
174,959 173,395
Less: treasury stock, at cost........................ (61,642) (61,642)
-------- --------
Total stockholders' equity......................... 113,317 111,753
-------- --------
Total liabilities and stockholders' equity........... $183,533 $194,964
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(In Thousands Except Per-Share Data)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------
2001 2000
------- -------
(Unaudited)
<S> <C> <C>
Net sales.................................................... $58,266 $69,733
Cost of sales................................................ 41,672 52,135
------- -------
Gross margin................................................. 16,594 17,598
Selling, product development and administrative expenses..... 13,510 13,074
------- -------
Operating income............................................. 3,084 4,524
Impairment charge............................................ 760 --
Other (income) expense:
Investment income.......................................... (37) (16)
Interest expense........................................... 333 490
Gain on sale of operation.................................. -- (6,065)
Foreign currency transaction loss.......................... 148 76
Other...................................................... 33 (312)
------- -------
477 (5,827)
------- -------
Income from continuing operations before income taxes........ 1,847 10,351
Income tax expense........................................... 610 3,832
------- -------
Income from continuing operations............................ 1,237 6,519
------- -------
Discontinued operations:
(Loss) income from operations of discontinued segments, net
of tax (benefit) expense of ($181) and $95, respectively.. (308) 215
Gain on disposal of discontinued operations, net of tax
expense of $448 and $44, respectively..................... 763 71
------- -------
Gain from discontinued operations.......................... 455 286
------- -------
Net income................................................... $ 1,692 $ 6,805
======= =======
Basic earnings per common share:
Continuing operations...................................... $ .08 $ .42
Discontinued operations.................................... .03 .01
------- -------
Net income................................................. $ .11 $ .43
Diluted earnings per common share:
Continuing operations...................................... $ .08 $ .42
Discontinued operations.................................... .03 .01
------- -------
Net income................................................. $ .11 $ .43
Weighted average common stock outstanding.................... 15,865 15,706
Weighted average common stock and equivalents outstanding.... 15,979 15,740
Net income................................................... $ 1,692 $ 6,805
Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments................... (384) (1,330)
Unrealized loss on derivative instruments.................. (126) --
Unrealized gain on securities.............................. -- 19
------- -------
Other comprehensive loss, before tax......................... (510) (1,311)
Income tax benefit related to items of other comprehensive
loss........................................................ 179 456
------- -------
Other comprehensive loss, net of tax......................... (331) (855)
Cumulative effect of change in accounting principle, net of
tax......................................................... 201 --
------- -------
Comprehensive income......................................... $ 1,562 $ 5,950
======= =======
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
LYDALL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
2001 2000
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................. $ 1,692 $ 6,805
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 2,540 2,614
Amortization........................................... 388 388
Gain on disposal of discontinued segments.............. (1,289) (71)
Gain on sale of operation.............................. -- (6,065)
Impairment charge...................................... 760 --
Loss on disposition of property, plant and equipment... -- 20
Foreign currency transaction loss...................... 148 76
Gain on receipt of common stock from demutualization of
insurance companies................................... -- (299)
Changes in operating assets and liabilities:
Accounts receivable.................................. 1,046 (3,120)
Taxes receivable..................................... 2,583 2,956
Inventories.......................................... (2,880) 870
Other assets......................................... (257) 158
Accounts payable..................................... 594 2,281
Accrued taxes........................................ (194) 1,186
Accrued payroll and other compensation............... (3,541) 4,053
Deferred income taxes................................ (208) 1,464
Other long-term liabilities.......................... 166 84
Other accrued liabilities............................ (1,174) (6,961)
-------- --------
Total adjustments...................................... (1,318) (366)
-------- --------
Net cash provided by operating activities.................. 374 6,439
-------- --------
Cash flows from investing activities:
Proceeds from sale of discontinued segments.............. 15,000 1,819
Proceeds from sale of operations......................... -- 12,037
Additions of property, plant, and equipment.............. (2,114) (4,193)
-------- --------
Net cash provided by investing activities.................. 12,886 9,663
-------- --------
Cash flows from financing activities:
Long-term debt payments.................................. (19,041) (70,777)
Long-term debt proceeds.................................. 7,825 55,134
Issuance of common stock................................. 2 236
-------- --------
Net cash used for financing activities..................... (11,214) (15,407)
-------- --------
Effect of exchange rate changes on cash.................... (100) (40)
-------- --------
Increase in cash and cash equivalents...................... 1,946 655
Cash and cash equivalents at beginning of period........... 2,220 1,154
-------- --------
Cash and cash equivalents at end of period................. $ 4,166 $ 1,809
======== ========
Supplemental Schedule of Cash Flow Information:
Cash paid during the period for:
Interest................................................. $ 304 $ 459
Income taxes............................................. 363 56
Non-cash transactions:
Unrealized gain/losses on available-for-sale securities.... -- 19
Fair market value of interest rate swap.................... 184 --
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
5
<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 (collectively, the
"Company"). All financial information is unaudited for the 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 operations for the
periods presented have been included. The year-end consolidated condensed
balance sheet was derived from the December 31, 2000 audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000.
