10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2013

OR

o 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)

Registrant’s telephone number, including area code: (860) 646-1233

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.10 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.         Yes o No x

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 o

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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. (Check one):

Large accelerated filer o	Non-accelerated filer o (Do not check if a smaller reporting company)	Accelerated filer x	Smaller reporting company o

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

On June 28, 2013, the aggregate market value of the Registrant’s voting stock held by nonaffiliates was $235,067,855 based on the New York Stock Exchange closing price on that date. For purposes of this calculation, the Registrant has assumed that its directors and executive officers are affiliates.

On February 18, 2014, there were 16,820,109 shares of Common Stock outstanding, exclusive of treasury shares.

 

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference to the definitive Proxy Statement to be distributed in connection with the Registrant’s
Annual Meeting of Stockholders to be held on April 25, 2014.

The exhibit index is located on pages 41 – 42.

INDEX TO ANNUAL REPORT ON FORM 10-K
  
Year Ended December 31, 2013

	Page Number
Cautionary Note Concerning Factors That May Affect Future Results		ii
PART I
Item 1. Business		1
Item 1A. Risk Factors		5
Item 1B. Unresolved Staff Comments		11
Item 2. Properties		11
Item 3. Legal Proceedings		11
Item 4. Mine Safety Disclosures		11
Executive Officers of the Registrant		12
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		13
Item 6. Selected Financial Data		16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		36
Item 8. Financial Statements and Supplementary Data		36
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		36
Item 9A. Controls and Procedures		37
Item 9B. Other Information		37
PART III
Item 10. Directors, Executive Officers and Corporate Governance		38
Item 11. Executive Compensation		38
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		38
Item 13. Certain Relationships and Related Transactions, and Director Independence		39
Item 14. Principal Accounting Fees and Services		39
PART IV
Item 15. Exhibits, Financial Statement Schedules		40
Signatures		43

The information called for by Items 10, 11, 12, 13 and 14, to the extent not included in this document, is incorporated herein by reference to such information included in the Company’s definitive Proxy Statement to be filed with the Securities and Exchange Commission and distributed in connection with Lydall, Inc.’s 2014 Annual Meeting of Stockholders to be held on April 25, 2014.

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CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

Lydall, Inc. and its subsidiaries are hereafter collectively referred to as “Lydall,” the “Company” or the “Registrant.” Lydall and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or trade names of Lydall and its subsidiaries.

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements contained in Annual Report on Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements within the meaning of the Exchange Act. 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 words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “forecasts,” “predicts,” “targets,” “prospects,” “strategy,” “signs” and other words of similar meaning in connection with the discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash and other measures of 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. Investors, therefore, 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 Annual Report on Form 10-K include, among others, statements relating to:

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

• Outlook for the fiscal year 2014;

• Expected vehicle production in the North American or European markets;

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

• Expected gross margin and working capital improvements from the application of Lean Six Sigma;

• Expected future transaction related expenses, including the tax deductibility of such expenses;

• Ability to integrate businesses acquired in the acquisition consummated in the first quarter of 2014;

• Expected future financial and operating performance of the acquisition;

• 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;

• Ability to meet cash operating requirements;

• Ability to meet financial covenants in its senior secured domestic revolving credit facility;

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

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

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• 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 legal proceedings and other 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 Annual Report on Form 10-K, 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 Company’s businesses serve which could have an effect on demand for the Company’s products and impact the Company’s profitability, challenges encountered by the Lydall in the integration of acquired businesses, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, swings in consumer confidence and spending, unstable economic growth, raw material pricing and supply issues, fluctuations in unemployment rates, and increases in fuel prices, as well as other risks and uncertainties identified in Part I, Item 1A — Risk Factors of this Annual Report on Form 10-K. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I

Item 1. BUSINESS

Lydall, Inc. has been incorporated in Delaware since 1987 after originally being incorporated in Connecticut in 1969. The principal executive offices are located in Manchester, Connecticut. The Company designs and manufactures 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.

Lydall serves a number of markets. The Company’s products are primarily sold directly to customers through an internal sales force and external sales representatives and distributed via common carrier. The majority of products are sold to original equipment manufacturers and tier-one suppliers. The Company competes through high-quality, specialty engineered innovative products and exceptional customer service. Lydall has a number of domestic and foreign competitors for its products, most of whom are either privately owned or divisions of larger companies.

Foreign and export sales were 45.2% of net sales in 2013, 46.7% in 2012, and 49.9% in 2011. Foreign sales were $128.0 million, $127.2 million, and $144.5 million for the years ended December 31, 2013, 2012 and 2011, respectively. Export sales primarily to Europe, Asia, Mexico and Canada were $52.1 million, $49.7 million, and $47.0 million in 2013, 2012 and 2011, respectively.

The increase in export sales dollars during 2013, compared to 2012, was primarily related to higher export sales to Mexico in the Thermal/Acoustical Metals and Thermal/Acoustical Fibers segments, due to strong overall demand in North America, partially offset by a decrease in export sales to South America in the Performance Materials segment as a result of the macro-economic slowdown in that region.

Foreign operations generated operating income of $5.1 million, $6.4 million, and $11.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. The decrease in operating income generated by foreign operations from 2012 to 2013 was primarily due to lower sales from unfavorable macro-economic conditions in Europe as well as startup costs associated with the Thermal/Acoustical Metal’s segment operation in China. Total foreign assets were $103.0 million, $95.1 million and $88.9 million at December 31, 2013, 2012 and 2011, respectively. For further detail regarding revenue and financial information about the Company’s geographic areas, see Note 10 to the Consolidated Financial Statements.

Acquisition:

On February 20, 2014 the Company completed an acquisition of certain industrial filtration businesses (“Industrial Filtration”) of Andrew Industries Limited, an Altham, United Kingdom based corporation pursuant to the terms of a Sale and Purchase Agreement (the “Sale and Purchase Agreement”) for $83.0 million in cash. The Industrial Filtration business has products sold under the brands Southern Felt^TM in the United States, Andrew Webron^TM in Europe, and China Felt Company^TM in Asia and serves a global customer base in the manufacture of non-woven felt filtration media and filter bags used primarily in industrial air filtration applications including power, cement, asphalt, incineration, food and pharmaceutical. The final purchase price, subject to certain customary post-closing adjustments, was financed with a combination of cash on hand and $60 million of borrowings from the Company’s $100 million amended and restated credit facility.

Amended Credit Facility:

On February 18, 2014 the Company amended and restated its $35 million senior secured revolving domestic credit facility to increase the available borrowing under this agreement to $100 million. The amended credit facility, secured by substantially all of the assets of the Company, has a maturity date of January 31, 2019 and was completed with the same financial institution as well as two additional financial institutions. The Company entered into this amended facility in part to fund $60 million of the purchase price of the Industrial Filtration acquisition.

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements are made available free of charge through the Investor Relations section of the Company’s Internet website at www.lydall.com after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “Commission”) and are also available on the Commission’s website at www.sec.gov. Information found on these websites is not part of this Form 10-K. Additionally, the public may read

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and copy any materials the Company files with the Commission at the Commission’s Public Reference room located at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

SEGMENTS

The Company’s reportable segments are Performance Materials, Thermal/Acoustical Metals and Thermal/Acoustical Fibers. The Performance Materials segment reports the results of the Filtration, Thermal Insulation and Life Sciences Filtration businesses. The Thermal/Acoustical Metals segment reports the results of Lydall’s automotive business, which includes metal parts and related tooling. The Thermal/Acoustical Fibers segment reports the results of Lydall’s automotive business, which includes fiber parts and related tooling. Other Products and Services (“OPS”) include Life Sciences Vital Fluids. As a result of the acquisition of the Industrial Filtration businesses on February 20, 2014, the Company expects to report the results of Industrial Filtration, subsequent to the acquisition date, in its own reportable segment. For additional information regarding the Company’s reportable segments, please refer to Note 10 in the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Performance Materials Segment

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

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^TM 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 series address a variety of application needs in fluid power including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes and diesel fuel filtration.

Life Sciences Filtration products have been 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.

Thermal Insulation products are high performance non-woven 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. The 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^TM 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.

Net sales from the Performance Materials segment represented 28.1% of Lydall’s net sales in 2013 compared with 31.2% in 2012 and 34.9% in 2011. Net sales generated by the international operations of the Performance Materials segment accounted for 30.1%, 30.6% and 29.8% of segment net sales in 2013, 2012, and 2011, respectively.

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Thermal/Acoustical Metals Segment

The Thermal/Acoustical Metals segment offers a full range of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in underbody (tunnel, fuel tank, exhaust, rear muffler and spare tire) and under hood (engine compartment, turbo charger, and manifolds) of cars, trucks, SUVs, 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 using aluminized and stainless steel with high performance heat absorbing materials. Additionally, a patented CLD (constraint layer damped) material is a lightweight material with characteristics to reduce vibration and parasitic noise on powertrain mounted heat shields.

Thermal/Acoustical Metals segment net sales represented 39.8% of the Company’s net sales in 2013, 40.6% in 2012 and 40.7% in 2011. Net sales generated by international operations of the Thermal/Acoustical Metals segment accounted for 59.5%, 59.2% and 44.2% of segment net sales in 2013, 2012 and 2011, respectively.

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, SUVs, 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 Fibers segment net sales represented 28.7% of the Company’s net sales in 2013, 24.9% in 2012 and 21.3% in 2011. There are no net sales generated by international operations, as the Thermal/Acoustical Fibers segment only produces domestically.

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

Other Products and Services (“OPS”)

The Life Sciences Vital Fluids business offers specialty products for blood filtration devices, blood transfusion single-use containers and the design and manufacture of single-use solutions for cell growth, frozen storage and fluid handling, as well as equipment for bioprocessing applications.

OPS net sales were 4.3% of the Company’s net sales in 2013 compared with 4.4% in 2012 and 3.8% in 2011.

For further detail regarding financial information about the Company’s reporting segments, see Note 10 to the Consolidated Financial Statements.

GENERAL BUSINESS INFORMATION

Lydall holds a number of patents, trademarks and licenses. While no single patent, trademark or license is critical to the success of Lydall, together these intangible assets are of considerable value to the Company.

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The Company’s business is generally not seasonal; however, results of operations are impacted by shutdowns at its domestic operations and European operations as a result of customer shutdowns in North America and Europe that typically occur in the third and fourth quarters of each year. Lydall maintains levels of inventory and grants credit terms that are normal within the industries it serves. The Company uses a wide range of raw materials in the manufacturing of its products, including aluminum and other metals to manufacture most of its automotive heat shields and various fibers in its Performance Materials and Thermal/Acoustical Fibers segments. The majority of raw materials used are generally available from a variety of suppliers.

Sales to Ford Motor Company accounted for 20.0%, 18.8% and 16.2% of Lydall’s net sales in the years ended December 31, 2013, 2012 and 2011, respectively. Sales to Chrysler Group LLC accounted for 10.9% and 10.0% of Lydall’s net sales in the years ended December 31, 2013 and 2012. No other customers accounted for more than 10% of Lydall’s net sales in such years.

