-----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, LFWh8rZQs2VLiW9MnxzbY0bwabLl+0IhgYoKo8dvGi0wQawWFawGgi+dvXsdCaXx GICWO4Cm2ZGJSVlesDTK2A== 0000950109-96-000849.txt : 19960216 0000950109-96-000849.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950109-96-000849 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960215 ITEM INFORMATION: Other events FILED AS OF DATE: 19960215 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07665 FILM NUMBER: 96520611 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 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 15, 1996 Lydall, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-7665 06-0865505 (Commission File Number) (IRS Employer Identification No.) One Colonial Road P. O. Box 151 Manchester, CT 06045-0151 (Address of principal executive offices) (Zip code) (203) 646-1233 Registrant's telephone number, including area code NOT APPLICABLE (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS On February 15, 1996, Lydall announced its earnings for the fourth quarter and year ended December 31, 1995. A copy of the Company's press release is attached as an exhibit to this report. Lydall also announced that a competitor, ATD Corporation ("ATD"), has filed a patent infringement complaint against the Company in the United States District Court for the Eastern District of Michigan, Southern Division. ATD alleged that the Company has infringed its product and method patents for an all metal insulator willfully, literally and under the Doctrine of Equivalence. ATD is seeking as relief an injunction and damages. The Company strongly believes the litigation is without merit and will defend it vigorously. The litigation became more focused following a January 9, 1996 decision on the parties' cross motions for summary judgment. A copy of the current amended complaint is filed as an exhibit to this Form 8K. Following the hearing, the Court ruled that Lydall's patent does not literally infringe the patent of ATD. The Court so far has not ruled on the issue of willful infringement pending the review of some additional documentation. The Company strongly believes the willful infringement claim is particularly without merit and is hopeful that this issue will be disposed of before trial. The issue of equivalency of the two inventions, or to what degree they are different, is a factual dispute which under law must be given to a jury to decide. Trial is expected to begin later in February, 1996. ATD has claimed highly inflated lost-profit damages of approximately $33 million, a figure which the Company vigorously disputes. ATD's claim for damages is premised on the assumption that, if Lydall had not competed with its own patented all-metal heat shield, ATD would have had 100 percent of the available business for this product, at exceptionally high margins, through at least 1999. Under applicable law, if ATD successfully proves that Lydall committed willful infringement, any damage award could be trebled. However, as noted above, Lydall believes there is no merit to the willfulness claim. Management believes, based upon written opinion of patent counsel, that its products do not infringe ATD's patents and that the Company is likely to prevail. The Company believes it has strong defenses to the action stemming in part from the fact that Lydall has its own patent allowed by the same patent examiner who allowed the ATD patent in question, in obvious belief that the Lydall invention was substantially different from the ATD patent. Moreover, the Company believes that if it had not entered the market with its own patented product, ATD would not have been the only alternative supplier of this type of product and would not have been able to maintain inflated pricing as ATD alleges. Lydall is actively contesting this action and expects to incur significant additional fees in its defense. Management believes the ultimate disposition of any claims and resulting legal fees will not have a material adverse effect upon the consolidated financial position or prospects of the Company. 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 hereunto duly authorized. LYDALL, INC. By: /s/ John E. Hanley ---------------------------- s/s John E. Hanley Vice-President-Finance and Treasurer (Principal Financial and Accounting Officer) Date: February 15, 1996 LYDALL, INC. Index to Exhibits
Exhibit No. Page - ----------- ---- 99.1 Press Release dated February 15, 1996 5 99.2 Amended Complaint for Patent Infringement 9
