-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VzL2jo9DGKhwQ51qxO1wAja8u3lBtdaneo5+Hqb05XUEgrIpxlMIAzjo7AQBON12 HPq/74n9HMX2dxPKVd+RHA== 0000950109-95-003120.txt : 19950814 0000950109-95-003120.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950109-95-003120 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYDALL INC /DE/ CENTRAL INDEX KEY: 0000060977 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 060865505 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07665 FILM NUMBER: 95561900 BUSINESS ADDRESS: STREET 1: ONE COLONIAL RD STREET 2: P O BOX 151 CITY: MANCHESTER STATE: CT ZIP: 06045-0151 BUSINESS PHONE: 2036461233 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL BOARD CO DATE OF NAME CHANGE: 19700115 10-Q 1 QUARTERLY REPORT - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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, 1995 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, 06045-0151 MANCHESTER, CONNECTICUT (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (203) 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 August 8, 1995 17,255,356
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- LYDALL, INC. INDEX
PAGE NO. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets............................. 2 Consolidated Condensed Statements of Income....................... 3-4 Consolidated Condensed Statements of Cash Flows................... 5 Notes to Consolidated Condensed Financial Statements.............. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 6-8 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders......... 8 Item 6. Exhibits and Reports on Form 8-K............................ 8 Signature............................................................. 9
1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LYDALL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS)
JUNE 30, DECEMBER 31, 1995 1994 -------- ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents.............................. $ 16,554 $ 11,684 Short-term investments................................. 3,117 2,904 Accounts receivable, net............................... 35,220 31,825 Inventories: Finished goods....................................... 7,426 5,423 Work in process...................................... 3,478 2,941 Raw materials and supplies........................... 8,584 6,822 LIFO reserve......................................... (2,103) (1,659) -------- -------- Total inventories...................................... 17,385 13,527 Prepaid expenses....................................... 845 662 Deferred tax asset..................................... 3,496 3,485 -------- -------- Total current assets................................. 76,617 64,087 -------- -------- Property, plant and equipment, at cost................... 100,253 94,431 Less accumulated depreciation............................ (43,069) (39,660) -------- -------- 57,184 54,771 Other assets, at cost, less amortization................. 16,572 17,755 -------- -------- $150,373 $136,613 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt...................... $ 2,865 $ 2,843 Accounts payable....................................... 17,345 17,032 Accrued payroll and other compensation................. 5,215 5,420 Accrued taxes.......................................... 978 2,196 Other accrued liabilities.............................. 8,422 5,773 -------- -------- Total current liabilities............................ 34,825 33,264 Long-term debt........................................... 7,839 10,607 Deferred tax liabilities................................. 12,442 11,752 Pensions and other long-term liabilities................. 4,954 4,763 Stockholders' equity: Preferred stock........................................ -- -- Common stock........................................... 2,083 1,013 Capital in excess of par value......................... 32,070 31,419 Retained earnings...................................... 67,201 56,023 Pension liability adjustment........................... (504) (547) Foreign currency translation adjustment................ 2,282 1,138 -------- -------- 103,132 89,046 Less: treasury stock, at cost.......................... (12,819) (12,819) -------- -------- Total stockholders' equity........................... 90,313 76,227 -------- -------- $150,373 $136,613 ======== ========
See accompanying Notes to Consolidated Condensed Financial Statements. 2 LYDALL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER-SHARE DATA)