2. Basic earnings per common share are based on income from continuing
operations and net income divided by the weighted average number of common
shares outstanding during the period. Diluted earnings per common share are
based on income from continuing operations and net income divided by the
weighted average number of common shares outstanding during the period,
including the effect of stock options, where such effect is dilutive.
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended March 31, 2001 Ended March 31, 2000
(unaudited) (unaudited)
------------------------- -------------------------
Income Income
from from
Continuing Per- Continuing Per-
Operations Shares Share Operations Shares Share
($000's) (000's) Amount ($000's) (000's) Amount
---------- ------- ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share.. $1,237 15,865 $.08 $6,519 15,706 $.42
Effect of dilutive stock
options.................. -- 114 -- -- 34 --
------ ------ ---- ------ ------ ----
Diluted earnings per
share.................... $1,237 15,979 $.08 $6,519 15,740 $.42
====== ====== ==== ====== ====== ====
<CAPTION>
Per- Per-
Net Income Shares Share Net Income Shares Share
($000's) (000's) Amount ($000's) (000's) Amount
---------- ------- ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share.. $1,692 15,865 $.11 $6,805 15,706 $.43
Effect of dilutive stock
options.................. -- 114 -- -- 34 --
------ ------ ---- ------ ------ ----
Diluted earnings per
share.................... $1,692 15,979 $.11 $6,805 15,740 $.43
====== ====== ==== ====== ====== ====
</TABLE>
3. In February 2001, the Company's Board of Directors adopted a plan to
discontinue the operations of the Paperboard Segment, consisting principally of
the Southern Products and Lydall & Foulds Divisions. Accordingly, the operating
results of this segment have been segregated from continuing operations and
reported as discontinued operations for all periods presented.
On February 1, 2001, the Company announced that the Lydall & Foulds Division
would be closed on April 1, 2001. Additionally, on February 5, 2001, the
Company sold the Southern Products Division for approximately $15 million in
cash, subject to a post closing adjustment. In total, the disposition of the
Paperboard Segment resulted in a gain, net of tax, of $.8 million or $.05 per
diluted share. The sale of the Southern Products Division resulted in a gain,
net of tax, of $3.6 million or $.23 per diluted share. The closing of the
Lydall & Foulds Division resulted in a loss, net of tax, of $2.8 million or
$.18 per share representing costs incurred from the measurement date through
March 31, 2001, severance and other exit costs to be incurred during the phase-
out period, and the adjustment to net realizable value for certain current and
long-lived assets.
Paperboard Segment net assets to be disposed of, consisting primarily of
accounts receivable, inventory and property, plant and equipment of the Lydall
& Foulds Division, with a total net realizable value of
6
<PAGE>
$1.5 million, have been classified in the Consolidated Condensed Balance Sheet
at March 31, 2001 as "Net Investment in Discontinued Operations."