The Company invested $7.6 million in 2013, $7.7 million in 2012, and $8.1 million in 2011 or approximately 2% in 2013, 2012 and 2011 of net sales, in research and development to develop new products and to improve existing products. All amounts were expensed as incurred. Most of the investment in research and development is application specific. There were no significant customer-sponsored research and development activities during the past three years.

Backlog at January 31, 2014 was $57.8 million. Lydall’s backlog was $53.4 million at December 31, 2013, $48.8 million at December 31, 2012, and $48.3 million at December 31, 2011. Thermal/Acoustical Metals and Thermal/Acoustical Fibers segment backlog, which comprises the majority of total backlog, may be impacted by various assumptions, including future automotive production volume estimates, changes in program launch timing and changes in customer development plans. The Company believes that global automotive orders for a two month period represent a reasonable timeframe to be deemed as firm orders and included as Thermal/Acoustical Metals and Thermal/Acoustical Fibers segment backlog. There are minimal seasonal aspects to Lydall’s backlog.

No material portion of Lydall’s business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of any governmental body.

Lydall believes that its plants and equipment are in substantial compliance with applicable federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment.

As of December 31, 2013, Lydall employed approximately 1,600 people. Three unions with contracts expiring on September 30, 2016 represent approximately 60 employees in the United States. All employees at the facilities in France and the Netherlands are covered under a National Collective Bargaining Agreement. Certain salaried and all hourly employees in Germany are also covered under a National Collective Bargaining Agreement. Lydall considers its employee relationships to be satisfactory and did not have any actual or threatened work stoppages due to union-related activities in 2013.

There are no significant anticipated operating risks related to foreign investment law, expropriation, or availability of material, labor or energy. The foreign and domestic operations limit foreign currency exchange transaction risk by completing transactions in functional currencies whenever practical or through the use of foreign currency forward exchange contracts when deemed appropriate.

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Item 1A. RISK FACTORS

The reader should carefully review and consider the risk factors discussed below. Any and all of these risk factors could materially affect the Company’s business, financial condition, future results of operations or cash flows and possibly lead to a decline in Lydall’s stock price. The risks, uncertainties and other factors described below constitute all material risk factors known to management as of the date of this report.

Uncertainty in the global economy has negatively impacted, and may continue to negatively impact, Lydall’s business — Uncertainty in the global economy has affected, and could continue to adversely affect, demand for the Company’s products and impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, swings in consumer confidence and spending, unstable economic growth and fluctuations in unemployment rates have caused economic instability that has had, and could continue to have, a negative impact on the Company’s results of operations, financial condition and liquidity. These factors also make it difficult to accurately forecast and plan future business activities.

The Company’s foreign and export sales were 45.2% of net sales in 2013, 46.7% in 2012, and 49.9% in 2011. If the global economy were to take a significant downturn, depending on the length, duration and severity of such downturn, the Company’s business and financial statements could be adversely affected.

The Company’s Thermal/Acoustical Metals and Thermal/Acoustical Fibers segments are tied to general economic and automotive industry conditions — The Company’s Thermal/Acoustical Metals and Thermal/Acoustical Fibers segments, suppliers in the automotive market, accounted for 68.5%, 65.5%, and 62.0% of consolidated net sales in 2013, 2012, and 2011, respectively. The segments net sales from products manufactured in North America were 65.4%, 63.1%, and 55.7% in 2013, 2012, and 2011, respectively, with the remainder manufactured in Europe. These segments are tied to general economic and automotive industry conditions as demand for vehicles depends largely on the strength of the economy, employment levels, consumer confidence levels, the availability and cost of credit and the cost of fuel. These factors have had, and could continue to have, a substantial impact on these segments. Adverse developments could reduce demand for new vehicles, causing Lydall’s customers to reduce their vehicle production in North America and Europe and, as a result, demand for Company products would be adversely affected.

The Company’s quarterly operating results may fluctuate; as a result, the Company may fail to meet or exceed the expectations of research analysts or investors, which could cause Lydall’s stock price to decline — The Company’s quarterly results are subject to significant fluctuations. Operating results have fluctuated as a result of many factors, including size and timing of orders and shipments, loss of significant customers, product mix, technological change, operational efficiencies and inefficiencies, competition, changes in deferred tax asset valuation allowances, strategic initiatives, severance and recruiting charges, asset impairments and general economic conditions. In addition, lower revenues may cause asset utilization to decrease, resulting in the under absorption of the Company’s fixed costs, which could negatively impact gross margins. Additionally, the Company’s gross margins vary among its product groups and have fluctuated from quarter to quarter as a result of shifts in product mix. Any and all of these factors could affect the Company’s business, financial condition, future results of operations or cash flows and possibly lead to a decline in Lydall’s stock price.

The Industrial Filtration acquisition exposes the Company to a number of risks and uncertainties, the occurrence of any of which could materially adversely affect the Company’s business, cash flows, financial condition and results of operations as well as the market price of Lydall’s common stock — The Company entered into a Sale and Purchase Agreement on February 20, 2014 relating to the acquisition of the Industrial Filtration businesses and funded the purchase price for the acquisition from cash on hand and borrowings under the amended credit facility. The acquisition exposes the Company to a number of risks and uncertainties, including the subsequent integration of the acquired businesses with the Company, the financial performance of the Industrial Filtration acquisition, risks associated with incurring additional indebtedness and the risks associated with international expansion.

Additionally, Company management has spent, and will continue to spend, a significant amount of its time and efforts directed toward the Industrial Filtration businesses, which time and efforts otherwise would have been spent on existing businesses and other opportunities that could have been beneficial to Lydall. In addition, the Company may not realize the anticipated benefits of the acquisition of the Industrial Filtration businesses. The Company’s ability to realize such benefits will depend on its ability to successfully and efficiently integrate the Industrial Filtration business, which involves products, markets, and geographies that are new to the Company. Difficulties of integration include coordinating and consolidating separate systems and facilities, integrating the management of the acquired business, integrating

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legal and financial controls in multiple jurisdictions, retaining market acceptance of products, maintaining employee morale, retaining key employees, and implementing Lydall’s management information systems and operational procedures and disciplines. Any such difficulties may make it more difficult to maintain relationships with employees, customers, business partners and suppliers. Also, even if integration is successful, the financial performance of the acquired business may not be as expected and there can be no assurance that the Company will realize anticipated revenue and earnings enhancements from the acquisition.

The Company’s inability to implement effective internal controls, procedures and policies for the acquired Industrial Filtration businesses as required by Sarbanes-Oxley Act of 2002 within the time periods prescribed thereby — The Company plans to fully evaluate the internal control of the Industrial Filtration businesses and any subsequently acquired companies, and then implement a standard framework established by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in internal control — integrated framework (1992) of internal controls at those acquired businesses. The Company cannot provide assurance that it will be able to provide a report that contains no material weaknesses with respect to the Industrial Filtration businesses or any other acquisition.

Implementation of the Company’s strategic initiatives may not be successful — As part of Lydall’s business strategy, the Company continues to review various strategic and business opportunities to grow the business and to assess the profitability and growth potential for each of its existing businesses. The Company may incur significant professional services expenses associated with the review and potential implementation of strategic business opportunities. The Company cannot predict with certainty whether any recent or future strategic transactions will be beneficial to the Company. Among other things, future performance could be impacted by the Company’s ability to:

• Identify and effectively complete strategic transactions;

• Obtain adequate financing to fund strategic initiatives, which could be difficult to obtain;

• Successfully integrate and manage acquired businesses that involve numerous operational and financial risks, including difficulties in the integration of acquired operations, diversion of management's attention from other business concerns, managing assets in multiple geographic regions and potential loss of key employees and key customers of acquired operations; and

• Improve operating margins through its Lean Six Sigma initiatives which are intended to improve processes and work flow, improve customer service, reduce costs and leverage synergies across the Company.

The Company incurred a substantial amount of additional indebtedness which could have an adverse effect on the Company’s financial health and make it more difficult for Lydall to obtain additional financing in the future — The Company financed the Industrial Filtration acquisition with available cash and $60.0 million in borrowings under the Amended Credit Facility executed on February 18, 2014. Incurring additional debt to fund the acquisition purchase price may have an adverse effect on the Company’s financial condition and may limit Lydall’s ability to obtain any necessary financing in the future for working capital, capital expenditures, future acquisitions, debt service requirements or other purposes. Additionally, the Company may not be able to generate sufficient cash flow or otherwise obtain funds necessary to meet the additional debt obligations. Any default under the Amended Credit Facility would likely result in the acceleration of the repayment obligations to our lenders.

The Company may not have adequate cash to fund its operating requirements — The principal source of the Company’s liquidity is operating cash flows. Other significant factors that affect the overall management of liquidity include capital expenditures, investments in businesses, acquisitions, income tax payments, pension funding, share repurchases, outcomes of contingencies and availability of lines of credit and long-term financing. The Company’s liquidity can be impacted by the Company’s ability to:

• Manage working capital and the level of future profitability. The consolidated cash balance is impacted by capital equipment and inventory investments that may be made in response to changing market conditions;

• Satisfy covenants and other obligations under its amended credit facility, which could limit or prohibit Lydall’s ability to borrow funds. Additionally, these debt covenants and other obligations could limit the Company’s ability to make acquisitions, incur additional debt, make investments, or consummate asset sales and obtain additional financing from other sources.

The Company is subject to the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, which impose restrictions on the Company and may carry substantial fines and penalties and result in criminal sanctions — The U.S. Foreign Corrupt Practices Act and

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anti-bribery laws in other jurisdictions, including anti-bribery legislation in the United Kingdom, generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or other commercial advantage. The Company’s policies mandate compliance with these anti-bribery laws, violations of which often carry substantial fines and penalties and could result in criminal sanctions against the Company, Lydall’s officers or employees. The Company cannot assure that its internal control policies and procedures always will protect it from reckless or other inappropriate acts committed by the Company’s affiliates, employees or agents. Violations of these laws, or allegations of such violations, could have a material adverse effect on Lydall’s business, or financial statements and could cause the market price of Lydall’s common stock to decline.

In order to meet its strategic objectives, the Company may also divest assets and/or businesses. Successfully executing such a strategy depends on various factors, including effectively transferring assets, liabilities, contracts, facilities and employees to any purchaser, identifying and separating the intellectual property to be divested from the intellectual property that the Company wishes to retain, reducing or eliminating fixed costs previously associated with the divested assets or business, and collecting the proceeds from any divestitures.

Raw material pricing and supply issues could affect all of the Company’s businesses — The Thermal/Acoustical Metals segment uses aluminum and other metals to manufacture most of its automotive heat shields. The Thermal/Acoustical Fibers segment and Performance Materials segment use various fibers in manufacturing products. If the prices of these raw materials, or any other raw materials used in the Company’s businesses increase, the Company may not have the ability to pass incremental cost increases on to its customers. In addition, an interruption in the ability of the Company to source such materials could negatively impact operations and sales.

