0001144204-12-042149.txt : 20120801 0001144204-12-042149.hdr.sgml : 20120801 20120801081737 ACCESSION NUMBER: 0001144204-12-042149 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 20120630 FILED AS OF DATE: 20120801 DATE AS OF CHANGE: 20120801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYDALL INC /DE/ CENTRAL INDEX KEY: 0000060977 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] 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: 12998466 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 v317437_10q.htm FORM 10-Q

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, 2012

¨ 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 Incorporation or Organization)	(I.R.S. Employer Identification No.)

One Colonial Road, Manchester, Connecticut	06042
(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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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 July 19, 2012

17,014,997

LYDALL, INC.

INDEX

			Page Number

Cautionary Note Concerning Factors That May Affect Future Results			3

Part I.	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Statements of Operations	4
		Condensed Consolidated Statements of Comprehensive Income	6
		Condensed Consolidated Balance Sheets	7
		Condensed Consolidated Statements of Cash Flows	8
		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
	Item 4.	Controls and Procedures	29
Part II.	Other Information
	Item 1.	Legal Proceedings	30
	Item 1A.	Risk Factors	30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 5.	Other Information	30
	Item 6.	Exhibits	31
Signature			32
Exhibit Index			33

Cautionary Note Concerning Factors That May Affect Future Results

This report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. In general, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements within the meaning of Section 21E. All such forward-looking statements are intended to provide management’s current expectations for the future operating and financial performance of the Company based on current expectations and assumptions relating to the Company’s business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of the words “believes,” “anticipates,” “may,” “plans,” “projects,” “expects,” “estimates,” “forecasts,” “predicts,” “targets,” and other similar expressions in connection with the discussion of future operating or financial performance. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Therefore, investors are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Forward-looking statements in this Quarterly Report on Form 10-Q includes, among others, statements relating to:

Overall economic and business conditions and the effects on the Company’s markets;

Expected automobile production in the North American or European automotive markets;

Growth opportunities in markets served by the Company’s Performance Materials segment;

Product development and new business opportunities;

Future strategic transactions, included but not limited to: acquisitions, joint ventures, alliances, licensing agreements and divestitures;

Pension plan funding requirements;

Future cash flow and uses of cash;

Future repurchases of the Company’s Common Stock;

Future amounts of stock-based compensation expense;

Future earnings and other measurements of financial performance;

Future levels of indebtedness and capital spending;

The Company’s ability to meet cash operating requirements;

The Company’s ability to meet financial covenants in its Domestic Credit Facility;

The expected future impact of recently issued accounting pronouncements upon adoption;

Future effective income tax rates and realization of deferred tax assets;

Estimates of fair values of reporting units and long-lived assets used in assessing goodwill and long-lived assets for possible impairment; and

The expected outcomes of contingencies.

All forward-looking statements are inherently subject to a number of risks and uncertainties that could cause the actual results of the Company to differ materially from those reflected in forward-looking statements made in this Quarterly Report on Form 10-Q, in press releases and in other statements made by the Company’s authorized officers. Such risks and uncertainties include, among others, worldwide economic cycles that affect the markets which the businesses serve could affect demand for the Company’s products and impact the Company’s profitability, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, swings in consumer confidence and spending, unstable economic growth, fluctuations in unemployment rates, and increases in fuel prices, which could cause economic instability and could have a negative impact on the Company’s results of operations and financial condition, as well as other risks and uncertainties identified in Part I, Item 1A - Risk Factors of Lydall’s Annual Report on Form 10-K for the year ended December 31, 2011 and Part 2, Item 1A – Risk Factors of this Quarterly Report on Form 10-Q.

The forward-looking statements speak only as of the date of this initial filing of this Quarterly Report on Form 10-Q, and Lydall does not undertake to update any forward-looking statement made in this report or that may from time to time be made by or on behalf of the Company.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

	Quarter Ended
	June 30,
	2012			Revised 2011
	(Unaudited)
Net sales	$	97,535		$	98,831
Cost of sales		75,542			80,774
Gross profit		21,993			18,057
Selling, product development and administrative expenses		13,655			13,477
Gain on sale of product line		(405	)		(405	)
Operating income		8,743			4,985
Interest expense		87			473
Other income, net		(27	)		(15	)
Income from continuing operations before income taxes		8,683			4,527
Income tax expense		2,091			1,911
Income from continuing operations		6,592			2,616
Income from discontinued operations, net of tax of $2,591		-			4,484
Net income	$	6,592		$	7,100
Basic earnings per share:
Continuing operations	$	0.39		$	0.16
Discontinued operations	$	-		$	0.27
Net income	$	0.39		$	0.42
Diluted earnings per share:
Continuing operations	$	0.39		$	0.15
Discontinued operations	$	-		$	0.27
Net income	$	0.39		$	0.42
Weighted average number of common shares outstanding:
Basic		16,770			16,741
Diluted		16,962			16,909

See accompanying Notes to Condensed Consolidated Financial Statements.

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

	Six Months Ended
	June 30,
	2012			Revised 2011
	(Unaudited)
Net sales	$	194,289		$	200,504
Cost of sales		153,055			164,442
Gross profit		41,234			36,062
Selling, product development and administrative expenses		27,899			27,347
Gain on sale of product line		(810	)		(810	)
Operating income		14,145			9,525
Interest expense		177			683
Other expense, net		16			28
Income from continuing operations before income taxes		13,952			8,814
Income tax expense		3,448			3,566
Income from continuing operations		10,504			5,248
Income from discontinued operations, net of tax of $2,728		-			4,732
Net Income	$	10,504		$	9,980
Basic earnings per share:
Continuing operations	$	0.63		$	0.31
Discontinued operations	$	-		$	0.28
Net income	$	0.63		$	0.60
Diluted earnings per share:
Continuing operations	$	0.62		$	0.31
Discontinued operations	$	-		$	0.28
Net income	$	0.62		$	0.59
Weighted average number of common shares outstanding:
Basic		16,799			16,738
Diluted		16,939			16,875

See accompanying Notes to Condensed Consolidated Financial Statements.

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

	Quarter Ended					Six Months Ended
	June 30,					June 30,
	2012			Revised 2011		2012			Revised 2011
	(Unaudited)					(Unaudited)
Net income	$	6,592		$	7,100	$	10,504		$	9,980
Changes in accumulated other comprehensive loss:
Foreign currency translation adjustments		(3,711	)		1,744		(1,656	)		5,803
Pension liability adjustment, net of tax		139			86		277			170
Comprehensive income	$	3,020		$	8,930	$	9,125		$	15,953

See accompanying Notes to Condensed Consolidated Financial Statements.

LYDALL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

	June 30,			December 31,
	2012			2011
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	46,055		$	30,905
Short-term investment		-			12,015
Accounts receivable, net		57,046			47,258
Inventories		33,293			33,846
Prepaid expenses and other current assets, net		8,607			6,796
Total current assets		145,001			130,820
Property, plant and equipment, at cost		242,411			240,157
Accumulated depreciation		(164,833	)		(161,218	)
Net, property, plant and equipment		77,578			78,939
Goodwill		18,018			18,059
Other intangible assets		4,058			4,537
Other assets, net		2,375			2,830
Total assets	$	247,030		$	235,185

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	843		$	1,035
Accounts payable		31,887			28,163
Accrued payroll and other compensation		9,828			9,031
Accrued taxes		3,027			2,532
Other accrued liabilities		4,560			4,038
Total current liabilities		50,145			44,799
Long-term debt		1,955			2,261
Deferred tax liabilities		5,291			5,240
Benefit plan liabilities		20,304			21,269
Other long-term liabilities		1,020			764

Commitments and Contingencies (Note 13)
Stockholders’ equity:
Preferred stock		-			-
Common stock		2,373			2,365
Capital in excess of par value		57,256			56,214
Retained earnings		194,795			184,291
Accumulated other comprehensive loss		(17,997	)		(16,618	)
Treasury stock, at cost		(68,112	)		(65,400	)
Total stockholders’ equity		168,315			160,852
Total liabilities and stockholders’ equity	$	247,030		$	235,185

See accompanying Notes to Condensed Consolidated Financial Statements.

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	Six Months Ended
	June 30,
	2012			Revised 2011
	(Unaudited)
Cash flows from operating activities:
Net income	$	10,504		$	9,980
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of discontinued operations, net of tax		-			(3,857	)
Gain on sale of product line		(810	)		(810	)
Depreciation and amortization		6,989			7,872
Deferred income taxes		(467	)		957
Stock based compensation		846			808
Loss on disposition of property, plant and equipment		17			2
Changes in operating assets and liabilities:
Accounts receivable		(9,428	)		(11,091	)
Inventories		215			(334	)
Accounts payable		4,041			801
Accrued payroll and other compensation		935			604
Accrued taxes		549			2,248
Other, net		(864	)		(1,413	)
Net cash provided by operating activities		12,527			5,767
Cash flows from investing activities:
Proceeds from divestiture		-			12,811
Capital expenditures		(5,785	)		(3,338	)
Reimbursement of cash from leasing company		-			818
Proceeds from maturity of short-term investment		12,015			-
Increase in restricted cash		-			(3,275	)
Net cash provided by investing activities		6,230			7,016
Cash flows from financing activities:
Debt repayments		(573	)		(739	)
Repurchases of common stock		(2,712	)		-
Common stock issued		203			73
Net cash used for financing activities		(3,082	)		(666	)
Effect of exchange rate changes on cash		(525	)		1,175
Increase in cash and cash equivalents		15,150			13,292
Cash and cash equivalents at beginning of period		30,905			24,988
Cash and cash equivalents at end of period	$	46,055		$	38,280

See accompanying Notes to Condensed Consolidated Financial Statements.

LYDALL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Financial Statement Presentation

Description of Business

Lydall, Inc. and its subsidiaries (the “Company” or “Lydall”) design and manufacture specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers, medical filtration media and devices and biopharmaceutical processing components for thermal/acoustical, filtration/separation, and bio/medical applications.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared, in all material respects, in accordance with the same accounting principles followed in the preparation of the Company’s annual financial statements for the year ended December 31, 2011. The year-end Condensed Consolidated Balance Sheet was derived from the December 31, 2011 audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Management believes that all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations and cash flows for the periods reported, have been included. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

On June 29, 2011, the Company sold all of the capital stock of its wholly-owned subsidiary, Lydall Industrial Thermal Solutions, Inc. (“Affinity”). The Condensed Consolidated Financial Statements for the quarter and six months ended June 30, 2011 have been retroactively restated to reflect Affinity as a discontinued operation.

During the quarter ended March 31, 2012, the Company revised its reportable segments in order to better align them with its strategic approach and operational decision-making. Refer to Note 12 Segment Information for further information. Prior period segment amounts throughout the Notes to the Condensed Consolidated Financial Statements have been reclassified to reflect the new segment structure. The reclassification of historical business segment information had no impact on the Company’s consolidated financial results.

As previously disclosed in the Form 10-K for the year ended December 31, 2011, during the third quarter of 2011 the Company identified and corrected certain prior period errors. As permitted by Staff Accounting Bulletin 108, Lydall revised in the Form 10-Q for the quarterly period ended September 30, 2011 previously reported financial results for the periods affected. Accordingly, the financial results for the three and six months ended June 30, 2011 included herein reflect the previously revised results.

Recently Adopted Accounting Pronouncements

Effective January 1, 2012, the Company adopted the FASB’s ASU No. 2011-05, Presentation of Comprehensive Income (Topic 220). The adoption of this accounting guidance did not have an impact on the Company’s financial position, results of operations or cash flows. As required by the new standard, the Condensed Consolidated Statements of Comprehensive Income is included in the Condensed Consolidated Financial Statements.

Effective January 1, 2012, the Company adopted the FASB’s ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends ASC 820, Fair Value Measurement. This ASU requires the categorization by level for items that are required to be disclosed at fair value, information about transfers between Level 1 and Level 2 and additional disclosure for Level 3 measurements. In addition, the ASU provides guidance on measuring the fair value of financial instruments managed within a portfolio and the application of premiums and discounts on fair value measurements. The adoption of this accounting guidance did not have an impact on the Company’s consolidated financial statements.

2. Short-Term Investment

The Company’s short-term investment at December 31, 2011 consisted of a $12.0 million certificate of deposit with a banking institution. At December 31, 2011, the short-term investment was classified as held to maturity and carried on the Consolidated Balance Sheet at amortized cost. The certificate of deposit matured on January 23, 2012, and $12.0 million of proceeds were recorded to cash and cash equivalents. There were no significant holding gains or losses.

3. Inventories

Inventories as of June 30, 2012 and December 31, 2011 were as follows:

	June 30,			December 31,
In thousands	2012			2011
Raw materials	$	14,025		$	15,068
Work in process		13,101			11,569
Finished goods		10,086			9,915
		37,212			36,552
Less: Progress billings		(3,919	)		(2,706	)
Total inventories	$	33,293		$	33,846

Included in work in process is gross tooling inventory of $7.8 million and $6.4 million at June 30, 2012 and December 31, 2011, respectively. Tooling inventory, net of progress billings, was $3.9 million and $3.7 million at June 30, 2012 and December 31, 2011, respectively.

4. Goodwill

The Company tests its goodwill for impairment annually in the fourth quarter, and whenever events or changes in circumstances indicate that the carrying value may exceed its fair value.

The changes in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2012 were as follows:

			Currency
	December 31,		translation			Other		June 30,
In thousands	2011		adjustments			adjustments		2012
Performance Materials	$	13,399	$	(104	)	$	63	$	13,358
Other Products and Services		4,660		-			-		4,660
Total goodwill	$	18,059	$	(104	)	$	63	$	18,018

Other adjustments relate to contingent consideration owed to the seller of DSM Solutech B.V. (“Solutech”) which was acquired by the Company in December 2008. Consideration equals 4.0% of Solutech’s net revenues (included in the Performance Materials segment), as defined, and increases the amount of goodwill previously recorded, as the acquisition occurred prior to the revised guidance issued by the Financial Accounting Standards Board (ASC 805) for business combinations.

5. Long-term Debt and Financing Arrangements

As of June 30, 2012 and December 31, 2011, the majority of debt outstanding was capital lease obligations. As of June 30, 2012 and December 31, 2011, the Company had no borrowings outstanding under any domestic credit facility, or any credit arrangement entered into by a foreign subsidiary, other than letters of credit.

On June 16, 2011, the Company entered into a $35.0 million senior secured domestic revolving credit facility (“Domestic Credit Facility”) with a new financial institution, which replaced the Company’s prior $35.0 million domestic credit facility that was terminated by the Company. The Domestic Credit Facility is secured by substantially all of the assets of the Company. The maturity date for the Domestic Credit Facility is June 15, 2016.

The loan agreement governing the Domestic Credit Facility contains a number of affirmative and negative covenants, including financial covenants. The Company is required to meet a minimum fixed charge coverage ratio. The fixed charge coverage ratio requires that, at the end of each fiscal quarter, the ratio of consolidated EBITDA, as defined in the loan agreement, to fixed charges may not be less than 1 to 1 for the immediately preceding 12 month period. In addition, the Company must maintain a Consolidated Leverage Ratio, as defined, as of the end of each fiscal quarter of no greater than 2.5 to 1.0. The Company must also meet a minimum consolidated EBITDA for the preceding 12 month period of $15.0 million through September 30, 2014 and $25.0 million thereafter. The Company was in compliance with all covenants at June 30, 2012.

The Company expects to fund its cash requirements from existing cash balances, cash generated by operations, and through borrowings, if needed, under its Domestic Credit Facility and foreign credit facilities. As of June 30, 2012, the Company had borrowing availability of $32.2 million under the Domestic Credit Facility net of standby letters of credit outstanding of $2.8 million. As of June 30, 2012, the Company’s foreign subsidiaries had various credit arrangements with banks totaling €9.0 million (approximately $11.4 million) all of which was available for borrowing, primarily restricted to borrowings by the respective foreign subsidiary.

6. Divestiture

On June 29, 2011, the Company sold its Affinity business for $15.2 million in cash. Affinity designed and manufactured high precision, specialty engineered temperature-control equipment for semiconductor, pharmaceutical, life sciences and industrial applications. The Company recorded a gain on sale, net of transaction costs and income taxes, of $3.9 million in the quarter ended June 30, 2011. The Condensed Consolidated Financial Statements have been retroactively restated to reflect Affinity as a discontinued operation for all periods presented.

The following table is a summary of the results of discontinued operations:

	Quarter Ended		Six Months Ended
In thousands	June 30, 2011		June 30, 2011
Net sales	$	6,818	$	13,255

Income before income taxes		989		1,374
Income tax expense		362		499
Income from discontinued operations		627		875
Gain on sale of discontinued operations, net of tax of $2,229		3,857		3,857
Income from discontinued operations, net of tax	$	4,484	$	4,732

7. Equity Compensation Plans

As of June 30, 2012 the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (“2003 Plan”) and the 2012 Stock Incentive Plan (“2012 Plan”) collectively, the “Plans,” under which incentive and non-qualified stock options and time and performance based restricted shares have been granted to employees and directors from authorized but unissued shares of common stock or treasury shares. The 2003 Plan is not active, but continues to govern all outstanding awards granted under the plan until the awards themselves are exercised or terminate in accordance with their terms. The 2012 Plan, approved by shareholders on April 27, 2012, authorized 1.75 million shares of common stock for awards. The 2012 Plan also authorizes an additional 1.2 million shares to the extent awards granted under prior stock plans that were outstanding as of April 27, 2012 are forfeited. The 2012 Plan provides for the following type of awards: options, restricted stock, restricted stock units and other stock-based awards.

The Company incurred compensation expense of $0.4 million for the quarters ended June 30, 2012 and June 30, 2011, and $0.8 million for the six month periods ended June 30, 2012 and June 30, 2011, for the Plans, including restricted stock awards. No compensation costs were capitalized as part of inventory.

Stock Options

The following table is a summary of outstanding and exercisable options as of June 30, 2012:

In thousands except per share amounts and years	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at June 30, 2012		888,328	$	8.65		6.2	$	4,388
Exercisable at June 30, 2012		536,302	$	9.17		4.6	$	2,392

There were no options granted during the quarter and six months ended June 30, 2012. The amount of cash received from the exercise of stock options during the quarter and six months ended June 30, 2012 was $0.2 million and the intrinsic value of options exercised was $0.1 million. There were no options granted during the quarter and six months ended June 30, 2011. There was minimal stock option exercise activity during the quarter and six months ended June 30, 2011. At June 30, 2012, the total unrecognized compensation cost related to nonvested stock option awards was approximately $1.1 million, with a weighted average expected amortization period of 2.8 years.

Restricted Stock

Restricted stock includes both performance-based and time-based awards. There were 114,500 performance-based restricted shares granted during the quarter and six months ended June 30, 2012, with a 2014 earnings per share target. No restricted shares were vested in the quarter and six months ended June 30, 2012. There were no shares granted in the prior year quarter and 22,120 shares were granted in the six months ended June 30, 2011. No restricted shares were vested in the quarter and six months ended June 30, 2011. At June 30, 2012, there were 369,776 unvested restricted stock awards with total unrecognized compensation cost related to these awards of $2.1 million with a weighted average expected amortization period of 2.2 years.

8. Stock Repurchase Plan

In April 2012, the Company’s Board of Directors approved a stock repurchase program (the “2012 Stock Repurchase Program”) which authorized the Company to repurchase up to 1.0 million shares of its common stock.

The Company repurchased 219,476 shares of its common stock at an average price of $12.35 per share for an aggregate purchase price of $2.7 million during the three and six months ended June 30, 2012 under the 2012 Stock Repurchase Program. There were 780,524 shares remaining authorized for repurchase under the 2012 Stock Repurchase Program as of June 30, 2012.

9. Employer Sponsored Benefit Plans

As of June 30, 2012, the Company maintains a defined benefit pension plan that covers certain domestic Lydall employees (“domestic pension plan”) that is closed to new employees and benefits are no longer accruing. The domestic pension plan is noncontributory and benefits are based on either years of service or eligible compensation paid while a participant is in the plan. The Company’s funding policy is to fund not less than the ERISA minimum funding standard and not more than the maximum amount that can be deducted for federal income tax purposes. The Company was minimally required to contribute approximately $2.7 million in cash to its domestic pension plan in 2012. However, the Company is evaluating the impact of the Moving Ahead for Progress in the 21^st Century Act (MAP-21) signed into law in July 2012, which is expected to lower the required minimum contribution to the domestic pension plan in 2012. Contributions of $0.6 million were made during the second quarter of 2012 and $1.0 million for the six months ended June 30, 2012. Contributions of $0.4 million were made during the second quarter of 2011 and $0.8 million for the six months ended June 30, 2011.

The following is a summary of the components of net periodic benefit cost for the domestic pension plan for the quarters and six months ended June 30, 2012 and 2011:

	Quarter Ended						Six Months Ended
	June 30,						June 30,
In thousands	2012			2011			2012			2011
Components of net periodic benefit cost
Interest cost	$	648		$	646		$	1,296		$	1,292
Expected return on assets		(640	)		(662	)		(1,280	)		(1,324	)
Amortization of actuarial loss		223			140			447			280
Net periodic benefit cost	$	231		$	124		$	463		$	248

10. Income Taxes

The Company's effective tax rate for income from continuing operations was 24.1% and 42.2% for the quarters ended June 30, 2012 and 2011 and 24.7% and 40.5% for the six months ended June 30, 2012 and 2011. The difference in the Company’s effective tax rate for the quarter and six months ended June 30, 2012 compared to statutory federal income tax rates was due the reversal of valuation allowance against foreign tax credit carryovers in the Company’s estimated annual effective tax rate for 2012. The anticipated use of foreign tax credit carryovers to offset 2012 U.S. federal income taxes is based on estimates concerning 2012 income generated from domestic and foreign sources.

The Company maintains valuation allowances against certain deferred tax assets where realization is not reasonably assured. The Company evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount to the extent it believes a portion will not be realized. The Company’s effective tax rates in future periods could be affected by earnings being lower or higher than anticipated in countries where tax rates differ from the United States federal rate, the relative impact of permanent tax adjustments on higher or lower earnings from domestic operations, changes in net deferred tax asset valuation allowances, completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of tax audits.

The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, France, Germany and the Netherlands. Within the next four quarters, the Company expects to conclude certain U.S. federal income tax matters through the year ended December 31, 2009, and it is reasonably expected that net unrecognized benefits of $0.5 million may be recognized. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2006, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2007.

11. Earnings Per Share

For the quarter and six months ended June 30, 2012 and 2011, basic earnings per share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method as long as their effect is not anti-dilutive.

The following table provides a reconciliation of weighted-average shares used to determine basic and diluted earnings per share.

	Quarter Ended				Six Months Ended
	June 30,				June 30,
In thousands	2012		2011		2012		2011
Basic average common shares outstanding		16,770		16,741		16,799		16,738
Effect of dilutive options and restricted stock awards		192		168		140		137
Diluted average common shares outstanding		16,962		16,909		16,939		16,875

For the quarters ended June 30, 2012 and June 30, 2011, stock options for 0.2 million and 0.4 million shares of common stock, respectively, were not considered in computing diluted earnings per common share because they were antidilutive.

For the six months ended June 30, 2012 and June 30, 2011, stock options for 0.4 million and 0.6 million shares of common stock, respectively, were not considered in computing diluted earnings per common share because they were antidilutive.

12. Segment Information

The Company’s reportable segments are Performance Materials, Thermal/Acoustical Metals, and Thermal/Acoustical Fibers. The Performance Materials segment reports the results of Industrial Filtration, Industrial Thermal Insulation, and Life Sciences Filtration businesses. The Thermal/Acoustical Metals segment reports the results of the Company’s metal-based automotive business. The Thermal/Acoustical Fibers segment reports the results of the Company’s fiber-based automotive business. Other Products and Services (“OPS”) includes Life Sciences Vital Fluids.

During the quarter ended March 31, 2012, the Thermal/Acoustical business reorganized its management reporting structure. Prior to this reorganization, the Thermal/Acoustical business was comprised of one operating segment for financial reporting purposes. The Company now manages and measures its Thermal/Acoustical business performance in two distinct operating segments: Thermal/Acoustical Metals and Thermal/Acoustical Fibers. The new segments reflect the way the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance.

On June 29, 2011, the Company sold its Affinity business, which had been included within OPS. Affinity designed and manufactured high precision, specialty engineered temperature-control equipment for semiconductor, pharmaceutical, life sciences and industrial applications. As a result of the sale, the Condensed Consolidated Financial Statements have been retroactively restated to reflect Affinity as a discontinued operation and the following segment information excludes Affinity’s net sales and operating income for all periods presented.

Prior period segment amounts throughout the notes to the Condensed Consolidated Financial Statements have been reclassified to give effect to the new segment structure and for discontinued operations. The reclassification of historical business segment information had no impact on the consolidated financial results.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions for air, fluid power, and industrial applications (“Industrial Filtration”), air and liquid life science applications (“Life Sciences Filtration”), and industrial thermal insulation solutions for building products, appliances, and energy and industrial markets (“Industrial Thermal Insulation”).

Industrial Filtration products include LydAir^®MG (Micro-Glass) Air Filtration Media, LydAir^®MB (Melt Blown) Air Filtration Media, LydAir^®SC (Synthetic Composite) Air Filtration Media, and Arioso™ Membrane Composite Media. These products constitute the critical media component of clean-air systems for applications in clean-space, commercial, industrial and residential HVAC, power generation, and industrial processes. Lydall has leveraged its extensive technical expertise and applications knowledge into a suite of media products covering the vast liquid filtration landscape across the engine and industrial fields. The LyPore^®Liquid Filtration Media and activated carbon containing ActiPure^®Filtration Media series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes, diesel filtration and fuel filtration.

Life Sciences Filtration products include the LyPore^® and ActiPure^®Filtration Media developed to meet the requirements of life science applications including biopharmaceutical pre-filtration and clarification, diagnostic and analytical testing, respiratory protection, life protection, medical air filtration, drinking water filtration and high purity process filtration such as that found in food and beverage and medical applications. Lydall also offers Solupor^®Membrane specialty microporous membranes that are utilized in various markets and applications including air and liquid filtration and transdermal drug delivery. Solupor^®membranes are made from ultra-high molecular weight polyethylene and incorporate a unique combination of mechanical strength, chemical inertness, and high porosity in a unique open structure.