4. During the quarter ended March 31, 2001, the Company recorded an
impairment charge before tax of $.8 million, or $.03 per share after tax,
related to assets held for sale owned by its Composite Materials Covington
Operation. On April 2, 2001, the Company sold certain assets of this operation
for approximately $1.8 million and announced that the operation would be
closing. Closing costs and severance benefits will be recorded as a charge in
the second quarter of 2001 and are expected to be between $.05 to $.06 per
share. The Covington operation generated net sales of $1.6 million and $1.8
million for the first quarter of 2001 and 2000, respectively, and was
essentially breakeven for both quarters.
5. Lydall's reportable segments are Thermal/Acoustical and
Filtration/Separation. All other products and services are aggregated in Other
Products and Services. For a full description of each segment, refer to the
"Notes to Consolidated Financial Statements" reported in the Company's 2000
Annual Report on Form 10-K. The table below presents net sales and operating
income by segment for the three months ended March 31, 2001 and 2000.
<TABLE>
<CAPTION>
In thousands Thermal/ Filtration/ Other Products Reconciling Consolidated
For the Three Months Ended Acoustical Separation & Services Items Totals
-------------------------- ---------- ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
March 31, 2001
Net sales............... $32,101 $17,566 $ 9,316 $ (717) $58,266
Operating income........ 4,618 1,784 677 (3,995) 3,084
======= ======= ======= ======= =======
March 31, 2000
Net sales............... $44,231 $16,221 $10,271 $ (990) $69,733
Operating income........ 4,283 2,422 878 (3,059) 4,524
======= ======= ======= ======= =======
</TABLE>
6. On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by Statement of Financial Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133, an amendment of FASB Statement No.
133" and Statement of Financial Accounting Standards No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment of
FASB Statement No. 133" (collectively referred to hereafter as "FAS 133"). In
accordance with the transition provisions of FAS 133, the Company recorded a
$.2 million net-of-tax cumulative-effect adjustment in other comprehensive
income as of January 1, 2001 representing the fair value of the interest rate
swap designated as a cash flow hedge.
At March 31, 2001, the interest rate swap is the Company's only derivative
instrument. The swap is a cash flow hedge utilized to convert the base rate
component of the variable interest rate on the Company's term loan to a fixed
rate. In accordance with FAS 133, the swap has been recorded at its fair value
as of the balance sheet date. Subsequent changes in the fair value of the swap
will be recorded in other comprehensive income to the extent the hedge is
effective. The Company formally assesses effectiveness on an ongoing basis. If
it is determined that the interest rate swap has ceased to be highly effective
as a hedge, the Company will discontinue hedge accounting prospectively and
changes in the fair value of the interest rate swap will be reported in current
period earnings.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Net Sales
Lydall, Inc. recorded net sales of $58.3 million in the first quarter of
2001 compared with $69.7 million for the same quarter in 2000, a decrease of
$11.5 million (16.4%). The disposition of two unprofitable German operations at
the end of the third quarter of 2000 reduced net sales by $13.6 million. After
adjusting for the disposition of the German operations, net sales increased for
the first quarter of 2001 over 2000 by $2.1 million, primarily due to increased
sales volume of the Company's thermal/acoustical and filtration/separation
products.
Gross Margin
Gross margin for the first quarter of 2001 was 28.5 percent compared to 25.2
percent for the same quarter of 2000. The disposition of the two German
operations accounted for a majority of the gross margin improvement as these
operations generated gross margins significantly below the Company's average.
In addition, increased sales volume for Lydall's automotive thermal/acoustical
products improved gross margins for the quarter ended March 31, 2001 when
compared to the same period in the prior year.
Selling, Product Development and Administrative Expenses
For the quarter ended March 31, 2001, selling, product development and
administrative expenses were $13.5 million compared to $13.1 million for the
same period in 2000. The increase in selling, product development and
administrative expenses is the result of increased selling expenses primarily
associated with the introduction of the Bio-PakTM product line, the restaffing
of the corporate finance department, increased payroll taxes associated with
incentive compensation paid in the first quarter of 2001 and unfavorable self-
insured claims experience. These increases were partially offset by the
reduction in selling, product development and administrative expenses due to
the divestiture of two German operations.
Impairment Charge
During the quarter ended March 31, 2001, the Company recorded an impairment
charge before tax of $.8 million, or $.03 per share after tax, related to
assets held for sale owned by its Composite Materials Covington Operation. On
April 2, 2001, the Company sold certain assets of this operation for
approximately $1.8 million and announced that the operation would be closing.