EX-99.1 2 PRESS RELEASE LYDALL, INC. EXHIBIT 99.1 PRESS RELEASE FOR IMMEDIATE RELEASE LYDALL ANNOUNCES RECORD 1995 FINANCIAL RESULTS -- SALES UP 18%, EPS UP 43% -- MANCHESTER, CONNECTICUT - February 15, 1996 - LYDALL, INC. (NYSE:LDL) today announced record results for the fourth quarter and year ended December 31, 1995. Net income for the year increased 45 percent on an 18 percent increase in sales. The year ended December 31, 1995 marked Lydall's eleventh consecutive year of earnings growth. Lydall reported net income of $22.4 million, or $1.23 per share, in 1995 compared with $15.5 million, or $.86 per share, in 1994 -- a 45 percent increase in net income and a 43 percent gain in per-share income. Sales for the year increased by 18 percent to $252.1 million from $213.1 million in 1994. Gross margin in 1995 was $77.7 million, or 30.8 percent of sales, compared with $64.9 million, or 30.5 percent of sales, in 1994. After-tax return on sales was 8.9 percent compared with 7.3 percent last year. For the fourth quarter ended December 31, 1995, sales were $62.4 million compared with $57.0 million for the same quarter last year, a 9.5 percent increase. Net income was $5.8 million compared with $4.3 million -- up 34 percent. On a per-share basis, the Company earned $.32 in the fourth quarter of 1995 compared with $.24 in the same period last year -- a 33 percent increase. Gross margin in the quarter was $19.5 million, or 31.3 percent of sales, and after-tax return on sales was 9.3 percent. For the 1994 period, gross margin was $17.3 million, or 30.4 percent of sales, and after-tax return on sales was 7.6 percent. All prior-period per-share figures have been adjusted to reflect a two-for- one stock split distributed on June 21, 1995. Commenting on Lydall's results, Leonard R. Jaskol, Chairman and Chief Executive Officer, stated, "We saw some economic softness during the fourth quarter, and yet, demand remained strong for our air filtration media, sold to clean-room filter manufacturers, and for our thermal barriers and heat shields, found predominantly in light- and medium-duty trucks, vans, and four-wheel drive vehicles. Sales performance during the quarter was more in line with our historical fourth-quarter norm. In recent years robust growth from acquisitions and product introductions have outweighed the effects of holiday closings and year-end inventory reductions by our customers. "Areas of softness were primarily in product lines more directly impacted by general economic conditions. We saw a bit of a slowdown in our materials handling business at year-end as compared to the torrid pace in the first half of the year. We also saw some slowing in those businesses outside of our filtration and thermal barrier concentrations. "Sales of high-efficiency air filtration media continued to be robust both domestically and abroad, fueled by the new construction of clean-room facilities for a growing number of applications, many outside the semiconductor segment. For instance, a growing amount of precision manufacturing is being done under clean-room conditions. Other examples include: medical research laboratories, pharmaceutical houses, and industrial plating and painting operations. -MORE- Lydall, Inc. News Release 2 of 4 February 15, 1996 "In addition to continuing growth from market penetration and new products within our automotive thermal barrier line, we experienced increased sales of cryogenic insulation which is used at temperatures approaching absolute zero, as well as increased demand for our flame barrier and duct lining materials used in commercial building applications. "Lydall's financial position continued to strengthen during 1995. We generated operating cash flow of $45.2 million during the year. We had cash, cash equivalents and short-term investments of $28.7 million and working capital of $52.7 million. Our current ratio was 2.77 at the end of 1995, and our total- debt-to-total-capitalization ratio was 9 percent. Year-end inventory was up slightly (4 percent) on an 18 percent increase in sales, and inventory turnover increased to 11.1 times from 10.2 times, marking the fourth consecutive year of improvement. "A pending lawsuit alleging patent infringement has been filed by ATD Corporation, (ATD) , a competitor of Lydall, with respect to our metal heat shields. ATD has a patent on its shield, and Lydall has a patent on its own shield; both patents were allowed by the same patent examiner. The Lydall products manufactured under its patent are only a small portion of our automotive thermal barrier product line. The court has ruled that Lydall's patent does not literally infringe on that of ATD; however, the issue of the equivalency of the two inventions, or to what degree they are different, is a factual dispute that under the law must be given to a jury to decide. So far, the court has not ruled on Lydall's motion to dismiss ATD's claim of willful infringement pending review of additional