Revision of Prior Period Amounts

12 Months Ended

Dec. 31, 2011

Revision of Prior Period Amounts

2. Revision of Prior Period Amounts

In preparing Lydall’s financial statements for the quarter ended September 30, 2011, the Company discovered certain prior period errors related to accounting for income taxes associated with dividends from a foreign subsidiary, which were omitted in error from U.S. income tax reporting. The impact of the errors was partially offset by a resulting adjustment to certain valuation allowances. These errors impacted income tax expense recorded by the Company beginning in the year ended December 31, 2004 and subsequent periods through June 30, 2011. The Company evaluated these errors and determined that they were immaterial to each of the original reporting periods affected. However, if the adjustments to correct the cumulative errors had been recorded in the third quarter of 2011, the Company believed the impact would have been material to 2011 results. As a result, the Company revised in the third quarter 2011 Form 10-Q its previously reported results for 2010, 2009 and 2008, for these income tax errors. In addition to recording these out of period tax adjustments, the Company recorded other adjustments to prior period amounts to correct other immaterial out of period errors.

 
The Consolidated Balance Sheets were also revised to reflect the cumulative effect of these errors described above and other immaterial errors. These revisions resulted in decreases to retained earnings of $1.3 million, $1.2 million and $1.0 million as of December 31, 2010, 2009 and 2008, respectively.

The adjustments to the Consolidated Statement of Cash Flows for the years ended December 31, 2010 and December 31, 2009 did not result in any changes to the amounts previously reported for net cash from operating activities, investing activities or financing activities in these periods. All adjustments had an immaterial effect on the components of cash flows from operating activities and had no net impact on net cash from operating activities in any period.

The revisions of prior period reported amounts are as follows:

Consolidated Balance Sheet - December 31, 2010

	As Previously  Reported					Revised
In thousands	December 31, 2010		Adjustments			December 31, 2010
Taxes receivable	$	1,867	$	(1,150	)	$	717
Total current assets	$	116,031	$	(1,150	)	$	114,881
Total assets	$	231,888	$	(1,150	)	$	230,738
Accrued taxes	$	3,113	$	317		$	3,430
Total current liabilities	$	52,671	$	317		$	52,988
Deferred tax liabilities	$	5,360	$	(157	)	$	5,203
Retained earnings	$	171,822	$	(1,310	)	$	170,512
Total stockholders' equity	$	155,455	$	(1,310	)	$	154,145
Total liabilities and stockholders' equity	$	231,888	$	(1,150	)	$	230,738

Consolidated Statement of Operations - Year Ended December 31, 2010

	As Previously Reported					Revised
	Year Ended					Year Ended
In thousands, except per share data	December 31, 2010*		Adjustments			December 31, 2010
Income tax expense from continuing operations	$	772	$	100		$	872
Income from continuing operations	$	1,999	$	(100	)	$	1,899
Net income	$	2,739	$	(100	)	$	2,639
Basic earnings per share:
Continuing operations	$	0.12				$	0.11
Discontinued operations	$	0.04				$	0.04
Net income	$	0.16				$	0.16
Diluted earnings per share:
Continuing operations	$	0.12				$	0.11
Discontinued operations	$	0.04				$	0.04
Net income	$	0.16				$	0.16
Weighted average number of common shares outstanding:
Basic		16,672					16,672
Diluted		16,788					16,788

Consolidated Statement of Operations - Year Ended December 31, 2009

	As Previously Reported						Revised
	Year Ended						Year Ended
In thousands, except per share data	December 31, 2009*			Adjustments			December 31, 2009
Income tax expense (benefit) from continuing operations	$	(2,969	)	$	243		$	(2,726	)
Loss from continuing operations	$	(12,922	)	$	(243	)	$	(13,165	)
Net loss	$	(14,572	)	$	(243	)	$	(14,815	)
Basic earnings (loss) per share:
Continuing operations	$	(0.78	)				$	(0.79	)
Discontinued Operations	$	(0.10	)				$	(0.10	)
Net loss	$	(0.88	)				$	(0.89	)
Diluted earnings per share:
Continuing operations	$	(0.78	)				$	(0.79	)
Discontinued Operations	$	(0.10	)				$	(0.10	)
Net loss	$	(0.88	)				$	(0.89	)
Weighted average number of common shares outstanding:
Basic		16,567						16,567
Diluted		16,567						16,567

* As previously reported years ended December 31, 2010 and 2009 have been retroactively restated to reflect Affinity as a discontinued operation. See Note 8.