Industrial Thermal Insulation products are high performance nonwoven veils, papers, mats and specialty composites for the building products, appliance, and energy and industrial markets. The Manniglas^®Thermal Insulation brand is diverse in its product application ranging from high temperature seals and gaskets in ovens and ranges to specialty veils for HVAC and cavity wall insulation. appLY^®Mat Needled Glass Mats have been developed to expand Lydall’s high temperature technology portfolio for broad application into the appliance market and supplements the Lytherm^®Insulation Media product brand, traditionally utilized in the industrial market for kilns and furnaces used in metal processing. Lydall’s Cryotherm^®Super-Insulating Media, CRS-Wrap^®Super-Insulating Media and Cryo-Lite^TMCryogenic Insulation products are industry standards for state-of-the-art cryogenic insulation designs used by manufacturers of cryogenic equipment for liquid gas storage, piping, and transportation.

Thermal/Acoustical Metals Segment

The Thermal/Acoustical Metals segment offers a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the interior (dash insulators), underbody (wheel well, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUV’s, heavy duty trucks and recreational vehicles.

Thermal/Acoustical Metals segment products are stamped metal combinations which provide thermal and acoustical shielding solutions for the global automotive and truck markets. Thermal/Acoustical Metals products include AMS^®which is an all metal shield designed to be used in various vehicle applications, and Direct Exhaust Mount Heat shields which are mounted to high temperature surfaces like exhaust down-pipes or engine manifolds.

Thermal/Acoustical Fibers Segment

The Thermal/Acoustical Fibers segment offers a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the interior (dash insulators), underbody (wheel well, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUV’s, heavy duty trucks and recreational vehicles.

Thermal/Acoustical Fibers segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites for the automotive and truck markets primarily in North America. Lydall’s dBCore^®is a lightweight acoustical composite that emphasizes absorption principles over heavy-mass type systems. Lydall’s dBLyte^®is a high-performance acoustical barrier with sound absorption and blocking properties and can be used throughout a vehicle’s interior to minimize intrusive noise from an engine compartment and road. Lydall’s ZeroClearance^®is an innovative thermal solution that utilizes an adhesive backing for attachment and is ideal for protecting floor sheet metal from excessive exhaust heat. Lydall’s specially engineered wheel wells provide a solution with weight reduction and superior noise suppression capabilities over conventional designs.

Thermal/Acoustical Metals segment and Thermal/Acoustical Fibers segment operating results include allocations of certain costs shared between the segments.

Other Products and Services

The Life Sciences Vital Fluids business offers specialty products for blood filtration devices, blood transfusion single-use containers and bioprocessing single-use containers and products for containment of media, buffers and bulk intermediates used in biotech, pharmaceutical and diagnostic reagent manufacturing processes.

The tables below present net sales and operating income by segment for the quarters and six months ended June 30, 2012 and 2011, and also a reconciliation of total segment net sales and operating income to total consolidated net sales and operating income.

Net sales by segment:

	Quarter Ended						Six Months Ended
	June 30,						June 30,
In thousands	2012			2011			2012			2011
Performance Materials Segment:
Industrial Filtration	$	18,109		$	18,449		$	36,285		$	38,920
Industrial Thermal Insulation		11,119			13,624			19,850			25,576
Life Sciences Filtration		3,295			3,819			5,476			7,865
Performance Materials Segment net sales		32,523			35,892			61,611			72,361

Thermal/Acoustical Metals Segment:
Metal parts		35,738			37,455			73,546			72,969
Tooling		1,947			2,406			6,252			8,344
Thermal/Acoustical Metals Segment net sales		37,685			39,861			79,798			81,313

Thermal/Acoustical Fibers Segment:
Fiber parts		24,191			20,283			46,337			39,712
Tooling		719			48			745			1,303
Thermal/Acoustical Fibers Segment net sales		24,910			20,331			47,082			41,015

Other Products and Services:
Life Sciences Vital Fluids		3,749			3,403			7,980			7,171
Other Products and Services net sales		3,749			3,403			7,980			7,171
Eliminations and Other		(1,332	)		(656	)		(2,182	)		(1,356	)
Consolidated Net Sales	$	97,535		$	98,831		$	194,289		$	200,504

Operating income (loss) by segment:

	Quarter Ended						Six Months Ended
	June 30,						June 30,
In thousands	2012			2011			2012			2011
Performance Materials	$	4,982		$	6,093		$	7,102		$	12,390
Thermal/Acoustical Metals		4,050			4,137			9,117			7,861
Thermal/Acoustical Fibers		3,382			(1,549	)		5,611			(3,087	)
Other Products and Services:
Life Sciences Vital Fluids		211			(294	)		520			(579	)
Corporate Office Expenses		(3,882	)		(3,402	)		(8,205	)		(7,060	)
Consolidated Operating Income	$	8,743		$	4,985		$	14,145		$	9,525

13. Commitments and Contingencies

From time-to-time the Company is subject to legal proceedings, claims, investigations and inquiries that arise in the ordinary course of business such as, but not limited to, patent, employment, personal injury, commercial and environmental matters. Although there can be no assurance, the Company is not aware of any matters pending that are expected to be material with respect to the Company’s business, financial position, results of operations or cash flows.

14. Recently Issued Accounting Standards

In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which amends ASC 210, Balance Sheet. This ASU requires entities to disclose gross and net information about both instruments and transactions eligible for offset in the statement of financial position and those subject to an agreement similar to a master netting arrangement. This would include derivatives and other financial securities arrangements. The effective date is January 1, 2013 and must be applied retrospectively. The adoption of this ASU will have no effect on the Company’s consolidated financial statements.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview and Outlook

Business

Lydall, Inc. and its subsidiaries (collectively, the “Company” or “Lydall”) design and manufacture specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers, medical filtration media and devices and biopharmaceutical processing components for filtration/separation, thermal/acoustical, and bio/medical applications. Lydall principally conducts its business through three reportable segments: Performance Materials, Thermal/Acoustical Metals and Thermal/Acoustical Fibers, with sales globally.

The Thermal/Acoustical Metals segment and Thermal/Acoustical Fibers segment (“Fibers Business”) offer a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the interior (dash insulators), underbody (wheel well, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUV’s, heavy duty trucks and recreational vehicles. Lydall’s patented products include organic and inorganic fiber composites (fiber parts) as well as metal combinations (metal parts).

Included in Other Products and Services (“OPS”) is the Life Sciences Vital Fluids business. Life Sciences Vital Fluids offers specialty products for blood filtration devices, blood transfusion single-use containers and bioprocessing single-use containers and products for containment of media, buffers and bulk intermediates used in biotech, pharmaceutical and diagnostic reagent manufacturing processes.

Second Quarter 2012 Highlights

Below are financial highlights comparing Lydall’s quarter ended June 30, 2012 (“Q2 2012”) results to its quarter ended June 30, 2011 results:

Consolidated net sales were $97.5 million, a decrease of $1.3 million, or 1.3%; foreign currency translation negatively impacted Q2 2012 net sales by $3.9 million;

Gross margin increased to 22.5% compared to 18.3%, principally caused by improvement in the Thermal/Acoustical Fibers segment;

Consolidated operating income was $8.7 million, or 9.0% of net sales, compared to operating income of $5.0 million, or 5.0% of net sales;

Effective tax rate of 24.1%, as a result of reversal of valuation allowance against foreign tax credit carryovers in the estimated annual effective tax rate for 2012 of $1.3 million, or $0.08 per share, compared to 42.2%;

Income from continuing operations was $6.6 million, $0.39 per share, compared to $2.6 million, or $0.15 per share;

Net income was $6.6 million, or $0.39 per share, compared to $7.1 million, or $0.42 per share, which included income from discontinued operations (including gain on sale of $3.9 million) of $4.5 million, or $0.27 per share in the second quarter of 2011; and

Cash provided by operations was $11.9 million compared to $7.9 million.

Operational and Financial Overview

Performance Materials Segment

The Performance Materials segment reported net sales of $32.5 million in the second quarter of 2012, a decrease of $3.4 million, or 9.4%, compared to net sales of $35.9 million in the second quarter of 2011. Foreign currency translation negatively impacted net sales by $1.2 million, or 3.4% in the current quarter compared to the second quarter of 2011. A reduction in Industrial Thermal Insulation net sales of $2.5 million primarily contributed to the remaining reduction in net sales. Negatively impacting the Industrial Thermal Insulation business was $1.3 million lower net sales of electrical paper products manufactured under a contract manufacturing agreement with a customer. The Company sold this product line to the customer in 2010, and the Company will continue to manufacture product until the customer commences manufacturing electrical paper products later in 2012. Also, net sales of insulation products used in commercial buildings were lower in the second quarter of 2012 compared to the same quarter of 2011 due to customers adjusting inventory levels on certain products. Net sales of Industrial Filtration products of $18.1 million in the second quarter of 2012, compared to $18.4 million in the second quarter of 2011, was at its highest amount since the third quarter of 2011, as the Company experienced increased demand for its products.

Net sales in the second quarter of 2011 were near record levels and subsequently declined the remainder of 2011. Net sales in the second quarter of 2012 improved 11.8% compared to the first quarter of 2012.

The segment reported operating income of $5.0 million, or 15.3% of net sales, in the second quarter of 2012 compared to operating income of $6.1 million, or 17.0% of net sales in the second quarter of 2011. Contributing to this reduction was the decrease in net sales of $3.4 million discussed above, lower absorption of fixed overhead costs and unfavorable mix among product sales, compared to the same period in the prior year.

Thermal/Acoustical Metals Segment

The Thermal/Acoustical Metals segment reported net sales of $37.7 million in the second quarter of 2012, a reduction of $2.2 million, or 5.5%, from the second quarter of 2011. Foreign currency translation negatively impacted net sales by $2.7 million, or 6.8%, in the current quarter compared to the second quarter of 2011. Higher net sales of domestic automotive metal parts were offset by lower net sales from the Company’s European operations and negative foreign currency translation. Higher consumer demand for automobiles on Lydall’s existing domestic platforms, as well as from sales of parts on new domestic platforms awarded to the Company contributed to higher domestic part net sales. Economic conditions in Europe contributed to lower demand for certain automotive parts in Europe during the second quarter of 2012 compared to the second quarter of 2011.

The segment reported operating income in the second quarter of 2012 of $4.1 million, or 10.7% of net sales, which was essentially flat compared to the second quarter of 2011.

Thermal/Acoustical Fibers Segment

The Thermal/Acoustical Fibers segment reported net sales of $24.9 million in the second quarter of 2012, an increase of $4.6 million, or 22.5%, from the second quarter of 2011. This increase was driven by higher consumer demand for automobiles on Lydall’s existing platforms, as well as from sales of parts on new platforms awarded to the Company.

The segment reported operating income in the second quarter of 2012 of $3.4 million, or 13.6% of net sales, compared to an operating loss of $1.5 million in the second quarter of 2011. This improvement was due to higher net sales and improved gross margin realized from manufacturing efficiency improvements. These manufacturing improvements began in the second half of 2011 and continued through the second quarter of 2012. Significant reductions in scrap, material usage, and labor costs primarily contributed to lower per-unit manufacturing costs in the current quarter compared to the second quarter of 2011, resulting in improved gross margin.

Liquidity

At June 30, 2012, the majority of debt outstanding was capital lease obligations. The Company had a cash balance of $46.1 million and no borrowings under any credit facility other than letters of credit. The Company expects to fund its cash requirements from existing cash balances, cash generated by operations and from available borrowings, as needed, under its Domestic Credit Facility and foreign credit facilities. At June 30, 2012, the Company had borrowing availability of $32.2 million under the Domestic Credit Facility, net of standby letters of credit outstanding of $2.8 million. The Company’s foreign subsidiaries had various credit arrangements with banks totaling €9.0 million (approximately $11.4 million) all of which was available for borrowing, primarily restricted to borrowings by the respective foreign subsidiary.

Outlook

Demand for Performance Materials and Thermal/Acoustical Fibers products in the third quarter of 2012 is expected to be at levels consistent with the second quarter of 2012, however, Thermal/Acoustical Metals is expected to be impacted by lower demand, primarily in Europe. Also, the Company receives a material portion of its revenue from foreign operations and translation of those operations’ results into U.S. dollars may be affected by negative Euro exchange rate fluctuations.

The Company remains committed to assessing and adjusting its portfolio of businesses to provide shareholder value, and, as previously announced, is exploring strategic alternatives with respect to its Thermal/Acoustical Fibers business.

Results of Operations

Note: All of the following tabular comparisons, unless otherwise indicated, are for the quarters ended June 30, 2012 (Q2-12) and June 30, 2011 (Q2-11) and for the six months ended June 30, 2012 (YTD-12) and June 30, 2011 (YTD-11).

Net Sales

	Quarter Ended							Six Months Ended
In thousands	Q2-12		Q2-11		Percent Change			YTD-12		YTD-11		Percent Change
Net sales	$	97,535	$	98,831		(1.3	)%	$	194,289	$	200,504		(3.1	)%

Net sales for the current quarter decreased by $1.3 million, or 1.3%, compared to the second quarter of 2011. Foreign currency translation decreased net sales by $3.9 million, or 4.0%, for the current quarter, compared with the second quarter of 2011, impacting the Thermal/Acoustical Metals segment by $2.7 million, or 6.8%, and the Performance Materials segment by $1.2 million, or 3.4%. The unfavorable foreign currency translation and lower sales volumes resulted in lower net sales for the Performance Materials and Thermal/Acoustical Metals segments of $3.4 million and $2.2 million, respectively, compared to the same quarter a year ago. This was partially offset by an increase in net sales volumes from the Thermal/Acoustical Fibers segment of $4.6 million, or 22.5%, compared to the same quarter a year ago. Net sales of OPS, in the second quarter of 2012, increased by $0.3 million, or 10.2%, compared to the same quarter a year ago, primarily due to sales volumes and price increases.

Net sales for the six months ended June 30, 2012 decreased by $6.2 million, or 3.1%, compared to the first six months of 2011. Foreign currency translation decreased net sales by $5.4 million, or 2.7%, for the current six months ended, compared with the first six months of 2011, impacting the Thermal/Acoustical Metals segment by $3.8 million, or 4.7%, and the Performance Materials segment by $1.6 million, or 2.2%. The unfavorable foreign currency translation and lower sales volumes resulted in lower net sales from the Performance Materials and Thermal/Acoustical Metals segments of $10.8 million and $1.5 million, respectively, compared to the same period of 2011. This was partially offset by an increase in net sales volumes from the Thermal/Acoustical Fibers segment of $6.1 million, or 14.8%, compared to the same period of 2011. Net sales of OPS, for the six months ended June 30, 2012, increased by $0.8 million, or 11.3%, compared to the same period a year ago, primarily due to sales volumes and price increases.

Gross Profit

	Quarter Ended									Six Months Ended
In thousands	Q2-12			Q2-11			Percent Change			YTD-12			YTD-11			Percent Change
Gross profit	$	21,993		$	18,057			21.8	%	$	41,234		$	36,062			14.3	%
Percentage of sales		22.5	%		18.3	%					21.2	%		18.0	%

Gross margin for the second quarter of 2012 was 22.5% compared to 18.3% in the second quarter of 2011. The primary contributor to the improved gross margin was the Thermal/Acoustical Fibers segment which reported higher net sales and improved gross margin realized from manufacturing efficiency improvements. Additionally, to a lesser extent, OPS reported gross margin improvement in the second quarter of 2012, compared to the same quarter of 2011, primarily as a result of higher net sales and improved absorption of fixed costs.

Gross margin for the six months ended June 30, 2012 was 21.2% compared to 18.0% in the comparable period of 2011. The primary contributor to the improved gross margin was the Thermal/Acoustical Fibers segment which reported higher net sales and improved gross margin realized from manufacturing efficiency improvements. Additionally, to a lesser extent, the Thermal/Acoustical Metals segment and OPS reported gross margin improvement in the first six months of 2012, compared to the same period of 2011. Thermal/Acoustical Metals segment improvement was attributed to increased volumes of metal part sales partially offset by foreign currency translation and lower raw material costs, specifically aluminum and aluminum conversion costs. OPS improvement was attributed to higher net sales and improved absorption of fixed costs. These improvements in gross margin were partially offset by lower gross margin in the Performance Materials segment due to a decrease in net sales, lower absorption of fixed overhead costs as well as unfavorable mix among product sales.

Selling, Product Development and Administrative Expenses

	Quarter Ended									Six Months Ended
In thousands	Q2-12			Q2-11			Percent Change			YTD-12			YTD-11			Percent Change
Selling, product development and administrative expenses	$	13,655		$	13,477			1.3	%	$	27,899		$	27,347			2.0	%
Percentage of sales		14.0	%		13.6	%					14.4	%		13.6	%

The increase in selling, product development and administrative expenses for the quarter and the six months ended June 30, 2012 compared to the same periods of 2011 was primarily due to higher professional services expense incurred by the corporate office, mostly associated with strategic initiatives with respect to the Fibers business, and to a lesser extent, higher accrued incentive compensation expense. Partially offsetting the increase was foreign currency translation of $0.4 million and $0.6 million for the quarter and six months ended June 30, 2012, compared with the comparable periods of 2011.

Gain On Sale of Product Line

	Quarter Ended						Six Months Ended
In thousands	Q2-12		Q2-11		Percent Change		YTD-12		YTD-11		Percent Change
Gain on sale of product line	$	405	$	405		-	$	810	$	810		-

On June 30, 2010, the Company divested its electrical papers product line business for total consideration of $5.8 million, of which $4.8 million was paid on June 30, 2010, with the remaining $1.0 million paid in accordance with a License Agreement on July 2, 2012. This transaction contained multiple deliverables, some of which were delivered on June 30, 2010, while others were delivered in subsequent periods through June 30, 2012. The Company recognized $0.4 million of gain in both second quarters of 2012 and 2011 and $0.8 million of gain in both six months ended June 30, 2012 and June 30, 2011 as the Company completed its services to be provided under the License Agreement.

Interest Expense

	Quarter Ended									Six Months Ended
In thousands	Q2-12			Q2-11			Percent Change			YTD-12			YTD-11			Percent Change

Interest expense	$	87		$	473			(81.6	)%	$	177		$	683			(74.1	)%
Weighted average interest rate		5.5	%		5.3	%					5.5	%		5.4	%

The decrease in interest expense for the quarter and six months ended June 30, 2012 compared to the same periods of 2011 was due to lower average principal balances on capital lease obligations as well as lower amortization of debt financing costs resulting from the Company’s new domestic revolving credit facility that was entered into during the second quarter of 2011.

Other Income/Expense

Other income and expense for the quarters and six months ended June 30, 2012 and 2011 consisted of insignificant activity related to foreign exchange transaction gains and losses and interest income.

Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, France, Germany and the Netherlands. Within the next four quarters, the Company expects to conclude certain U.S. federal income tax matters through the year ended December 31, 2009 and it is reasonably expected that net unrecognized benefits of $0.5 million may be recognized. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2006, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2007.

Discontinued Operation, net of tax

	Quarter Ended		Six Months Ended
In thousands	June 30, 2011		June 30, 2011
Net sales	$	6,818	$	13,255

Income before income taxes		989		1,374
Income tax expense		362		499
Income from discontinued operations		627		875
Gain on sale of discontinued operations, net of tax of $2,229		3,857		3,857
Income from discontinued operations, net of tax	$	4,484	$	4,732

Segment Results

The following tables presents sales and operating income information for the key product and service groups included within each operating segment and other products and services for the quarter and six months ended June 30, 2012 compared with the quarter and six months ended June 30, 2011:

Net sales by segment:

	Quarter Ended
In thousands	Q2-12			Q2-11			Dollar Change
Performance Materials Segment:
Industrial Filtration	$	18,109		$	18,449		$	(340	)
Industrial Thermal Insulation		11,119			13,624			(2,505	)
Life Sciences Filtration		3,295			3,819			(524	)
Performance Materials Segment net sales		32,523			35,892			(3,369	)
Thermal/Acoustical Metals Segment:
Metal parts		35,738			37,455			(1,717	)
Tooling		1,947			2,406			(459	)
Thermal/Acoustical Metals Segment net sales		37,685			39,861			(2,176	)
Thermal/Acoustical Fibers Segment:
Fiber parts		24,191			20,283			3,908
Tooling		719			48			671
Thermal/Acoustical Fibers Segment net sales		24,910			20,331			4,579
Other Products and Services:
Life Sciences Vital Fluids		3,749			3,403			346
Other Products and Services net sales		3,749			3,403			346
Eliminations and Other		(1,332	)		(656	)		(676	)
Consolidated Net Sales	$	97,535		$	98,831		$	(1,296	)

	Six Months Ended
In thousands	YTD-12			YTD-11			Dollar Change
Performance Materials Segment:
Industrial Filtration	$	36,285		$	38,920		$	(2,635	)
Industrial Thermal Insulation		19,850			25,576			(5,726	)
Life Sciences Filtration		5,476			7,865			(2,389	)
Performance Materials Segment net sales		61,611			72,361			(10,750	)
Thermal/Acoustical Metals Segment:
Metal parts		73,546			72,969			577
Tooling		6,252			8,344			(2,092	)
Thermal/Acoustical Metals Segment net sales		79,798			81,313			(1,515	)
Thermal/Acoustical Fibers Segment:
Fiber parts		46,337			39,712			6,625
Tooling		745			1,303			(558	)
Thermal/Acoustical Fibers Segment net sales		47,082			41,015			6,067
Other Products and Services:
Life Sciences Vital Fluids		7,980			7,171			809
Other Products and Services net sales		7,980			7,171			809
Eliminations and Other		(2,182	)		(1,356	)		(826	)
Consolidated Net Sales	$	194,289		$	200,504		$	(6,215	)

Operating income (loss) by segment:

	Quarter Ended
	Q2-12						Q2-11
In thousands	Operating Income			Operating Margin %			Operating Income			Operating Margin %			Dollar Change
Performance Materials	$	4,982			15.3	%	$	6,093			17.0	%	$	(1,111	)
Thermal/Acoustical Metals		4,050			10.7	%		4,137			10.4	%		(87	)
Thermal/Acoustical Fibers		3,382			13.6	%		(1,549	)		(7.6	)%		4,931
Other Products and Services:
Life Sciences Vital Fluids		211			5.6	%		(294	)		(8.6	)%		505
Corporate Office Expenses		(3,882	)					(3,402	)					(480	)
Consolidated Operating Income	$	8,743			9.0	%	$	4,985			5.0	%	$	3,758

	Six Months Ended
	YTD-12						YTD-11
In thousands	Operating Income			Operating Margin %			Operating Income			Operating Margin %			Dollar Change
Performance Materials	$	7,102			11.5	%	$	12,390			17.1	%	$	(5,288	)
Thermal/Acoustical Metals		9,117			11.4	%		7,861			9.7	%		1,256
Thermal/Acoustical Fibers		5,611			11.9	%		(3,087	)		(7.5	)%		8,698
Other Products and Services:
Life Sciences Vital Fluids		520			6.5	%		(579	)		(8.1	)%		1,099
Corporate Office Expenses		(8,205	)					(7,060	)					(1,145	)
Consolidated Operating Income	$	14,145			7.3	%	$	9,525			4.8	%	$	4,620

Performance Materials

Segment net sales decreased $3.4 million, or 9.4%, in the second quarter of 2012 compared to the near record levels in the second quarter of 2011, due to decreased volumes and the negative impact of foreign currency translation. A reduction in Industrial Thermal Insulation net sales of $2.5 million, or 18.4%, primarily contributed to the reduction in net sales. Negatively impacting the Industrial Thermal Insulation business was $1.3 million lower net sales of electrical paper products manufactured under a contract manufacturing agreement with a customer. The Company sold this product line to the customer in 2010, and the Company will continue to manufacture product until the customer commences manufacturing electrical paper products later in 2012. Also impacting Industrial Thermal Insulation net sales was a decrease in sales of products used in commercial buildings due to customers adjusting inventory levels on certain products. Net sales of Industrial Filtration products decreased by $0.3 million, or 1.8%, in the second quarter of 2012 compared to the second quarter of 2011, due to foreign currency translation decreasing net sales $1.2 million, or 3.4%. The Company experienced greater demand for its products primarily in North America. Net sales of Life Sciences Filtration products decreased by $0.5 million, or 13.7%, in the second quarter of 2012 compared to the second quarter of 2011, primarily due to decreased demand for products used in life protection application products.

The segment reported operating income of $5.0 million, in the second quarter of 2012, or 15.3% of net sales, compared to operating income of $6.1 million, or 17.0% of net sales, in the second quarter of 2011. Operating income in the second quarters of 2012 and 2011 included a $0.4 million gain from services provided to the buyer of the electrical papers product line in accordance with the terms of a license agreement, which expired June 30, 2012. The decrease in operating income was primarily a result of lower net sales of $3.4 million, lower absorption of fixed overhead costs as well as unfavorable mix among product sales. Segment selling, product development and administrative expenses decreased $0.3 million in the current quarter compared to the second quarter of 2011, primarily due to foreign currency translation.

Segment net sales decreased $10.8 million, or 14.9%, in the first six months of 2012 compared to the record levels in the first six months of 2011, due to decreased volumes and the negative impact of foreign currency translation. A reduction in Industrial Thermal Insulation net sales of $5.7 million, or 22.4%, primarily contributed to the reduction in net sales. Negatively impacting the Industrial Thermal Insulation business was $3.1 million lower net sales of electrical paper products manufactured under a contract manufacturing agreement with a customer. The Company sold this product line to the customer in 2010, and the Company will continue to manufacture product until the customer commences manufacturing electrical paper products later in 2012. Also impacting Industrial Thermal Insulation net sales was a decrease in products used in commercial buildings due to a temporary customer shut-down in the first quarter of 2012 and customers adjusting inventory levels on certain products. Net sales of Industrial Filtration products decreased by $2.6 million, or 6.8%, in the first six months of 2012 compared to the first six months of 2011, due to a reduction in demand for its products in Europe and Asia markets as well as foreign currency translation decreasing net sales $1.6 million. Net sales of Life Sciences Filtration products decreased by $2.4 million, or 30.4%, in the first six months of 2012 compared to the first six months of 2011, primarily due to decreased demand for products used in water and life protection application products.

