-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gjc+yYnnIE3Vlu0h+COI2SHQNbGeI3rjF3FU8gmoUaWqpaHlCEZLDbWVbtEfkzoX M60cO35sx1KvR/0g8KWrAQ== 0000950109-95-004620.txt : 19951119 0000950109-95-004620.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950109-95-004620 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590078 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 SEPTEMBER 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 (I.R.S. EMPLOYER (STATE OR OTHER JURISDICTION OF IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 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 November 8, 1995 17,289,988
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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..................................... 7-8 Part II. Other Information 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)
SEPTEMBER 30, DECEMBER 31, 1995 1994 ------------- ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents.......................... $ 22,417 $ 11,684 Short-term investments............................. 2,993 2,904 Accounts receivable, net........................... 35,769 31,825 Inventories: Finished goods................................... 6,450 5,423 Work in process.................................. 3,724 2,941 Raw materials and supplies....................... 7,910 6,822 LIFO reserve..................................... (2,420) (1,659) -------- -------- Total inventories.................................. 15,664 13,527 Prepaid expenses................................... 769 662 Deferred tax asset................................. 3,503 3,485 -------- -------- Total current assets............................. 81,115 64,087 -------- -------- Property, plant and equipment, at cost............... 103,293 94,431 Less accumulated depreciation........................ (44,763) (39,660) -------- -------- 58,530 54,771 Other assets, at cost, less amortization............. 15,733 17,755 -------- -------- $155,378 $136,613 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt.................. $ 2,866 $ 2,843 Accounts payable................................... 17,457 17,032 Accrued payroll and other compensation............. 5,341 5,420 Accrued taxes...................................... 1,538 2,196 Other accrued liabilities.......................... 6,934 5,773 -------- -------- Total current liabilities........................ 34,136 33,264 Long-term debt....................................... 7,794 10,607 Deferred tax liabilities............................. 12,931 11,752 Pensions and other long-term liabilities............. 4,873 4,763 Stockholders' equity: Preferred stock.................................... -- -- Common stock....................................... 2,084 1,013 Capital in excess of par value..................... 32,156 31,419 Retained earnings.................................. 72,648 56,023 Pension liability adjustment....................... (485) (547) Foreign currency translation adjustment............ 2,060 1,138 -------- -------- 108,463 89,046 Less: treasury stock, at cost...................... (12,819) (12,819) -------- -------- Total stockholders' equity....................... 95,644 76,227 -------- -------- $155,378 $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 SEPTEMBER 30, -------------------- 1995 1994 --------- --------- (UNAUDITED) Net sales................................................ $ 61,487 $ 54,446 Cost of sales............................................ 42,572 38,058 --------- --------- Gross margin............................................. 18,915 16,388 Selling, product development and administrative expenses. 9,643 9,329 --------- --------- Operating income......................................... 9,272 7,059 Other (income) expense Investment income...................................... (288) (95) Interest expense....................................... 200 240 Other, net............................................. 123 309 --------- --------- 35 454 --------- --------- Income before income taxes............................... 9,237 6,605 Income tax expense....................................... 3,790 2,727 --------- --------- Net income............................................... $ 5,447 $ 3,878 ========= ========= Net income per common and common equivalent share*....... $ .30 $ .21 ========= ========= Weighted average common stock and equivalents outstanding*............................................ 18,418 18,057 ========= =========
- -------- * 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)
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 1995 1994 -------- -------- (UNAUDITED) Net sales................. $189,775 $156,118 Cost of sales............. 131,610 108,538 -------- -------- Gross margin.............. 58,165 47,580 Selling, product development and administrative expenses.. 30,362 26,778 -------- -------- Operating income.......... 27,803 20,802 Other (income) expense Investment income....... (718) (63) Interest expense........ 655 755 Other, net.............. 293 1,021 -------- -------- 230 1,713 -------- -------- Income before income taxes.................... 27,573 19,089 Income tax expense........ 10,948 7,925 -------- -------- Net income................ $ 16,625 $ 11,164 ======== ======== Net income per common and common equivalent share*. $ .91 $ .62 ======== ======== Weighted average common stock and equivalents outstanding*............. 18,285 17,913 ======== ========
- -------- * 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)