documentation. The Company adamantly believes this claim is particularly without merit and is hopeful that this issue will be disposed of before trial. Trial is expected to begin later this month. ATD has claimed exaggerated damages of approximately $33 million, a figure which the Company vigorously disputes. The Company believes the suit and ATD's claim for damages are completely without merit and, based upon written opinion of counsel and several experts, expects to prevail in the case. The Company today filed a current report on Form 8-K with the Securities and Exchange Commission further detailing the litigation. "As a whole, we closed 1995 having slightly exceeded sales and earnings projections made early in the year. We made excellent progress within our quality program and invested heavily in capital improvements directly tied to improving efficiency and process control. I'm disappointed, however, that we did not complete any acquisitions during the year despite extensive efforts worldwide. Growth by acquisition is an important element of our strategy and will continue to be a major focus in 1996." Lydall, Inc. is a manufacturer of technologically advanced engineered materials for demanding specialty applications. -MORE Lydall, Inc. News Release 3 of 4 February 15, 1996 SUMMARY OF OPERATIONS In thousands except per-share data
(Unaudited) Fourth Quarter Twelve Months Ended Dec. 31, Ended Dec. 31, 1995 1994 1995 1994 ---------- --------- --------- ---------- Net sales $ 62,353 $ 56,954 $ 252,128 $ 213,072 Cost of sales 42,820 39,650 174,430 148,188 ---------- --------- --------- ---------- Gross margin 19,533 17,304 77,698 64,884 Selling, new product development and administrative expenses 10,306 9,433 40,668 36,211 ---------- --------- --------- ---------- Operating income 9,227 7,871 37,030 28,673 ---------- --------- --------- ---------- Other (income) expense: Investment income (395) (168 ) (1,113) (231) Interest expense 123 580 778 1,335 Other, net 197 12 490 1,033 ---------- --------- --------- ---------- (75) 424 155 2,137 ---------- --------- --------- ---------- Income before income taxes 9,302 7,447 36,875 26,536 Income tax expense 3,489 3,108 14,437 11,033 ---------- --------- --------- ---------- Net income $ 5,813 $ 4,339 $ 22,438 $ 15,503 ---------- --------- --------- ---------- Net income per share * $ 0.32 $ 0.24 $ 1.23 $ 0.86 Weighted average shares and equivalents outstanding * 18,399 18,070 18,313 17,953
* Prior-period restated to reflect a two-for-one stock split distributed on June 21, 1995.
Lydall, Inc. News Release 4 of 4 February 15, 1996 FINANCIAL POSITION As of As of In thousands except ratio data December 31, December 31, (Unaudited) 1995 1994 ------------ ------------ Cash, cash equivalents, and short-term investments $28,733 $14,588 Working capital 52,730 30,823 Long-term debt, net of current maturities 7,750 10,607 Stockholders' equity 101,811 76,227 Total capitalization 112,432 89,677 Current ratio 2.77 1.93 Total debt/total capitalization .09 .15 Common Stock Data * Fourth quarter ended December 31, 1995 1994 ------------ --------- High $28.500 $18.625 Low 21.500 15.500 Last 22.750 16.250
1,261,500 shares of Lydall common stock (LDL) were traded on the New York Stock Exchange during the fourth quarter 1995. * Prior-period restated to reflect a two-for-one stock split distributed on June 21, 1995. ### EX-99.2 3 COPY OF COMPLAINT UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION EXHIBIT 99.2 ATD CORPORATION, Plaintiff, Civil No. 94 CV 74320 DT v. Hon. Gerald E. Rosen LYDALL, INC., Demand For Jury Trial Defendant. ________________________________ BARRIS, SOTT, DENN & DRIKER, P.L.L.C. Morley Witus (30895) 211 W. Fort Street, 15th Floor Detroit, Michigan 48226-3281 (313) 965-9725 BURNS, DOANE, SWECKER & MATHIS Frederick G. Michaud, Jr. Ronni S. Jillions The George Mason Building Washington & Prince Street P.O. Box 1404 Alexandria, Virginia 22313-1404 (703) 836-6620 Attorneys for Plaintiff AMENDED COMPLAINT FOR PATENT INFRINGEMENT Plaintiff, ATD Corporation, by and through its attorneys, alleges and avers as follows: THE PARTIES 1. Plaintiff ATD Corporation (hereinafter "ATD") is a Missouri corporation with its principal place of business at 1250 Ambassador Boulevard, St. Louis, Missouri 63132. 