The segment reported operating income of $7.1 million, in the first six months of 2012, or 11.5% of net sales, compared to operating income of $12.4 million, or 17.1% of net sales, in the first six months of 2011. Operating income in the first six months of 2012 and 2011 included a $0.8 million gain from services provided to the buyer of the electrical papers product line in accordance with the terms of a license agreement, which expired June 30, 2012. The decrease in operating income was primarily a result of lower net sales of $10.8 million, lower absorption of fixed overhead costs as well as unfavorable mix among product sales. Segment selling, product development and administrative expenses decreased $0.3 million in the first half of 2012 compared to the first six months of 2011, primarily due to foreign currency translation.

Thermal/Acoustical Metals

In the second quarter of 2012, segment net sales decreased by $2.2 million, or 5.5%, compared to the second quarter of 2011. Foreign currency translation decreased net sales by $2.7 million, or 6.8%, for the current quarter, compared with the second quarter of 2011. Automotive parts net sales decreased by $1.7 million, or 4.6%, compared to the second quarter of 2011 due to foreign currency translation of $2.6 million, partially offset by increased demand for automobiles in North America on existing platforms, as well as from sales of parts on new platforms awarded to the Company, partially offset by lower demand in Europe. Tooling net sales in the second quarter of 2012 were lower by $0.5 million compared to the second quarter of 2011 due to foreign currency translation and the timing of new product launches.

For the second quarter of 2012, operating income for the segment was $4.1 million, or 10.7% of net sales, which was essentially flat compared to the second quarter of 2011.

In the first six months of 2012, segment net sales decreased by $1.5 million, or 1.9%, compared to the first six months of 2011. Foreign currency translation decreased net sales by $3.8 million, or 4.7%, in the first six months of 2012 compared with the first six months of 2011. Automotive parts net sales increased by $0.6 million, compared to the first six months of 2011. Higher volumes of net sales were due to strong consumer demand for automobiles in North America on existing platforms, as well as from sales of parts on new platforms awarded to the Company, partially offset by lower demand in Europe. Tooling net sales in the first six months of 2012 were lower by $2.1 million compared to the first six months of 2011 due to timing of new product launches and foreign currency translation.

For the first six months of 2012, operating income for the segment was $9.1 million, or 11.4% of net sales, compared to $7.9 million, or 9.7% of net sales, in the first six months of 2011. Contributing to this increase was increased volumes of metal parts sales, partially offset by foreign currency translation and lower raw material costs, specifically aluminum and aluminum conversion costs, compared to the first six months of 2011. Segment selling, product development and administrative expenses were essentially flat in the first half of 2012 compared to the first half of 2011.

Thermal/Acoustical Fibers

Segment net sales increased by $4.6 million, or 22.5%, compared to the second quarter of 2011. Automotive parts net sales increased by $3.9 million, or 19.3%, compared to the second quarter of 2011. Higher volumes of net sales were due to strong consumer demand for automobiles on existing platforms, as well as from sales of new parts on existing and new platforms awarded to the Company. Tooling net sales in the second quarter of 2012 were higher by $0.7 million compared to the second quarter of 2011, due to timing of new product launches.

Operating income for the segment was $3.4 million, or 13.6% of net sales, compared to an operating loss of $1.5 million in the second quarter of 2011. This improvement was due to higher net sales and improved gross margin realized from manufacturing efficiency improvements. These manufacturing improvements began in the second half of 2011 and continued through the second quarter of 2012. Significant reductions in scrap, material usage, and labor costs primarily contributed to lower per-unit manufacturing costs in the second quarter of 2012 compared to the second quarter of 2011, resulting in improved gross margin. Segment selling, product development and administrative expenses were essentially flat in the current quarter compared to the second quarter of 2011.

Segment net sales increased by $6.1 million, or 14.8%, compared to the first half of 2011. Automotive parts net sales increased by $6.6 million, or 16.7%, compared to the first half of 2011. Higher volumes of net sales were due to strong consumer demand for automobiles on existing platforms, as well as from sales of new parts on existing and new platforms awarded to the Company. Tooling net sales in the first half of 2012 were lower by $0.6 million compared to the first half of 2011, due to timing of new product launches.

Operating income for the segment was $5.6 million, or 11.9% of net sales, compared to an operating loss of $3.1 million in the first half of 2011. This improvement was due to higher net sales and improved gross margin realized from manufacturing efficiency improvements. These manufacturing improvements began in the second half of 2011 and continued through the first half of 2012. Significant reductions in scrap, material usage, and labor costs primarily contributed to lower per-unit manufacturing costs in the first half of 2012 compared to the first half of 2011, resulting in improved gross margin. Segment selling, product development and administrative expenses increased $0.2 million in the first half of 2012 compared to the first half of 2011. This increase was primarily related to increases in selling expenses as a result of higher net sales.

Other Products and Services

OPS net sales for the quarter ended June 30, 2012 increased $0.3 million, or 10.2%, compared to the same quarter a year ago, due to increased sales from the Life Sciences Vital Fluids business which was primarily attributed to higher volumes of blood transfusion net sales.

OPS reported operating income of $0.2 million, or 5.6% of net sales, for the quarter ended June 30, 2012, compared to an operating loss of $0.3 million for the second quarter of 2011. This improvement was due to higher net sales as well as reductions in the business’s cost structure in order to better align it with the long development cycles in the bioprocessing industry.

OPS net sales for the six months ended June 30, 2012 increased $0.8 million, or 11.3%, compared to the same period a year ago, due to increased sales from the Life Sciences Vital Fluids business which was primarily attributed to higher volumes of blood transfusion and bioprocessing product net sales.

OPS reported operating income of $0.5 million, or 6.5% of net sales, for the six months ended June 30, 2012, compared to an operating loss of $0.6 million for the same period a year ago. This improvement was due to higher net sales as well as reductions in 2012 to the business’s cost structure in order to better align it with the long development cycles in the bioprocessing industry.

Corporate Office Expenses

Corporate office expenses were $3.9 million and $3.4 million in the second quarters of 2012 and 2011, respectively. The increase was principally due to higher accrued incentive compensation.

Corporate office expenses were $8.2 million and $7.1 million in the first six months of 2012 and 2011, respectively. The increase was principally due to higher professional fees primarily related to exploring strategic initiatives with respect to the Fibers business and higher accrued incentive compensation.

Liquidity and Capital Resources

The Company assesses its liquidity in terms of its ability to generate cash to fund operating, investing and financing activities. The principal source of liquidity is operating cash flows. In addition to operating cash flows, other significant factors that affect the overall management of liquidity include capital expenditures, investments in businesses, strategic transactions, income tax payments, outcomes of contingencies, pension plan funding and availability of lines of credit and long-term financing. The Company manages worldwide cash requirements by considering available funds among domestic and foreign subsidiaries. The Company expects to finance its 2012 operating cash and capital spending requirements from existing cash balances, cash provided by operating activities and through borrowings under its existing credit agreements, as needed.

Financing Arrangements

The loan agreement governing the Domestic Credit Facility contains a number of affirmative and negative covenants, including financial covenants. The Company is required to meet a minimum fixed charge coverage ratio. The fixed charge coverage ratio requires that, at the end of each fiscal quarter, the ratio of consolidated EBITDA, as defined in the loan agreement, to fixed charges may not be less than 1 to 1 for the immediately preceding 12 month period. In addition, the Company must maintain a Consolidated Leverage Ratio, as defined, as of the end of each fiscal quarter of no greater than 2.5 to 1.0. The Company must also meet a minimum consolidated EBITDA of $15.0 million through September 30, 2014 and $25.0 million thereafter. The Company was in compliance with all covenants at June 30, 2012.

As of June 30, 2012, the Company had borrowing availability of $32.2 million under the Domestic Credit Facility, net of standby letters of credit outstanding of $2.8 million. The Company’s foreign subsidiaries had various credit arrangements with banks totaling €9.0 million (approximately $11.4 million) all of which was available for borrowings, primarily restricted to borrowings by the respective foreign subsidiary.

Operating Cash Flows

Net cash provided by operating activities in the first six months of 2012 was $12.5 million compared with net cash provided by operating activities of $5.8 million in the first six months of 2011. In the first six months of 2012 compared to the same period for 2011, net income, excluding the gain on sale of discontinued operations from all periods, improved by $4.4 million. Since December 31, 2011, operating assets and liabilities increased by $4.6 million, primarily due to increases in accounts receivable of $9.4 million in the first half of 2012, partially offset by higher accounts payable of $4.0 million due to timing of inventory purchases. The increase in accounts receivable was due to higher net sales in the last half of the second quarter of 2012 compared to the last half of the fourth quarter of 2011, with accounts receivable days outstanding at June 30, 2012 being consistent with December 31, 2011.

Investing Cash Flows

In the first six months of 2012, net cash provided by investing activities was $6.2 million compared to cash provided by investing of $7.0 million in the first six months of 2011. The Company received $12.0 million in cash in the first six months of 2012 as a result of its short-term investment maturing, compared to receiving $12.8 million in cash in the second quarter of 2011 as part of the sale of Affinity. Capital expenditures were $5.8 million during the first six months of 2012, compared with $3.3 million for the same period of 2011. Capital spending for 2012 is expected to be approximately $12.0 million to $14.0 million. Additionally, in the second quarter of 2011, the company placed $3.3 million into escrow as collateral for letters of credit.

Financing Cash Flows

In the first six months of 2012, net cash used for financing activities was $3.1 million compared to net cash used of $0.7 million in the first six months of 2011. In the first six months of 2012, the Company repurchased $2.7 million in company stock, compared to none for the comparable period. Capital lease payments made were $0.6 million and $0.7 million for the first six months of 2012 and 2011, respectively.

Critical Accounting Estimates

The preparation of the Company’s consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Footnote 1 of the “Notes to Consolidated Financial Statements” and Critical Accounting Estimates in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and the “Notes to Condensed Consolidated Financial Statements” of this report describe the significant accounting policies and critical accounting estimates used in the preparation of the consolidated financial statements. The Company’s management is required to make judgments and estimates about the effect of matters that are inherently uncertain. Actual results could differ from management’s estimates. There have been no significant changes in the Company’s critical accounting estimates during the quarter ended June 30, 2012.

During the fourth quarter of 2011, the Company performed its annual impairment analysis of $4.7 million of goodwill in the Life Sciences Vital Fluids reporting unit (“VF reporting unit”), included in OPS. The Company’s goodwill impairment testing analysis included estimating the fair value of the VF reporting unit, using both: (i) the income approach - discounted cash flows, and (ii) the market approach - comparable company analysis. The income approach involved determining the present value of future cash flows from the reporting unit’s projected financial results in 2012 – 2014 (and the projected cash flows beyond that three year period computed as the terminal value) and discounting those amounts based on appropriate market risks and other market factors. Based on those projections and the market approach using valuation multiples derived from select guideline companies, the Company concluded that the fair value of this reporting unit exceeded its carrying value of net assets. As a result, there was no impairment of goodwill.

The estimates of fair value of reporting units are based on the best information available as of the date of the assessment, which incorporate management assumptions about expected future cash flows, as well as other factors such as market capitalization and other market information. Future cash flows can be affected by numerous factors including changes in economic, industry or market conditions, changes in the underlying business or products of the reporting unit, changes in competition and changes in technology. Any changes in key assumptions about the business and its prospects, changes in any of the factors discussed above or other factors could affect the fair value of one or more of the reporting units resulting in an impairment charge. If future operating performance in the VF reporting unit does not reasonably meet expectations or other key assumptions change or are not met, then a non-cash impairment charge to income from operations could occur.

Recently Issued Accounting Standards

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in market risks from those disclosed in Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Company’s President and Chief Executive Officer (the “CEO”) and Vice President and Chief Financial Officer (the “CFO”), conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e)). Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures were effective as of June 30, 2012. The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management of the Company, with the participation of its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Change in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2012 that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to legal proceedings, claims, investigations and inquiries that arise in the ordinary course of business such as, but not limited to, patent, employment, personal injury, commercial, and environmental matters. Although there can be no assurance, the Company is not aware of any matters pending that are expected to be material with respect to the Company’s business, financial position, results of operations or cash flows.

Item 1A. Risk Factors

See the Company’s most recent annual report filed on Form 10-K (Part I, Item 1A). There has been no material change in this information. The risks described in the annual report on Form 10-K, and the “Safe Harbor Statement” in this report, are not the only risks faced by the Company. Additional risks and uncertainties not currently known or that are currently judged to be immaterial may also materially affect the Company’s business, financial position, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In August 2003, the Company’s Board of Directors approved a stock repurchase to mitigate the potentially dilutive effects of stock options and shares of restricted and unrestricted stock granted by the Company. Under the 2003 repurchase program, shares may be purchased by the Company up to the quantity of shares underlying options and other equity-based awards granted under shareholder approved plans.

On April 27, 2012 the Company’s Board of Directors approved a new stock repurchase program under which the Company may purchase up to 1.0 million shares. The new program replaces the 2003 repurchase program. During the three months ended June 30, 2012, the Company repurchased 219,476 shares at a total cost of $2.7 million.

The following table provides information with respect to all purchases made by the Company during the three months ended June 30, 2012. All purchases listed below were made in the open market at prevailing market prices.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly announced plan		Maximum Number of Shares That May Yet Be Purchased Under the Plan

April 1, 2012 - April 30, 2012		-	$	-		-		1,000,000
May 1, 2012 - May 31, 2012		130,167	$	12.28		130,167		869,833
June 1, 2012 - June 30, 2012		89,309	$	12.45		89,309		780,524
		219,476	$	12.35		219,476		780,524

Item 5. Other Information

On July 27, 2012, James V. Laughlan, Chief Accounting Officer and Controller (Principal Accounting Officer) was appointed the additional position of Treasurer, reporting to Erika H. Steiner, Vice President and Chief Financial Officer (Principal Financial Officer). The Treasurer position was previously held by Ms. Steiner.

Item 6. Exhibits

Exhibit Number		Description

3.1		Certificate of Incorporation of the Registrant, as amended, filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K dated March 12, 2004 and incorporated herein by this reference.

3.2		Bylaws of the Registrant, as amended and restated as of December 11, 2003, filed as Exhibit 3.2 to the Registrant’s Annual Report on 10-K dated March 12, 2004 and incorporated herein by this reference.

10.1		Lydall 2012 Stock Incentive Compensation Plan, filed with the Registrant’s 2012 Proxy Statement dated March 16, 2012 and incorporated herein by this reference.

10.2		Offer of Employment Letter to David H. Williams dated June 12, 2012, filed herewith.

10.3		Employment Agreement with David H. Williams dated June 27, 2012, filed herewith.

10.4		Form (for U.S. Employees) of Lydall, Inc. [Nonqualified] [Incentive] Stock Option Agreement, dated April 26, 2012, filed herewith.

10.5		Form (For U.S. Employees) of Lydall, Inc. Performance Share Award Agreement (Three-Year Period), dated April 26, 2012, filed herewith.

10.6		Form (For French Employees) of Lydall, Inc. Performance Share Award Agreement (Three-Year Period), dated June 21, 2012, filed herewith.

10.7		Form (For German Employees) of Lydall, Inc. Performance Share Award Agreement (Three-Year Period), dated June 21, 2012, filed herewith.

10.8		Form (For U.S Employees) of Lydall, Inc. Restricted Share Award Agreement, dated June 21, 2012, filed herewith.

10.9		Form (For Non-Employee Directors) of Lydall, Inc. Restricted Share Award Agreement, dated July 26, 2012, filed herewith.

10.10		Form (For Netherlands Employees) of Lydall, Inc. Nonqualified Stock Option Agreement, dated July 26, 2012, filed herewith.

10.11		Form (For French Employees) of Lydall, Inc. Nonqualified Stock Option Agreement, dated July 26, 2012, filed herewith.

10.12		Form (For German Employees) of Lydall, Inc. Nonqualified Stock Option Agreement, dated July 26, 2012, filed herewith.

31.1		Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, filed herewith.

31.2		Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, filed herewith.

32.1		Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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.

August 1, 2012	By:	/s/ Erika H. Steiner
		Erika H. Steiner Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

LYDALL, INC.

Index to Exhibits

Exhibit Number		Description

3.1		Certificate of Incorporation of the Registrant, as amended, filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K dated March 12, 2004 and incorporated herein by this reference.

3.2		Bylaws of the Registrant, as amended and restated as of December 11, 2003, filed as Exhibit 3.2 to the Registrant’s Annual Report on 10-K dated March 12, 2004 and incorporated herein by this reference.

10.1		Lydall 2012 Stock Incentive Compensation Plan, filed with the Registrant’s 2012 Proxy Statement dated March 16, 2012 and incorporated herein by this reference.

10.2		Offer of Employment Letter to David H. Williams dated June 12, 2012, filed herewith.

10.3		Employment Agreement with David H. Williams dated June 27, 2012, filed herewith.

10.4		Form (for U.S. Employees) of Lydall, Inc. [Nonqualified] [Incentive] Stock Option Agreement, dated April 26, 2012, filed herewith.

10.5		Form (For U.S. Employees) of Lydall, Inc. Performance Share Award Agreement (Three-Year Period), dated April 26, 2012, filed herewith.

10.6		Form (For French Employees) of Lydall, Inc. Performance Share Award Agreement (Three-Year Period), dated June 21, 2012, filed herewith.

10.7		Form (For German Employees) of Lydall, Inc. Performance Share Award Agreement (Three-Year Period), dated June 21, 2012, filed herewith.

10.8		Form (For U.S Employees) of Lydall, Inc. Restricted Share Award Agreement, dated June 21, 2012, filed herewith.

10.9		Form (For Non-Employee Directors) of Lydall, Inc. Restricted Share Award Agreement, dated July 26, 2012, filed herewith.

10.10		Form (For Netherlands Employees) of Lydall, Inc. Nonqualified Stock Option Agreement, dated July 26, 2012, filed herewith.

10.11		Form (For French Employees) of Lydall, Inc. Nonqualified Stock Option Agreement, dated July 26, 2012, filed herewith.

10.12		Form (For German Employees) of Lydall, Inc. Nonqualified Stock Option Agreement, dated July 26, 2012, filed herewith.

31.1		Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, filed herewith.

31.2		Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, filed herewith.

32.1		Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

EX-10.2 2 v317437_ex10-2.htm EXHIBIT 10.2

	Lydall, Inc.	Telephone 860 646-1233
	One Colonial Road	Facsimile 860 646-4917
	P.O. Box 151	Facsimile 860 646-8847
	Manchester, CT 06045-0151	www.lydall.com

Exhibit 10.2

June 12, 2012

David H. Williams

XXXXX

Dear Dave:

I am pleased to extend an invitation to you to join Lydall as President of its Performance Materials business. A formal appointment as an officer of Lydall will take place at the next Board of Directors’ meeting following your date of hire. Your starting date will be on a mutually agreed upon date, and is contingent upon successful fulfillment of all pre-employment requirements as outlined below. Mona Estey, Vice President of Human Resources, will assist you in all of the pre-employment procedures that may be required. As discussed, the particulars are as follows:

Compensation

Your base annual rate of compensation is $275,000 and will be paid on a bi-weekly basis. You will be eligible to participate in the Company Annual Incentive Performance (AIP) program at 40 percent of your actual paid base salary in accordance with Plan Provisions. You will receive a written description of the program with related targets during your orientation.

Sign On Bonus

The Company agrees to pay a lump sum of $60,000 as a sign on bonus within 30 days of your date of hire, providing you are an employee in good standing as of that date.

Health Premium Bridge

The Company will provide reimbursement in your first paycheck for documented COBRA premiums paid by you to bridge the Lydall health coverage waiting period of one month.

Stock Awards

The Compensation Committee of the Board of Directors will grant to you 20,000 shares of Incentive Stock Options and 15,000 shares of time-based Restricted Stock effective after expiration of the current quarter closing blackout period (This period is expected to expire on August 1, 2012). These grants will be made under the terms of Lydall’s existing shareholder approved stock plan.

Executive Agreement

Attached is an Agreement that outlines the terms of your severance arrangements.

Benefits

You are eligible for a comprehensive benefit package that includes medical, dental, disability, life, and 401(k) program. The applicable waiting periods and vesting schedules are outlined in the Benefits Handbook which will be provided to you during your orientation. A Summary of Benefits has been provided for your review.

Executive Life Program: in place of the Basic Life insurance described in the Summary of Benefits provided to all employees, you will participate in an executive life program that provides three times your annual base salary under an individually-owned universal life policy. The premiums for this benefit will be taxable to you as ordinary income. The other life programs (AD&D, Business Travel, and Supplemental) in the Summary of Benefits will apply to you as described.

Executive Long-Term Disability (LTD) Program: you are provided an executive LTD policy that is in addition to the group LTD program. The group program provides 60% replacement income to a monthly maximum of $10,000. The executive program is designed to obtain replacement income to bring executive up to 100% of base salary; however, it is limited to the supplemental insurance that can be obtained from the carrier based upon each individual executive.

Vacation

You will be eligible for two weeks paid vacation for the balance of 2012, and four weeks paid vacation in 2013. You will continue at that level until you are eligible for additional weeks according to the Vacation Policy. All other provisions of the Vacation Policy apply.

Company Car

You will be provided with a $920 monthly car allowance that is intended to cover the cost of a car and its maintenance and insurance costs, as outlined in the Company Policy. A company gas card will be provided for your use, and the personal use will be estimated by the company and considered taxable income.

Moving and Relocation

The Company has agreed to provide full relocation assistance as outlined in the attached Full Relocation Benefit Procedure. You must follow all the requirements in this Policy in order to be eligible for relocation benefits, including signing a Lydall Relocation Repayment Agreement that states you are subject to repay the relocations costs to the company in the event of your voluntary termination or a termination for “cause”. Please contact Beth Duncan at CBRB Relocation Services (XXX-XXX-XXXX xXXXX) who will assist in all aspects of your relocation including the physical move of your household goods.

Other

Employment with the Company is contingent upon: 1) your passing a substance abuse screening; 2) your signing the Confidentiality, Invention and Non-Compete Agreement; 3) your ability to provide the Company with proper documentation to establish your identity and eligibility for employment in the U.S; 4) completion of an Employment Application; 5) satisfactory completion and receipt of references and background checks; and 6) your providing a copy of any agreement with your current or prior employers and our determination that your employment would not be a violation of any such agreement. Any violation of the above terms may subject you to withdrawal of the offer or termination of employment.

This letter is not a contract of employment. If you accept the offer and the other conditions for employment are satisfied, your employment with Lydall will be at-will, and both parties remain free to terminate the employment relationship at any time, in which case, the provisions of this letter may no longer apply. The terms of this offer must remain confidential and any disclosure to third parties, other than your legal counsel and advisors, must receive the written approval of the Company in advance.

Prior to your first day of employment, you must have completed your substance abuse screening at the clinic the company identifies for your location. You will find instructions when you use the assigned access code (provided below) to log into our website.

Should you accept this invitation to join Lydall, you will need to complete pre-employment forms and bring them to the Human Resources Department on your first day of employment. To obtain these required forms log into www.Lydall.com, select New Hires. This website will provide you with all of the pre-employment documents and policies you will need to begin your first day of employment. The following are the access codes that you will need to gain access to these forms: Username: XXXX, Password: XXXX (Username and Password are case sensitive).

This offer is valid for 30 days unless accepted or withdrawn in writing. This Letter Agreement supersedes all prior understanding, whether written or oral, relating to the terms of your employment with Lydall. We look forward to the contributions that you will bring to our team. Please feel free to contact me if you have any questions.

Sincerely,

/s/ Dale G. Barnhart

Dale G. Barnhart

President and Chief Executive Officer

Previously provided documents: Summary of Benefits, Relocation Procedure, Confidentiality, Invention and Non-Compete Agreement

Acceptance of Offer:	/s/ David H. Williams	6/27/12
	David H. Williams	Date

EX-10.3 3 v317437_ex10-3.htm EXHIBIT 10.3

Exhibit 10.3

AGREEMENT

THIS AGREEMENT is made and entered into as of the 27th day of June, 2012, by and between LYDALL, INC., a Delaware corporation and/or its subsidiaries (together the "Company"), and David H. Williams (the "Employee").

W I T N E S S E T H

WHEREAS, the Company and the Employee (the "Parties") have agreed to enter into this agreement (the "Agreement) relating to the termination of the employment of the Employee;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Parties, intending to be legally bound, agree as follows:

1. Termination of Employment by the Company.

1.1 Termination by the Company Other Than For Cause. The Company may terminate the Employee's employment at any time other than for Cause (as defined in Section 1.2), by giving the Employee a written notice of termination at least 30 days before the date of termination (or such lesser notice period as the Employee may agree to). In the event of such a termination of employment pursuant to this Section 1.1, the Employee shall be entitled to receive (i) the benefits described in Section 3 if such termination of employment does not occur within 18 months following a "Change of Control" (as defined in Section 5), or (ii) the benefits described in Section 4 if such termination of employment occurs within 18 months following a Change of Control.

1.2 Termination for Cause. The Company may terminate the Employee's employment immediately for Cause for any of the following reasons: (i) an act or acts of dishonesty or fraud by the Employee relating to the performance of his services to the Company; (ii) a breach by the Employee of his duties or responsibilities under this Agreement resulting in significant demonstrable injury to the Company or any of its subsidiaries; (iii) the Employee's conviction of a felony or any crime involving moral turpitude; (iv) the Employee's material failure (for reasons other than death or Disability) to perform his duties under this Agreement or insubordination (defined as refusal to execute or carry out directions from the Board or its duly appointed designees) where the Employee has been given written notice of the acts or omissions constituting such failure or insubordination and the Employee has failed to cure such conduct, where susceptible to cure, within ten days following such notice; or (v) a breach by the Employee of any provision of any material policy of the Company or of his obligations under the confidentiality, non-competition and invention ownership agreement executed by the Employee and attached hereto as Exhibit A (the "Confidentiality Agreement"). The Company shall exercise its right to terminate the

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Employee's employment for Cause by giving the Employee written notice of termination specifying in reasonable detail the circumstances constituting such Cause. In the event of such termination of the Employee's employment for Cause, the Employee shall be entitled to receive only (i) his base salary earned through the date of such termination of employment plus his base salary for the period of any vacation time earned but not taken for the year of termination of employment, such base salary to be paid in a lump sum no later than the next payroll date following the Employee's date of termination to the extent not previously paid, (ii) any other compensation and benefits to the extent actually earned by the Employee under any other benefit plan or program of the Company as of the date of such termination of employment, such compensation and benefits to be paid at the normal time for payment of such compensation and benefits to the extent not previously paid and (iii) any reimbursement amounts owing.