If the Company’s goodwill or other long-lived assets become impaired, it may be required to record a significant charge to earnings — The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is also tested by the Company for impairment during the fourth quarter of each year. Factors that may be considered a change in circumstances, indicating that the carrying value of goodwill or other long-lived assets may not be recoverable, include, but are not limited to, a decline in the Company’s stock price and market capitalization, reduced future cash flow estimates, and slower growth rates. In 2013, the Company determined that its Solutech long-lived asset group, with a carrying amount of $4.7 million, had excess fair value over its carrying value. The determination of fair value was based on the assumption that Solutech’s customers would succeed in commercializing their products that contain Solutech technology. Small changes in future operating results in Solutech could result in a future non-cash impairment charge to income from operations.

Volatility in the securities markets, interest rates, and other factors could substantially increase the Company’s costs and funding for its domestic defined benefit pension plan — The Company’s domestic defined benefit pension plan is funded with trust assets invested in a diversified portfolio of securities. Changes in interest rates, mortality rates, investment returns, and the market value of plan assets may affect the funded status and cause volatility in the net periodic benefit cost and future funding requirements of such plan. A significant increase in benefit plan liabilities or future funding requirements could have a negative impact on the Company’s financial statements.

The Company is involved with certain legal proceedings and may become involved in future legal proceedings all of which could give rise to liability — The Company is involved in legal proceedings that, from time to time, may be material. These proceedings may include, without limitation, commercial or contractual disputes, intellectual property matters, personal injury claims, shareholder claims, and employment matters. No assurances can be given that such proceedings and claims will not have a material adverse impact on the Company’s financial statements.

New regulations related to conflict minerals could adversely impact the Company’s business — The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions designed to improve transparency and accountability concerning the supply of certain minerals, known as conflict minerals, originating from the Democratic Republic of the Congo (DRC) and adjoining countries. In August 2012, the SEC promulgated new disclosure and reporting requirements for companies who use conflict minerals in their products. Complying with these new disclosure and reporting requirements may require the Company to incur substantial costs and expenditures to conduct due diligence to determine the sources of conflict minerals used in Lydall’s products. Moreover, these requirements may result in changes to the sourcing practices of the Company’s customers which may require the identification and qualification of alternate sourcing for the components of products Lydall manufactures, which could impact the availability of, or cause increases in the price of, materials

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used in our products. As there may be only a limited number of suppliers offering “conflict free” conflict minerals, there can be no assurance that the Company will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices.

Changes in tax rates and exposure to additional income tax liabilities — The Company is subject to risks with respect to changes in tax law and rates, changes in rules related to accounting for income taxes, or adverse outcomes from tax audits that are in process in various jurisdictions in which the Company operates. In addition, certain jurisdictions have statutory rates greater than or less than the United States statutory rate. Changes in the mix and source of earnings between jurisdictions could have a significant impact on the Company’s overall effective tax rate.

Realization of deferred tax assets is not assured — 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 all deferred tax assets and reduces the carrying amount to the extent it believes a portion will not be realized. Changes in these assessments can result in an increase or reduction to valuation allowances on deferred tax assets and could have a significant impact on the Company’s overall effective tax rate.

The Company’s future success depends upon its ability to continue to innovate, improve its products, develop and market new products, and identify and enter new markets — Improved performance and growth are partially dependent on new product introductions planned for the future. Delays in developing products and long customer qualification cycles may impact the success of new product programs. The degree of success of new product programs could impact the Company’s future results.

The Company’s international operations expose it to business, economic, political, legal and other risks — The Company believes that in order to be competitive and grow its businesses, it needs to maintain significant international operations. Foreign sales were $128.0 million, $127.2 million and $144.5 million for the years ended December 31, 2013, 2012, and 2011, respectively. International operations are subject to inherent risks including political and economic conditions in various countries, unexpected changes in regulatory requirements, longer accounts receivable collection cycles and potentially adverse tax consequences.

Foreign currency exchange rate fluctuations may affect the Company’s results of operations — As a result of the Industrial Filtration acquisition, the Company’s international operations will expand substantially and its financial results will be more exposed to currency exchange rate fluctuations and an increased proportion of assets, liabilities and expenses will be denominated in non-U.S. dollar currencies. The Company’s foreign and domestic operations seek to limit foreign currency exchange transaction risk by completing transactions in functional currencies whenever practical or through the use of foreign currency forward exchange contracts when deemed appropriate. If the Company does not successfully hedge its currency exposure, changes in the rate of exchange between these currencies and the U.S. dollar may negatively impact the Company. Additionally, translation of the results of operations and financial condition of its foreign operations into U.S. dollars may be affected by exchange rate fluctuations. The Company receives a material portion of its revenue from foreign operations. Foreign operations generated sales of $128.0 million, $127.2 million, and $144.5 million for the years ended December 31, 2013, 2012, and 2011, respectively, or approximately 32.1%, 33.6% and 37.7% of total sales.

The Company’s manufacturing processes are subject to inherent risk — The Company operates a number of manufacturing facilities and relies upon an effective workforce and properly performing machinery and equipment. The workforce may experience a relatively high turnover rate, causing inefficiencies associated with retraining and rehiring. The equipment and systems necessary for such operations may break down, perform poorly or fail, and possibly cause higher manufacturing costs. Manufacturing processes affect the Company’s ability to deliver quality products on a timely basis, and delays in delivering products to customers could result in the Company incurring penalties from customers.

Increases in energy pricing can affect all of the Company’s businesses — Higher energy costs at the Company’s manufacturing plants or higher energy costs passed on from the Company’s vendors could impact the Company’s profitability.

The Company’s resources are limited and may impair its ability to capitalize on changes in technology, competition and pricing  — The industries in which the Company sells its products are highly competitive and many of the competitors are affiliated with entities that are substantially larger and that have greater financial, technical and marketing resources. The Company’s more limited resources and relatively diverse product mix may limit or impair its ability to capitalize on changes in technology, competition and pricing.

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The Company’s products may fail to perform as expected, subjecting it to warranty or other claims from its customers — If such failure results in, or is alleged to result in, bodily injury and/or property damage or other losses, the Company may be subject to product liability lawsuits, U.S. Food and Drug Administration product recalls and other claims, any of which could have a material adverse impact on results of operations and cash flows.

If the Company does not retain its key employees, the Company’s ability to execute its business strategy could be adversely affected  — The Company’s success, in part, depends on key managerial, engineering, sales and marketing and technical personnel and its ability to continue to attract and retain additional personnel. The loss of certain key personnel could have a material, adverse effect upon the Company’s business and results of operations. There is no assurance that the Company can retain its key employees or that it can attract competent and effective new or replacement personnel in the future.

The Company’s current reserve levels may not be adequate to cover potential exposures  — Estimates and assumptions may affect the reserves that the Company has established to cover uncollectible accounts receivable, excess or obsolete inventory, income tax valuation and fair market value write downs of certain assets and various liabilities. Actual results could differ from those estimates.

The Company is subject to environmental laws and regulations, that could increase its expense and affect operating results — The Company is subject to federal, state, local, and foreign environmental, health and safety laws and regulations that affect operations. New and changing environmental laws and regulations may impact the products manufactured and sold to customers. In order to maintain compliance with such laws and regulations, the Company must devote significant resources and maintain and administer adequate policies, procedures and oversight. Should the Company fail to do these things, it could be negatively impacted by lower net sales, fines, legal costs, and clean-up requirements.

The Company may be unable to adequately protect its intellectual property, which may limit its ability to compete effectively — The Company owns intellectual property, including patents and trademarks, which play an important role in helping the Company to maintain its competitive position in a number of markets. The Company is subject to risks with respect to (i) changes in the intellectual property landscape of markets in which it competes; (ii) the potential assertion of intellectual property-related claims against the Company; (iii) the failure to maximize or successfully assert its intellectual property rights; and (iv) significant technological developments by others.

Disruptions may occur to the Company’s operations relating to information technology — The capacity, reliability and security of the Company’s information technology (“IT”) hardware and software infrastructure and the ability to expand and update this infrastructure in response to the Company’s changing needs are important to the operation of the businesses. In response to a review of its IT infrastructure, the Company has undertaken a project to upgrade its enterprise resource planning (“ERP”) system. The deployment, implementation and integration to a new version of its ERP system may not be managed in an efficient, timely and cost effective manner resulting in greater than anticipated costs and other operating difficulties. Also, any inadequacy, interruption, loss of data, integration failure or security failure of the Company’s IT technology could harm its ability to effectively operate its business, which could adversely impact the Company’s results of operations and cash flows.

Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to the Company’s systems, networks, and data — Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk to the security of the Company’s systems and networks and the confidentiality, availability and integrity of the Company’s data. While the Company attempts to mitigate these risks by employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems and contingency plans, the Company remains potentially vulnerable to additional known or unknown threats. The Company also may have access to sensitive, confidential or personal data or information in certain of Lydall’s businesses that is subject to privacy and security laws, regulations and customer-imposed controls. Despite efforts made by the Company to protect sensitive, confidential or personal data or information, the Company may be vulnerable to security breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromising of sensitive, confidential or personal data or information. In addition, a cyber-related attack could result in other negative consequences, including damage to the Company’s reputation or competitiveness, remediation or increased protection costs, litigation or regulatory action.

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The Company could be subject to work stoppages or other business interruptions as a result of its unionized work force — A portion of the Company’s hourly employees are represented by various union locals and covered by collective bargaining agreements. These agreements contain various expiration dates and must be renegotiated upon expiration. Specifically, three union contracts expiring on September 30, 2016 represent approximately 60 employees in the United States. If the Company is unable to negotiate any of its collective bargaining agreements on satisfactory terms prior to expiration, the Company could experience disruptions in its operations which could have a material adverse effect on operations.

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Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

The principal properties of the Company as of December 31, 2013 are situated at the following locations and have the following characteristics:

Location	Primary Business Segment/General Description	Type of Interest
Hamptonville, North Carolina	Thermal/Acoustical Metals and Fibers – Product Manufacturing	Owned
Yadkinville, North Carolina	Thermal/Acoustical Metals and Fibers – Product Manufacturing	Leased
Meinerzhagen, Germany	Thermal/Acoustical Metals – Product Manufacturing	Owned
Saint-Nazaire, France	Thermal/Acoustical Metals – Product Manufacturing	Leased
Taicang, China	Thermal/Acoustical Metals – Product Manufacturing	Leased
Green Island, New York	Performance Materials – Specialty Media Manufacturing	Owned
Rochester, New Hampshire	Performance Materials – Specialty Media Manufacturing	Owned
Saint-Rivalain, France	Performance Materials – Specialty Media Manufacturing	Owned
Geleen, the Netherlands	Performance Materials – Specialty Media Manufacturing	Leased
Heerlen, the Netherlands	Performance Materials – Specialty Media Manufacturing	Leased
Winston-Salem, North Carolina	Other Products and Services – Biomedical Products Manufacturing	Leased
Manchester, Connecticut	Corporate Office	Owned

For additional information regarding lease obligations, see Note 12 to the Consolidated Financial Statements. The Company considers its properties to be in good operating condition and suitable and adequate for its present needs. In addition to the properties listed above, the Company has several leases for sales offices and warehouses in the United States, Europe and Asia, which the Company believes are immaterial individually and in the aggregate.