Closing costs and severance benefits will be recorded as a charge in the second
quarter of 2001 and are expected to be between $.05 and $.06 per share.
Other (Income) Expense
Other expense for the quarter ended March 31, 2001 was $.5 million and
consisted primarily of interest expense of $.3 million and foreign currency
transaction losses of approximately $.2 million.
Other income for the quarter ended March 31, 2000 was $5.8 million and
consisted primarily of a gain from the sale of the Hoosick Falls Operation of
$6.1 million and a gain of $.3 million from the receipt of common stock due to
the demutualization of one of the Company's insurance carriers. These gains
were partially offset by interest expense of $.5 million.
Income Taxes
The effective tax rate on income from continuing operations for the three
months ended March 31, 2001 was 33.0 percent compared to 37.0 percent for the
same period in 2000. The decrease is primarily due to the gain on the sale of
the Hoosick Falls Operation recorded in the first quarter of 2000 that resulted
in an unusually high state effective tax rate when compared to the Company's
historic effective rate.
8
<PAGE>
SEGMENT RESULTS
Thermal/Acoustical
Thermal/Acoustical net sales decreased $12.1 million (27.4 %) for the first
quarter of 2001 compared to the same period in 2000. Net sales for the first
quarter of 2000 include $13.6 million of sales from the two German operations
that were divested at the end of the third quarter of 2000. After adjusting
prior year net sales for the divested operations, segment net sales increased
approximately $1.5 million primarily due to the increased sales volume of the
Company's automotive thermal/acoustical products.
Thermal/Acoustical operating income for the first quarter of 2001 increased
$.3 million (7.8%) over the same period in 2000 primarily due to increased
sales volume. Operating margin increased from 9.7 percent in 2000 to 14.4
percent in 2001 primarily due to the disposition of the two unprofitable German
operations and increased sales volumes.
Filtration/Separation
Filtration/Separation net sales increased $1.3 million (8.3%) for the first
quarter ended March 31, 2001 compared to the same period of 2000. Sales of the
Company's bioprocessing products increased as a number of new qualifications
for the Company's Bio-Pak(TM) customized sterile containers were obtained
during the quarter. In addition, demand for the Company's high-efficiency air
filtration media was particularly strong in Europe, and U.S. demand remained
strong for the first quarter ended March 31, 2001.
Filtration/Separation operating income decreased $.6 million (26.3%) for the
first quarter ended March 31, 2001 compared to the same period in 2000. Lower
operating income was primarily due to increased raw material costs for air
filtration media and increased spending associated with the introduction of the
Bio-Pak(TM) product line.
Other Products and Services
Other Products and Services net sales decreased $1.0 million (9.3%) for the
first quarter of 2001 compared to the same period in 2000. The absence of
approximately $.5 million of gasket sales, a business that was sold in the
first quarter of 2000, accounted for a portion of the net decrease. Lower
demand for the Company's specialty substrates was partially offset by growth of
Lydall Transport, Ltd. The Covington Operation, sold on April 2, 2001,
generated net sales of $1.6 million and was essentially breakeven for the first
quarter of 2001.
Other Products and Services operating income decreased $.2 million (23.0%)
for the first quarter ended March 31, 2001 compared to the same period in 2000.
The decrease was primarily due to lower sales volume.
OUTLOOK
The Company completed its strategic restructuring plan during the first
quarter with the sale of non-core businesses and the closing of unprofitable
operations. As a result, Lydall has narrowed its strategic focus to its two
core businesses--filtration/separation and thermal/acoustical. Lydall will also
continue to operate and grow its Lydall Transport, Ltd. subsidiary, a provider
of total logistics services and an important service provider to the Company's
other businesses.