2. Termination of Employment by the Employee. The Employee may terminate his employment at any time and for any reason by giving the Company a written notice of termination to that effect at least 30 days before the date of termination (or such lesser notice period as the Company may agree to); provided, however, that the Company following receipt of such notice from the Employee may elect to have the Employee's employment terminate immediately following its receipt of such notice. In the event of the Employee's termination of his employment, the Employee shall be entitled to receive only (i) his base salary earned through the date of such termination of employment plus his base salary for the period of vacation time earned but not taken for the year of termination of employment, such base salary to be paid in a lump sum no later than the next payroll date following the Employee's date of termination to the extent not previously paid, (ii) any other compensation and benefits to the extent actually earned by the Employee under any other benefit plan or program of the Company as of the date of such termination of employment, such compensation and benefits to be paid at the normal time for payment of such compensation and benefits to the extent not previously paid, and (iii) any reimbursement amounts owing.

3. Benefits Upon Termination Without Cause (No Change of Control). If (a) the Employee's employment hereunder shall terminate because of termination by the Company pursuant to Section 1.1 and (b) such termination of employment does not occur within 18 months following a Change of Control of the Company, the Employee shall be entitled to the following:

(a) The Company shall pay to the Employee his base salary earned through the date of such termination of employment in a lump sum no later than the next payroll date following the Employee's date of termination to the extent not previously paid, and any other compensation and benefits to the extent actually earned by the Employee under any benefit plan or program of the Company as of the date of such termination of employment, any such compensation and benefits to be paid at the normal time for payment of such compensation and benefits to the extent not previously paid.

(b) The Company shall pay the Employee any reimbursement amounts owing.

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(c) The Company shall pay to the Employee one (1) times the sum of (i) the Employee's annual rate of base salary in effect immediately preceding his termination of employment, and (ii) the average of his annual bonuses earned under the Company's annual bonus plan for the three calendar years preceding his termination of employment (or, if the Employee was not eligible for a bonus in each of those three calendar years, then the average of such bonuses for all of the calendar years in such three-year period for which he was eligible), with any deferred bonuses counting for the year earned rather than the year paid (the "Severance Benefit"). The Severance Benefit shall be paid in installments at the times that salary payments are normally made by the Company; provided that, if at the time of the Employee's termination of employment, the Employee is a "specified employee" as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations and guidance issued thereunder (a "Specified Employee"), then the Severance Benefit shall be paid in a lump sum on the first payroll date that occurs six (6) months after the date of the Employee's termination of employment.

(d) If the Employee elects to continue coverage under the Company's health plan pursuant to COBRA, then for the period beginning on the date of the Employee's termination of employment and ending on the earlier of (i) the date which is 12 months after the date of such termination of employment or (ii) the date the Employee becomes eligible for health insurance benefits under the group health plan of another employer, the Company will pay the same percentage of the Employee's premium for COBRA coverage for the Employee and, if applicable, his spouse and dependent children, as the Company paid at the applicable time for coverage under such plan for actively employed members of management generally. In addition, for the period beginning on the date of the Employee's termination of employment and ending on the earlier of (i) the date which is 12 months after the date of such termination of employment or (ii) the date on which the Employee becomes eligible for life insurance benefits from another employer, the Company will continue to provide the executive life insurance benefits that the Company would have provided to the Employee if the Employee had continued in employment with the Company for such period, but only if the Employee timely pays the portion of the premium for such coverage that members of management of the Company generally are required to pay for such coverage, if any. The Employee shall notify the Company promptly if he, while eligible for benefits under this subsection (d), becomes eligible to receive health and/or life insurance benefits from another employer.

(e) The Company will pay to the outplacement services provider reasonably selected by the Employee an amount not to exceed $10,000 for outplacement services costs incurred by Employee within the twelve months following the Employee's termination of employment.

(f) The Company's obligation to provide the severance benefits set forth in Sections 3(c), (d) and (e) upon the Employee's termination of employment without Cause, which does not occur within 18 months following a Change of Control, is subject to the Employee's execution without revocation of a valid release in substantially the form attached to this Agreement as Exhibit B (the "Release").

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4. Benefits Upon Termination Without Cause (Change of Control). If (a) the Employee's employment hereunder shall terminate because of termination by the Company pursuant to Section 1.1 and (b) such termination of employment occurs within 18 months following a Change of Control of the Company, the Employee shall be entitled to the following:

(b) The Company shall pay the Employee any reimbursement amounts owing.

(c) The Company shall pay to the Employee as a severance benefit an amount equal to two (2) times the sum of (i) his annual rate of base salary in effect immediately preceding his termination of employment, and (ii) the average of his three highest annual bonuses earned under the Company's annual bonus plan for any of the five calendar years preceding his termination of employment (or, if the Employee was not eligible for a bonus for at least three calendar years in such five-year period, then the average of such bonuses for all of the calendar years in such five-year period for which the Employee was eligible), with any deferred bonuses counting for the year earned rather than the year paid (the "COC Severance Benefit"). The COC Severance Benefit shall be paid in a lump sum within 30 days after the date of such termination of employment; provided that, if at the time of the Employee's termination of employment, the Employee is a Specified Employee, then the COC Severance Benefit shall be paid in a lump sum on the date that is six (6) months after the date of such termination of employment.

(d) The Company shall pay to the Employee as a bonus for the year of termination of his employment an amount equal to a portion (determined as provided in the next sentence) of the Employee's target bonus opportunity under the Company's annual bonus plan for the calendar year of termination of the Employee's employment or, if none, such portion of the bonus awarded to the Employee under the Company's annual bonus plan for the calendar year immediately preceding the calendar year of the termination of the Employee's employment, with deferred bonuses counting for the year earned rather than the year paid. Such portion shall be determined by dividing the number of days of the Employee's employment during such calendar year up to his termination of employment by 365 (366 if a leap year). Such payment shall be made in a lump sum within 30 days after the date of such termination of employment, and the Employee shall have no right to any further bonuses under said plan; provided that, if at the time of the Employee's termination of employment, the Employee is a Specified Employee, then such payment shall be made in a lump sum on the date that is six (6) months after the date of such termination of employment, and the Employee shall have no right to any further bonuses under said plan.

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(e) If the Employee elects to continue coverage under the Company's health plan pursuant to COBRA, then for the period beginning on the date of the Employee's termination of employment and ending on the earlier of (i) the date which COBRA coverage ends but not to exceed 24 months after the date of such termination of employment or (ii) the date the Employee becomes eligible for comparable benefits from another employer, the Employee (and, if applicable, the Employee's spouse and dependent children) shall remain covered by the medical, dental, executive life insurance, and, if reasonably commercially available through nationally reputable insurance carriers, executive long-term disability plans of the Company that covered the Employee immediately prior to his termination of employment as if the Employee had remained in employment for such period; provided, however, that the coverage under any such plan is conditioned on the timely payment by the Employee (or his spouse or dependent children) of the portion of the premium for such coverage that actively employed members of senior management of the Company generally are required to pay for such coverage. The Employee shall notify the Company promptly if he, while eligible for benefits under this subsection (e) becomes eligible to receive benefits from another employer.

(f) Each stock option granted by the Company to the Employee and outstanding immediately prior to termination of his employment shall be fully vested and immediately exercisable and may be exercised by the Employee (or, following his death, by the person or entity to which such option passes) at any time prior to the expiration date of the applicable option (determined without regard to any earlier termination of the option that would otherwise occur by reason of termination of his employment). Each restricted stock award granted by the Company to the Employee and outstanding immediately prior to termination of the Employee's employment shall be fully vested upon such termination of employment.

(g) The Company will pay to the outplacement services provider reasonably selected by the Employee an amount not to exceed $10,000 for outplacement services costs incurred by Employee within the twelve months following the Employee's termination of employment.

(h) The Company shall promptly pay all reasonable attorneys' fees and related expenses incurred by the Employee in seeking to obtain or enforce any right or benefit under this Section 4 or to defend against any claim or assertion in connection with this Section 4, but only if and to the extent that the Employee substantially prevails.

(i) The Company will pay to the Employee an automobile allowance, in an amount equal to the Employee's monthly lease allowance at the time of termination, each month for 24 months following termination of the Employee's employment to replace the Company-leased automobile, which leased automobile will be returned to the Company by the Employee on the date of termination of the Employee's employment; provided that, if at the time of the Employee's termination of employment, the Employee is a Specified Employee, then fifty percent (50%) of the automobile allowance shall be paid in a lump sum on the date that is six (6) months after the date of termination, and the remaining fifty percent (50%) of the automobile allowance shall be paid in six (6) equal monthly installments, beginning in the seventh month following the date of termination.

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(j) The Company's obligation to provide the severance benefits set forth in Sections 4(c), (d), (e), (f), (g), (h) and (i) upon the Employee's termination of employment without Cause within 18 months following a Change of Control is subject to the Employee's execution of the Release.

5. Change of Control. For the purposes of this Agreement, a "Change of Control" shall be deemed to occur upon the consummation of any of the following events: (a) any person or persons acting together which would constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (other than the Company or any subsidiary of the Company) shall beneficially own (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at least 25% of the total voting power of all classes of capital stock of the Company entitled to vote generally in the election of the Board; (b) Current Directors (as herein defined) shall cease for any reason to constitute at least a majority of the members of the Board (for this purpose, a "Current Director" shall mean any member of the Board as of the date hereof and any successor of a Current Director whose election, or nomination for election by the Company's shareholders, was approved by at least a majority of the Current Directors then on the Board); (c) (i) the complete liquidation of the Company or (ii) the merger or consolidation of the Company, other than a merger or consolidation in which (x) the holders of the common stock of the Company immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the common stock of the continuing or surviving corporation immediately after such consolidation or merger or (y) the Board immediately prior to the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation, which liquidation, merger or consolidation has been approved by the shareholders of the Company; or (d) the sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company pursuant to an agreement (or agreements) which has (have) been approved by the shareholders of the Company.

6. Golden Parachute Excise Tax.

(a) In the event that any payment or benefit received or to be received by the Employee pursuant to this Agreement or any other plan, program or arrangement of the Company or any of its affiliates would constitute an "excess parachute payment" within the meaning of Section 280G of the Code ("Excess Parachute Payment"), then the payments under this Agreement shall be reduced (by the minimum possible amounts) until no amount payable to the Employee under this Agreement constitutes an Excess Parachute Payment; provided, however, that no such reduction shall be made if the net after-tax payment (after taking into account Federal, state, local or other income and excise taxes) to which the Employee would otherwise be entitled without such reduction would be greater than the net after-tax payment (after taking into account Federal, state, local or other income and excise taxes) to the Employee resulting from the receipt of such payments with such reduction. If, as a result of subsequent events or conditions (including a subsequent payment or absence of a subsequent payment under this Agreement or other plan, program or arrangement of the Company or any of its affiliates), it is determined that payments under this Agreement have been reduced by more than the minimum amount required to prevent any payments from constituting an Excess Parachute Payment, then an additional payment shall be promptly made to the Employee in an amount equal to the additional amount that can be paid without causing any payment to constitute an Excess Parachute Payment.

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(b) All determinations required to be made under this Section 6 shall be made by a nationally recognized independent accounting firm mutually agreeable to the Company and the Employee (the "Accounting Firm") which shall provide detailed supporting calculations to the Company and the Employee as requested by the Company or the Employee. All fees and expenses of the Accounting Firm shall be borne solely by the Company and shall be paid by the Company upon demand of the Employee as incurred or billed by the Accounting Firm. All determinations made by the Accounting Firm pursuant to this Section 6 shall be final and binding upon the Company and the Employee.

(c) To the extent any payment or benefit is to be reduced pursuant to this Section 6, the severance payment described in Section 3(c) or 4(c) will first be reduced and then the bonus described in Section 4(d), in each case only to the extent necessary.

7. Entitlement to Other Benefits. Except as otherwise provided in this Agreement, this Agreement shall not be construed as limiting in any way any rights or benefits that the Employee or his spouse, dependents or beneficiaries may have pursuant to any other plan or program of the Company; provided that the Employee shall not be eligible to receive any benefits under any circumstances under any severance plan or policy of the Company, including, without limitation, the Lydall, Inc. Severance Plan.

8. General Provisions.

8.1 No Duty to Seek Employment. The Employee shall not be under any duty or obligation to seek or accept other employment following termination of employment, and no amount, payment or benefits due to the Employee hereunder shall be reduced or suspended if the Employee accepts subsequent employment, except as expressly set forth herein.

8.2 Deductions and Withholding. All amounts payable or which become payable under any provision of this Agreement shall be subject to any deductions authorized by the Employee and any deductions and withholdings required by law.

8.3 Notices. All notices, demands, requests, consents, approvals or other communications (collectively "Notices") required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be delivered personally, sent by facsimile transmission with a copy deposited in the United States mail, registered or certified, return receipt requested, postage prepaid, or sent by overnight mail addressed as follows:

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	To the Company:	Lydall, Inc. P.O. Box 151 One Colonial Road Manchester, CT 06045-0151 Attn: Chief Executive Officer

	To the Employee:	David H. Williams
		XXXXX
		XXXXX

or such other address as such party shall have specified most recently by written notice. Notice mailed as provided herein shall be deemed given when so delivered personally or sent by facsimile transmission, or, if sent by overnight mail, on the day after the date of mailing.

8.4 No Disparagement. The Employee shall not during the period of his employment with the Company, nor following the date of termination of his employment for any reason, publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning the Company, or any of its subsidiaries or affiliates or any of their shareholders, directors, officers, employees or agents. "Disparaging" remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged. The Employee agrees that the terms of this Section 8.4 shall survive the term of this Agreement and the termination of the Employee's employment.

8.5 Proprietary Information and Inventions. The Confidentiality Agreement is incorporated by reference in this Agreement, and the Employee agrees to continue to be bound thereby.

8.6 Covenant to Notify Management. The Employee agrees to abide by the ethics policies of the Company as well as the Company's other rules, regulations, policies and procedures. The Employee agrees to comply in full with all governmental laws and regulations as well as ethics codes applicable. In the event that the Employee is aware or suspects the Company, or any of its officers or agents, of violating any such laws, ethics, codes, rules, regulations, policies or procedures, the Employee agrees to bring all such actual and suspected violations to the attention of the Company immediately so that the matter may be properly investigated and appropriate action taken. The Employee understands that the Employee is precluded from filing a complaint with any governmental agency or court having jurisdiction over wrongful conduct unless the Employee has first notified the Company of the facts and permits it to investigate and correct the concerns.

8.7 Amendments and Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Employee and the Company. No waiver by either Party hereto at any time of any breach by the other Party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

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8.8 Beneficial Interests. This Agreement shall inure to the benefit of and be enforceable by (a) the Company's successors and assigns and (b) the Employee's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee shall die while any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee, or other designee or, if there be no such designee, to the Employee's estate.

8.9 Successors. The Company will require any successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform.

8.10 Assignment. This Agreement and the rights, duties, and obligations hereunder may not be assigned or delegated by any Party without the prior written consent of the other Party and any attempted assignment or delegation without such prior written consent shall be void and be of no effect. Notwithstanding the foregoing provisions of this Section 8.10, the Company may assign or delegate its rights, duties and obligations hereunder to any affiliate or to any person or entity which succeeds to all or substantially all of the business of the Company or one of its subsidiaries through merger, consolation, reorganization, or other business combination or by acquisition of all or substantially all of the assets of the Company or one of its subsidiaries without the Employee's consent.

8.11 Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut without regard to the conflicts of law provisions thereof.

8.12 Statute of Limitations. The Employee and the Company hereby agree that there shall be a one year statute of limitations for the filing of any requests for arbitration or any lawsuit relating to this Agreement or the terms or conditions of Employee's employment by the Company. If such a claim is filed more than one year subsequent to the Employee's last day of employment it shall be precluded by this provision, regardless of whether or not the claim has accrued at that time.

8.13 Right to Injunctive and Equitable Relief. The Employee's obligations under Section 9.4 are of a special and unique character, which gives them a peculiar value. The Company cannot be reasonably or adequately compensated for damages in an action at law in the event the Employee breaches such obligations. Therefore, the Employee expressly agrees that the Company shall be entitled to injunctive and other equitable relief without bond or other security in the event of such breach in addition to any other rights or remedies which the Company may possess or be entitled to pursue. Furthermore, the obligations of the Employee and the rights and remedies of the Company under Section 8.4 and this Section 8.13 are cumulative and in addition to, and not in lieu of, any obligations, rights, or remedies as created by applicable law. The Employee agrees that the terms of this Section 8.13 shall survive the term of this Agreement and the termination of the Employee's employment.

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8.14 Severability or Partial Invalidity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

8.15 Entire Agreement. This Agreement, along with the Confidentiality Agreement, constitutes the entire agreement of the Parties and supersedes all prior written or oral and all contemporaneous oral agreements, understandings, and negotiations between the Parties with respect to the subject matter hereof. This Agreement may not be changed orally and may only be modified in writing signed by both Parties. This Agreement, along with the Confidentiality Agreement, is intended by the Parties as the final expression of their agreement with respect to such terms as are included herein and therein and may not be contradicted by evidence of any prior or contemporaneous agreement. The Parties further intend that this Agreement, along with the Confidentiality Agreement, constitutes the complete and exclusive statement of their terms and that no extrinsic evidence may be introduced in any judicial proceeding involving such agreements.

8.16 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Employee has hereunto set his hand as of the day and year first above written.

	LYDALL, INC

By:	\s\ Dale Barnhart	6/27/2012
	Dale Barnhart	Date
	President and Chief
	Executive Officer


	\s\ David H. Williams	6/27/2012
	David H. Williams	Date

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EXHIBIT A

CONFIDENTIALITY AGREEMENT

Lydall, Inc.

(Also referred to as the “Company”)

Confidentiality, Invention and Non-Compete Agreement

In consideration of my employment by the Company, or future employment with an affiliate to whom I am transferred (together the “Company”), the compensation and other benefits to be received by me from the Company, I agree that:

Definitions

The term “Confidential Information” as used in this Agreement includes all business information and records which relate to the Company or to parties working with the Company under a confidentiality agreement, and which are not known to the public generally, including, but not limited to, technical notebook records, technical reports, patent applications, machine equipment, computer software, models, process and product designs including any drawings and descriptions, unwritten knowledge and “know-how”, operating instructions, training manuals, production and development processes, production or other schedules, customer lists, customer buying records, product sales records, sales requests, territory listings, market surveys, plans including marketing plans and long-range plans, salary information, contracts, supplier lists, product costs, policy statements, policy procedures, policy manuals, flowcharts, computer printouts, program listings, reproductions and correspondence.

The term “Invention” as used in this Agreement includes any discovery, improvement, design or idea, patentable, copywriteable or otherwise, which relates to any activity or business in which the Company is engaged or any process, equipment, material, product or method (including computer software) in which the Company has any direct or indirect interest.

Inventions

I will disclose promptly to the Company any Invention conceived, developed or perfected by me, either alone or jointly with another or others, while I am an employee, whether or not such conception, development or perfection occurs during the hours of my employment.

I grant to the Company without further compensation, all my right, title and interest in and to any such Invention for the sole use and benefit of the Company, together with all U.S. and foreign patents, trademarks or copyrights that may at any time be granted, and all reissues, renewals and extensions of such patents, trademarks or copyrights. At the request and expense of the Company, I will at any time do what the Company reasonably believes to be necessary to assist the Company to vest full right and title to each such Invention in the Company, enable the Company to obtain and maintain full right and title in any country, prosecute applications for and secure patents (including their reissue, renewal and extension), trademarks, copyrights and any other form of protection for each such Invention, and prosecute or defend any interference or opposition which may be declared involving any such application or patent and any litigation in which the Company may be involved concerning any such Invention. This will include preparing, executing and delivering any written document, drawings, flowcharts, or computer printouts. The provisions of this section will continue after I stop working for the Company and shall be binding on my executors, administrators and assigns, unless waived in writing by the Company.

Confidential Information

I have not disclosed and will not disclose to the Company, and I will not use, in the discharge of my duties as an employee of the Company, any trade secret or confidential or proprietary information belonging to a former employer or other person. The limitation set forth in this section shall not apply to matters which (a) are or become public knowledge, (b) were previously known to the Company, (c) are subsequently received by the Company from a third party, or (d) are independently derived by the Company.

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I will not, directly or indirectly, during or at any time after the period of my employment by the Company, use for myself or others, or disclose to others, any Confidential Information, no matter how such information becomes known to me, unless I first obtain the Company’s written consent.

When I leave the Company’s employ, or at any other time upon request by the Company, I will promptly deliver to the Company all documents and records, including but not limited to those listed under the definition of Confidential Information, which are in my possession or under my control and which pertain to the Company, any of its activities or any of my activities while in the course of my employment and all copies thereof. I will not retain or deliver to any others copies of these documents or records.


		THE FOLLOWING SECTION 4 ONLY RELATES TO SALARIED EXEMPT AND NON-EXEMPT EMPLOYEES

	4.	Non-Competition
		I acknowledge and agree that the Company’s business competes upon a worldwide basis, and that the degree of competition in that business is high. I recognize that the Company may assign me to duties in a geographic area or specific market. I agree that, unless I first obtain the Company’s written consent, I will not during my employment with the Company and for a period of two (2) years following the termination of my employment (provided, however, that if I am employed by the Company for less than two (2) years, the post-employment period to which this section applies shall be the greater of six (6) months or the length of my employment in any capacity), directly or indirectly or through others, individually, or as a member, officer, director, employee, agent, or investor of any partnership or entity (except ownership of not more than one percent (1%) of the outstanding publicly traded stock of any company):

	(i)	participate in the ownership, management, operation or control of, or work for (as an employee, consultant or independent contractor) or have any material financial interest in, any business competitive with the Company in (a) any market in which the company for which I have worked in the two (2) preceding years has sold or attempted to sell any of its product in the two (2) years preceding my termination or (b) if the Company has assigned me to duties in a geographic area, within two hundred fifty (250) miles of any such geographic area in which I have worked in the two (2) years preceding my termination,

	(ii)	induce or encourage any employee of the Company to terminate his or her employment with the Company, or

	(iii)	solicit, induce or encourage any person, business or entity which is a supplier of, a purchaser from, or a contracting party with, the Company to terminate any written or oral agreement, order or understanding with the Company or to conduct business in a way that results in an adverse impact to the Company.

	I further understand and agree that the remedy at law for any breach or threatened breach of my agreement not to compete contained in this section would be inadequate and that any breach or attempted breach would result in irreparable damage to the Company, the monetary amount of which would be impossible to ascertain. Thus, I agree that in the event of any breach or threatened breach of my agreement not to compete, in addition to all other available legal or equitable remedies, the Company may obtain injunctive relief to remedy damage caused by such breach or threatened breach, and that the Company shall be entitled to recover from me its costs and expenses, including reasonable attorney fees, incurred in remedying such breach or threatened breach.

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General Terms

I represent and agree that I have and will assume no obligations to others inconsistent with any of my obligations to the Company under this Agreement. I represent and agree that the performance of my duties and obligations as an employee of the Company does not, and shall not, breach any agreement that obligates me to refrain from competing, directly or indirectly, with the business of any other party.

In consideration of my employment, I agree to conform to the policies of the Company. I understand that my employment is for an indefinite period and can be terminated at any time, with or without cause or prior notice by either the Company or me. No other representations or agreements have been made regarding the term or termination of my employment.

This Agreement, which is ancillary to any other agreement I may have with the Company, (a) is intended as the complete and exclusive statement of my agreement with the Company with respect to its subject matter, (b) shall be binding upon my heirs, executors and administrators, (c) shall be assignable by the Company to its successors; (d) shall not be modified unless in writing and signed by me and the Company, (e) shall be governed by and construed in accordance with the law of the State of Connecticut, the Company ‘s home office state, and (f) if any part of this Agreement is found invalid by any court, the remainder shall be valid and enforceable in law and equity.

			Lydall, Inc.

Employee Name:	David H. Williams	By:	/s/ David H. Williams
Date:	6/27/2012	Title:	President, Performance Materials

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EXHIBIT B

TERMINATION, VOLUNTARY RELEASE AND WAIVER OF RIGHTS AGREEMENT

I, David H. Williams, unqualifiedly accept and agree to the relinquishment of my title, responsibilities and obligations as an employee of Lydall, Inc. and/or its subsidiaries (together "the Company"), and concurrently and unconditionally agree to sever my relationship as an employee of the Company, in consideration for the voluntary payment to me by the Company of the separation benefits set forth in Section 3, 4 of the Agreement dated as of June 27^th, 2012 by and between me and the Company (the "Severance Agreement"), which is made a part hereof.

1. In exchange for this consideration, which I understand that the Company is not otherwise obligated to provide to me, I voluntarily agree to waive and forego any and all claims, rights, interests, covenants, contracts, warranties, promises, undertakings, actions, suits, causes of action, obligations, debts, attorneys' fees or other expenses, accounts, judgments, fines, fees, losses and liabilities, of any kind, nature or description, in law, equity or otherwise (collectively, "Claims") that I may have against the Company and to release the Company and their respective affiliates, subsidiaries, officers, directors, employees, representatives, agents, successors and assigns (hereinafter collectively referred to as "Releasees") from any obligations any of them may owe to me, accepting the aforestated consideration as full settlement of any monies or obligations owed to me by Releasees that may have arisen at any time prior to the date of my execution of this Termination, Voluntary Release and Waiver of Rights Agreement (the "Agreement"), except as specifically provided below in the following paragraph number 2.

2. I do not waive, nor has the Company asked me to waive, any rights arising exclusively under the Fair Labor Standards Act, except as such waiver may henceforth be made in a manner provided by law. I do not waive, nor has the Company asked me to waive, any vested benefits that I may have or that I may have derived from the course of my employment with the Company. I understand that such vested benefits will be subject to and administered in accordance with the established and usual terms governing same. I do not waive any rights which may in the future, after the execution of this Agreement, arise exclusively from a substantial breach by the Company of a material obligation of the Company expressly undertaken in consideration of my entering into this Agreement.