Item 3. LEGAL PROCEEDINGS

The Company is, from time to time, subject to governmental audits, proceedings and various litigation relating to matters incidental to its business, including product liability, employment matters and environmental claims. While it is not possible to determine the ultimate disposition of each of these proceedings and whether they will be resolved favorably for the Company, the Company expects that the outcome of such proceedings, individually or in the aggregate, will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of Lydall, Inc. or its subsidiaries, together with the offices presently held by them, their business experience since January 1, 2009, and their age as of February 28, 2014, the record date of the Company’s 2014 Annual Meeting, are as follows:

Name	Age	Position and Date of Appointment	Other Business Experience Since 2009
Dale G. Barnhart	61	President, Chief Executive Officer (August 27, 2007)	Not applicable
Robert K. Julian	51	Executive Vice President and Chief Financial Officer (October 29, 2012)	Senior Vice President and Chief Financial Officer, Legrand North America (2004 – 2012), a provider of products and systems for electrical installation and information networks for commercial, residential and industrial buildings.
Joseph A. Abbruzzi	55	President, Industrial Filtration (February 20, 2014); formerly Sr. V.P., General Manager, Lydall Thermal/Acoustical — Fibers (March 14, 2011)	Vice President & General Manager, Guardian Automotive, Glass Division (2007 – 2010), a manufacture of glass products for commercial, residential, interiors, automotive, energy/solar, and technical glass industries.
William M. Lachenmeyer	55	Vice President, Human Resources (September 30, 2013)	Vice President Human Resources, Smith & Wesson Holding Corporation (2005 – 2012), a manufacture of firearms.
James V. Laughlan	41	Vice President, Chief Accounting Officer and Treasurer (March 26, 2013); formerly Chief Accounting Officer, Controller and Treasurer (July 27, 2012); formerly Chief Accounting Officer and Controller (March 29, 2010); formerly Principal Accounting Officer and Controller (December 4, 2007); formerly Controller (October 17, 2005)	Not applicable
Chad A. McDaniel	40	Vice President, General Counsel and Secretary (May 10, 2013)	Associate General Counsel, United Technologies Corporation (“UTC”), Sikorsky Aircraft division (2012 – 2013), Director; Executive Assistant to the President, UTC Fire & Security division (2010 – 2012); Assistant Counsel, UTC Pratt & Whitney division (2007 – 2010); UTC is a manufacturer of high-technology products and services for the global aerospace and building systems industries.
David H. Williams	49	President, Performance Materials (June 27, 2012)	General Manager, Saint-Gobain-Performance Plastic division (2009 – 2012), a producer of engineered, high performance polymer products.

There is no family relationship among any of the Company’s directors or executive officers.

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PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY

The Company’s Common Stock is traded on the New York Stock Exchange (“NYSE”) under the symbol LDL. The table below shows the range of reported sale prices on the NYSE Composite Tape for the Company’s Common Stock for the periods indicated. As of December 31, 2013, 4,763 stockholders of record held 16,819,240 shares of Lydall’s Common Stock, $.10 par value.

	High		Low		Close
2013
First Quarter	$	16.08	$	14.54	$	15.35
Second Quarter		15.38		13.29		14.60
Third Quarter		17.18		14.53		17.17
Fourth Quarter		19.27		15.50		17.62
2012
First Quarter	$	10.44	$	8.79	$	10.19
Second Quarter		13.62		9.94		13.52
Third Quarter		14.43		12.12		14.09
Fourth Quarter		14.65		11.68		14.34

The Company does not pay a cash dividend on its Common Stock. The Company’s domestic credit facility, entered into on June 16, 2011 and the Amended Credit Facility entered into on February 18, 2014, place no restrictions on cash dividend payments, so long as the payments do not place the Company in default.

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ISSUER PURCHASES OF EQUITY SECURITIES

In April 2012, the Company’s Board of Directors approved a Stock Repurchase Program (“Repurchase Program”) to mitigate the potentially dilutive effects of stock options and shares of restricted and unrestricted stock granted by the Company. Under the Repurchase Program, up to 1.0 million shares of Common Stock may be purchased by the Company. There is no expiration date for the Repurchase Program.

As of December 31, 2013, there were 267,089 shares remaining available for purchase under the Repurchase Program. During 2013, the Company repurchased 423,244 shares of Common Stock at an aggregate purchase price of $6.1 million, and acquired an additional 34,472 shares through withholding, pursuant to provisions in agreements with recipients of restricted stock granted under the Company’s equity compensation plans, which allow the Company to withhold the number of shares having fair value equal to each recipient’s tax withholding due. The following table details the activity for the fourth quarter ended December 31, 2013.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
Activity October 1, 2013 – October 31, 2013		—		—		—		267,089
Activity November 1, 2013 – November 30, 2013		—		—		—		267,089
Activity December 1, 2013 – December 31, 2013		12,236	$	16.85		—		267,089
Total		12,236		—		—		267,089

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PERFORMANCE GRAPH

The following performance graph and related information shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, nor shall such information be incorporated by reference into any filing of Lydall, Inc. under the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.

The following graph compares the cumulative total return on Lydall’s shares over the past five years with the cumulative total return on shares of companies comprising the Standard & Poor’s Smallcap 600 Index and the Russell 2000 Index. Cumulative total return is measured assuming an initial investment of $100 on December 31, 2008, including reinvestment of dividends, if any. Due to the diversity of niche businesses that the Company participates in, it is difficult to identify a reasonable peer group or one industry or line-of-business index for comparison purposes. Thus, Lydall has chosen to compare its performance to the Standard & Poor’s Smallcap 600 Index and to the Russell 2000 Index, which are comprised of issuers with generally similar market capitalizations to that of the Company.

	12/08		12/09		12/10		12/11		12/12		12/13
Lydall, Inc.		100.00		90.61		140.00		165.04		249.39		306.43
S&P Smallcap 600		100.00		125.57		158.60		160.22		186.37		263.37
Russe ll 2000		100.00		127.17		161.32		154.59		179.86		249.69

* $100 invested on 12/31/08 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.

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Item 6. SELECTED FINANCIAL DATA

FIVE-YEAR SUMMARY

In thousands except per share amounts and ratio data	2013		2012			2011			2010			2009
Financial results from continuing operations
Net sales	$	397,969	$	378,924		$	383,588		$	316,113		$	239,732
Income (loss) from continuing operations	$	19,155	$	16,806		$	9,047		$	1,899		$	(13,165	)
Common stock per share data
Basic income (loss) from continuing operations	$	1.16	$	1.01		$	0.54		$	0.11		$	(0.79	)
Basic income (loss) from discontinued operations	$	—	$	—		$	0.28		$	0.04		$	(0.10	)
Basic net income (loss)	$	1.16	$	1.01		$	0.82		$	0.16		$	(0.89	)
Diluted income (loss) from continuing operations	$	1.14	$	0.99		$	0.54		$	0.11		$	(0.79	)
Diluted income (loss) from discontinued operations	$	—	$	—		$	0.28		$	0.04		$	(0.10	)
Diluted net income (loss)	$	1.14	$	0.99		$	0.82		$	0.16		$	(0.89	)
Financial position
Total assets	$	274,685	$	251,916		$	235,185		$	230,738		$	223,083
Long-term debt, net of current maturities	$	1,051	$	1,646		$	2,261		$	3,392		$	5,220
Total stockholders’ equity	$	200,087	$	174,496		$	160,852		$	154,145		$	155,179
Property, plant and equipment
Net property, plant and equipment	$	78,863	$	76,254		$	78,939		$	88,236		$	93,419
Capital expenditures	$	13,826	$	11,404		$	8,884		$	12,001		$	5,921
Depreciation	$	12,109	$	12,784		$	13,625		$	13,650		$	14,923
Performance and other ratios
Gross margin		21.4%		20.5	%		17.6	%		17.0	%		13.8	%
Operating margin		7.2%		5.6	%		4.2	%		1.1	%		(6.4	%)
Total debt to total capitalization		0.8%		1.4	%		2.0	%		3.1	%		4.2	%

Please read Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this Annual Report on Form 10-K and the Notes to the Consolidated Financial Statements for specific changes in the Company and its markets that provide context to the above data for the years 2011 through 2013 including, without limitation, discussions concerning (i) how global economic uncertainties have affected the Company’s results; (ii) dispositions of business operations; (iii) asset impairment charges; and (iv) the Company’s effective tax rate. In 2010, changes in the Company that provide context to the above data include the recording of a pretax gain on the sale of a product line of $2.5 million, or $0.15 per diluted share, within the Performance Materials segment. In 2009, changes in the Company that provide context to the above data include the recording of pretax restructuring charges of $5.8 million, or $0.35 per diluted share, within the Thermal/Acoustical Metals segment related to the transfer and consolidation of its Vermont operation into its North Carolina operation.

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview and Outlook

Lydall, Inc. and its subsidiaries (collectively, the “Company” or “Lydall”) design and manufacture specialty engineered filtration media, 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 Performance Materials segment includes filtration media solutions primarily for air and fluid power applications (“Filtration”), air and liquid life science applications (“Life Sciences Filtration”), and thermal insulation solutions for building products, appliances, and energy markets (“Thermal Insulation”).

The Thermal/Acoustical Metals segment offers a full range of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in underbody (tunnel, fuel tank, exhaust, rear muffler and spare tire) and under hood (engine compartment, turbo charger, and manifolds) of cars, trucks, SUVs, heavy duty trucks and recreational vehicles.

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, SUVs, heavy duty trucks and recreational vehicles.

Other Products and Services (“OPS”) is comprised of 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.