THREE MONTHS ENDED JUNE 30, -------------------- 1995 1994 --------- --------- (UNAUDITED) Net sales................................................ $ 65,552 $ 53,556 Cost of sales............................................ 45,528 37,509 --------- --------- Gross margin............................................. 20,024 16,047 Selling, product development and administrative expenses. 10,456 8,864 --------- --------- Operating income......................................... 9,568 7,183 Other (income) expense Investment income...................................... (198) (71) Interest expense....................................... 191 255 Other, net............................................. (54) 541 --------- --------- (61) 725 --------- --------- Income before income taxes............................... 9,629 6,458 Income tax expense....................................... 3,757 2,700 --------- --------- Net income............................................... $ 5,872 $ 3,758 ========= ========= Net income per common and common equivalent share*....... $ .32 $ .21 ========= ========= Weighted average common stock and equivalents outstand- ing*.................................................... 18,293 17,898 ========= =========
- -------- * 1994 restated to reflect a two-for-one stock split distributed June 21, 1995. See accompanying Notes to Consolidated Condensed Financial Statements. 3 LYDALL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER-SHARE DATA)
SIX MONTHS ENDED JUNE 30, ------------------ 1995 1994 -------- -------- (UNAUDITED) Net sales.................................................... $128,288 $101,672 Cost of sales................................................ 89,038 70,480 -------- -------- Gross margin................................................. 39,250 31,192 Selling, product development and administrative expenses..... 20,719 17,449 -------- -------- Operating income............................................. 18,531 13,743 Other (income) expense Investment (income), expense............................... (430) 32 Interest expense........................................... 455 515 Other, net................................................. 170 712 -------- -------- 195 1,259 -------- -------- Income before income taxes................................... 18,336 12,484 Income tax expense........................................... 7,158 5,198 -------- -------- Net income................................................... $ 11,178 $ 7,286 ======== ======== Net income per common and common equivalent share*........... $ .61 $ .41 ======== ======== Weighted average common stock and equivalents outstanding*... 18,218 17,841 ======== ========
- -------- * 1994 restated to reflect a two-for-one stock split distributed June 21, 1995. See accompanying Notes to Consolidated Condensed Financial Statements. 4 LYDALL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, ----------------- 1995 1994 ------- -------- (UNAUDITED) Cash flows from operating activities: Net income................................................ $11,178 $ 7,286 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation............................................ 3,687 3,087 Amortization............................................ 763 650 Changes in operating assets and liabilities, excluding effects from acquisitions: Accounts receivable................................... (2,992) (3,484) Inventories........................................... (3,593) (468) Other assets.......................................... 282 55 Accounts payable...................................... 43 2,975 Accrued taxes......................................... (1,285) (64) Accrued payroll and other compensation................ (232) (187) Deferred income taxes................................. 384 407 Other long-term liabilities........................... 65 (215) Other accrued liabilities............................. 2,614 2,247 ------- -------- Total adjustments....................................... (264) 5,003 ------- -------- Net cash provided by operating activities................... 10,914 12,289 ------- -------- Cash flows from investing activities: Purchase of assets of Columbus and Jacksonville Opera- tions.................................................... -- (16,836) Additions of property, plant & equipment.................. (5,228) (1,708) Purchase of short-term investments, net................... (208) (1,852) Disposals of property, plant & equipment, net............. 380 100 ------- -------- Net cash used for investing activities...................... (5,056) (20,296) ------- -------- Cash flows from financing activities: Long-term debt repayments................................. (2,777) (2,260) Issuance of common stock.................................. 1,721 268 ------- -------- Net cash used for financing activities...................... (1,056) (1,992) ------- -------- Effect of exchange rate changes on cash..................... 68 78 ------- -------- Increase (decrease) in cash and cash equivalents............ 4,870 (9,921) Cash and cash equivalents at beginning of period............ 11,684 13,820 ------- -------- Cash and cash equivalents at end of period.................. $16,554 $ 3,899 ======= ======== Supplemental Schedule of Cash Flow Information: Cash paid during the period for: Interest.................................................. $ 550 $ 489 Income taxes.............................................. 8,007 5,365 Non-cash transactions: Note issued to purchase assets of Columbus operation...... -- 2,250 Reclassification of short-term investments to long-term, net...................................................... -- 1,988 Effect on Additional Paid in Capital and Common Stock for stock split effected in the form of a stock dividend..... 1,041 --