3. Except as set forth in paragraph 2, I do fully, irrevocably and forever waive, relinquish and agree to forego any and all Claims whatsoever, whether known or unknown, that I may have or may hereafter have against the Releasees or any of them arising out of or by reason of any cause, matter or thing whatsoever from the beginning of the world to the date hereof, including without limitation any and all matters relating to my employment with the Company and the cessation thereof and all matters arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq., the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq., the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq., the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., all as amended, or under any other laws, ordinances, Employee orders, regulations or administrative or judicial case law arising under the statutory or common laws of the United States, the State of Connecticut or any other applicable county or municipal ordinance.

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4. As a material inducement to the Company to enter into this Agreement, I, the undersigned, recognize that I may have been privy to certain confidential, proprietary and trade secret information of the Company which, if known to third parties, could be used in a manner that would reduce the value of the Company for its shareholders. In order to reduce the risk of that happening, I, the undersigned, agree that for a period of two (2) years after termination of employment, I, the undersigned, will not, directly or indirectly, assist, or be part of or have any involvement in, any effort to acquire control of the Company through the acquisition of its stock or substantially all of its assets, without the prior consent of the Board of Directors of the Company. This provision shall not prevent the undersigned from owning up to not more than one percent (1%) of the outstanding publicly traded stock of any company.

5. I further acknowledge pursuant to the Older Worker's Benefit Protection Act (29 U.S.C. § 626(f)), I expressly agree that the following statements are true:

a. The payment of the consideration described in Section 3, 4 of the Severance Agreement is in addition to the standard employee benefits and anything else of value which the Company owes me in connection with my employment with the Company or the separation of employment.

b. I have [twenty-one days] days from [date of receipt] to consider and sign this agreement. If I choose to sign this Agreement before the end of the [twenty-one] day period, that decision is completely voluntary and has not been forced on me by the Company.

c. I will have seven (7) days after signing the Agreement in which to revoke it, and the Agreement will not become effective or enforceable until the end of those seven (7) days.

d. I am now being advised in writing to consult an attorney before signing this Agreement.

I acknowledge that I have been given sufficient time to freely consult with an attorney or counselor of my own choosing and that I knowingly and voluntarily execute this Agreement, after bargaining over the terms hereof, with knowledge of the consequences made clear, and with the genuine intent to release claims without threats, duress, or coercion on the part of the Company. I do so understanding and acknowledging the significance of such waiver.

6. Further, in view of the above-referenced consideration voluntarily provided to me by the Company, after due deliberation, I agree to waive any right to further litigation or claim against any or all of the Releasees except as specifically provided in paragraph number 2 above. I hereby agree to indemnify and hold harmless the Releasees and their respective agents or representatives from and against any and all losses, costs, damages or expenses, including, without limitation, attorney’s fees incurred by said parties, or any of them, arising out of any breach of this Agreement by me or by any person acting on my behalf, or the fact that any representation made herein by the undersigned was false when made.

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7. As a material inducement to the Company to enter into this Agreement, I, the undersigned, understand and agree that if I should fail to comply with the conditions hereof or to carry out the agreement set forth herein, all amounts previously paid under this Agreement shall be immediately forfeited to the Company and that the right or claim to further payments and/or benefits hereunder would likewise be forfeited.

8. As a further material inducement to the Company to enter into this Agreement, the undersigned provides as follows:

First. I represent that I have not filed any complaints or charges against the Company, or any of the Releasees relating to the relinquishment of my former titles and responsibilities at the Company or the terms of my employment with the Company and that if any agency or court assumes jurisdiction of any complaint or charge against the Company or any of the Releasees on behalf of me concerning my employment with the Company, I understand and agrees that I have, by my knowing and willing execution of this Agreement waived my rights to any form of recovery or relief against the Company, or any of the Releasees, including but not limited to, attorney's fees. Provided, however, that this provision shall not preclude the undersigned from pursuing appropriate legal relief against the Company for redress of a substantial breach of a material obligation of the Company expressly undertaken in consideration of my entering into this Agreement.

Second. I acknowledge and understand that the consideration for this release shall not be in any way construed as an admission by the Company or any of the Releasees of any improper acts or any improper employment decisions, and that the Company, specifically disclaims any liability on the part of itself, the Releasees, and their respective agents, employees, representatives, successors or assigns in this regard.

Third. I acknowledge and agree that this Agreement shall be binding upon me, upon the Company, and upon our respective administrators, representatives, Employees, successors, heirs and assigns and shall inure to the benefit of said parties and each of them.

Fourth. I represent, understand and agree that this Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any and all prior agreements or understandings between the parties pertaining to the subject matter hereof, except for the confidentiality and non-competition agreement previously executed by me, the terms of which retain their full force and effect, and which are in no way limited or curtailed by this Agreement. (A copy of that agreement is attached to the Severance Agreement as Exhibit A and is made a part hereof.)

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Fifth. Modification. This Agreement may not be altered or changed except by an agreement in writing that has been properly executed by the party against whom any waiver, change, modification or discharge is sought.

Sixth. Severability. All provisions and terms of this Agreement are severable. The invalidity or unenforceability of any particular provision(s) or term(s) of this Agreement shall not affect the validity or enforceability of the other provisions and such other provisions shall be enforceable in law or equity in all respects as if such particular invalid or unenforceable provision(s) or term(s) were omitted. Notwithstanding the foregoing, the language of all parts of this Agreement shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties.

Seventh. No Disparagement. Unless otherwise required by a court of competent jurisdiction or pursuant to any recognized subpoena power, I agree and promise that I will not make any oral or written statements or reveal any information to any person, company, or agency which is disparaging or damaging to the reputation or business of the Company, its subsidiaries, directors, officers or affiliates, or which would interfere in any way with the business relations between the Company or any of its subsidiaries or affiliates and any of their customers, suppliers or vendors whether present or in the future.

Eighth. Confidentiality. The Company and the undersigned agree to refrain from disclosing to third parties and to keep strictly confidential all details of this Agreement and any and all information relating to its negotiation, except as necessary to each party's accountants or attorneys.

Ninth. Termination of Agreement. Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated by the Company and all further payment obligations of the Company will cease, if: (a) the undersigned is terminated for "Cause" prior to the undersigned's separation date; or (b) facts are discovered after the undersigned's separation date that would have supported a termination for "Cause" had such facts been discovered prior to the undersigned's separation date.

AFFIRMATION OF RELEASOR

I, David H. Williams, warrant that I am competent to execute this Termination, Voluntary Release and Waiver of Rights Agreement and that I accept full responsibility thereof.

I, David H. Williams, warrant that I have had the opportunity to consult with an attorney of my choosing with respect to this matter and the consequences of my executing this Termination, Voluntary Release and Waiver of Rights Agreement.

I, David H. Williams, have read this Termination, Voluntary Release and Waiver of Rights Agreement carefully and I fully understand its terms. I execute this document voluntarily with full and complete knowledge of its significance.

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Executed this 27th day of June 27, 2012, at xxxxxxxxxxxxxxxx.

		NAME

STATE OF	)
	)	SS:
COUNTY OF	)

Subscribed and sworn to before me, a Notary Public in and for said County and State, this ____________ day of ______________, 20__, under the pains and penalties of perjury.

Notary Public

My Commission Expires:

County of Residence:

EX-10.4 4 v317437_ex10-4.htm EXHIBIT 10.4

Exhibit 10.4

FORM (FOR U.S. EMPLOYEES) OF

LYDALL, INC.

[NONQUALIFIED] [INCENTIVE] STOCK OPTION AGREEMENT

THIS [NONQUALIFIED] [INCENTIVE] STOCK OPTION AGREEMENT (this “Agreement”) is made between Lydall, Inc., a Delaware corporation (“Lydall”), and the recipient (the “Recipient”) with respect to [a Nonqualified] [an Incentive] Stock Option granted under Lydall’s 2012 Stock Incentive Plan (the "Plan") pursuant to the award letter (the “Award Letter”), dated [_________], from Lydall to the Recipient. All capitalized terms used but not defined in this Agreement shall have the same meanings that have been ascribed to them in the Plan.

1. Grant of Award. On the Date of Grant (as defined in the Award Letter), the Recipient has been granted [a Nonqualified] [an Incentive] Stock Option to purchase up to the number of shares of Common Stock as set forth in the Award Letter (the “Option”). The Option is subject to the terms and conditions set forth in the Award Letter, this Agreement and the Plan. The vesting and exercisability schedule of the Option is set forth in the Award Letter.

2. Type of Option. The Option is [a Nonqualified Stock Option which does not qualify for Incentive Stock Option treatment under Section 422 of the Code] [intended to qualify for Incentive Stock Option treatment under Section 422 of the Code to the maximum extent permitted by the Code].

3. Option Price. The purchase price of each Share subject to the Option is set forth in the Award Letter.

4. Acceptance of Option. The Recipient shall have no rights with respect to the Option unless the Recipient accepts this Agreement no later than the close of business on the date that is sixty (60) days after the Date of Grant. Such acceptance of the Option shall be effected by accessing the website of Lydall’s administrative agent (the “Administrative Agent”), referenced in the Award Letter, and completing the required on-line grant acknowledgement process.

5. Manner of Exercise.

(a) Administrative Agent. To the extent the Option is exercisable in accordance with the Award Letter, the Administrative Agent must be used to exercise all or any portion of the Option. The Administrative Agent will provide the Recipient with a confirmation of each exercise made. The Administrative Agent will collect funds for the option purchase price and taxes related to an exercise (as applicable). To exercise all or any portion of the Option or to ask questions regarding how to exercise, contact the Administrative Agent.

(b) Payment Upon Exercise. Shares purchased upon the exercise of the Option shall be paid for as follows:

(i) in cash or by check, payable to the order of Lydall;

(ii) unless prohibited by the Plan Administrator, by a “broker-assisted cashless exercise” procedure consistent with Section 5(f)(2) of the Plan;

(iii) unless prohibited by the Plan Administrator, by delivery at the time of exercise (either by actual physical delivery or by attestation) of Shares owned by the Recipient valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such Shares, if acquired directly from Lydall, were owned by the Recipient for such minimum period of time, if any, as may be established by the Plan Administrator, and (iii) such Shares are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements; or

(iv) only if expressly permitted by the Plan Administrator, any other method permitted under the Plan.

(c) Tax Withholding. The Recipient must satisfy all income and employment tax withholding obligations associated with the exercise of the Option in accordance with the Plan before Recipient’s ownership of the Shares upon exercise will be recognized.

(d) Compliance With Policies. All employees must comply with Lydall’s policies regarding trading of its securities. In addition, Lydall requires officers designated under Section 16 of the Exchange Act and certain other designated employees to pre-clear certain transactions with Lydall’s General Counsel. The Recipient should consult applicable Lydall policies prior to engaging in any transaction relating to the Option.

6. Other Terms and Conditions.

(a) Term of Option. The Option shall have a maximum term of ten (10) years from the Date of Grant, subject to earlier termination in accordance with the following provisions in the event that the Recipient ceases to be an employee of the Company:

(i) Termination by Reason of Death or Disability. If the Recipient’s employment by the Company terminates by reason of the death or permanent and total disability (as defined in Section 22(e) of the Code) (“Disability”) of the Recipient, the Option shall thereupon automatically terminate, except that the portion of the Option that has vested on or prior to the date of termination may thereafter be exercised by the Recipient or the legal representative of his or her estate for a period of one year from the date of such termination of employment or until the expiration of the maximum term of the Option, whichever period is shorter.

(ii) Other Termination. If the Recipient’s employment by the Company terminates for any reason other than the death or Disability of the Recipient, and provided the termination was not for Cause, the Option shall thereupon automatically terminate, except that the portion of the Option that was vested on or prior to the date of such termination of employment may thereafter be exercised by the Recipient for a period of [one year] [three months]¹ from the date of such termination of employment or until the expiration of the maximum term of such Option, whichever period is shorter. Notwithstanding the foregoing, if the Plan Administrator determines that the termination of the Recipient’s employment by the Company was for Cause, the Option shall automatically terminate as of the date of such termination of employment, and no portion of the Option may be exercised by the Recipient after such date.

____________________________

¹ For NQSO, one year; for ISO, three months.

(b) Exercise of Option and Limitations Thereon. The Option shall become exercisable subject to the limitations set forth in the Award Letter.

(c) Nontransferability. Except as permitted by the Plan Administrator pursuant to Section 9(a) of the Plan, the Option shall not be transferable by the Recipient except by will or by the laws of descent and distribution, and the Option shall be exercisable, during the Recipient’s lifetime, only by the Recipient.

(d) No Stockholder Rights. The Recipient shall not be entitled to any rights as a stockholder with respect to any Shares subject to the Option prior to the date of issuance to him or her of any such Shares following a valid exercise of the Option.

(e) Recoupment of Awards. The Option shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

(f) Incentive Stock Option Provisions.

(i) Limitation on Incentive Stock Option Treatment. In the event that the Shares subject to the Option (together with all other “incentive stock options” (as defined in Section 422 of the Code) granted to Recipient) that first become exercisable in any calendar year have an aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of $100,000 shall be treated as subject to a Nonqualified Stock Option.

(ii) Notification of Disqualifying Disposition. The Recipient shall promptly notify Lydall in the event of a disqualifying disposition (within the meaning of the Code) of any Shares acquired pursuant to the Option and provide Lydall with all relevant information related thereto, including without limitation the date of the disqualifying disposition, the number of shares disposed of, and the value of the consideration received.]

7. No Employment Rights. Nothing in this Agreement shall be deemed to: (a) confer or be deemed to confer upon the Recipient any right to continue in the employ of the Company or in any way affect the right of the Company to dismiss or otherwise terminate the Recipient’s employment at any time for any reason with or without cause, (b) impose upon the Company any liability for any forfeiture of the Option which may result if the Recipient’s employment is terminated, or (c) affect the Company’s right to terminate or modify any contractual relationship with a Recipient who is not an employee of the Company.

8. Changes in Capitalization. Neither this Agreement nor the grant of the Option shall affect in any way the right or power of Lydall or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Lydall’s capital structure or its business, or any merger or consolidation of Lydall or any Lydall Affiliate, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of Lydall or any Lydall Affiliate, or any sale or transfer of all or any part of Lydall’s assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Option shall be subject to the terms of the Plan.

10. Plan Terms and Plan Administrator Authority. This Agreement and the rights of the Recipient hereunder are subject to all of the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations as the Plan Administrator may adopt for the administration of the Plan. It is expressly understood that the Plan Administrator is authorized to administer, construe and make, in its sole and absolute discretion, all determinations necessary or appropriate for the administration of the Plan and this Agreement, all of which shall be binding upon the Recipient. This Agreement shall be interpreted and applied in a manner consistent with the provisions of the Plan, and in the event of any inconsistency between this Agreement and the Plan, the terms of the Plan shall control.

11. Miscellaneous

(a) Amendment; Modification; Waiver. No provision of this Agreement may be amended, modified or waived unless authorized by the Plan Administrator, and no amendment or modification of this Agreement may be made without Recipient’s consent except as permitted by Section 9(e) of the Plan.

(b) Notices. Except as otherwise provided herein, every notice or other communication relating to this Agreement shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided, that, unless and until some other address be so designated, all notices or communications to the Company shall be mailed to or delivered to Lydall’s Vice President, General Counsel and Secretary, with a copy to its Vice President of Human Resources, both at Lydall, Inc., One Colonial Road, P. O. Box 151, Manchester, Connecticut, 06045-0151, and all notices by the Company to the Recipient may be given to the Recipient personally or may be mailed to him or her at the last address designated for the Recipient on the employment records of the Company. For purposes of this section, the term “mailed” includes electronic delivery methods.

(c) Appointment of Agent. By accepting the Option evidenced by this Agreement, the Recipient hereby irrevocably nominates, constitutes and appoints each of Lydall’s Vice President of Human Resources and the Administrative Agent as his or her agent and attorney-in-fact to take any and all actions and to execute any and all documents, in the name and on behalf of the Recipient, for any purpose necessary or convenient for the administration of the Plan and this Agreement. This power is intended as a power coupled with an interest and shall survive the Recipient’s death. In addition, it is intended as a durable power and shall survive the Recipient’s incapacity. Lydall has the right to change the appointed transfer agent or Administrative Agent from time to time.

(d) Governing Law; Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Delaware, and the Recipient agrees to the exclusive jurisdiction of Connecticut courts.

(e) Compliance with Laws. The issuance of Shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act and the Exchange Act, and any rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. Lydall shall not be obligated to issue or deliver to Recipient any Shares pursuant to this Agreement if such issuance would violate any such requirements.

(f) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity, legality or enforceability of the remainder of this Agreement, it being intended that all rights and obligations of the Company and the Recipient shall be enforceable to the fullest extent permitted by law.

12. Statute of Limitations. The Recipient hereby agrees that there shall be a one-year statute of limitations for the filing of any claim relating to this Agreement or the terms or conditions of the Option. If such a claim is filed more than one year subsequent to the date on which the Option terminates for any reason whatsoever, it shall be precluded by this provision, whether or not the claim has accrued at that time.

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.


	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

EX-10.5 5 v317437_ex10-5.htm EXHIBIT 10.5

Exhibit 10.5

FORM (FOR U.S. EMPLOYEES) OF

LYDALL, INC.

PERFORMANCE SHARE AWARD AGREEMENT

(Three-Year Period)

THIS PERFORMANCE SHARE AWARD AGREEMENT (this “Agreement”) is made between Lydall, Inc., a Delaware corporation (“Lydall”), and the recipient (the “Recipient”) with respect to an Award under Lydall’s 2012 Stock Incentive Plan (the “Plan”) pursuant to the award letter (the “Award Letter”), dated [_________], from Lydall to the Recipient. All capitalized terms used but not defined in this Agreement shall have the same meanings that have been ascribed to them in the Plan, unless the context clearly requires otherwise.

1. Grant of Performance Shares. On the Date of Grant (as defined in the Award Letter), the Recipient has been granted the number of shares of Restricted Stock as set forth in the Award Letter (the “Performance Shares”). The Performance Shares are subject to the terms and conditions set forth in the Award Letter, this Agreement and the Plan. By accepting this Agreement, Recipient understands that the Performance Shares will be forfeited unless both (a) the Performance Objectives (as defined below) are met and (b) the Recipient remains in employment by the Company through the date of the Certification (as defined below).

2. Acceptance of Award. The Recipient shall have no rights with respect to the Performance Shares unless the Recipient accepts this Agreement no later than the close of business on the date that is sixty (60) days after the Date of Grant. Such acceptance shall be effected by accessing the website of Lydall’s administrative agent (the “Administrative Agent”), referenced in the Award Letter and completing the required on-line grant acknowledgment process.

3. Ownership of Performance Shares; No Rights to Dividends on Performance Shares That Do Not Vest. As soon as practicable after the acceptance of the Award by the Recipient, Lydall will cause the Performance Shares to be issued in book entry form in the name of the Recipient, whereupon they will be held for the benefit of the Recipient by the Administrative Agent until the Performance Shares vest or are forfeited in accordance with the terms and conditions of the Plan and this Agreement. Upon such issue, the Recipient shall be the holder of record of the Performance Shares granted hereunder and will have, subject to the terms and conditions of the Plan and this Agreement, voting rights of a stockholder with respect to such Shares. Lydall shall retain custody of all Unvested Dividends made or declared with respect to the Performance Shares, subject to the same restrictions, terms and conditions as are applicable to the Performance Shares, until such time, if ever, as the Performance Shares shall vest.

4. Performance Condition.

(a) Period. The Performance Period for the Performance Shares is defined in the Award Letter.

(b) Performance Objectives. The actual number of Shares eligible for vesting will depend upon satisfaction of the Performance Objectives as defined below. To the extent this Award is intended to be a Section 162(m) Award, this Award shall be subject to Section 9(h) of the Plan. The “Performance Objectives” shall be the EPS (as defined below) for the last full fiscal year of the Performance Period compared to the target for such fiscal year (the “EPS Target”) established by the Plan Administrator, as stated in the Award Letter and calculated as set forth in the following table:

	EPS Achievement	“Vesting Percentage” of Performance Shares
Below Threshold	Less than 95% of EPS Target	None
Threshold	95% of EPS Target	80%
Target	100% of EPS Target	100%
Maximum	110% of EPS Target	120%

For purposes of the foregoing, “EPS” means the diluted net income per share of Common Stock of Lydall for the last year of the Performance Period, as set forth in the audited financial statements of Lydall, as may be adjusted by the Plan Administrator pursuant to the terms of the Plan. Any adjustments with respect to Section 162(m) Awards shall be subject to compliance with Section 162(m).

The Vesting Percentage of the Performance Shares where performance achievement is between Threshold and Target will be scaled on a linear basis from 80% to 100%, and the Vesting Percentage of the Performance Shares where performance achievement is between Target and Maximum will be scaled on a linear basis from 100% to 120%.

EPS will be rounded to the nearest whole cent, and the number of Performance Shares determined by the Vesting Percentage will be rounded to the nearest whole share. All other calculations will be rounded to two decimal places. In the event that, in determining the EPS for the last full fiscal year of the Performance Period, the Plan Administrator adjusts the diluted net income per share of Common Stock from that set forth in the audited financial statements of Lydall, the Certification may include a brief statement setting forth the amount of the adjustment and the reasons therefor. Any adjustments with respect to Section 162(m) Awards shall be subject to compliance with Section 162(m).

(c) Determination of Level of Performance Objectives Achieved. As soon as practicable following the completion of the Performance Period and the preparation of Lydall’s audited financial statements for the applicable period, the Plan Administrator shall (a) determine the satisfaction of the Performance Objectives and (b) certify in writing, in accordance with the requirements of Section 162(m) to the extent applicable, the extent to which the Performance Objectives have been achieved, if at all, and the Vesting Percentage as defined in 4(b) resulting therefrom (such certification being hereinafter referred to as the “Certification”).

(d) Delivery of Vested Shares. Following the Certification, the Recipient shall be entitled to receive that number of Shares calculated by multiplying the number of Performance Shares set forth in the Award Letter by the Vesting Percentage set forth in the Certification, together with any Unvested Dividends relating thereto, provided the Recipient has settled all applicable tax withholding obligations arising from the vesting of the Award, as set forth in Section 6 below. All such vested Shares to which the Recipient is entitled, together with any Unvested Dividends, if any, relating thereto and any additional Performance Shares, if any, to which the Recipient is entitled by virtue of the Vesting Percentage being in excess of 100%, shall be released or delivered, as applicable, to the Recipient as soon as reasonably practical after the date of the Certification. Delivery of Shares will be made electronically via book entry to an account in the name of the Recipient maintained with Lydall’s transfer agent. In connection therewith, the Recipient agrees to execute any documents reasonably requested by Lydall or the Administrative Agent.

5. Forfeiture; Transfer Restrictions.

(a) All Performance Shares that do not vest pursuant to Section 4, as well as any Unvested Dividends relating to the Performance Shares that do not vest, shall be forfeited, effective as of the date of the Certification.

(b) If the Recipient’s employment with the Company terminates for any reason whatsoever prior to the date on which the Certification is made, then, effective upon the date of such termination, all of the Performance Shares, as well as any Unvested Dividends relating thereto, shall be forfeited.

(c) Neither the Performance Shares, nor the Recipient’s interest in any of the Performance Shares or Unvested Dividends, may be encumbered, sold, assigned, transferred, pledged or otherwise disposed of at any time prior to the date of the Certification. In the event any such action is taken, all of the Performance Shares evidenced by this Agreement, as well as any Unvested Dividends relating thereto, shall thereupon automatically be forfeited, effective as of the date of such event.

(d) All forfeited Shares shall be delivered promptly to Lydall by the Administrative Agent, and Lydall shall direct the transfer agent and registrar of the Common Stock to make appropriate entries upon its or their records.

(e) The Plan Administrator shall make all determinations as to whether an event has occurred resulting in the forfeiture of Performance Shares and any related Unvested Dividends, and all such determinations of the Plan Administrator shall be final and conclusive.

(f) The Performance Shares shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

6. Taxation.

(a) The Recipient recognizes and agrees that there may be certain tax issues that affect the Recipient arising from the grant and/or vesting of the Performance Shares and that the Recipient is solely responsible for payment of all federal, state and local taxes resulting therefrom. The Company expressly provides no tax advice to the Recipient and recommends that the Recipient seek personal tax advice. In general, the Recipient will have taxable income in any year during which Performance Shares vest, in an amount equal to the number of Shares that vest multiplied by the fair market value of the Common Stock on the vesting date. This amount will be included in Recipient’s taxable income reported on Form W-2 for that year.

(b) Any applicable income and employment tax withholding obligations associated with the vesting of the Performance Shares must be satisfied in accordance with the Plan and sub-section (c) below, prior to the delivery of vested Shares to the Recipient.

(c) Unless otherwise determined by the Plan Administrator, Recipient’s tax withholding liability will be satisfied through “net withholding” whereby the number of vested Shares actually delivered to the Recipient is reduced by a number of Shares with a fair market value of the Common Stock on the vesting date equal to the Company’s minimum statutory withholding tax liability outlined in (b) above.

(d) Section 83(b) of the Code permits the Recipient to recognize income in the year in which the Performance Shares are granted, rather than in the subsequent year in which they vest. This election must be filed with the Internal Revenue Service within 30 days of the Date of Grant. The Recipient is encouraged to discuss this alternative with his or her own tax advisor. In the event that the Recipient desires to make an election under Section 83(b) of the Code, the Recipient first shall make appropriate arrangements with the Company for the payment of all applicable withholding taxes associated with such election.

7. No Employment Rights. Nothing in this Agreement shall be deemed to: (a) confer or be deemed to confer upon the Recipient any right to continue in the employ of the Company or in any way affect the right of the Company to dismiss or otherwise terminate the Recipient’s employment at any time for any reason with or without cause, (b) impose upon the Company any liability for any forfeiture of Performance Shares which may result if the Recipient’s employment is terminated, or (c) affect the Company’s right to terminate or modify any contractual relationship with a Recipient who is not an employee of the Company.