NINE MONTHS ENDED SEPTEMBER 30, ------------------ 1995 1994 -------- -------- (UNAUDITED) Cash flows from operating activities: Net income................................................ $ 16,625 $ 11,164 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation............................................. 5,602 4,752 Amortization............................................. 1,134 1,033 Changes in operating assets and liabilities, excluding effects from acquisition: Accounts receivable..................................... (3,585) (6,420) Inventories............................................. (1,922) (1,512) Other assets............................................ 378 404 Accounts payable........................................ 191 5,009 Accrued taxes........................................... (715) 130 Accrued payroll and other compensation.................. (102) 774 Deferred income taxes................................... 906 613 Other long-term liabilities............................. 9 (127) Other accrued liabilities............................... 1,136 3,280 -------- -------- Total adjustments......................................... 3,032 7,936 -------- -------- Net cash provided by operating activities.................. 19,657 19,100 Cash flows from investing activities: Purchase of assets of Columbus and Jacksonville Operations............................................... -- (16,843) Additions of property, plant & equipment.................. (8,726) (5,072) Disposals of property, plant & equipment, net............. 406 561 (Purchase) Sale of short-term investments, net............ 382 (2,162) -------- -------- Net cash used for investing activities..................... (7,938) (23,516) -------- -------- Cash flows from financing activities: Long-term debt repayments................................. (2,816) (2,691) Issuance of common stock.................................. 1,808 341 -------- -------- Net cash used for financing activities..................... (1,008) (2,350) -------- -------- Effect of exchange rate changes on cash.................... 22 135 -------- -------- (Decrease) Increase in cash and cash equivalents........... 10,733 (6,631) Cash and cash equivalents at beginning of period........... 11,684 13,820 -------- -------- Cash and cash equivalents at end of period................. $ 22,417 $ 7,189 ======== ======== Supplemental schedule of cash flow information: Cash paid during the period for: Interest................................................. $ 556 $ 536 Income taxes............................................. 10,977 7,437 Non-cash transactions: Note issued to purchase assets of Columbus operation..... -- 2,250 Reclassification between short-term and long-term investments, net........................................ 447 1,966 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. Certain prior year information has been reclassified to conform with the current year presentation format with no impact on net income or working capital. 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 of the total waste volume at the site. 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 City 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 the insurer of the current operator of the former subsidiary's plant, 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. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the third quarter ended September 30, 1995, sales were $61.5 million compared with $54.4 million for the same quarter last year, a 13 percent increase. Net income was $5.4 million compared with $3.9 million--up 40 percent. On a per-share basis, the Company earned $.30 in the third quarter of 1995 compared with $.21 in the same period last year--a 43 percent increase. Gross margin in the quarter was $18.9 million, or 30.8 percent of sales, and after-tax return on sales was 8.9 percent. For the 1994 period, gross margin was $16.4 million, or 30.1 percent of sales, and after-tax return on sales was 7.1 percent. Sales for the nine months ended September 30, 1995, were $189.8 million compared with $156.1 million-- up 22 percent. Net income was $16.6 million, or $.91 per share, compared with $11.2 million, or $.62 per share--a 47 percent increase in earnings per share. Gross margin was $58.2 million, or 30.6 percent of sales, for the nine months ended September 30, 1995, and the after- tax return on sales was 8.8 percent. For the 1994 nine-month period, gross margin was $47.6 million, or 30.5 percent of sales, and the after-tax return on sales was 7.2 percent. 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 seven months of results from the Columbus Operation and three months from the Jacksonville Operation. Selling, new product development and administrative expenses increased 13.4% in the first nine months of the year versus the same period in 1994. As a percentage of sales however, these expenses decreased to 16.0% in 1995 from 17.2% in 1994. The Company anticipates that these expenses will remain at approximately 16 percent through the end of the year. Despite a slight slowing of economic growth, demand was steady in most of our markets. International sales, up by 29 percent year-to-date, continued to outpace the growth of domestic sales during the quarter. We saw solid growth in our materials-handling slipsheet and thermal barrier businesses. In the thermal area, sales for automotive and cryogenic applications were particularly strong. Sales of high-efficiency air filtration media continued to be robust both domestically and abroad fueled by the intensity of the semiconductor market. Capital spending in the industry is the highest it has ever been and is forecast to stay at these levels through 1997. This, together with the increasing use of clean rooms in more and more industrial applications, bode well for future growth of Lydall's air filtration product line. During the second quarter, Lydall received certain tangible and intangible assets as a result of a mediated settlement between the Company and Baxter Healthcare. The amount of the settlement and details are confidential under the terms of the agreement and are recorded in other income. 