Lydall's thermal/acoustical and filtration/separation businesses remain
healthy and are expected to strengthen during the second quarter. The Company
started several new development efforts for filtration/separation products in
the first quarter of 2001, and the automotive portion of the thermal/acoustical
9
<PAGE>
business continues to benefit from new-product introductions. Also in April,
the Company entered into a strategic alliance with BGF Industries, Inc. By
virtue of the agreement, Lydall is the exclusive representative of BGF products
for thermal applications in the appliance market. The agreement enhances
Lydall's position as a thermal solutions provider to the consumer appliance
market and significantly broadens the Company's product offering in this area.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, cash and cash equivalents were $4.2 million compared to
$2.2 million at December 31, 2000. Working capital at March 31, 2001 was $46.8
million compared with $54.6 million at December 31, 2000. The reduction in
working capital is mainly due to the sale of the Southern Products Division of
the Paperboard Segment during the first quarter of 2001.
Capital expenditures were $2.1 million for the first quarter of 2001
compared with $4.2 million for the same period in 2000 as the Company completed
several major capital projects in 2000.
As of March 31, 2001, the Company had unused borrowing capacity of
approximately $49.7 million under various credit facilities. Management
believes that the Company's cash and cash equivalents, operating cash flow, and
unused borrowing capacity at March 31, 2001 are sufficient to meet current and
anticipated requirements for the foreseeable future.
ACCOUNTING STANDARDS
On January 1, 2001 the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by Statement of Financial Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133, an amendment of FASB Statement No.
133" and Statement of Financial Accounting Standards No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment of
FASB Statement No. 133" (collectively referred to hereafter as "FAS 133"). In
accordance with the transition provisions of FAS 133, the Company recorded a
$.2 million net-of-tax cumulative-effect adjustment in other comprehensive
income as of January 1, 2001 representing the fair value of an interest rate
swap previously designated a cash flow hedge.
FORWARD-LOOKING INFORMATION
In the interest of more meaningful disclosure, Lydall and its management
make statements regarding the future outlook of the Company which constitute
"forward-looking statements" under the securities laws. These forward looking
statements are intended to provide management's current expectations for the
future operating and financial performance of the company, based on assumptions
currently believed to be valid. Forward-looking statements are included under
the "Outlook" section of this Item and elsewhere within this report and are
generally identified through the use of language such as "believe," "expect,"
"estimate," "anticipate" and other words of similar meaning in connection with
discussion of future operating or financial performance.
All forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from those expressed or implied in
the forward-looking statements. Some of the factors that might cause such a
difference include risks and uncertainties which are detailed in Note 14 and in
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of the Company's 2000 Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in market risks from those disclosed
in Item 7A. of Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000.
10
<PAGE>
Part II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
3.1--Certificate of Incorporation of the Registrant (filed as Exhibit 3.1
to the Registrant's Annual Report on Form 10-K dated March 21, 2001, and
incorporated herein by this reference).
3.2--By-laws of the Registrant (filed as Exhibit 3(ii) to the
Registrant's Quarterly Report on Form 10-Q dated November 12, 1999, and
incorporated herein by this reference).
10.1--Asset Purchase and Sale Agreement between Lydall
Filtration/Separation, Inc. and Bennett Fleet (Chambly), Inc., dated
April 2, 2001, filed herewith.
10.2--Agreement and General Release with Raymond J. Lanzi dated March 28,
2001, filed herewith.
b. Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three months
ended March 31, 2001.
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)
/s/ Thomas P. Smith
May 11, 2001 By___________________________________
Thomas P. Smith
Vice President--Controller
(On behalf of the Registrant and
as Principal Accounting Officer)
12
<PAGE>
LYDALL, INC.
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
No.
-------
<C> <S>
3.1 Certificate of Incorporation of the Registrant (filed as Exhibit 3.1
to the Registrant's Annual Report on Form 10-K dated March 21, 2001,
and incorporated herein by this reference).
3.2 By-laws of the Registrant (filed as Exhibit 3(ii) to the Registrant's
Quarterly Report on Form 10-Q dated November 12, 1999, and
incorporated herein by this reference).
10.1 Asset Purchase and Sale Agreement between Lydall
Filtration/Separation, Inc. and Bennett Fleet (Chambly), Inc., dated
April 2, 2001.
10.2 Agreement and General Release with Raymond J. Lanzi dated March 28,
2001.
</TABLE>
13
</TEXT>
</DOCUMENT>