See accompanying Notes to Consolidated Condensed Financial Statements. 5 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 Committees 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 the financial statements and credit reports on several of these prp's, and based on these financial reports, does not believe the Company 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 recently 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. In June of 1995, the Company and its former subsidiary were sued in the Northern District of Indiana by another prp seeking contribution. Based on the alleged contribution of its former subsidiary to the site, the Company's alleged total exposure of less than $100 thousand has been accrued. 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. 4. On May 10, 1995, the Board of Directors of Lydall declared a two-for-one stock split effected in the form of a stock dividend. The record date for the stock split was May 24, 1995. The distribution of common shares was made on June 21, 1995. To record the effect of the stock split $1.0 million was reclassified from Capital in Excess of Par Value to Common Stock. Share and per share amounts prior to the 1995 stock split have been restated to reflect the two-for-one stock split. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS: For the second quarter ended June 30, 1995, sales were $65.6 million compared with $53.6 million for the same quarter last year, a 22 percent increase. Net income was $5.9 million, or $.32 a share compared with $3.8 6 million, or $.21 a share--a 56 percent increase in net income with a 52 percent increase in earnings per share. After-tax return on sales for the quarter was a record 9 percent compared with 7 percent for the same period last year. Sales for the six months ended June 30, 1995 were $128.3 million compared with $101.7 million for the same period in 1994--up 26 percent. Net income was $11.2 million, or $.61 per share, for the six months ended June 30, 1995 compared with net income of $7.3 million, or $.41 per share, for the same period in 1994--a 53 percent increase in net income, while earnings per share increased by 49 percent. Return on sales, after tax, for the six months ended June 30, 1995 was 8.7 percent compared with 7.2 percent for the corresponding period ended June 30, 1994. Sales and net income for all of 1995 included results from both the Jacksonville, Florida and Columbus, Ohio Operations which were acquired during 1994. Results for 1994 included only four months of results from the Columbus Operation and no results from the Jacksonville Operation, which was acquired at the end of June. Gross margins remained relatively constant, between 30 and 31 percent, for the three months and six months ended June 30, 1995 and 1994. Lydall continued to do well in all of its markets. International sales growth, including foreign and exports, continued to outpace overall sales growth and was up 37 percent in the second quarter compared with the same quarter last year. The materials-handling business remained strong, both domestically and overseas. Sales of high-efficiency air filtration media have also been strong around the world. Lydall's facility in France increased its production of air filtration media during the period both for consumption in Europe and for export to the United States. Global capacity is particularly significant to Lydall in this important market. Thermal barrier products sold to the automotive market continued to perform well. Lydall has not experienced any slowdown in automotive sales which are driven by increasing heat management applications. Also, a significant portion of the heat-shield business is in sport-utility vehicles, vans, and light-duty trucks, sales of which are growing steadily. In addition, Lydall's battery insulating program is on target, and this product is now approved for virtually every Ford vehicle, including 1996 and 1997 models. In other thermal areas, growth in industrial applications, particularly sales of commercial building materials and architectural components was strong. Demand for cryogenic insulating products also continued at a strong pace. Selling, new product development and administrative expenses increased 18.7% in the first six months of the year versus the same period in 1994. As a percentage of sales however, these expenses decreased to 16.2% in 1995 from 17.2% in 1994. The Company anticipates that these expenses will remain at the 16 to 17 percent level through the end of the year. During the second quarter, Lydall received certain tangible and intangible assets as a result of a mediated settlement between the Company and Baxter Healthcare. Included in Other Income, the amount of the settlement and details are confidential under the terms of the agreement. Although this ends the relationship with Baxter, development of Lydall's leukocyte depletion media continues. Hemasure, Inc. announced