2. Upon information and belief, defendant Lydall, Inc. (hereinafter "Lydall") is a Delaware corporation with its principal place of business at One Colonial Road, P.O. Box 151, Manchester, Connecticut. JURISDICTION 3. This is an action for patent infringement arising under the Patent Laws of the United States, Title 35, United States Code, including 35 U.S.C. (S)(S)271, 281-285,and 295. Jurisdiction is conferred on this Court pursuant to 28 U.S.C. (S)1338(a). COUNT ONE 4. On April 30, 1991, United States Letters Patent No. 5,011,743 entitled "Pad Including Heat Sink and Thermal Insulation Areas" was duly and legally issued to ATD, as assignee of the inventors William M. Sheridan and Raymond E. Ragland. ATD is still the legal owner of United States Letters Patent No. 5,011,743. A copy of United States Letters Patent No. 5,011,743 is attached hereto as Exhibit A. 5. Upon information and belief, Lydall knowingly and willfully has infringed, literally and under the doctrine of equivalents, and is presently infringing, literally and under the doctrine of equivalents, United States Letters Patent No. 5,011,743 by making, using, or selling within the United States, and by actively inducing others to use and sell within the United States, and in this Judicial District, metal heat insulation pads which employ the invention of United States Letters Patent No. 5,011,743, or articles including such pads, and will continue to do so unless enjoined by this Court. 6. ATD has been damaged as a result of Lydall's infringing activities and will continue to be damaged unless such activities are enjoined by this Court. 2 COUNT TWO 7. On May 12, 1992, United States Letters Patent No. 5,111,577 entitled "Pad Including Heat Sink And Thermal Insulation Areas" was duly and legally issued to ATD, as assignee of the inventors William M. Sheridan and Raymond E. Ragland. ATD is still the legal owner of United States Letters Patent No. 5,111,577. A copy of United States Letters Patent No. 5,111,577 is attached hereto as Exhibit B. 8. Upon information and belief, Lydall knowingly and willfully has infringed, literally and under the doctrine of equivalents, and is presently infringing, literally and under the doctrine of equivalents, United States Letters Patent No. 5,111,577 by making, using, or selling within the United States, and by actively inducing others to use and sell within the United States, and in this Judicial District, metal heat insulation pads made according to the invention of United States Letters Patent No. 5,111,577, or articles including such pads, and will continue to do so unless enjoined by this Court. 9. ATD has been damaged as a result of Lydall's infringing activities and will continue to be damaged unless such activities are enjoined by this Court. WHEREFORE, ATD demands: (a) an injunction against Lydall's continued infringement of United States Letters Patent No. 5,011,743; (b) an injunction against Lydall's continued infringement of United States Letters Patent No. 5,111,577; 3 (c) an accounting for damages resulting from Lydall's infringement of United States Letters Patents No. 5,011,743 and 5,111,577, and that the damages so ascertained be trebled because of the knowing and willful nature of Lydall's conduct; (d) an assessment of interest on the damages so computed; (e) an award of ATD's attorneys fees and costs of this action; and (f) such other and further relief as this Court deems just and appropriate. Dated: 6/5/95 --------------- BARRIS, SOTT, DENN & DRIKER, P.L.L.C. By: /s/ Morley Witus -------------------------- Morley Witus (30895) Attorney for Plaintiff 211 W. Fort Street, 15th Floor Detroit, Michigan 48226-3281 (313) 965-9725 Of Counsel: BURNS, DOANE, SWECKER & MATHIS /s/ Frederick G. Michaud, Jr. - ----------------------------- Frederick G. Michaud, Jr. Ronni S. Jillions Attorneys for Plaintiff The George Mason Building Washington & Prince Street P.O. Box 1404 Alexandria, Virginia 22313-1404 (703) 836-6620 4 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ATD CORPORATION, Plaintiff, Case No. 94-CV-74320-DT v Hon. Gerald E. Rosen LYDALL, INC., Defendant, _________________________________/ CERTIFICATE OF SERVICE ---------------------- On June 5, 1995, copies of ATD'S MOTION FOR LEAVE TO AMEND THE COMPLAINT UNDER FED.R.CIV.P. 15; MEMORANDUM IN SUPPORT OF ATD'S MOTION FOR LEAVE TO AMEND THE COMPLAINT UNDER FED.R.CIV.P. 15; along with a copy of the proposed AMENDED COMPLAINT FOR PATENT INFRINGEMENT; and this Proof of Service, were served via courier on: Dennis J. Levasseur BODMAN, LONGLEY & DAHLING 100 Renaissance Center, 34th Floor Detroit, Michigan 48243 and via Federal Express on Fred S. Whisenhunt GRIFFIN, BUTLER, WHISENHUNT & KURTOSSY Suite PH-1, 2300 Ninth Street, South Arlington, Virginia 22204-2396 Robert A. Molan Raymond L. Sweigart CUSHMAN DARBY & CUSHMAN, L.L.P. 1100 New York Avenue, N.W., Ninth Floor, East Tower Washington, D.C. 20005 I declare under penalty of perjury that the foregoing is true and correct. Executed on: June 5, 1995 ------------ /s/ Kathleen Stevens ---------------------------------------------- KATHLEEN STEVENS -----END PRIVACY-ENHANCED MESSAGE-----