Highlights

Below are financial highlights comparing Lydall’s 2013 results to its 2012 results:

• Consolidated net sales of $398.0 million, an increase of $19.0 million, or 5.0%, primarily from higher Thermal/Acoustical Fibers segment net sales;

º Foreign currency translation positively impacted 2013 net sales by $3.8 million, or 1.0%;

• Gross margin increased to 21.4%, compared to 20.5%, principally as a result of lower raw material costs, improved absorption of fixed overhead costs as a result of higher net sales, labor efficiencies and other cost savings primarily in the Thermal/Acoustical Fibers segment;

• Selling, product development and administrative expenses were $56.5 million, or 14.2% of net sales, compared to $57.2 million, or 15.1% of net sales;

º Lower selling, product development and administrative expenses in the Performance Materials segment were partially offset by higher expenses from the Thermal/Acoustical Metals segment;

º The decrease in selling, product development and administrative expenses as a percentage of net sales of 0.9% was primarily related to an increase in net sales compared to the prior year in the Thermal/Acoustical Fibers segment of 21.1%, while selling, product development and administrative expenses in this segment remained essentially unchanged;

º 2013 strategic initiative costs of approximately $1.2 million, primarily associated with the Industrial Filtration acquisition completed on February 20, 2014, were included in administrative expenses. 2012 also included approximately $1.2 million of strategic initiative costs included in administrative expenses;

• Operating income was $28.7 million, or 7.2% of net sales, compared to $21.4 million, or 5.6% of net sales;

º Operating income in 2012 included an asset impairment charge of $1.8 million associated with the abandonment of an ERP project and income from services provided under the License Agreement of $0.8 million which expired in June 2012;

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• Income tax expense was $9.2 million, or an effective tax rate of 32.4%, compared to income tax expense of $4.2 million, or an effective tax rate of 19.9% in 2012;

º The effective tax rate in 2013 was positively impacted by the reversal of valuation allowances associated with state tax credit carryovers of $1.1 million, or $0.07 per share, and a discrete tax benefit of $0.5 million, or $0.03 per share, as the Company concluded certain U.S. federal income tax matters through the year ended December 31, 2009.

º The effective tax rate in 2012 was positively impacted by the reversal of valuation allowances, associated with foreign tax credit carryovers, of $3.9 million, or $0.23 per share;

• Net income was $19.2 million, or $1.14 per diluted share, compared to $16.8 million, or $0.99 per diluted share in 2012;

• Cash generated from operations was $30.3 million in 2013 compared to $34.4 million in 2012, the decrease primarily a result of working capital requirements; and

• During 2013, cash of $6.1 million was used to purchase approximately 423,000 shares of the Company’s common stock under a share repurchase program compared to 2012 when the Company used $3.8 million of cash to purchase approximately 310,000 shares.

Consolidated net sales for 2013 were $398.0 million, an increase of $19.0 million, or 5.0%, compared to 2012, primarily from higher net sales of $19.9 million in the Thermal/Acoustical Fibers segment. The Thermal/Acoustical Fibers segment continued to benefit from increased production of vehicles on Lydall’s platforms in North America resulting in greater parts net sales of $12.4 million, or 13.2%, as well as increased tooling revenues of $7.5 million to support the launch of new vehicle platforms. Higher net sales were also reported in the Thermal/Acoustical Metals segment of $4.5 million, or 2.9%, due to increased tooling revenues to support the launch of new vehicle platforms. Lower net sales were reported in 2013, compared to 2012, by the Performance Materials segment of $6.0 million, or 5.1%. The lower net sales were due to a reduction in Filtration net sales of $3.6 million as demand for products in Europe declined as a result of macroeconomic conditions. Also in the Performance Materials segment, net sales were lower in the Thermal Insulation business related to electrical papers products by $4.5 million as the Company completed its obligation to manufacture and sell these products pursuant to the agreement with the buyer of this product line in a prior year. This decrease was partially offset by higher net sales of other Thermal Insulation products in the Performance Materials segment.

Consolidated operating income was $28.7 million in 2013 compared to $21.4 million in 2012. The increase in operating income of $7.3 million was attributable to the Company’s Thermal/Acoustical Fibers segment, with an increase in operating income of $8.6 million, and lower corporate office expenses of $0.7 million in 2013 compared to 2012. These increases were offset to some extent by a decrease in operating income in the Thermal/Acoustical Metals segment of $0.6 million, which included start-up costs of $0.6 million for its China operation, as well as decreased operating income in the Performance Materials segment of $0.9 million as 2012 included a gain of $0.8 million from services provided under a license agreement, and a decrease in Life Sciences Vital Fluids business operating income of $0.4 million, each in 2013 compared to 2012.

Consolidated operating margin in 2013 was 7.2% compared to 5.6% in 2012. This increase was primarily due to an improvement in the Thermal/Acoustical Fibers segment as a result of improved gross margin realized from higher net sales and favorable absorption of fixed overhead costs, lower raw material costs and lower labor costs, and to a lesser extent, $1.8 million related to a completed pricing negotiation and a non-recurring customer project. This increase in operating margin was partially offset by decreases in 2013 operating margin in the Thermal/Acoustical Metals segment due to an increase in selling, product development and administrative expenses as a percentage of net sales to 7.7% compared to 6.9% in 2012, and in the Performance Materials segment due to the absence in 2013 of a $0.8 million gain from a license agreement in 2012.

Other Matters

On February 20, 2014 the Company completed an acquisition of certain filtration related entities (“Industrial Filtration”) from Andrew Industries Limited, an Altham, United Kingdom based corporation pursuant to the terms of a Sale and Purchase Agreement (the “Sale and Purchase Agreement”) for $83.0 million in cash. The Industrial Filtration businesses have operations in the United States, the United Kingdom, and China, serving a global customer base in the manufacture of non-woven filter felt media and filter bags used primarily

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in industrial air filtration applications. The final purchase price, subject to certain customary post-closing adjustments, was financed with a combination of cash on hand and borrowings of $60 million from the Company’s $100 million amended credit facility.

On February 18, 2014 the Company amended and restated its $35 million senior secured revolving domestic credit facility to increase the available borrowing under this agreement to $100 million. The amended credit facility, secured by substantially all of the assets of the Company, has a maturity date of January 31, 2019 and was completed with the same financial institution as well as two additional financial institutions. The Company entered into this amended credit facility in part to fund $60 million of the purchase price of the acquisition, as well as provide the Company with greater borrowing flexibility, more favorable interest rates and financial covenants.

Outlook

The Company’s long-term strategy for profitable growth includes increasing revenues and margins through new product development, geographic expansion into Asia and Europe, acquisitions, and from the application of Lean Six Sigma initiatives. The Industrial Filtration acquisition is aligned with the Company’s strategic objectives to strengthen Lydall’s leadership position in the filtration and engineered materials markets that it serves. This acquisition expands the Company’s position as an industry-leading, global provider of filtration products and provides complementary and new technologies while adding significant revenue growth. The acquisition is expected to be accretive to Lydall’s 2014 full-year earnings and cash flow, inclusive of transaction related expenses, the effect of inventory step-up and incremental amortization of intangible assets. A major focus for the Company in 2014 will be to integrate the acquired companies into Lydall and begin to introduce Lean Six Sigma principles to the acquired businesses. The Company expects to begin to achieve some gross margin and working capital improvements in the latter part of 2014, but expects the full impact of such lean initiatives to be realized post 2014.

In 2013, the Company made an investment in a facility in China to expand its Thermal/Acoustical Metals presence into Asia. During the first half of 2014, the Company expects to begin parts production in this facility to serve Lydall’s existing automotive customers globally.

Entering 2014, the Company is seeing positive signs in the European and Asian markets served by the Company’s Performance Materials and Thermal/Acoustical Metals segments. The Thermal/Acoustical Fibers and Metals segments are expected to continue to benefit from strong demand in North America on the Company’s existing platforms and new platform awards. While net sales are dependent on which automotive platforms the Company serves, overall, an automotive forecasting service is predicting production of automobiles to increase by 4.1% in North America and to increase by 1.8% in Europe during 2014 compared to 2013.

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CONSOLIDATED RESULTS OF OPERATIONS

Net Sales

In thousands of dollars	2013		Percent Change		2012		Percent Change			2011
Net sales	$	397,969		5.0%	$	378,924		-1.2	%	$	383,588

Net sales in 2013 increased $19.0 million, or 5.0%, compared to 2012. Foreign currency translation increased net sales in 2013 by $3.8 million, or 1.0%, compared to 2012, impacting the Thermal/Acoustical Metals segment’s net sales by $2.7 million, or 1.8%, and the Performance Materials segment’s net sales by $1.1 million, or 0.9%. The increase in net sales was primarily due to higher net sales of $19.9 million, or 21.1%, for the Thermal/Acoustical Fibers segment compared to 2012 as parts net sales increased by $12.4 million, or 13.2%, and tooling sales increased $7.5 million. Net sales in the Thermal Acoustical Metals segment increased $4.5 million, or 2.9%, compared to 2012, primarily due to increased tooling net sales and foreign currency translation. OPS net sales increased $0.3 million, or 1.9%. The increase in net sales in the Thermal/Acoustical Fibers and Metals segments and OPS were partially offset by lower sales volumes in the Performance Material Segment of $6.0 million or 5.1%.

Net sales in 2012 decreased $4.7, million or 1.2%, compared to 2011. Foreign currency translation decreased net sales in 2012 by $10.6 million, or 2.8%, compared to 2011, impacting the Thermal/Acoustical Metals segment’s net sales by $7.5 million, or 4.8%, and the Performance Materials segment’s net sales by $3.1 million, or 2.3%. In the Performance Materials segment, lower sales volumes, lower sales due to the sale of a product line in 2010, and the unfavorable foreign currency translation resulted in lower net sales of $16.0 million in 2012 compared to 2011. In the Thermal/Acoustical Metals segment, unfavorable foreign currency translation resulted in lower net sales of $2.0 million compared to 2011. The decrease in net sales in the Performance Materials and Thermal/Acoustical Metals segments were partially offset by Thermal/Acoustical Fibers segment and OPS increases in net sales. In the Thermal/Acoustical Fibers segment, net sales increased $12.7 million, or 15.5%, compared with 2011, primarily due to increased sales volume. In OPS, net sales increased $2.2 million, or 14.9%, primarily due to volume.

Gross Profit

In thousands of dollars	2013		2012			2011
Gross profit	$	85,225	$	77,807		$	67,506
Gross margin		21.4%		20.5	%		17.6	%

The increase in gross margin by 90 basis points in 2013 compared to 2012 was attributable to the Thermal/Acoustical Fibers segment due to lower raw material costs, improved absorption of fixed overhead costs as a result of higher net sales, labor efficiencies and other cost savings. Small changes in gross margin for the Thermal/Acoustical Metals and Performance Materials segments and OPS had minimal impact on the Company’s consolidated gross margin.

The increase in gross margin in 2012 compared to 2011 was primarily attributable to the Thermal/Acoustical Fibers segment, which reported improved gross margin realized from increased sales and manufacturing efficiency improvements. Partially offsetting the Thermal/Acoustical Fibers gross margin improvement was the Performance Materials segment, which reported lower gross margin due to lower net sales and unfavorable absorption of fixed costs due to lower production. The Thermal/Acoustical Metals segment reported essentially flat gross margin in 2012 compared to 2011, while gross margin for OPS was higher in 2012 compared to 2011 due to an increase in net sales and favorable mix of products.