that its LeukoNet Pre-Storage Leukoreduction Filtration System, which incorporates Lydall's media, has been cleared for marketing by the U.S. Food and Drug Administration. The Company does not expect the Hemasure announcement to have a material impact on 1995 results. The Company's effective tax rate decreased due to several factors including stronger export sales resulting in a favorable Foreign Sales Corporation benefit and the settlement of Internal Revenue Service audits. The Internal Revenue Service is currently examining Lydall's federal income tax returns for 1990 through 1992. Management believes that the ultimate resolution of the examinations will not have a material effect upon the consolidated earnings and financial position of the Company. Tax assessments, if any, as a result of the examination are expected to be funded by cash balances or cash generated from operations. 7 LIQUIDITY AND CAPITAL RESOURCES: On June 30, 1995, Lydall closed with $19.7 million in cash, cash equivalents and short-term investments compared with $14.6 million at December 31, 1994. During the first six months of 1995, the Company repaid $3.3 million of long term debt and accrued interest. This payment, along with normal payments for taxes and capital expenditures, was made with cash generated from operations and cash on hand. Increased levels of accounts receivable and inventories are directly attributable to higher sales levels. Operating cash flow (earnings before taxes, interest expense and investment income or expense plus depreciation and amortization) was $11.9 million in the quarter bringing operating cash flow year-to-date to $22.8 million. This compares to $8.6 million for the quarter and $16.8 million year to date in 1994. The current ratio increased to 2.20 from 1.93; total debt to total capitalization was .11 versus .15; and debt to equity was .12 versus .18 when comparing June 30, 1995 with December 31, 1994, respectively. The Company expects to continue to finance its day to day operating needs from accumulated cash plus cash from operations. Lydall continues to actively seek strategic acquisitions and to reinvest in the Company with the primary focus on the ongoing comprehensive quality program. 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 10, 1995. In addition to the election of directors, stockholders approved an Amendment to the Certificate of Incorporation to increase the number of authorized common stock shares. The proposals were approved by the stockholders as follows:
WITHHOLD BROKER FOR AGAINST ABSTAIN AUTHORITY NONVOTES --------- ------- ------- --------- -------- 1. Approval of amendment to the Certificate of Incorporation.. 6,111,086 445,426 36,241 -- -- 2. Election of Nominees to the Board of Directors Lee A. Asseo.................. 6,574,474 -- -- 18,279 -- Paul S. Buddenhagen........... 6,574,474 -- -- 18,279 -- Carole F. Butenas............. 6,574,474 -- -- 18,279 -- Samuel P. Cooley.............. 6,574,474 -- -- 18,279 -- W. Leslie Duffy............... 6,567,447 -- -- 25,306 -- Leonard R. Jaskol............. 6,574,474 -- -- 18,279 -- William P. Lyons.............. 6,568,482 -- -- 24,271 -- William J. Rankin............. 6,574,474 -- -- 18,279 -- Joel Schiavone................ 6,567,155 -- -- 25,598 -- Roger M. Widmann.............. 6,574,474 -- -- 18,279 -- Albert E. Wolf................ 6,568,482 -- -- 24,271 --
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 quarter ended June 30, 1995. 8 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/ John E. Hanley By __________________________________ JOHN E. HANLEY Vice President-Finance and Treasurer (Principal Financial and Accounting Officer) August 8, 1995 9 LYDALL, INC. Index to Exhibits Exhibit No. Page - ------- ---- 11.1 Schedule of Computation of Weighted Average Shares Outstanding EX-11.1 2 SCHEDULE OF COMPUTATIONS LYDALL, INC. Exhibit 11.1 Schedule of Computation of Weighted Average Shares Outstanding
Three Months Six Months Ended Ended June 30, June 30, -------------- --------------- 1995 1994 1995 1994 ------ ------ ------ -------- (Unaudited) (Unaudited) Primary - -------- Weighted average number of common shares 17,253 16,638 17,246 16,594 Additional shares assuming conversion of stock options and warrants 1,040 1,260 972 1,247 ------ ------ ------ ----- Weighted average common shares and equivalents outstanding 18,293 17,898 18,218 17,841 ====== ====== ====== ====== Fully Diluted ------------- Weighted average number of common shares 17,253 16,638 17,246 16,594 Additional shares assuming conversion of stock options and warrants 1,104 1,260 1,007 1,271 ------ ------ ------ ------ Weighted average common shares and equivalents outstanding 18,357 17,898 18,253 17,865 ====== ====== ====== ======
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS DEC-31-1995 APR-01-1995 JUN-30-1995 1 16,554 3,117 36,090 1,801 17,385 76,617 100,253 43,069 150,373 34,825 10,704 2,083 0 0 88,230 150,373 128,288 128,288 89,038 89,038 170 150 455 18,336 7,158 11,178 0 0 0 11,178 .61 .61
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