8. Changes in Capitalization. Neither this Agreement nor the grant of the Performance Shares shall affect in any way the right or power of Lydall or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Lydall’s capital structure or its business, or any merger or consolidation of Lydall or any Lydall Affiliate, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of Lydall or any Lydall Affiliate, or any sale or transfer of all or any part of Lydall’s assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Performance Shares shall be subject to the terms of the Plan.

11. Miscellaneous

(c) Appointment of Agent. By accepting the Performance Shares evidenced by this Agreement, the Recipient hereby irrevocably nominates, constitutes and appoints each of Lydall’s Vice President of Human Resources and the Administrative Agent as his or her agent and attorney-in-fact to take any and all actions and to execute any and all documents, in the name and on behalf of the Recipient, for any purpose necessary or convenient for the administration of the Plan and this Agreement. This power is intended as a power coupled with an interest and shall survive the Recipient’s death. In addition, it is intended as a durable power and shall survive the Recipient’s incapacity. Lydall has the right to change the appointed transfer agent or Administrative Agent from time to time.

(e) Compliance with Laws. The issuance or delivery of Shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act and the Exchange Act, and any rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. Lydall shall not be obligated to issue or deliver to Recipient any Shares pursuant to this Agreement if such issuance or delivery would violate any such requirements.

12. Statute of Limitations. The Recipient hereby agrees that there shall be a one-year statute of limitations for the filing of any claim relating to this Agreement or the terms or conditions of the Performance Shares. If such a claim is filed more than one year subsequent to the earlier of the date on which the vesting of the Performance Shares is scheduled to occur or termination of the Recipient’s employment, it shall be precluded by this provision, whether or not the claim has accrued at that time.

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.


	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

EX-10.6 6 v317437_ex10-6.htm EXHIBIT 10.6

Exhibit 10.6

FORM (FOR FRENCH EMPLOYEES) OF

LYDALL, INC.

PERFORMANCE SHARE AWARD AGREEMENT

(Three-Year Period)

THIS PERFORMANCE SHARE AWARD AGREEMENT (this “Agreement”) is made between Lydall, Inc., a Delaware corporation (“Lydall” or the “Company”), and the recipient (the “Recipient”) with respect to an Award under Lydall’s 2012 Stock Incentive Plan (the “Plan”) pursuant to the award letter (the “Award Letter”), dated [_________], from Lydall to the Recipient. All capitalized terms used but not defined in this Agreement shall have the same meanings that have been ascribed to them in the Plan, unless the context clearly requires otherwise.

4. Performance Condition.

(a) Period. The Performance Period for the Performance Shares is defined in the Award Letter.

	EPS Achievement	“Vesting Percentage” of Performance Shares
Below Threshold	Less than 95% of EPS Target	None
Threshold	95% of EPS Target	80%
Target	100% of EPS Target	100%
Maximum	110% of EPS Target	120%

5. Forfeiture; Transfer Restrictions.

(f) The Performance Shares shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

6. Taxation.

(a) The Recipient recognizes and agrees that there may be certain tax issues that affect the Recipient arising from the grant and/or vesting of the Performance Shares and that the Recipient is solely responsible for payment of any personal income tax and the employee’s share of the social security contributions (together “Tax Liabilities”) resulting therefrom. The Company expressly provides no tax advice to the Recipient and recommends that the Recipient seek personal tax advice.

7. No Employment Rights. Nothing in this Agreement shall be deemed to: (a) confer or be deemed to confer upon the Recipient any right to continue in the employ of the Company or in any way affect the right of the Company to dismiss or otherwise terminate the Recipient’s employment at any time for any reason with or without cause, (b) impose upon the Company any liability for any forfeiture of Performance Shares which may result if the Recipient’s employment is terminated, or (c) affect the Company’s right to terminate or modify any contractual relationship with a Recipient who is not an employee of the Company.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Performance Shares shall be subject to the terms of the Plan.

11. Miscellaneous

12. Statute of Limitations. The Recipient hereby agrees that there shall be a one-year statute of limitations for the filing of any claim relating to this Agreement or the terms or conditions of the Performance Shares. If such a claim is filed more than one year subsequent to the earlier of the date on which the vesting of the Performance Shares is scheduled to occur or termination of the Recipient’s employment, it shall be precluded by this provision, whether or not the claim has accrued at that time.

13. Data Privacy. The Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement by and among, as applicable, his or her employer or contracting party and Lydall for the exclusive purpose of implementing, administering and managing his or her participation in the Plan. The Recipient understands that Lydall holds certain personal information about him or her, including, but not limited to, his or her name, home address and telephone number, work location and phone number, date of birth, hire date, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Recipient’s favor, for the purpose of implementing, administering and managing the Plan (“Personal Data”). The Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these third parties may be located in the Recipient’s country or elsewhere, and that such third party’s country may have different data privacy laws and protections than the Recipient’s country. The Recipient understands that he or she may request a list with the names and addresses of any potential third parties receiving the Personal Data by contacting in writing the individuals listed in Section 11(b) of this Agreement. The Recipient authorizes such third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing his or her participation in the Plan. The Recipient understands that Personal Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the individuals listed in Section 11(b) of this Agreement. The Recipient understands, however, that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, the Recipient understands that he or she may contact in writing the individuals listed in Section 11(b) of this Agreement.

14. Nature of the Grant. By entering into this agreement and accepting the grant of Performance Shares, Recipient acknowledges that: (i) the Plan is established voluntarily by Lydall, it is discretionary in nature and it may be modified, amended, suspended or terminated by Lydall at any time unless otherwise provided in the Plan and this Agreement; (ii) the grant of the Performance Shares is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Shares, or benefits in lieu of Performance Shares, even if Performance Shares have been granted repeatedly in the past; (iii) all decisions with respect to future grants, if any, will be at the sole discretion of the Plan Administrator; (iv) the Recipient’s participation in the Plan shall not create a right to further employment with the Recipient’s employer and shall not interfere with the ability of the Recipient’s employer to terminate the Recipient’s employment relationship at any time with or without cause; (v) the Recipient’s participation in the Plan is voluntary; (vi) the Performance Share grant is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to Lydall or Recipient’s employer, and which is outside the scope of the Recipient’s employment contract, if any; (vii) the Performance Share grant is not part of normal or expected compensation or salary for any purpose including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (viii) in the event that Recipient’s employer is not Lydall, the grant of Performance Shares will not be interpreted to form an employment contract or relationship with Lydall; and furthermore, the grant of Performance Shares will not be interpreted to form an employment contract with Recipient’s employer or any subsidiary or affiliate of Lydall; and (ix) in consideration of the Performance Share grant, no claim or entitlement to compensation or damages shall arise from termination of the Performance Shares (for any reason whatsoever and whether or not in breach of local labor laws) and Recipient irrevocably releases Lydall and his or her employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, Recipient shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.


	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

EX-10.7 7 v317437_ex10-7.htm EXHIBIT 10.7

Exhibit 10.7

FORM (FOR GERMAN EMPLOYEES) OF

LYDALL, INC.

PERFORMANCE SHARE AWARD AGREEMENT

(Three-Year Period)

4. Performance Condition.

(a) Period. The Performance Period for the Performance Shares is defined in the Award Letter.

	EPS Achievement	“Vesting Percentage” of Performance Shares
Below Threshold	Less than 95% of EPS Target	None
Threshold	95% of EPS Target	80%
Target	100% of EPS Target	100%
Maximum	110% of EPS Target	120%

5. Forfeiture; Transfer Restrictions.

(f) The Performance Shares shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

6. Taxation.

(a) The Recipient recognizes and agrees that the allocation or issue of Performance Shares constitutes a cash benefit that may be subject to inland payroll tax/income tax and that the Recipient is solely responsible for payment of such tax liabilities. The Company expressly provides no tax advice to the Recipient and recommends that the Recipient seek personal tax advice.

(b) The Recipient undertakes to satisfy all tax liabilities relating to the allocation and issue of the Performance Shares, including possible commitments to pay tax, properly, on time and in due form. The Recipient shall compensate Lydall Gerhardi GmbH & Co. KG and Lydall for all damages incurred by either company as the result of the Recipient’s failure to meet his/her taxation obligations and duties under fiscal law, properly or on time. Should Lydall Gerhardi GmbH & Co. KG and Lydall suffer damages from a breach of such fiscal obligations on the part of the Recipient, either or both companies shall be entitled to assert claims directly against the Recipient.

(c) Lydall Gerhardi GmbH & Co. KG and the Recipient agree that all payments made by Lydall Gerhardi GmbH & Co. KG on the Recipient’s payroll/income tax debts to third parties, particularly to any tax authority, shall be made exclusively and solely for account of the Recipient. If Lydall Gerhardi GmbH & Co. KG has made payments on or in connection with the Recipient’s tax debts that are covered by the withholding (and payment) of the Recipient’s claims to remuneration, the Recipient undertakes to reimburse Lydall Gerhardi GmbH & Co. KG immediately for such payments.

(d) Unless otherwise determined by the Plan Administrator, Recipient’s tax withholding liability will be satisfied through “net withholding” whereby the number of vested Shares actually delivered to the Recipient is reduced by a number of Shares with a fair market value of the Common Stock on the vesting date equal to the Company’s minimum statutory withholding tax liability outlined in (b) above.

7. No Employment Rights. Nothing in this Agreement shall be deemed to: (a) confer or be deemed to confer upon the Recipient any right to continue in the employ of the Company or in any way affect the right of the Company to dismiss or otherwise terminate the Recipient’s employment at any time for any reason with or without cause, (b) impose upon the Company any liability for any forfeiture of Performance Shares which may result if the Recipient’s employment is terminated, or (c) affect the Company’s right to terminate or modify any contractual relationship with a Recipient who is not an employee of the Company.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Performance Shares shall be subject to the terms of the Plan.

11. Miscellaneous

12. Statute of Limitations. The Recipient hereby agrees that there shall be a one-year statute of limitations for the filing of any claim relating to this Agreement or the terms or conditions of the Performance Shares. If such a claim is filed more than one year subsequent to the earlier of the date on which the vesting of the Performance Shares is scheduled to occur or termination of the Recipient’s employment, it shall be precluded by this provision, whether or not the claim has accrued at that time.

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.


	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

EX-10.8 8 v317437_ex10-8.htm EXHIBIT 10.8

Exhibit 10.8

FORM (FOR U.S. EMPLOYEES) OF

LYDALL, INC.

RESTRICTED SHARE AWARD AGREEMENT

THIS RESTRICTED SHARE AWARD AGREEMENT (this “Agreement”) is made between Lydall, Inc., a Delaware corporation (“Lydall”), and the recipient (the “Recipient”) with respect to an Award under Lydall’s 2012 Stock Incentive Plan (the “Plan”) pursuant to the award letter (the “Award Letter”), dated [_________], from Lydall to the Recipient. All capitalized terms used but not defined in this Agreement shall have the same meanings that have been ascribed to them in the Plan, unless the context clearly requires otherwise.

1. Grant of Restricted Shares. On the Date of Grant (as defined in the Award Letter), the Recipient has been granted the number of shares of Restricted Stock as set forth in the Award Letter (the “Restricted Shares”). The Restricted Shares are subject to the terms and conditions set forth in the Award Letter, this Agreement and the Plan. Unless otherwise provided in this Agreement or the Award Letter, all Restricted Shares covered by the Award shall be subject to the restrictions and conditions set forth in Section 5 below until such restrictions and conditions lapse and such Restricted Shares vest as set forth in the Award Letter. The period during which the Restricted Shares are subject to the restrictions and conditions of Section 5, as set forth in the Award Letter, is hereinafter referred to as the “Restriction Period.” By accepting this Agreement, Recipient understands that the Restricted Shares are subject to forfeiture unless the Recipient remains in employment by the Company until the end of the applicable Restriction Period.

2. Acceptance of Award. The Recipient shall have no rights with respect to the Restricted Shares unless the Recipient accepts this Agreement no later than the close of business on the date that is sixty (60) days after the Date of Grant. Such acceptance shall be effected by accessing the website of Lydall’s administrative agent (the “Administrative Agent”), referenced in the Award Letter and completing the required on-line grant acknowledgment process.

3. Ownership of Restricted Shares; No Rights to Dividends on Restricted Shares That Do Not Vest. As soon as practicable after the acceptance of the Award by the Recipient, Lydall will cause the Restricted Shares to be issued in book entry form in the name of the Recipient, whereupon they will be held for the benefit of the Recipient by the Administrative Agent until the Restricted Shares vest or are forfeited in accordance with the terms and conditions of the Plan and this Agreement. Upon such issue, the Recipient shall be the holder of record of the Restricted Shares granted hereunder and will have, subject to the terms and conditions of the Plan and this Agreement, voting rights of a stockholder with respect to such Shares. Lydall shall retain custody of all Unvested Dividends made or declared with respect to the Restricted Shares, subject to the same restrictions, terms and conditions as are applicable to the Restricted Shares, until such time, if ever, as the Restricted Shares shall vest.

4. Delivery of Vested Shares. Following the end of the Restriction Period, the Recipient shall be entitled to receive the applicable number of vested Shares according to the Award Letter, together with any Unvested Dividends relating thereto, provided the Recipient has settled all applicable tax withholding obligations arising from the vesting of the Award, as set forth in Section 6 below. All such vested Shares to which the Recipient is entitled, together with any Unvested Dividends, if any, relating thereto, shall be released or delivered, as applicable, to the Recipient as soon as reasonably practical after the end of the Restriction Period. Delivery of Shares will be made electronically via book entry to an account in the name of the Recipient maintained with Lydall’s transfer agent. In connection therewith, the Recipient agrees to execute any documents reasonably requested by Lydall or the Administrative Agent.

5. Forfeiture; Transfer Restrictions.

(a) If the Recipient’s employment with the Company terminates for any reason whatsoever during the Restriction Period, then, effective upon the date of such termination, all of the non-vested Restricted Shares, as well as any Unvested Dividends relating thereto, shall be forfeited.

(b) Neither the Restricted Shares, nor the Recipient’s interest in any of the Restricted Shares or Unvested Dividends, may be encumbered, sold, assigned, transferred, pledged or otherwise disposed of at any time prior to the end of the Restriction Period. In the event any such action is taken, all of the Restricted Shares evidenced by this Agreement, as well as any Unvested Dividends relating thereto, shall thereupon automatically be forfeited, effective as of the date of such event.

(c) All forfeited Shares shall be delivered promptly to Lydall by the Administrative Agent, and Lydall shall direct the transfer agent and registrar of the Common Stock to make appropriate entries upon its or their records.

(d) The Plan Administrator shall make all determinations as to whether an event has occurred resulting in the forfeiture of Restricted Shares and any related Unvested Dividends, and all such determinations of the Plan Administrator shall be final and conclusive.

(e) The Restricted Shares shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

6. Taxation.

(a) The Recipient recognizes and agrees that there may be certain tax issues that affect the Recipient arising from the grant and/or vesting of the Restricted Shares and that the Recipient is solely responsible for payment of all federal, state and local taxes resulting therefrom. The Company expressly provides no tax advice to the Recipient and recommends that the Recipient seek personal tax advice. In general, the Recipient will have taxable income in any year during which Restricted Shares vest, in an amount equal to the number of Shares that vest multiplied by the fair market value of the Common Stock on the vesting date. This amount will be included in Recipient’s taxable income reported on Form W-2 for that year.

(b) Any applicable income and employment tax withholding obligations associated with the vesting of the Restricted Shares must be satisfied in accordance with the Plan and sub-section (c) below, prior to the delivery of vested Shares to the Recipient.

(d) Section 83(b) of the Code permits the Recipient to recognize income in the year in which the Restricted Shares are granted, rather than in the subsequent year in which they vest. This election must be filed with the Internal Revenue Service within 30 days of the Date of Grant. The Recipient is encouraged to discuss this alternative with his or her own tax advisor. In the event that the Recipient desires to make an election under Section 83(b) of the Code, the Recipient first shall make appropriate arrangements with the Company for the payment of all applicable withholding taxes associated with such election.

7. No Employment Rights. Nothing in this Agreement shall be deemed to: (a) confer or be deemed to confer upon the Recipient any right to continue in the employ of the Company or in any way affect the right of the Company to dismiss or otherwise terminate the Recipient’s employment at any time for any reason with or without cause, (b) impose upon the Company any liability for any forfeiture of Restricted Shares which may result if the Recipient’s employment is terminated, or (c) affect the Company’s right to terminate or modify any contractual relationship with a Recipient who is not an employee of the Company.

8. Changes in Capitalization. Neither this Agreement nor the grant of the Restricted Shares shall affect in any way the right or power of Lydall or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Lydall’s capital structure or its business, or any merger or consolidation of Lydall or any Lydall Affiliate, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of Lydall or any Lydall Affiliate, or any sale or transfer of all or any part of Lydall’s assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Restricted Shares shall be subject to the terms of the Plan.

11. Miscellaneous

(c) Appointment of Agent. By accepting the Restricted Shares evidenced by this Agreement, the Recipient hereby irrevocably nominates, constitutes and appoints each of Lydall’s Vice President of Human Resources and the Administrative Agent as his or her agent and attorney-in-fact to take any and all actions and to execute any and all documents, in the name and on behalf of the Recipient, for any purpose necessary or convenient for the administration of the Plan and this Agreement. This power is intended as a power coupled with an interest and shall survive the Recipient’s death. In addition, it is intended as a durable power and shall survive the Recipient’s incapacity. Lydall has the right to change the appointed transfer agent or Administrative Agent from time to time.

12. Statute of Limitations. The Recipient hereby agrees that there shall be a one-year statute of limitations for the filing of any claim relating to this Agreement or the terms or conditions of the Restricted Shares. If such a claim is filed more than one year subsequent to the earlier of the date on which the vesting of the Restricted Shares is scheduled to occur or termination of the Recipient’s employment, it shall be precluded by this provision, whether or not the claim has accrued at that time.

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.


	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

EX-10.9 9 v317437_ex10-9.htm EXHIBIT 10.9

EXHIBIT 10.9

FORM (FOR NON-EMPLOYEE DIRECTORS) OF

LYDALL, INC.

RESTRICTED SHARE AWARD AGREEMENT

1. Grant of Restricted Shares. On the Date of Grant (as defined in the Award Letter), the Recipient has been granted the number of shares of Restricted Stock as set forth in the Award Letter (the “Restricted Shares”). The Restricted Shares are subject to the terms and conditions set forth in the Award Letter, this Agreement and the Plan. Unless otherwise provided in this Agreement or the Award Letter, all Restricted Shares covered by the Award shall be subject to the restrictions and conditions set forth in Section 5 below until such restrictions and conditions lapse and such Restricted Shares vest as set forth in the Award Letter. The period during which the Restricted Shares are subject to the restrictions and conditions of Section 5, as set forth in the Award Letter, is hereinafter referred to as the “Restriction Period.” By accepting this Agreement, Recipient understands that the Restricted Shares are subject to forfeiture unless the Recipient remains in service with the Company until the end of the applicable Restriction Period.

2. Acceptance of Award. The Recipient shall have no rights with respect to the Restricted Shares unless the Recipient accepts this Agreement by signing and delivering to Lydall a copy of this Agreement no later than the close of business on the date that is sixty (60) days after the Date of Grant. .

3. Ownership of Restricted Shares; No Rights to Dividends on Restricted Shares That Do Not Vest. As soon as practicable after the acceptance of the Award by the Recipient, Lydall will cause the Restricted Shares to be issued in book entry form in the name of the Recipient, whereupon they will be held for the benefit of the Recipient by Lydall’s administrative agent (the “Administrative Agent”) until the Restricted Shares vest or are forfeited in accordance with the terms and conditions of the Plan and this Agreement. Upon such issue, the Recipient shall be the holder of record of the Restricted Shares granted hereunder and will have, subject to the terms and conditions of the Plan and this Agreement, voting rights of a stockholder with respect to such Shares. Lydall shall retain custody of all Unvested Dividends made or declared with respect to the Restricted Shares, subject to the same restrictions, terms and conditions as are applicable to the Restricted Shares, until such time, if ever, as the Restricted Shares shall vest.

4. Delivery of Vested Shares. Following the end of the Restriction Period, the Recipient shall be entitled to receive the applicable number of vested Shares according to the Award Letter, together with any Unvested Dividends relating thereto. All such vested Shares to which the Recipient is entitled, together with any Unvested Dividends, if any, relating thereto, shall be released or delivered, as applicable, to the Recipient as soon as reasonably practical after the end of the Restriction Period. Delivery of Shares will be made electronically via book entry to an account in the name of the Recipient. In connection therewith, the Recipient agrees to execute any documents reasonably requested by Lydall or the Administrative Agent.

EXHIBIT 10.9

5. Forfeiture; Transfer Restrictions.

(a) If the Recipient’s service with the Company terminates for any reason whatsoever during the Restriction Period, then, effective upon the date of such termination, all of the non-vested Restricted Shares, as well as any Unvested Dividends relating thereto, shall be forfeited.

(e) The Restricted Shares shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

6. Taxation.

(b) Any applicable tax withholding obligations associated with the vesting of the Restricted Shares must be satisfied in accordance with the Plan, prior to the delivery of vested Shares to the Recipient.

(c) Section 83(b) of the Code permits the Recipient to recognize income in the year in which the Restricted Shares are granted, rather than in the subsequent year in which they vest. This election must be filed with the Internal Revenue Service within 30 days of the Date of Grant. The Recipient is encouraged to discuss this alternative with his or her own tax advisor.

7. Changes in Capitalization. Neither this Agreement nor the grant of the Restricted Shares shall affect in any way the right or power of Lydall or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Lydall’s capital structure or its business, or any merger or consolidation of Lydall or any Lydall Affiliate, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of Lydall or any Lydall Affiliate, or any sale or transfer of all or any part of Lydall’s assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

EXHIBIT 10.9

8. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Restricted Shares shall be subject to the terms of the Plan.

9. Plan Terms and Plan Administrator Authority. This Agreement and the rights of the Recipient hereunder are subject to all of the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations as the Plan Administrator may adopt for the administration of the Plan. It is expressly understood that the Plan Administrator is authorized to administer, construe and make, in its sole and absolute discretion, all determinations necessary or appropriate for the administration of the Plan and this Agreement, all of which shall be binding upon the Recipient. This Agreement shall be interpreted and applied in a manner consistent with the provisions of the Plan, and in the event of any inconsistency between this Agreement and the Plan, the terms of the Plan shall control.

10. Miscellaneous

(b) Notices. Except as otherwise provided herein, every notice or other communication relating to this Agreement shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided, that, unless and until some other address be so designated, all notices or communications to the Company shall be mailed to or delivered to Lydall’s Vice President, General Counsel and Secretary, with a copy to its Vice President of Human Resources, both at Lydall, Inc., One Colonial Road, P. O. Box 151, Manchester, Connecticut, 06045-0151, and all notices by the Company to the Recipient may be given to the Recipient personally or may be mailed to him or her at the last address designated for the Recipient on the records of the Company. For purposes of this section, the term “mailed” includes electronic delivery methods.

EXHIBIT 10.9

11. Statute of Limitations. The Recipient hereby agrees that there shall be a one-year statute of limitations for the filing of any claim relating to this Agreement or the terms or conditions of the Restricted Shares. If such a claim is filed more than one year subsequent to the earlier of the date on which the vesting of the Restricted Shares is scheduled to occur or termination of the Recipient’s service, it shall be precluded by this provision, whether or not the claim has accrued at that time.

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.

	By:
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

The undersigned Recipient hereby acknowledges receipt of the foregoing Restricted Stock Award Agreement and agrees to its terms and conditions.

		\s\ Dale Barnhart
		NAME

EX-10.10 10 v317437_ex10-10.htm EXHIBIT 10.10

EXHIBIT 10.10

FORM (FOR NETHERLANDS EMPLOYEES) OF

LYDALL, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made between Lydall, Inc., a Delaware corporation (“Lydall”), and the recipient (the “Recipient”) with respect to a Nonqualified Stock Option granted under Lydall’s 2012 Stock Incentive Plan (the "Plan") pursuant to the award letter (the “Award Letter”), dated [_________], from Lydall to the Recipient. All capitalized terms used but not defined in this Agreement shall have the same meanings that have been ascribed to them in the Plan.

1. Grant of Award. On the Date of Grant (as defined in the Award Letter), the Recipient has been granted a Nonqualified Stock Option to purchase up to the number of shares of Common Stock as set forth in the Award Letter (the “Option”). The Option is subject to the terms and conditions set forth in the Award Letter, this Agreement and the Plan. The vesting and exercisability schedule of the Option is set forth in the Award Letter.

2. Type of Option. The Option is a Nonqualified Stock Option .

3. Option Price. The purchase price of each Share subject to the Option is set forth in the Award Letter.

5. Manner of Exercise.

(b) Payment Upon Exercise. Shares purchased upon the exercise of the Option shall be paid for as follows:

(i) in cash or by check, payable to the order of Lydall;

(ii) unless prohibited by the Plan Administrator, by a “broker-assisted cashless exercise” procedure consistent with Section 5(f)(2) of the Plan;

NETHERLANDS Form of Non-Qual Stock Option Agreement

EXHIBIT 10.10

(iv) only if expressly permitted by the Plan Administrator, any other method permitted under the Plan.

(c) Tax Withholding. All taxes, duties, levies, charges and social securities premiums ("Taxes") payable (ultimately) by the Recipient in connection with this Stock Option Agreement, including the grant, ownership, vesting and/or exercise of the Stock Options and/or the sale, delivery or ownership of the Share(s) acquired in connection with the exercise of the Stock Options are for the sole risk and account of the Recipient. By signing the Stock Option Agreement, the Recipient authorizes Lydall or its respective Lydall Affiliate to make whatever deductions or withholdings from his salary or compensation, owed to him by Lydall or the Lydall Affiliate, which may be required to settle any Taxes to be determined by Lydall necessary to be withheld or deducted under applicable tax and social security laws and regulations.

6. Other Terms and Conditions.

(ii) Other Termination. If the Recipient’s employment by the Company terminates for any reason other than the death or Disability of the Recipient, and provided the termination was not for Cause, the Option shall thereupon automatically terminate, except that the portion of the Option that was vested on or prior to the date of such termination of employment may thereafter be exercised by the Recipient for a period of one year from the date of such termination of employment or until the expiration of the maximum term of such Option, whichever period is shorter. Notwithstanding the foregoing, if the Plan Administrator determines that the termination of the Recipient’s employment by the Company was for Cause, the Option shall automatically terminate as of the date of such termination of employment, and no portion of the Option may be exercised by the Recipient after such date.