Selling, Product Development and Administrative Expenses

In thousands of dollars	2013		2012			2011
Selling, product development and administrative expenses	$	56,512	$	57,239		$	52,937
Percentage of net sales		14.2%		15.1	%		13.8	%

Selling, product development and administrative expenses decreased by $0.7 million, or 1.3%, in 2013 compared to 2012. The decrease was primarily due to a $1.8 million asset impairment charge incurred in 2012 due to the abandonment of an ERP project as well as lower

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severance and recruiting costs in 2013 of approximately $1.0 million, primarily at the corporate office. Also, lower sales commissions of $0.5 million, due to reduced commission rates particularly in our Thermal/Acoustical Fibers segment, and lower professional services expenses and other costs of $0.4 million contributed to lower expense in 2013. These decreased expenses were partially offset by an increase of $2.7 million associated with higher salaries, benefits and incentive compensation expense in 2013, due to increased headcount, annual salary increases and higher accruals related to the targets achieved in the Company’s incentive bonus program. Administrative expenses included strategic initiative costs of approximately $1.2 million in both 2013 and 2012. The strategic initiative costs incurred in 2013 were primarily associated with the Industrial Filtration acquisition completed on February 20, 2014.

Selling, product development and administrative expenses increased by $4.3 million, or 8.1%, in 2012 compared to 2011. The increase was primarily due to higher expenses incurred by the corporate office and, to a lesser extent, higher salaries and wages. During the fourth quarter of 2012, the Company recorded a $1.8 million asset impairment charge due to the abandonment of an ERP project. Also contributing to the increase in selling, product development and administrative expenses in 2012 were higher strategic initiative costs of $1.2 million, severance and recruiting costs of $1.0 million, primarily associated with the departure of the Company’s Chief Financial Officer and hiring of the Company’s new Chief Financial Officer, and salaries and wages of $0.7 million. Higher salaries and wages expense in 2012 was primarily caused by annual salary increases. Partially offsetting the increase was $0.2 million in lower sales commission expense. The decrease in net sales in 2012, compared to 2011, caused the decrease in sales commission expense in 2012. Foreign currency translation decreased selling, product development and administrative expenses by $1.1 million, or 2.0%, for 2012 compared to 2011.

Gain on Sale of Product Line

In thousands of dollars	2013		2012		2011
Gain on sale of product line	$	—	$	810	$	1,619

On June 30, 2010, the Company divested its electrical papers product line business, included in the Performance Materials segment, 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, and recognized in income, while others were delivered in subsequent periods. The Company deferred $3.2 million of the gain from this sale related to undelivered elements of the transaction at June 30, 2010. As part of the sale transaction, the Company entered into a License Agreement with the buyer. Pursuant to the License Agreement, treated as a separate unit of accounting, the Company granted the buyer the right to use certain process technology and provided certain services to the buyer to facilitate the transfer of know-how for the manufacture of electrical paper products. The deferred gain amount was recognized as income as services under the License Agreement were delivered in periods subsequent to the sale, including $1.6 million recognized in 2011 and $0.8 million in 2012. As of June 30, 2012, the Company satisfied its obligations under the License Agreement.

Discontinued Operations, net of tax

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 for the year ended December 31, 2011.

In thousands of dollars	2013		2012		2011
Net sales	$	—	$	—	$	13,255
Income before income taxes		—		—		1,374
Income tax expense		—		—		499
Income from discontinued operations		—		—		875
Gain on sale of discontinued operations, net of tax of $2,229		—		—		3,857
Income from discontinued operations, net of tax	$	—	$	—	$	4,732

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Interest Expense

In thousands of dollars	2013		2012			2011
Interest expense	$	304	$	365		$	880
Weighted average interest rate during the year		5.4%		5.4	%		5.4	%

Interest expense was lower in 2013 compared to 2012 due to lower average principal balances on capital lease obligations.

Interest expense was lower in 2012 compared to 2011 due to decreased amortization of debt financing costs associated with the Company’s domestic revolving credit facility entered into in June 2011 and decreases in unused borrowing fees, as well as lower average principal balances on capital lease obligations.

Other Income and Expense

In thousands of dollars	2013		2012		2011
Other expense (income), net	$	67	$	31	$	(94	)

The amounts included in other expense (income), net, in all years presented are primarily related to insignificant activity related to foreign currency transaction gains and losses and interest income.

Income Taxes from Continuing Operations

	2013		2012			2011
Effective income tax rate		32.4%		19.9	%		41.3	%

The Company’s effective tax rate from continuing operations for 2013 was 32.4% compared to 19.9% in 2012 and 41.3% in 2011. For 2013, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by the release of valuation allowances against state tax credit carryovers of $1.1 million, $0.8 million of permanent benefit relating to Domestic Production Activities Deduction, and a tax benefit of $0.5 million related to the conclusion of certain U.S. federal income tax matters through the year ended December 31, 2009. These favorable tax adjustments are partially offset by an increase in valuation allowance established against a foreign net deferred tax asset. The $1.1 million reversal of valuation allowances against state tax credit carryovers included $0.3 million of state tax credits expected to offset 2013 state income taxes and $0.8 million expected to benefit future periods. The company currently maintains a full valuation allowance against a foreign deferred tax asset in the Netherlands as future realization of the asset is not reasonably assured due to consistent historical losses since 2008. During 2013, the Company increased this valuation allowance by $0.6 million in order to reserve against additional loss carryforwards that were generated in the Netherlands during the current year.

For 2012, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by the release of valuation allowances against foreign tax credit carryovers of $3.9 million and state net operating loss carryovers, partially offset by an increase in valuation allowance established against a foreign net deferred tax asset. The Company’s state income taxes in 2012 were offset by the reversal of valuation allowances against state net operating loss carryovers of $0.5 million as the Company used certain state net operating loss carryovers to offset 2012 state income taxes. During 2012, the Company increased its valuation allowance against a foreign deferred tax asset in the Netherlands by $0.7 million as future realization of such tax benefit was not reasonably assured.

For 2011, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by valuation allowances against foreign tax credit carryovers, a valuation allowance against a foreign net deferred tax asset, and dividends from a foreign subsidiary.

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

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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 has been relying on proposed regulations that were issued in 2008 for its tax accounting policy regarding deduction versus capitalization of repairs related to tangible property. On December 23, 2011, the IRS issued temporary regulations that would go into effect for years beginning on or after January 1, 2012 to replace the proposed regulations. On December 14, 2012, the regulations were amended to allow a taxpayer to choose to delay the effective date to tax years beginning on or after January 1, 2014. The IRS released the final tangible property regulations on September 13, 2013. All taxpayers must comply with the final repair regulations beginning with the first tax year beginning on or after January 1, 2014. The Company has performed a preliminary analysis of the potential impact of the final regulations and determined they will not have a significant impact on the Company’s consolidated financial statements.

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. The Company is no longer subject to U.S. federal examinations for years before 2010, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2003.

In the first quarter of 2014, the Company acquired the Industrial Filtration division of Andrew Industries Limited. The Company incurred $1.2 million of transaction costs in 2013 related to this acquisition and recognized a deferred tax benefit of $0.4 million. In the first quarter of 2014, the Company incurred additional transaction costs related to this acquisition. As a result of the transaction being consummated in the first quarter of 2014, an analysis must be completed to determine the income tax deductibility of the transaction related costs. A preliminary analysis indicates that certain transaction costs will be non-deductible for income taxes resulting in a discrete income tax expense ranging from $0.8 million to $1.2 million in the first quarter of 2014 .

SEGMENT RESULTS

Consolidated Net Sales	For the Years Ended December 31,
In thousands	2013		2012			2011
Performance Materials Segment:
Filtration	$	64,752	$	68,379		$	72,888
Thermal Insulation		36,929		38,449			47,299
Life Sciences Filtration		10,320		11,207			13,872
Performance Materials Segment net sales		112,001		118,035			134,059
Thermal/Acoustical Metals Segment:
Metal parts		135,833		136,276			142,646
Tooling		22,573		17,645			13,290
Thermal/Acoustical Metals Segment net sales		158,406		153,921			155,936
Thermal/Acoustical Fibers Segment:
Fiber parts		105,876		93,519			79,631
Tooling		8,444		917			2,116
Thermal/Acoustical Fibers Segment net sales		114,320		94,436			81,747
Other Products and Services:
Life Sciences Vital Fluids		17,175		16,853			14,670
Other Products and Services net sales		17,175		16,853			14,670
Eliminations and Other		(3,933)		(4,321	)		(2,824	)
Consolidated Net Sales	$	397,969	$	378,924		$	383,588

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Operating Income from Continuing Operations	For the Years Ended December 31,
In thousands	2013		2012			2011
Performance Materials Segment	$	9,462	$	10,400		$	18,194
Thermal/Acoustical Metals Segment		14,088		14,708			15,915
Thermal/Acoustical Fibers Segment		21,486		12,851			(3,055	)
Other Products and Services:
Life Sciences Vital Fluids		778		1,190			(1,040	)
Corporate Office Expenses		(17,101)		(17,771	)		(13,826	)
Consolidated Operating Income from Continuing Operations	$	28,713	$	21,378		$	16,188

Performance Materials Segment

Segment net sales decreased $6.0 million, or 5.1%, in 2013 compared to 2012, due to decreased sales volumes offset to some extent by the positive impact of foreign currency translation of $1.1 million or 0.9%. A reduction in Filtration net sales of $3.6 million, or 5.3%, primarily contributed to the reduction in segment net sales as demand for products in Europe was lower due to macroeconomic conditions. Net sales in the Thermal Insulation business decreased by $1.5 million, including $4.5 million of lower net sales in 2013 of electrical papers products. The Company completed in 2012 its obligation to manufacture and sell these products, pursuant to an agreement with the buyer of this product line in a prior year. This reduction was partially offset by higher net sales of other Thermal Insulation products of $3.0 million, including greater demand for products used to transport cryogenic products and insulate commercial buildings. Net sales of Life Sciences Filtration products decreased by $0.9 million, or 7.9%, in 2013 compared to 2012 due to decreased demand for products used in water and respiration application products.

The Performance Materials segment reported operating income of $9.5 million, or 8.4% of net sales in 2013, compared to operating income of $10.4 million, or 8.8% of net sales in 2012. Operating income in 2012 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. Operating income in 2013 was essentially flat with 2012 when excluding this gain of $0.8 million from 2012. During 2013, the impact of lower sales volume, unfavorable absorption of fixed overhead costs and unfavorable product mix on operating income was nearly offset by lower selling, product development and administrative expenses of $2.0 million, or 10.6%, in 2013 compared to 2012, primarily due to cost containment measures. The Segment reported lower general administrative expenses of $0.9 million, lower salaries, benefits and accrued incentive compensation of $0.6 million, and reductions in research and development expenses of $0.4 million. The reduction in general administrative expenses of $0.9 million was primarily related to a loss on disposal of assets in 2012, lower amortization of intangible assets, lower professional services and lower travel expenses in 2013 compared to 2012.