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. During the third quarter 1995, the French government enacted a tax increase which had the effect of increasing our Axohm Division's tax rate from 33.3 percent to 36.6 percent, effective January 1, 1995. Domestic U.S. rates were reduced during the year 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 effect of these events resulted in an estimated ongoing effective rate of approximately 39.0 percent for the Company. LIQUIDITY AND CAPITAL RESOURCES: On September 30, 1995, Lydall closed with $25.4 million in cash, cash equivalents and short-term investments compared with $14.6 million at December 31, 1994. During the first nine months of 1995, the Company repaid $3.4 million of long term debt and accrued interest. This payment, along with normal payments 7 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 $11.4 million in the quarter bringing operating cash flow year-to-date to $34.2 million. This compares to $8.8 million for the quarter and $25.6 million year to date in 1994. The current ratio increased to 2.38 from 1.93; total debt to total capitalization was .10 versus .15; and debt to equity was .11 versus .18 when comparing September 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 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 4.1 --Amendment of Incorporation of Lydall, Inc. dated August 14, 1995, (filed as Exhibit 3.1 to the registrants Annual Report on Form 10K dated March 28, 1994, and incorporated herein by this reference). 4.2 --Bylaws of Lydall Inc. (filed as Exhibit 3.2 to the registrant's Registration Statement on Form 8-B dated October 16, 1987 and incorporated herein by this reference). 11.1 --Schedule of Computation of Weighted Average Shares Outstanding 27.1 --Financial Data Schedule
(b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended September 30, 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 Accounting and Financial Officer) November 9, 1995 9 LYDALL, INC. Index to Exhibits Exhibit No. Page No. - ----------- -------- 4.1 Amendment of Incorporation of Lydall, Inc. 14 11.1 Schedule of Computation of Weighted Average Shares Outstanding 16 13 EX-4.1 2 CERTIFICATE OF AMENDMENT State of Delaware Office of the Secretary of State ------------------------------ I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "LYDALL, INC.", FILED IN THIS OFFICE ON THE FOURTEENTH DAY OF AUGUST, A.D. 1995, AT 4:30 O'CLOCK P.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING. [SEAL APPEARS HERE] /s/ Edward J. Freel ------------------------------------ Edward J. Freel, Secretary of State 2136103 8100 AUTHENTICATION: 7608300 950184123 DATE: 08-15-95 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF LYDALL, INC. Lydall, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify that: The amendment to the Corporation's Restated Certificate of Incorporation set forth in the following resolution approved by the Corporation's Board of Directors and stockholders was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: RESOLVED: That Article 4 of the Restated Certificate of Incorporation of this Corporation be amended to read as follows, in its entirety: Article 4. The designation of each class of stock, the authorized number of shares of each such class, and the par value of each share thereof, are as follows: --------------------------------------------------------------------------- Authorized Number Designation of Shares Par Value ----------- ----------------- --------- Common Stock 30,000,000 $ .10 Preferred Stock 500,000 $ 1.00 -------------------------------------------------------------------------- IN WITNESS WHEREOF, Lydall, Inc. has caused this Certificate to be signed and attested by its duly authorized officers this 14th day of August, 1995. ATTEST: LYDALL, INC. /s/ Mary Adamowicz By /s/ Carole F. Butenas - ------------------------------- ------------------------------- Mary Adamowicz Carole F. Butenas Secretary Vice President EX-11.1 3 COMPUTATION OF WEIGHTED AVERAGE SHARES LYDALL, INC. Exhibit 11.1 Schedule of Computation of Weighted Average Shares Outstanding
Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 1995 1994 1995 1994 ---- ---- ---- ---- (Unaudited) (Unaudited) Primary - ------- Weighted average number of common shares 17,259 16,665 17,251 16,617 Additional shares assuming conversion of stock options and warrants 1,159 1,392 1,034 1,296 ------ ------ ------ ------ Weighted average common shares and equivalents outstanding 18,418 18,057 18,285 17,913 ====== ====== ====== ====== Fully Diluted - ------------- Weighted average number of common shares 17,259 16,665 17,251 16,617 Additional shares assuming conversion of stock options and warrants 1,170 1,424 1,061 1,323 ------ ------ ------ ------ Weighted average common shares and equivalents outstanding 18,429 18,089 18,312 17,940 ====== ====== ====== ======
16 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1995 JUL-01-1995 SEP-30-1995 22,417 2,993 36,834 1,847 15,664 81,115 103,293 44,763 155,378 34,136 10,660 2,084 0 0 93,559 155,378 189,775 189,775 131,610 131,610 230 224 655 27,573 10,948 16,625 0 0 0 16,625 .91 .91
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