NETHERLANDS Form of Non-Qual Stock Option Agreement

EXHIBIT 10.10

(b) Exercise of Option and Limitations Thereon. The Option shall become exercisable subject to the limitations set forth in the Award Letter.

(e) Recoupment of Awards. The Option shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Option shall be subject to the terms of the Plan.

NETHERLANDS Form of Non-Qual Stock Option Agreement

EXHIBIT 10.10

11. Miscellaneous

(e) Compliance with Laws. The issuance of Shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state or other securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act and the Exchange Act, and any rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. Lydall shall not be obligated to issue or deliver to Recipient any Shares pursuant to this Agreement if such issuance would violate any such requirements.

NETHERLANDS Form of Non-Qual Stock Option Agreement

EXHIBIT 10.10

14. Nature of the Grant. By entering into this agreement and accepting the grant of the Option, Recipient acknowledges that: (i) the Plan is established voluntarily by Lydall, it is discretionary in nature and it may be modified, amended, suspended or terminated by Lydall at any time unless otherwise provided in the Plan and this Agreement; (ii) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if Options have been granted repeatedly in the past; (iii) all decisions with respect to future grants, if any, will be at the sole discretion of the Plan Administrator; (iv) the Recipient’s participation in the Plan shall not create a right to further employment with the Recipient’s employer and shall not interfere with the ability of the Recipient’s employer to terminate the Recipient’s employment relationship at any time with or without cause; (v) the Recipient’s participation in the Plan is voluntary; (vi) the Option grant is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to Lydall or Recipient’s employer, and which is outside the scope of the Recipient’s employment contract, if any; (vii) the Option grant is not part of normal or expected compensation or salary for any purpose including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (viii) in the event that Recipient’s employer is not Lydall, the grant the Option will not be interpreted to form an employment contract or relationship with Lydall; and furthermore, the grant of the Option will not be interpreted to form an employment contract with Recipient’s employer or any subsidiary or affiliate of Lydall; and (ix) in consideration of the Option grant, no claim or entitlement to compensation or damages shall arise from termination of the Option (for any reason whatsoever and whether or not in breach of local labor laws) and Recipient irrevocably releases Lydall and his or her employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, Recipient shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

NETHERLANDS Form of Non-Qual Stock Option Agreement

EXHIBIT 10.10

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.


	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart
		Title: President and Chief Executive Officer

NETHERLANDS Form of Non-Qual Stock Option Agreement

EX-10.11 11 v317437_ex10-11.htm EXHIBIT 10.11

EXHIBIT 10.11

FORM (FOR FRENCH EMPLOYEES) OF

LYDALL, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

2. Type of Option. The Option is a Nonqualified Stock Option .

3. Option Price. The purchase price of each Share subject to the Option is set forth in the Award Letter.

5. Manner of Exercise.

(b) Payment Upon Exercise. Shares purchased upon the exercise of the Option shall be paid for as follows:

(i) in cash or by check, payable to the order of Lydall;

(ii) unless prohibited by the Plan Administrator, by a “broker-assisted cashless exercise” procedure consistent with Section 5(f)(2) of the Plan;

FRENCH FORM OF NON-QUAL STOCK OPTIONS

EXHIBIT 10.11

(iv) only if expressly permitted by the Plan Administrator, any other method permitted under the Plan.

(c) Tax Withholding. The Recipient must satisfy all applicable income , employment and other tax-related withholding obligations associated with the exercise of the Option in accordance with the Plan before Recipient’s ownership of the Shares upon exercise will be recognized.

6. Other Terms and Conditions.

(ii) Other Termination. If the Recipient’s employment by the Company terminates for any reason other than the death or Disability of the Recipient, and provided the termination was not for Cause, the Option shall thereupon automatically terminate, except that the portion of the Option that was vested on or prior to the date of such termination of employment may thereafter be exercised by the Recipient for a period of one year from the date of such termination of employment or until the expiration of the maximum term of such Option, whichever period is shorter. Notwithstanding the foregoing, if the Plan Administrator determines that the termination of the Recipient’s employment by the Company was for Cause, the Option shall automatically terminate as of the date of such termination of employment, and no portion of the Option may be exercised by the Recipient after such date.

(b) Exercise of Option and Limitations Thereon. The Option shall become exercisable subject to the limitations set forth in the Award Letter.

FRENCH FORM OF NON-QUAL STOCK OPTIONS

EXHIBIT 10.11

(e) Recoupment of Awards. The Option shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Option shall be subject to the terms of the Plan.

11. Miscellaneous

FRENCH FORM OF NON-QUAL STOCK OPTIONS

EXHIBIT 10.11

FRENCH FORM OF NON-QUAL STOCK OPTIONS

EXHIBIT 10.11

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.

	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart Title: President and Chief Executive Officer

FRENCH FORM OF NON-QUAL STOCK OPTIONS

EX-10.12 12 v317437_ex10-12.htm EXHIBIT 10.12

EXHIBIT 10.12

FORM (FOR GERMAN EMPLOYEES) OF

LYDALL, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

2. Type of Option. The Option is a Nonqualified Stock Option .

3. Option Price. The purchase price of each Share subject to the Option is set forth in the Award Letter.

5. Manner of Exercise.

(b) Payment Upon Exercise. Shares purchased upon the exercise of the Option shall be paid for as follows:

(i) in cash or by check, payable to the order of Lydall;

(ii) unless prohibited by the Plan Administrator, by a “broker-assisted cashless exercise” procedure consistent with Section 5(f)(2) of the Plan;

GERMAN Form of Non-Qual Stock Options

EXHIBIT 10.12

(iv) only if expressly permitted by the Plan Administrator, any other method permitted under the Plan.

(i) the Recipient recognizes and agrees that the allocation, issue and exercising of the Option constitutes a cash benefit that may be subject to inland payroll tax/income tax and social benefits and that the Recipient explicitly acknowledges that this tax and social burden is to be borne solely by him/her alone.

(ii) the Recipient undertakes to satisfy all fiscal obligations relating to the allocation, issue and exercising of the Option, including possible commitments to pay tax, properly, on time and in due form. The Recipient shall compensate Lydall Gerhardi GmbH & Co. KG and Lydall, Inc. for all damages incurred by either company from the Recipient’s failure to satisfy his/her tax obligations and duties under fiscal law, properly or on time. Should Lydall Gerhardi GmbH & Co. KG or Lydall, Inc. suffer damages from a breach of such fiscal obligations on the part of the Recipient, either or both companies shall be entitled to claim directly from the Recipient.

(iii) Lydall Gerhardi GmbH & Co. KG and the Recipient agree that all payments made by Lydall Gerhardi GmbH & Co. KG on the Recipient’s payroll/income tax debts to third parties, particularly to any tax authority, shall be made exclusively and solely for account of the Recipient. If Lydall Gerhardi GmbH & Co. KG has made payments on or in connection with the Recipient’s tax debts that are covered by the withholding (and payment) of the Recipient’s claims to remuneration, the Recipient undertakes to reimburse Lydall Gerhardi GmbH & Co. KG immediately for such payments.

6. Other Terms and Conditions.

GERMAN Form of Non-Qual Stock Options

EXHIBIT 10.12

(ii) Other Termination. If the Recipient’s employment by the Company terminates for any reason other than the death or Disability of the Recipient, and provided the termination was not for Cause, the Option shall thereupon automatically terminate, except that the portion of the Option that was vested on or prior to the date of such termination of employment may thereafter be exercised by the Recipient for a period of one year from the date of such termination of employment or until the expiration of the maximum term of such Option, whichever period is shorter. Notwithstanding the foregoing, if the Plan Administrator determines that the termination of the Recipient’s employment by the Company was for Cause, the Option shall automatically terminate as of the date of such termination of employment, and no portion of the Option may be exercised by the Recipient after such date.

(b) Exercise of Option and Limitations Thereon. The Option shall become exercisable subject to the limitations set forth in the Award Letter.

(e) Recoupment of Awards. The Option shall be subject to the forfeiture and recoupment provisions of Section 10(a) of the Plan.

GERMAN Form of Non-Qual Stock Options

EXHIBIT 10.12

9. Change in Control. Upon a Change in Control Event or other Reorganization Event, the Option shall be subject to the terms of the Plan.

11. Miscellaneous

GERMAN Form of Non-Qual Stock Options

EXHIBIT 10.12

GERMAN Form of Non-Qual Stock Options

EXHIBIT 10.12

IN WITNESS WHEREOF, the undersigned officer of Lydall has executed this Agreement.

	LYDALL, INC.

	By:	/s/ Dale G. Barnhart
		Name: Dale G. Barnhart Title: President and Chief Executive Officer

GERMAN Form of Non-Qual Stock Options

EX-31.1 13 v317437_ex31-1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATION

I, Dale G. Barnhart, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lydall, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



August 1, 2012		/s/ Dale G. Barnhart
		Dale G. Barnhart President and Chief Executive Officer

EX-31.2 14 v317437_ex31-2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATION

I, Erika H. Steiner, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lydall, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



August 1, 2012		/s/ Erika H. Steiner
		Erika H. Steiner Vice President and Chief Financial Officer

EX-32.1 15 v317437_ex32-1.htm EXHIBIT 32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lydall, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certifications are accompanying the Form 10-Q solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code) and are not being filed as a part of this Form 10-Q or as a separate disclosure document.



August 1, 2012		/s/ Dale G. Barnhart
		Dale G. Barnhart President and Chief Executive Officer

August 1, 2012		/s/ Erika H. Steiner
		Erika H. Steiner Vice President and Chief Financial Officer

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<div style="font: 10pt Times New Roman, Times, Serif"> 11. Earnings Per Share   For the quarter and six months ended June 30, 2012 and 2011, basic earnings per share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method as long as their effect is not anti-dilutive.   The following table provides a reconciliation of weighted-average shares used to determine basic and diluted earnings per share.   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Quarter Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Six Months Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid">In thousands</td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 48%">Basic average common shares outstanding</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,770</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,741</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,799</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,738</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Effect of dilutive options and restricted stock awards</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 192</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 168</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 140</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 137</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="padding-bottom: 1pt">Diluted average common shares outstanding</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,962</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,909</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,939</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,875</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table>   For the quarters ended June 30, 2012 and June 30, 2011, stock options for 0.2 million and 0.4 million shares of common stock, respectively, were not considered in computing diluted earnings per common share because they were antidilutive.   For the six months ended June 30, 2012 and June 30, 2011, stock options for 0.4 million and 0.6 million shares of common stock, respectively, were not considered in computing diluted earnings per common share because they were antidilutive. </div>

846000

0.62

-104000

<div style="font: 10pt Times New Roman, Times, Serif"> The following table is a summary of the results of discontinued operations:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Quarter Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Six Months Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid"> In thousands</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30, 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30, 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 70%; text-align: left; padding-bottom: 1pt">Net sales</td> <td style="width: 1%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left"> $</td> <td style="width: 12%; border-bottom: Black 1pt solid; text-align: right"> 6,818</td> <td style="width: 1%; padding-bottom: 1pt; text-align: left">  </td> <td style="width: 1%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left"> $</td> <td style="width: 12%; border-bottom: Black 1pt solid; text-align: right"> 13,255</td> <td style="width: 1%; padding-bottom: 1pt; text-align: left">  </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left">Income before income taxes</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">989</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">1,374</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Income tax expense</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 362</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 499</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left; padding-left: 9pt">Income from discontinued operations</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">627</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">875</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"> Gain on sale of discontinued operations, net of tax of $2,229</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 3,857</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 3,857</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -8.1pt; padding-left: 8.1pt"> Income from discontinued operations, net of tax</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,484</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,732</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> Operating income (loss) by segment:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Quarter Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six Months Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold">In thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 48%">Performance Materials</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">4,982</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">6,093</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">7,102</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">12,390</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td>Thermal/Acoustical Metals</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">4,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">4,137</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">9,117</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">7,861</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td>Thermal/Acoustical Fibers</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">3,382</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(1,549</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,611</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(3,087</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Other Products and Services:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Life Sciences Vital Fluids</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">211</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(294</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">520</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(579</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Corporate Office Expenses</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (3,882</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (3,402</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (8,205</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (7,060</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> Consolidated Operating Income</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 8,743</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 4,985</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 14,145</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 9,525</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> </table> </div>

2712000

6989000

0.247

200000

<div style="font: 10pt Times New Roman, Times, Serif"> 9. Employer Sponsored Benefit Plans   As of June 30, 2012, the Company maintains a defined benefit pension plan that covers certain domestic Lydall employees (“domestic pension plan”) that is closed to new employees and benefits are no longer accruing. The domestic pension plan is noncontributory and benefits are based on either years of service or eligible compensation paid while a participant is in the plan. The Company’s funding policy is to fund not less than the ERISA minimum funding standard and not more than the maximum amount that can be deducted for federal income tax purposes. The Company was minimally required to contribute approximately $2.7 million in cash to its domestic pension plan in 2012. However, the Company is evaluating the impact of the Moving Ahead for Progress in the 21st Century Act (MAP-21) signed into law in July 2012, which is expected to lower the required minimum contribution to the domestic pension plan in 2012. Contributions of $0.6 million were made during the second quarter of 2012 and $1.0 million for the six months ended June 30, 2012. Contributions of $0.4 million were made during the second quarter of 2011 and $0.8 million for the six months ended June 30, 2011.   The following is a summary of the components of net periodic benefit cost for the domestic pension plan for the quarters and six months ended June 30, 2012 and 2011:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Quarter Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Six Months Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid">In thousands</td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left">Components of net periodic benefit cost</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 48%; text-align: left">Interest cost</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">648</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">646</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">1,296</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">1,292</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left">Expected return on assets</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(640</td> <td style="text-align: left">)</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(662</td> <td style="text-align: left">)</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(1,280</td> <td style="text-align: left">)</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(1,324</td> <td style="text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Amortization of actuarial loss</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 223</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 140</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 447</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 280</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Net periodic benefit cost</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 231</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 124</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 463</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 248</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

<div style="font: 10pt Times New Roman, Times, Serif"> The changes in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2012 were as follows:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Currency</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">December 31,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">translation</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Other</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">June 30,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold; border-bottom: Black 1pt solid">In thousands</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> adjustments</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> adjustments</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 40%; text-align: left">Performance Materials</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">13,399</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">(104</td> <td style="width: 1%; text-align: left">)</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">63</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">13,358</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Other Products and Services</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,660</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> -</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> -</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,660</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Total goodwill</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 18,059</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> (104</td> <td style="padding-bottom: 1pt; text-align: left">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 63</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 18,018</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

12527000

6230000

<div style="font: 10pt Times New Roman, Times, Serif"> The following is a summary of the components of net periodic benefit cost for the domestic pension plan for the quarters and six months ended June 30, 2012 and 2011:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Quarter Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Six Months Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid">In thousands</td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left">Components of net periodic benefit cost</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 48%; text-align: left">Interest cost</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">648</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">646</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">1,296</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">1,292</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left">Expected return on assets</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(640</td> <td style="text-align: left">)</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(662</td> <td style="text-align: left">)</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(1,280</td> <td style="text-align: left">)</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">(1,324</td> <td style="text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Amortization of actuarial loss</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 223</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 140</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 447</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 280</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Net periodic benefit cost</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 231</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 124</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 463</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 248</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

-447000

-63000

<div style="font: 10pt Times New Roman, Times, Serif"> 6. Divestiture   On June 29, 2011, the Company sold its Affinity business for $15.2 million in cash. Affinity designed and manufactured high precision, specialty engineered temperature-control equipment for semiconductor, pharmaceutical, life sciences and industrial applications. The Company recorded a gain on sale, net of transaction costs and income taxes, of $3.9 million in the quarter ended June 30, 2011. The Condensed Consolidated Financial Statements have been retroactively restated to reflect Affinity as a discontinued operation for all periods presented.   The following table is a summary of the results of discontinued operations:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Quarter Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Six Months Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid"> In thousands</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30, 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30, 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 70%; text-align: left; padding-bottom: 1pt">Net sales</td> <td style="width: 1%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left"> $</td> <td style="width: 12%; border-bottom: Black 1pt solid; text-align: right"> 6,818</td> <td style="width: 1%; padding-bottom: 1pt; text-align: left">  </td> <td style="width: 1%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left"> $</td> <td style="width: 12%; border-bottom: Black 1pt solid; text-align: right"> 13,255</td> <td style="width: 1%; padding-bottom: 1pt; text-align: left">  </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left">Income before income taxes</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">989</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">1,374</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Income tax expense</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 362</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 499</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left; padding-left: 9pt">Income from discontinued operations</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">627</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">875</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"> Gain on sale of discontinued operations, net of tax of $2,229</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 3,857</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 3,857</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -8.1pt; padding-left: 8.1pt"> Income from discontinued operations, net of tax</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,484</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,732</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

5785000

<div style="font: 10pt Times New Roman, Times, Serif"> Inventories as of June 30, 2012 and December 31, 2011 were as follows:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">June 30,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">December 31,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid"> In thousands</td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 74%; text-align: justify">Raw materials</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">14,025</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">15,068</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">Work in process</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">13,101</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">11,569</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: justify; padding-bottom: 1pt">Finished goods</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 10,086</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 9,915</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">37,212</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">36,552</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: justify; padding-bottom: 1pt">Less: Progress billings</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (3,919</td> <td style="padding-bottom: 1pt; text-align: left">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (2,706</td> <td style="padding-bottom: 1pt; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: justify; padding-bottom: 1pt">Total inventories</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 33,293</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 33,846</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

15150000

935000

-277000

<div style="FONT: 10pt Times New Roman, Times, Serif"> 14. Recently Issued Accounting Standards   In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which amends ASC 210, Balance Sheet. This ASU requires entities to disclose gross and net information about both instruments and transactions eligible for offset in the statement of financial position and those subject to an agreement similar to a master netting arrangement. This would include derivatives and other financial securities arrangements. The effective date is January 1, 2013 and must be applied retrospectively. The adoption of this ASU will have no effect on the Company’s consolidated financial statements. </div>

16939000

<div style="font: 10pt Times New Roman, Times, Serif"> 2. Short-Term Investment   The Company’s short-term investment at December 31, 2011 consisted of a $12.0 million certificate of deposit with a banking institution. At December 31, 2011, the short-term investment was classified as held to maturity and carried on the Consolidated Balance Sheet at amortized cost. The certificate of deposit matured on January 23, 2012, and $12.0 million of proceeds were recorded to cash and cash equivalents. There were no significant holding gains or losses. </div>

<div style="font: 10pt Times New Roman, Times, Serif"> 1. Basis of Financial Statement Presentation   Description of Business   Lydall, Inc. and its subsidiaries (the “Company” or “Lydall”) design and manufacture specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers, medical filtration media and devices and biopharmaceutical processing components for thermal/acoustical, filtration/separation, and bio/medical applications.   Basis of Presentation   The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared, in all material respects, in accordance with the same accounting principles followed in the preparation of the Company’s annual financial statements for the year ended December 31, 2011. The year-end Condensed Consolidated Balance Sheet was derived from the December 31, 2011 audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Management believes that all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations and cash flows for the periods reported, have been included. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.   On June 29, 2011, the Company sold all of the capital stock of its wholly-owned subsidiary, Lydall Industrial Thermal Solutions, Inc. (“Affinity”). The Condensed Consolidated Financial Statements for the quarter and six months ended June 30, 2011 have been retroactively restated to reflect Affinity as a discontinued operation.   During the quarter ended March 31, 2012, the Company revised its reportable segments in order to better align them with its strategic approach and operational decision-making. Refer to Note 12 Segment Information for further information. Prior period segment amounts throughout the Notes to the Condensed Consolidated Financial Statements have been reclassified to reflect the new segment structure. The reclassification of historical business segment information had no impact on the Company’s consolidated financial results.   As previously disclosed in the Form 10-K for the year ended December 31, 2011, during the third quarter of 2011 the Company identified and corrected certain prior period errors.  As permitted by Staff Accounting Bulletin 108, Lydall revised in the Form 10-Q for the quarterly period ended September 30, 2011 previously reported financial results for the periods affected. Accordingly, the financial results for the three and six months ended June 30, 2011 included herein reflect the previously revised results.   Recently Adopted Accounting Pronouncements   Effective January 1, 2012, the Company adopted the FASB’s ASU No. 2011-05, Presentation of Comprehensive Income (Topic 220). The adoption of this accounting guidance did not have an impact on the Company’s financial position, results of operations or cash flows. As required by the new standard, the Condensed Consolidated Statements of Comprehensive Income is included in the Condensed Consolidated Financial Statements.   Effective January 1, 2012, the Company adopted the FASB’s ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends ASC 820, Fair Value Measurement. This ASU requires the categorization by level for items that are required to be disclosed at fair value, information about transfers between Level 1 and Level 2 and additional disclosure for Level 3 measurements. In addition, the ASU provides guidance on measuring the fair value of financial instruments managed within a portfolio and the application of premiums and discounts on fair value measurements. The adoption of this accounting guidance did not have an impact on the Company’s consolidated financial statements. </div>

194289000

9428000

-1656000

0.63

-3082000

1296000

810000

0.63

1000000

<div style="font: 10pt Times New Roman, Times, Serif"> The following table provides a reconciliation of weighted-average shares used to determine basic and diluted earnings per share.   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Quarter Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Six Months Ended</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June 30,</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1pt solid">In thousands</td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 48%">Basic average common shares outstanding</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,770</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,741</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,799</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 10%; text-align: right">16,738</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Effect of dilutive options and restricted stock awards</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 192</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 168</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 140</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 137</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="padding-bottom: 1pt">Diluted average common shares outstanding</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,962</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,909</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,939</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 16,875</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table> </div>

16799000

<div style="FONT: 10pt Times New Roman, Times, Serif"> 10. Income Taxes   The Company's effective tax rate for income from continuing operations was 24.1% and 42.2% for the quarters ended June 30, 2012 and 2011 and 24.7% and 40.5% for the six months ended June 30, 2012 and 2011. The difference in the Company’s effective tax rate for the quarter and six months ended June 30, 2012 compared to statutory federal income tax rates was due the reversal of valuation allowance against foreign tax credit carryovers in the Company’s estimated annual effective tax rate for 2012. The anticipated use of foreign tax credit carryovers to offset 2012 U.S. federal income taxes is based on estimates concerning 2012 income generated from domestic and foreign sources.   The Company maintains valuation allowances against certain deferred tax assets where realization is not reasonably assured. The Company evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount to the extent it believes a portion will not be realized. The Company’s effective tax rates in future periods could be affected by earnings being lower or higher than anticipated in countries where tax rates differ from the United States federal rate, the relative impact of permanent tax adjustments on higher or lower earnings from domestic operations, changes in net deferred tax asset valuation allowances, completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of tax audits.   The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, France, Germany and the Netherlands. Within the next four quarters, the Company expects to conclude certain U.S. federal income tax matters through the year ended December 31, 2009, and it is reasonably expected that net unrecognized benefits of $0.5 million may be recognized. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2006, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2007. </div>

-215000

140000

1280000

P6Y2M12D

153055000

<div style="font: 10pt Times New Roman, Times, Serif"> 3. Inventories   Inventories as of June 30, 2012 and December 31, 2011 were as follows:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">June 30,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">December 31,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid"> In thousands</td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> <td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 74%; text-align: justify">Raw materials</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">14,025</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right">15,068</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">Work in process</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">13,101</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">11,569</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: justify; padding-bottom: 1pt">Finished goods</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 10,086</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 9,915</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">37,212</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">36,552</td> <td style="text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: justify; padding-bottom: 1pt">Less: Progress billings</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (3,919</td> <td style="padding-bottom: 1pt; text-align: left">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (2,706</td> <td style="padding-bottom: 1pt; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: justify; padding-bottom: 1pt">Total inventories</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 33,293</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 33,846</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table>   Included in work in process is gross tooling inventory of $7.8 million and $6.4 million at June 30, 2012 and December 31, 2011, respectively. Tooling inventory, net of progress billings, was $3.9 million and $3.7 million at June 30, 2012 and December 31, 2011, respectively. </div>