Segment net sales decreased by $16.0 million, or 12.0%, in 2012 compared to 2011, due to decreased sales volumes and the negative impact of foreign currency translation of $3.1 million, or 2.3%. A reduction in Thermal Insulation net sales of $8.9 million, or 18.7%, primarily contributed to the reduction in net sales. This reduction was due to the Company selling the electrical papers product line to a customer in 2010. The Company sold $6.3 million less electrical paper products to this customer in 2012 compared to 2011, as the customer prepared to commence its own manufacturing of electrical paper products. Also impacting Thermal Insulation net sales was a decrease in demand and customers adjusting inventory levels on certain commercial building products. Net sales of Filtration products decreased by $4.5 million, or 6.2%, in 2012 compared to 2011, due to a reduction in demand for its products in Europe and Asia markets as well as foreign currency translation decreasing net sales $3.1 million. Net sales of Life Sciences Filtration products decreased by $2.7 million, or 19.2%, in 2012 compared to 2011, primarily due to decreased demand for products used in water and life protection application products.

The Performance Materials segment reported operating income of $10.4 million in 2012, or 8.8% of net sales, compared to operating income of $18.2 million, or 13.6% of net sales in 2011. The decrease in operating income was driven primarily by lower net sales of $16.0 million, lower absorption of fixed overhead costs and unfavorable mix among product sales. Operating income in 2012 and 2011 also includes a $0.8 million and $1.6 million gain, respectively, from services provided to the buyer of the electrical papers product line in accordance with the terms of a License Agreement. Segment selling, product development and administrative expenses in 2012 were largely unchanged compared to 2011.

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Thermal/Acoustical Metals Segment

Segment net sales increased by $4.5 million, or 2.9%, in 2013 compared to 2012. Foreign currency translation positively impacted net sales by $2.7 million, or 1.8%, in 2013 compared to 2012. Tooling net sales in 2013 were higher by $4.9 million, or 27.9%, compared to 2012 due to timing of new product launches, particularly in Europe. Automotive parts net sales decreased by $0.4 million, or 0.3%, in 2013 compared to 2012, due to decreased demand from customers served by the Company’s European automotive operations due to macroeconomic conditions, partially offset by higher parts sales in North America due to strong market demand.

The Thermal/Acoustical Metals segment reported operating income of $14.1 million, or 8.9% of net sales, in 2013 compared to $14.7 million, or 9.6% of net sales, in 2012. The decrease in operating income was primarily due to higher selling, product development and administrative costs of $1.6 million offset to some extent by higher gross profit of $1.0 million related to increased net sales in 2013 compared to 2012. The increase in selling, product development and administrative costs of $1.6 million in 2013 compared to 2012 was primarily due to higher salaries, benefits and accrued incentive compensation of $0.6 million, increased sales commissions of $0.3 million, higher research and development design services of $0.3 million, and higher expenses of $0.3 million related to the start-up of the segment’s China operations.

Segment net sales decreased by $2.0 million, or 1.3%, in 2012 compared to 2011. Foreign currency translation negatively impacted net sales by $7.5 million, or 4.8%, in 2012 compared to 2011. Automotive parts net sales in 2012 decreased by $6.4 million, or 4.5%, compared to 2011 due to unfavorable foreign currency translation of $6.6 million. Lower parts sales volume from the Company’s European operations was offset by higher parts sales volume of domestic automotive parts. Economic conditions in Europe and Asia contributed to lower demand for certain automotive parts from the Company’s European operations beginning during the second quarter of 2012. Tooling net sales in 2012 increased $4.4 million, or 32.8%, compared to 2011, due to timing of new product launches.

The Thermal/Acoustical Metals segment reported operating income of $14.7 million, or 9.6% of net sales, in 2012 compared to operating income of $15.9 million, or 10.2% of net sales, in 2011. Contributing to this decrease was unfavorable mix in sales between automotive parts and tooling, as tooling net sales, which increased by $4.4 million in 2012 compared to 2011, typically results in lower gross margin. Segment selling, product development and administrative expenses in 2012 were essentially unchanged compared to 2011.

Thermal/Acoustical Fibers Segment

Segment net sales increased by $19.9 million, or 21.1%, in 2013 compared to 2012. Automotive parts net sales increased by $12.4 million, or 13.2%, in 2013 compared to 2012. Higher volumes of net sales were primarily due to improved consumer demand for vehicles in North America on Lydall’s existing platforms and new platform launches, and to a lesser extent, from a completed pricing negotiation and a non-recurring customer project. Domestic automobile production increased 4.8% in 2013 compared to 2012. Tooling net sales in 2013 were higher by $7.5 million compared to 2012, due to timing of new product launches.

The Thermal/Acoustical Fibers segment reported operating income of $21.5 million, or 18.8% of net sales, in 2013 compared to operating income of $12.9 million, or 13.6%, in 2012. This increase was due to higher net sales and improved gross margin realized from favorable absorption of fixed overhead costs, lower raw material costs and reductions in labor costs, and to a lesser extent, $1.8 million related to a completed pricing negotiation and a non-recurring customer project. Segment selling, product development and administrative expenses were essentially unchanged in 2013 compared to 2012 contributing to an operating margin increase to 18.8% in 2013 from 13.6% in 2012.

Segment net sales increased by $12.7 million, or 15.5%, in 2012 compared to 2011. Automotive parts net sales increased by $13.9 million, or 17.4%, in 2012 compared to 2011. This increase was driven by higher consumer demand for vehicles on the Company’s existing domestic platforms and new platform awards, as the Company continued to benefit from the overall increase in domestic automobile production, which was up 16.8% in 2012. Tooling net sales in 2012 decreased $1.2 million, or 56.7%, compared to 2011, due to timing of new product launches.

The Thermal/Acoustical Fibers Segment reported operating income of $12.9 million, or 13.6% of net sales, in 2012, compared to an operating loss of $3.1 million in 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 2012. Significant reductions in scrap, material usage, and labor primarily contributed to lower per-unit manufacturing costs in 2012 compared to 2011. Segment selling, product development and administrative expenses in 2012 were essentially unchanged compared to 2011.

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Other Products and Services

Life Sciences Vital Fluids net sales increased $0.3 million, or 1.9% in 2013, compared to 2012, due to higher volumes of blood filtration and cell therapy net sales, and to a lesser extent, price increases.

Life Sciences Vital Fluids reported operating income of $0.8 million, or 4.5% of net sales, in 2013 compared to $1.2 million, or 7.1% of net sales, in 2012. This decrease in operating income was due to a reduction in gross profit of $0.2 million related to an unfavorable mix of product sales as well as an increase in selling and product development costs of $0.2 million, in 2013 compared to 2012, as the Company expanded its product offerings in the biotech and cellular therapy markets.

Life Sciences Vital Fluids net sales increased $2.2 million, or 14.9%, in 2012 compared to 2011, which were primarily attributed to higher volumes of blood filtration, blood transfusion and bioprocessing product net sales and, to a lesser extent, price increases.

Life Sciences Vital Fluids reported operating income of $1.2 million in 2012, or 7.1% of net sales, compared to an operating loss of $1.0 million, or 7.1% of net sales, in 2011. 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 qualification cycles in the bioprocessing industry.

Corporate Office Expenses

The decrease in corporate office expenses of $0.7 million in 2013 compared to 2012 was due to a $1.5 million asset impairment charge in 2012 associated with the abandonment of an ERP project, lower severance and recruiting costs of $0.7 million, and lower professional services costs of $0.4 million. These decreases were partially offset by an increase in salaries, benefits and accrued incentive compensation of $1.6 million due to increased headcount, annual salary increases and meeting higher bonus targets on the Company’s incentive bonus program. Other administrative costs increased $0.3 million in 2013 compared to 2012. Corporate office strategic initiative costs of approximately $1.2 and $1.0 million were included in administrative expenses in both 2013 and 2012, respectively. The strategic initiative costs incurred in 2013 were primarily associated with the Industrial Filtration acquisition completed on February 20, 2014.

The increase in corporate office expenses of $3.9 million in 2012 compared to 2011 was due to a $1.5 million asset impairment charge, associated with the abandonment of an ERP project, higher strategic initiatives expenses of $1.0 million and severance and recruiting charges of $1.0 million primarily associated with the departure of the Company’s Chief Financial Officer and hiring of the new Chief Financial Officer. During the fourth quarter of 2012, the Company recorded a $1.8 million asset impairment charge ($1.5 million in corporate office expenses) due to the abandonment of an ERP project as the original project costs were deemed to have no future fair value.

LIQUIDITY AND CAPITAL RESOURCES

	For the Year Ended December 31,
In thousands except ratio data	2013		2012			2011
Cash and cash equivalents	$	75,407	$	63,623		$	30,905
Short-term investment	$	—	$	—		$	12,015
Cash provided by operating activities	$	30,280	$	34,405		$	14,657
Cash (used for) provided by investing activities	$	(13,986)	$	1,611		$	(6,309	)
Cash used for financing activities	$	(5,617)	$	(3,871	)	$	(1,621	)
Depreciation and amortization	$	12,593	$	13,572		$	14,478
Capital expenditures	$	(13,826)	$	(11,404	)	$	(8,884	)
Total debt	$	1,714	$	2,411		$	3,296
Total capitalization (debt plus equity)	$	201,801	$	176,907		$	164,148
Total debt to total capitalization		0.8%		1.4	%		2.0	%

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, acquisitions and divestitures, income tax payments, stock repurchases,

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debt service, pension funding and availability of lines of credit and long-term financing. The Company manages worldwide cash requirements considering available funds among domestic and foreign subsidiaries.

At December 31, 2013, the Company held $75.4 million in cash and cash equivalents the majority of which was held by domestic subsidiaries.

Operating Cash Flows

Net cash provided by operating activities in 2013 was $30.3 million compared with $34.4 million in 2012. This decrease was primarily due to an increase in operating assets and liabilities of $4.7 million in 2013, compared to a decrease in operating assets and liabilities of $3.0 million in 2012, for a change of $7.7 million, partially offset by improvement in net income of $2.3 million. Net income in 2012 included an adjustment for a non-cash operating item of $1.8 million on the loss on an asset impairment and a $0.8 million gain on sale of a product line. The increase in operating assets and liabilities in 2013 was primarily due to an increase in accounts receivable of $4.1 million due to increased sales in the fourth quarter of 2013 compared to the fourth quarter of 2012 and inventory of $3.0 million, partially offset by an increase in other liabilities, net of $3.0 million. The increase in inventory was due to an increase in net tooling inventory in preparation of new part launches and increased production activity.

Net cash provided by operating activities in 2012 was $34.4 million compared with $14.7 million in 2011. This increase was primarily due to a decrease in operating assets and liabilities of $3.0 million in 2012, compared to an increase of $11.3 million in 2011, a change of $14.3 million, and an improvement in net income of $3.0 million. The decrease in operating assets and liabilities in 2012 was primarily due to a decrease in inventory of $2.7 million. Inventory decreased due to lower production activity at the end of 2012 compared to the end of 2011 and concentrated efforts to reduce levels of raw material inventory.