-17000

800000

13952000

41234000

<div style="font: 10pt Times New Roman, Times, Serif"> 13. Commitments and Contingencies   From time-to-time the Company is subject to legal proceedings, claims, investigations and inquiries that arise in the ordinary course of business such as, but not limited to, patent, employment, personal injury, commercial and environmental matters. Although there can be no assurance, the Company is not aware of any matters pending that are expected to be material with respect to the Company’s business, financial position, results of operations or cash flows. </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> 12. Segment Information   The Company’s reportable segments are Performance Materials, Thermal/Acoustical Metals, and Thermal/Acoustical Fibers. The Performance Materials segment reports the results of Industrial Filtration, Industrial Thermal Insulation, and Life Sciences Filtration businesses. The Thermal/Acoustical Metals segment reports the results of the Company’s metal-based automotive business. The Thermal/Acoustical Fibers segment reports the results of the Company’s fiber-based automotive business. Other Products and Services (“OPS”) includes Life Sciences Vital Fluids.   During the quarter ended March 31, 2012, the Thermal/Acoustical business reorganized its management reporting structure. Prior to this reorganization, the Thermal/Acoustical business was comprised of one operating segment for financial reporting purposes. The Company now manages and measures its Thermal/Acoustical business performance in two distinct operating segments: Thermal/Acoustical Metals and Thermal/Acoustical Fibers. The new segments reflect the way the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance.   On June 29, 2011, the Company sold its Affinity business, which had been included within OPS. Affinity designed and manufactured high precision, specialty engineered temperature-control equipment for semiconductor, pharmaceutical, life sciences and industrial applications. As a result of the sale, the Condensed Consolidated Financial Statements have been retroactively restated to reflect Affinity as a discontinued operation and the following segment information excludes Affinity’s net sales and operating income for all periods presented.   Prior period segment amounts throughout the notes to the Condensed Consolidated Financial Statements have been reclassified to give effect to the new segment structure and for discontinued operations. The reclassification of historical business segment information had no impact on the consolidated financial results.   Performance Materials Segment   The Performance Materials segment includes filtration media solutions for air, fluid power, and industrial applications (“Industrial Filtration”), air and liquid life science applications (“Life Sciences Filtration”), and industrial thermal insulation solutions for building products, appliances, and energy and industrial markets (“Industrial Thermal Insulation”).   Industrial Filtration products include LydAir® MG (Micro-Glass) Air Filtration Media, LydAir® MB (Melt Blown) Air Filtration Media, LydAir® SC (Synthetic Composite) Air Filtration Media, and Arioso™ Membrane Composite Media. These products constitute the critical media component of clean-air systems for applications in clean-space, commercial, industrial and residential HVAC, power generation, and industrial processes. Lydall has leveraged its extensive technical expertise and applications knowledge into a suite of media products covering the vast liquid filtration landscape across the engine and industrial fields. The LyPore® Liquid Filtration Media and activated carbon containing ActiPure® Filtration Media series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes, diesel filtration and fuel filtration.   Life Sciences Filtration products include the LyPore® and ActiPure® Filtration Media developed to meet the requirements of life science applications including biopharmaceutical pre-filtration and clarification, diagnostic and analytical testing, respiratory protection, life protection, medical air filtration, drinking water filtration and high purity process filtration such as that found in food and beverage and medical applications. Lydall also offers Solupor® Membrane specialty microporous membranes that are utilized in various markets and applications including air and liquid filtration and transdermal drug delivery. Solupor® membranes are made from ultra-high molecular weight polyethylene and incorporate a unique combination of mechanical strength, chemical inertness, and high porosity in a unique open structure.   Industrial Thermal Insulation products are high performance nonwoven veils, papers, mats and specialty composites for the building products, appliance, and energy and industrial markets. The Manniglas® Thermal Insulation brand is diverse in its product application ranging from high temperature seals and gaskets in ovens and ranges to specialty veils for HVAC and cavity wall insulation. appLY® Mat Needled Glass Mats have been developed to expand Lydall’s high temperature technology portfolio for broad application into the appliance market and supplements the Lytherm® Insulation Media product brand, traditionally utilized in the industrial market for kilns and furnaces used in metal processing. Lydall’s Cryotherm® Super-Insulating Media, CRS-Wrap® Super-Insulating Media and Cryo-LiteTM Cryogenic Insulation products are industry standards for state-of-the-art cryogenic insulation designs used by manufacturers of cryogenic equipment for liquid gas storage, piping, and transportation.   Thermal/Acoustical Metals Segment   The Thermal/Acoustical Metals segment offers a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the interior (dash insulators), underbody (wheel well, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUV’s, heavy duty trucks and recreational vehicles.   Thermal/Acoustical Metals segment products are stamped metal combinations which provide thermal and acoustical shielding solutions for the global automotive and truck markets. Thermal/Acoustical Metals products include AMS® which is an all metal shield designed to be used in various vehicle applications, and Direct Exhaust Mount Heat shields which are mounted to high temperature surfaces like exhaust down-pipes or engine manifolds.   Thermal/Acoustical Fibers Segment   The Thermal/Acoustical Fibers segment offers a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the interior (dash insulators), underbody (wheel well, fuel tank, exhaust) and under hood (engine compartment) of cars, trucks, SUV’s, heavy duty trucks and recreational vehicles.   Thermal/Acoustical Fibers segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites for the automotive and truck markets primarily in North America. Lydall’s dBCore® is a lightweight acoustical composite that emphasizes absorption principles over heavy-mass type systems. Lydall’s dBLyte® is a high-performance acoustical barrier with sound absorption and blocking properties and can be used throughout a vehicle’s interior to minimize intrusive noise from an engine compartment and road. Lydall’s ZeroClearance® is an innovative thermal solution that utilizes an adhesive backing for attachment and is ideal for protecting floor sheet metal from excessive exhaust heat. Lydall’s specially engineered wheel wells provide a solution with weight reduction and superior noise suppression capabilities over conventional designs.   Thermal/Acoustical Metals segment and Thermal/Acoustical Fibers segment operating results include allocations of certain costs shared between the segments.   Other Products and Services   The Life Sciences Vital Fluids business offers specialty products for blood filtration devices, blood transfusion single-use containers and bioprocessing single-use containers and products for containment of media, buffers and bulk intermediates used in biotech, pharmaceutical and diagnostic reagent manufacturing processes.   The tables below present net sales and operating income by segment for the quarters and six months ended June 30, 2012 and 2011, and also a reconciliation of total segment net sales and operating income to total consolidated net sales and operating income.   Net sales by segment:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Quarter Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six Months Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold">In thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Performance Materials Segment:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt; WIDTH: 48%"> Industrial Filtration</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">18,109</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">18,449</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">36,285</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">38,920</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Industrial Thermal Insulation</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">11,119</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,624</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">19,850</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">25,576</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Life Sciences Filtration</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,295</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,819</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,476</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,865</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> Performance Materials Segment net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 32,523</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 35,892</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 61,611</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 72,361</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Thermal/Acoustical Metals Segment:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Metal parts</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">35,738</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">37,455</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">73,546</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">72,969</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Tooling</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 1,947</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,406</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 6,252</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 8,344</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 0.25in; FONT-WEIGHT: bold"> Thermal/Acoustical Metals Segment net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 37,685</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 39,861</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 79,798</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 81,313</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Thermal/Acoustical Fibers Segment:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Fiber parts</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">24,191</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">20,283</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">46,337</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">39,712</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Tooling</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 719</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 48</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 745</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 1,303</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 0.25in; FONT-WEIGHT: bold"> Thermal/Acoustical Fibers Segment net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 24,910</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 20,331</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 47,082</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 41,015</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Other Products and Services:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Life Sciences Vital Fluids</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,749</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,403</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,980</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,171</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 0.25in; FONT-WEIGHT: bold"> Other Products and Services net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,749</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,403</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,980</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,171</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Eliminations and Other</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (1,332</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (656</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (2,182</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (1,356</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> Consolidated Net Sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 97,535</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 98,831</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 194,289</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 200,504</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> </table>   Operating income (loss) by segment:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Quarter Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six Months Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold">In thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 48%">Performance Materials</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">4,982</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">6,093</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">7,102</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">12,390</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td>Thermal/Acoustical Metals</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">4,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">4,137</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">9,117</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">7,861</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td>Thermal/Acoustical Fibers</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">3,382</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(1,549</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,611</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(3,087</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Other Products and Services:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Life Sciences Vital Fluids</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">211</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(294</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">520</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(579</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Corporate Office Expenses</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (3,882</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (3,402</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (8,205</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (7,060</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> Consolidated Operating Income</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 8,743</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 4,985</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 14,145</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 9,525</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> </table> </div>

-467000

400000

10504000

27899000

<div style="font: 10pt Times New Roman, Times, Serif"> 4. Goodwill   The Company tests its goodwill for impairment annually in the fourth quarter, and whenever events or changes in circumstances indicate that the carrying value may exceed its fair value.   The changes in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2012 were as follows:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Currency</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">December 31,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">translation</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Other</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">June 30,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold; border-bottom: Black 1pt solid">In thousands</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> adjustments</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> adjustments</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 40%; text-align: left">Performance Materials</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">13,399</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">(104</td> <td style="width: 1%; text-align: left">)</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">63</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">13,358</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Other Products and Services</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,660</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> -</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> -</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">  </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 4,660</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Total goodwill</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 18,059</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> (104</td> <td style="padding-bottom: 1pt; text-align: left">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 63</td> <td style="padding-bottom: 1pt; text-align: left"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td> <td style="border-bottom: Black 1pt solid; text-align: right"> 18,018</td> <td style="padding-bottom: 1pt; text-align: left"> </td> </tr> </table>   Other adjustments relate to contingent consideration owed to the seller of DSM Solutech B.V. (“Solutech”) which was acquired by the Company in December 2008. Consideration equals 4.0% of Solutech’s net revenues (included in the Performance Materials segment), as defined, and increases the amount of goodwill previously recorded, as the acquisition occurred prior to the revised guidance issued by the Financial Accounting Standards Board (ASC 805) for business combinations. </div>

3448000

-525000

0.62

12015000

<div style="font: 10pt Times New Roman, Times, Serif"> 7. Equity Compensation Plans   As of June 30, 2012 the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (“2003 Plan”) and the 2012 Stock Incentive Plan (“2012 Plan”) collectively, the “Plans,” under which incentive and non-qualified stock options and time and performance based restricted shares have been granted to employees and directors from authorized but unissued shares of common stock or treasury shares. The 2003 Plan is not active, but continues to govern all outstanding awards granted under the plan until the awards themselves are exercised or terminate in accordance with their terms. The 2012 Plan, approved by shareholders on April 27, 2012, authorized 1.75 million shares of common stock for awards. The 2012 Plan also authorizes an additional 1.2 million shares to the extent awards granted under prior stock plans that were outstanding as of April 27, 2012 are forfeited. The 2012 Plan provides for the following type of awards: options, restricted stock, restricted stock units and other stock-based awards.   The Company incurred compensation expense of $0.4 million for the quarters ended June 30, 2012 and June 30, 2011, and $0.8 million for the six month periods ended June 30, 2012 and June 30, 2011, for the Plans, including restricted stock awards. No compensation costs were capitalized as part of inventory.   Stock Options   The following table is a summary of outstanding and exercisable options as of June 30, 2012:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="font-weight: bold; border-bottom: Black 1pt solid"> In thousands except per share amounts and years</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Shares</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted- Average Exercise Price</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted- Average Remaining Contractual Term (years)</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">  </td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Aggregate Intrinsic Value</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">  </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 40%">Outstanding at June 30, 2012</td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 12%; text-align: right">888,328</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">8.65</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 12%; text-align: right">6.2</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 12%; text-align: right">4,388</td> <td style="width: 1%; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td>Exercisable at June 30, 2012</td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">536,302</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left">$</td> <td style="text-align: right">9.17</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left"> </td> <td style="text-align: right">4.6</td> <td style="text-align: left"> </td> <td> </td> <td style="text-align: left">$</td> <td style="text-align: right">2,392</td> <td style="text-align: left"> </td> </tr> </table>   There were no options granted during the quarter and six months ended June 30, 2012. The amount of cash received from the exercise of stock options during the quarter and six months ended June 30, 2012 was $0.2 million and the intrinsic value of options exercised was $0.1 million. There were no options granted during the quarter and six months ended June 30, 2011. There was minimal stock option exercise activity during the quarter and six months ended June 30, 2011. At June 30, 2012, the total unrecognized compensation cost related to nonvested stock option awards was approximately $1.1 million, with a weighted average expected amortization period of 2.8 years.   Restricted Stock   Restricted stock includes both performance-based and time-based awards. There were 114,500 performance-based restricted shares granted during the quarter and six months ended June 30, 2012, with a 2014 earnings per share target. No restricted shares were vested in the quarter and six months ended June 30, 2012. There were no shares granted in the prior year quarter and 22,120 shares were granted in the six months ended June 30, 2011. No restricted shares were vested in the quarter and six months ended June 30, 2011. At June 30, 2012, there were 369,776 unvested restricted stock awards with total unrecognized compensation cost related to these awards of $2.1 million with a weighted average expected amortization period of 2.2 years. </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> Net sales by segment:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Quarter Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six Months Ended</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold">In thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Performance Materials Segment:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt; WIDTH: 48%"> Industrial Filtration</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">18,109</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">18,449</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">36,285</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">38,920</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Industrial Thermal Insulation</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">11,119</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,624</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">19,850</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">25,576</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Life Sciences Filtration</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,295</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,819</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,476</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,865</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> Performance Materials Segment net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 32,523</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 35,892</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 61,611</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 72,361</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Thermal/Acoustical Metals Segment:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Metal parts</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">35,738</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">37,455</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">73,546</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">72,969</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Tooling</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 1,947</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,406</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 6,252</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 8,344</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 0.25in; FONT-WEIGHT: bold"> Thermal/Acoustical Metals Segment net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 37,685</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 39,861</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 79,798</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 81,313</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Thermal/Acoustical Fibers Segment:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-LEFT: 9pt">Fiber parts</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">24,191</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">20,283</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">46,337</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">39,712</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Tooling</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 719</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 48</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 745</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 1,303</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 0.25in; FONT-WEIGHT: bold"> Thermal/Acoustical Fibers Segment net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 24,910</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 20,331</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 47,082</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 41,015</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">Other Products and Services:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Life Sciences Vital Fluids</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,749</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,403</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,980</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,171</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 0.25in; FONT-WEIGHT: bold"> Other Products and Services net sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,749</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 3,403</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,980</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 7,171</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Eliminations and Other</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (1,332</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (656</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (2,182</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (1,356</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> Consolidated Net Sales</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 97,535</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 98,831</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 194,289</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">$</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 200,504</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> </table> </div>

<div style="font: 10pt Times New Roman, Times, Serif"> 5. Long-term Debt and Financing Arrangements   As of June 30, 2012 and December 31, 2011, the majority of debt outstanding was capital lease obligations. As of June 30, 2012 and December 31, 2011, the Company had no borrowings outstanding under any domestic credit facility, or any credit arrangement entered into by a foreign subsidiary, other than letters of credit.   On June 16, 2011, the Company entered into a $35.0 million senior secured domestic revolving credit facility (“Domestic Credit Facility”) with a new financial institution, which replaced the Company’s prior $35.0 million domestic credit facility that was terminated by the Company. The Domestic Credit Facility is secured by substantially all of the assets of the Company. The maturity date for the Domestic Credit Facility is June 15, 2016.   The loan agreement governing the Domestic Credit Facility contains a number of affirmative and negative covenants, including financial covenants. The Company is required to meet a minimum fixed charge coverage ratio. The fixed charge coverage ratio requires that, at the end of each fiscal quarter, the ratio of consolidated EBITDA, as defined in the loan agreement, to fixed charges may not be less than 1 to 1 for the immediately preceding 12 month period. In addition, the Company must maintain a Consolidated Leverage Ratio, as defined, as of the end of each fiscal quarter of no greater than 2.5 to 1.0. The Company must also meet a minimum consolidated EBITDA for the preceding 12 month period of $15.0 million through September 30, 2014 and $25.0 million thereafter. The Company was in compliance with all covenants at June 30, 2012.   The Company expects to fund its cash requirements from existing cash balances, cash generated by operations, and through borrowings, if needed, under its Domestic Credit Facility and foreign credit facilities. As of June 30, 2012, the Company had borrowing availability of $32.2 million under the Domestic Credit Facility net of standby letters of credit outstanding of $2.8 million. As of June 30, 2012, the Company’s foreign subsidiaries had various credit arrangements with banks totaling €9.0 million (approximately $11.4 million) all of which was available for borrowing, primarily restricted to borrowings by the respective foreign subsidiary. </div>

177000

549000

2182000 <div style="FONT: 10pt Times New Roman, Times, Serif"> 8. Stock Repurchase Plan   In April 2012, the Company’s Board of Directors approved a stock repurchase program (the “2012 Stock Repurchase Program”) which authorized the Company to repurchase up to 1.0 million shares of its common stock.   The Company repurchased 219,476 shares of its common stock at an average price of $12.35 per share for an aggregate purchase price of $2.7 million during the three and six months ended June 30, 2012 under the 2012 Stock Repurchase Program. There were 780,524 shares remaining authorized for repurchase under the 2012 Stock Repurchase Program as of June 30, 2012. </div>

1200000

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36285000

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5611000

47082000

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46337000

2700000

219476

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P2Y2M12D

P2Y9M18D

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13624000

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48000

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100000

8743000

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6592000

3020000

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0.241

200000

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-139000

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648000

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640000

75542000

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21993000

200000

6592000

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3749000

4982000

32523000

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11119000

3295000

211000

4050000

37685000

1947000

35738000

3382000

24910000

719000

24191000

2700000

219476

12.35

P2Y2M12D

P2Y9M18D

114500

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Stock Repurchase Plan - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified		3 Months Ended	6 Months Ended
	Apr. 30, 2012 Share Repurchase Program Two Thousand And Twelve	Jun. 30, 2012 2012 Stock Repurchase Program	Jun. 30, 2012 2012 Stock Repurchase Program
Share Repurchases [Line Items]
Common stock repurchase authorized shares	1,000,000
Repurchased shares of common Stock		219,476	219,476
Repurchased shares of common stock average price per share		$ 12.35	$ 12.35
Repurchased shares of common Stock aggregate purchase price		$ 2.7	$ 2.7
Remaining authorized funds for stock repurchase		780,524	780,524

- Definition

Number of shares that have been repurchased during the period and have not been retired and are not held in treasury. Some state laws may govern the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock.

+ References+ Details

- Definition

Equity impact of the value of stock that has been repurchased during the period and has not been retired and is not held in treasury. Some state laws may mandate the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock.

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Net Sales by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting, Revenue Reconciling Item [Line Items]
Eliminations and Other	$ (1,332)	$ (656)	$ (2,182)	$ (1,356)
Net sales	97,535	98,831	194,289	200,504
Performance Materials Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	32,523	35,892	61,611	72,361
Performance Materials Segment \| Industrial Filtration
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	18,109	18,449	36,285	38,920
Performance Materials Segment \| Industrial Thermal Insulation
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	11,119	13,624	19,850	25,576
Performance Materials Segment \| Life Sciences Filtration
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	3,295	3,819	5,476	7,865
Thermal/Acoustical Metals Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	37,685	39,861	79,798	81,313
Thermal/Acoustical Metals Segment \| Metal Parts
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	35,738	37,455	73,546	72,969
Thermal/Acoustical Metals Segment \| Tooling
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	1,947	2,406	6,252	8,344
Thermal/Acoustical Fibers Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	24,910	20,331	47,082	41,015
Thermal/Acoustical Fibers Segment \| Fiber Parts
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	24,191	20,283	46,337	39,712
Thermal/Acoustical Fibers Segment \| Tooling
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	719	48	745	1,303
Other Products and Services
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	3,749	3,403	7,980	7,171
Other Products and Services \| Life Sciences Vital Fluids
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	$ 3,749	$ 3,403	$ 7,980	$ 7,171

XML 24 R33.htm IDEA: XBRL DOCUMENT

Long-term Debt and Financing Arrangements - Additional Information (Detail) In Millions, unless otherwise specified	6 Months Ended			6 Months Ended		1 Months Ended
	Jun. 30, 2012	Jun. 30, 2012 Minimum	Jun. 30, 2012 Maximum	Jun. 30, 2012 Period 1 Minimum USD ($)	Jun. 30, 2012 Period 2 Minimum USD ($)	Jun. 16, 2011 Domestic Credit Facility USD ($)	Jun. 30, 2012 Domestic Credit Facility USD ($)	Jun. 16, 2011 Prior Domestic Credit Facility USD ($)	Jun. 30, 2012 Foreign Credit Facility USD ($)	Jun. 30, 2012 Foreign Credit Facility EUR (€)
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity						$ 35.0		$ 35.0
Line of credit facility, maturity date						Jun. 15, 2016
Required fixed charge coverage ratio for preceding 12 month period		1
Required consolidated leverage ratio as of end of each fiscal quarter			2.5
Required Consolidated EBITDA				15.0	25.0
Debt instrument, covenant compliance	The Company was in compliance with all covenants at June 30, 2012
Line of credit facility, remaining borrowing capacity							32.2
Standby letters of credit, outstanding							2.8
Line of credit facility, amount available for borrowings									$ 11.4	€ 9.0

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Employer Sponsored Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2012

Summary of Components of Net Periodic Benefit Cost for Domestic Pension Plan

The following is a summary of the components of net periodic benefit cost for the domestic pension plan for the quarters and six months ended June 30, 2012 and 2011:

	Quarter Ended						Six Months Ended
	June 30,						June 30,
In thousands	2012			2011			2012			2011
Components of net periodic benefit cost
Interest cost	$	648		$	646		$	1,296		$	1,292
Expected return on assets		(640	)		(662	)		(1,280	)		(1,324	)
Amortization of actuarial loss		223			140			447			280
Net periodic benefit cost	$	231		$	124		$	463		$	248

XML 27 R42.htm IDEA: XBRL DOCUMENT

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Taxes [Line Items]
Effective tax rate for income from continuing operations	24.10%	42.20%	24.70%	40.50%
Net unrecognized benefits that may be recognized	$ 0.5		$ 0.5

- Definition

A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations.

+ References+ Details

Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of Inventory [Line Items]
Raw materials	$ 14,025	$ 15,068
Work in process	13,101	11,569
Finished goods	10,086	9,915
Inventory, Gross, Total	37,212	36,552
Less: Progress billings	(3,919)	(2,706)
Total inventories	$ 33,293	$ 33,846

Short-Term Investment - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Schedule of Investments [Line Items]
Certificate of deposit included in short-term investment		$ 12,000,000
Proceeds from maturity of short-term investment	$ 12,015,000

Inventories - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of Inventory [Line Items]
Work in process	$ 13,101	$ 11,569
Inventories	33,293	33,846
Tools
Schedule of Inventory [Line Items]
Work in process	7,800	6,400
Inventories	$ 3,900	$ 3,700

Changes in Carrying Amount of Goodwill by Reporting Unit (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012 Performance Materials Segment	Jun. 30, 2012 Other Products and Services	Dec. 31, 2011 Other Products and Services
Goodwill [Line Items]
Beginning Balance	$ 18,059	$ 13,399	$ 4,660	$ 4,660
Currency translation adjustments	(104)	(104)
Other adjustments	63	63
Ending Balance	$ 18,018	$ 13,358	$ 4,660	$ 4,660

Goodwill - Additional Information (Detail)	Jun. 30, 2012
Goodwill [Line Items]
Contingent consideration as percentage of revenue for acquisition	4.00%

Segment Information - Additional Information (Detail) (Thermal and Acoustical)	6 Months Ended	12 Months Ended
	Jun. 30, 2012 Segment	Dec. 31, 2011 Segment
Thermal and Acoustical
Segment Reporting Information [Line Items]
Number of operating segments	2	1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income	$ 10,504	$ 9,980
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of discontinued operations, net of tax		(3,857)
Gain on sale of product line	(810)	(810)
Depreciation and amortization	6,989	7,872
Deferred income taxes	(467)	957
Stock based compensation	846	808
Loss on disposition of property, plant and equipment	17	2
Changes in operating assets and liabilities:
Accounts receivable	(9,428)	(11,091)
Inventories	215	(334)
Accounts payable	4,041	801
Accrued payroll and other compensation	935	604
Accrued taxes	549	2,248
Other, net	(864)	(1,413)
Net cash provided by operating activities	12,527	5,767
Cash flows from investing activities:
Proceeds from divestiture		12,811
Capital expenditures	(5,785)	(3,338)
Reimbursement of cash from leasing company		818
Proceeds from maturity of short-term investment	12,015
Increase in restricted cash		(3,275)
Net cash provided by investing activities	6,230	7,016
Cash flows from financing activities:
Debt repayments	(573)	(739)
Repurchases of common stock	(2,712)
Common stock issued	203	73
Net cash used for financing activities	(3,082)	(666)
Effect of exchange rate changes on cash	(525)	1,175
Increase in cash and cash equivalents	15,150	13,292
Cash and cash equivalents at beginning of period	30,905	24,988
Cash and cash equivalents at end of period	$ 46,055	$ 38,280

Summary of Results of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	$ 6,818	$ 13,255
Income before income taxes	989	1,374
Income tax expense	362	499
Income from discontinued operations	627	875
Gain on sale of discontinued operations, net of tax of $2,229	3,857	3,857
Income from discontinued operations, net of tax	$ 4,484	$ 4,732

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Income from discontinued operations, tax	$ 2,591	$ 2,728

Document and Entity Information	6 Months Ended
Document and Entity Information	Jun. 30, 2012	Jul. 19, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Trading Symbol	LDL
Entity Registrant Name	LYDALL INC /DE/
Entity Central Index Key	0000060977
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		17,014,997

Divestiture - Additional Information (Detail) (USD $)	3 Months Ended	6 Months Ended	3 Months Ended
Divestiture - Additional Information (Detail) (USD $)	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2011 Lydall Industrial Thermal Solutions Inc	Jun. 29, 2011 Lydall Industrial Thermal Solutions Inc
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale of Affinity business in cash				$ 15,200,000
Gain on sale of Affinity business, net of transaction cost and income taxes	$ 3,857,000	$ 3,857,000	$ 3,900,000

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 46,055	$ 30,905
Short-term investment		12,015
Accounts receivable, net	57,046	47,258
Inventories	33,293	33,846
Prepaid expenses and other current assets, net	8,607	6,796
Total current assets	145,001	130,820
Property, plant and equipment, at cost	242,411	240,157
Accumulated depreciation	(164,833)	(161,218)
Net, property, plant and equipment	77,578	78,939
Goodwill	18,018	18,059
Other intangible assets	4,058	4,537
Other assets, net	2,375	2,830
Total assets	247,030	235,185
Current liabilities:
Current portion of long-term debt	843	1,035
Accounts payable	31,887	28,163
Accrued payroll and other compensation	9,828	9,031
Accrued taxes	3,027	2,532
Other accrued liabilities	4,560	4,038
Total current liabilities	50,145	44,799
Long-term debt	1,955	2,261
Deferred tax liabilities	5,291	5,240
Benefit plan liabilities	20,304	21,269
Other long-term liabilities	1,020	764
Commitments and Contingencies (Note 13)
Stockholders' equity:
Preferred stock
Common stock	2,373	2,365
Capital in excess of par value	57,256	56,214
Retained earnings	194,795	184,291
Accumulated other comprehensive loss	(17,997)	(16,618)
Treasury stock, at cost	(68,112)	(65,400)
Total stockholders' equity	168,315	160,852
Total liabilities and stockholders' equity	$ 247,030	$ 235,185

Summary of Outstanding and Exercisable Options (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Shares
Outstanding at June 30, 2012	888,328
Exercisable at June 30, 2012	536,302
Weighted-Average Exercise Price
Outstanding at June 30, 2012	$ 8.65
Exercisable at June 30, 2012	$ 9.17
Weighted-average remaining contractual term (years)
Outstanding at June 30, 2012	6 years 2 months 12 days
Exercisable at June 30, 2012	4 years 7 months 6 days
Aggregate intrinsic value
Outstanding at June 30, 2012	$ 4,388
Exercisable at June 30, 2012	$ 2,392