Investing Cash Flows

Net cash used for investing activities was $14.0 million in 2013 compared to net cash provided for investing activities of $1.6 million in 2012. Capital expenditures in 2013 were $13.8 million compared to $11.4 million in 2012, an increase of $2.4 million. Investing activities during 2013 included an earn-out payment of $0.2 million made by the Company related to the acquisition of DSM Solutech B.V. which occurred in 2008. Investing activities in 2012 included the receipt of $1.0 million in remaining proceeds from the 2010 sale of its electrical papers product line. In addition, in 2012 the Company redeemed its $12.0 million short term investment which was purchased in 2011.

Net cash provided by investing activities was $1.6 million in 2012 compared to net cash used for investing activities of $6.3 million in 2011. Capital expenditures in 2012 were $11.4 million compared to $8.9 million in 2011. Investing activities in 2012 included the receipt of $1.0 million in remaining proceeds from the 2010 sale of its electrical papers product line. Investing activities in 2011 included the net proceeds of $14.0 million from the sale of Affinity. A portion of those proceeds, $12.0 million, were invested in 2011 in a short term investment that matured on January 23, 2012 and became available to fund operating, investing, or financing activities. In 2011, the Company received $0.8 million from a leasing company as a result of sale-leaseback transactions for equipment.

Financing Cash Flows

In 2013, net cash used for financing activities was $5.6 million compared with net cash used for financing activities of $3.9 million in 2012. In 2013, the Company acquired $6.6 million of its Common Stock through its stock repurchase and equity compensation plans, compared to $4.0 million in 2012. Debt payments and capital lease payments were $0.8 million in 2013 compared to $1.1 million in 2012. The Company received $1.5 million from the exercise of stock options during 2013, compared to $1.0 million during 2012.

In 2012, net cash used for financing activities was $3.9 million compared with net cash used for financing activities of $1.6 million in 2011. Debt payments and capital lease payments were $1.1 million in 2012 compared to $1.5 million in 2011. In 2012, the Company acquired $4.0 million of its Common Stock through its stock repurchase and equity compensation plans, compared to $0.2 million in 2011. The Company received $1.0 million from the exercise of stock options in 2012, compared to $0.1 million received in 2011.

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Financing Arrangements

On February 18, 2014, the Company amended and restated its $35.0 million senior secured domestic revolving credit facility (“Amended Credit Facility) with a financial institution and two additional lenders, increasing the available borrowing from $35 million to $100 million. The Amended Credit Facility is secured by substantially all of the assets of the Company. The maturity date for the Amended Credit Facility is January 31, 2019, at which time amounts outstanding under the Amended Credit Facility are due and payable. The Company entered into this Amended Credit Facility in part to fund $60.0 million of the purchase price of the Industrial Filtration acquisition. The Company may prepay outstanding borrowings under the Amended Credit Facility at any time and expects to prepay amounts borrowed prior to maturity.

Under the terms of the Amended Credit Facility, the lenders are providing a $100 million revolving credit facility to the Company, under which the lenders may make revolving loans and issue letters of credit to or for the benefit of the Company and its subsidiaries. The Amended Credit Facility may be increased by an aggregate amount not to exceed $50 million through an accordion feature, subject to specified conditions.

The Amended Credit Facility contains a number of affirmative and negative covenants, including financial and operational covenants. The Company is required to meet a minimum interest coverage ratio. The interest coverage ratio requires that, at the end of each fiscal quarter, the ratio of consolidated EBIT, to Consolidated Interest Charges, both as defined in the Amended Credit Facility, may not be less than 2.0 to 1.0 for the immediately preceding 12 month period. In addition, the Company must maintain a Consolidated Leverage Ratio, as defined in the Amended Credit Facility, as of the end of each fiscal quarter of no greater than 3.0 to 1.0. The Company must also meet minimum consolidated EBITDA as of the end of each fiscal quarter for the preceding 12 month period of $30.0 million.

Interest is charged on borrowings at the Company’s option of either: (i) Base Rate plus the Applicable Rate, or (ii) the Eurodollar Rate plus the Applicable Rate. The Base Rate is a fluctuating rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by Bank of America, and (c) the Eurocurrency Rate plus 1.00%. The Eurocurrency Rate means (i) if denominated in LIBOR quoted currency, a fluctuating LIBOR per annum rate equal to the London Interbank Offered Rate; (ii) if denominated in Canadian Dollars, the rate per annum equal to the Canadian Dealer Offered Rate; or (iii) the rate per annum as designated with respect to such alternative currency at the time such alternative currency is approved by the Lenders. The Applicable Rate is determined based on the Company’s Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). The Applicable Rate added to the Base Rate Committed Loans ranges from 15 basis points to 100 basis points, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 75 basis points to 175 basis points. The Company will pay a quarterly fee ranging from 20 basis points to 30 basis points on the unused portion of the $100 million available under the Amended Credit Agreement.

The Company’s previous $35.0 million senior secured domestic revolving credit facility (“Domestic Credit Facility”) that was outstanding on December 31, 2013, was entered into on June 16, 2011. The Domestic Credit Facility was secured by substantially all of the assets of the Company. The maturity date for the Domestic Credit Facility was June 15, 2016. The Company had no borrowings under the Domestic Credit Facility during 2013 and no outstanding borrowings at December 31, 2013 or December 31, 2012. At December 31, 2013, the Company had available $32.4 million under the Domestic Credit Facility, net of standby letters of credit outstanding of $2.6 million. The Company was in compliance with all covenants at December 31, 2013 and December 31, 2012.

On September 30, 2011, the Company, through a foreign subsidiary, entered into a new €8.0 million foreign credit facility (“Foreign Credit Facility”), with €6.0 million available for borrowings and €2.0 million available to fund letters of credit. This Foreign Credit Facility replaced the prior foreign credit facility that expired on September 30, 2011. The Foreign Credit Facility, which has a maturity date of September 30, 2014, was completed with the same group of banking institutions and under similar terms and conditions to those in place under the prior foreign credit facility. At December 31, 2013, the Company’s foreign subsidiaries’ various credit arrangements with banks totaled €9.0 million (approximately $12.4 million) all of which was available for borrowings, primarily restricted to borrowings by the respective foreign subsidiary. The Company’s foreign subsidiaries had no borrowings outstanding on any of its credit arrangements at December 31, 2013 and December 31, 2012.

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Future Cash Requirements

The Company manages worldwide cash requirements considering available funds among domestic and foreign subsidiaries. The Company expects to fund its operating cash requirements from existing cash balances, cash generated by operations, and through borrowings, as needed, under its existing domestic and foreign credit facilities. The Company continually explores its core markets for suitable acquisitions, joint ventures, alliances and licensing agreements. If completed, such activities would be financed with existing cash balances, cash generated from operations, under the credit facilities described under “Financing Arrangements” above or other forms of financing, as required.

At December 31, 2013, total indebtedness, of which the majority is capital leases, was $1.7 million, or 0.8% of the Company’s total capital structure. Cash requirements for 2014 are expected to include the funding of ongoing operations, capital expenditures, payments due on capital and operating leases, pension plan contributions, income tax payments and optional prepayments on borrowings made to fund the Industrial Filtration acquisition which was completed on February 20, 2014. The Company’s cash balance at December 31, 2013 was $75.4 million of which approximately $26 million is expected to be used in the first quarter of 2014 to fund the acquisition of Industrial Filtration, and pay related transaction costs. Capital spending for 2014 is expected to be approximately $17 million to $22 million, including the expected capital spending associated with the acquisition of the Industrial Filtration business on February 20, 2014.

Contractual Obligations

The following table summarizes the Company’s significant contractual obligations as of December 31, 2013 and the effect such contractual obligations are expected to have on the Company’s liquidity and cash flows in future periods. For recent financing activity please refer to “Financing Arrangements” above.

	Payments Due by Period
In thousands	2014		2015		2016		2017		2018		After 5 years		Total
Contractual Obligations:
Pension plan contributions	$	2,200	$	—	$	—	$	—	$	—	$	—	$	2,200
Operating leases		3,900		2,813		2,434		2,243		886		1,302		13,578
Capital leases*		736		731		358		—		—		—		1,825
Total Contractual Obligations	$	6,836	$	3,544	$	2,792	$	2,243	$	886	$	1,302	$	17,603

* Includes estimated interest payments

The Company has a capital lease agreement for the land and building at the St. Nazaire, France operating facility, included in the Thermal/Acoustical Metals segment, requiring monthly principal and interest payments until 2016. The capital lease provides an option for the Company to purchase the land and building at the end of the lease for a nominal amount.

The above table does not reflect net tax contingencies of $1.3 million, the timing of which is uncertain. Refer to Note 11 to the Consolidated Financial Statements for additional discussion on unrecognized tax benefits. Purchase orders or contracts for normal purchases of raw materials and other goods and services are not included in the table above. The Company is not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. For purposes of this table, contractual obligations for purchase of goods or services are defined as agreements that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions. The Company does not have significant agreements for the purchase of raw materials or other goods specifying minimum quantities or set prices that exceed expected requirements.

The Company’s long-term debt payments and interest rates for all of the Company’s outstanding debt were fixed as of December 31, 2013. Actual payments may vary significantly from those included in the table above depending on future debt levels, timing of debt repayments and sources of funding utilized.

The amount included in the contractual obligations table related to the Company’s future pension plan contributions represents the minimum funding requirements under ERISA for the 2013 plan year and the minimum contributions for the 2014 plan year based on the

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Company’s pension plan valuations at December 31, 2013. However, the Company expects to make contributions of approximately $4.2 million in 2014 to the plan. See Note 8 to the Consolidated Financial Statements for additional information regarding the Company’s pension plans.

In addition to the above contractual obligations, the Company utilizes letters of credit in the ordinary course of business for security deposit requirements. Outstanding letters of credit were $2.6 million and $2.5 million at December 31, 2013 and 2012, 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. Note 1 in Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of the Consolidated Financial Statements. The Company’s management is required to make judgments about and estimates of the effect of matters that are inherently uncertain. Actual results could differ from management’s estimates. The most significant areas involving management judgments and estimates are described below.

Goodwill

The Company had goodwill of $18.6 million at December 31, 2013 and $18.3 million at December 31, 2012. Goodwill is not amortized, but rather is subject to impairment tests annually or more frequently when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units, including related goodwill. The Company’s reporting units are operating segments or components of operating segments for which discrete financial information is available and segment management regularly reviews the operating results of that reporting unit. The impairment test used for goodwill was a two-step approach. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is considered not impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of the reporting unit, a second step of the impairment test would be performed in order to determine the implied fair value of a reporting unit’s goodwill. Determining the implied fair value of goodwill would require a valuation of the reporting unit’s tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of its goodwill, goodwill is deemed impaired and is written down to the extent of the difference.

During the fourth quarter of 2013, the Company performed its annual impairment analysis of the $13.9 million of goodwill in the Performance Materials reporting unit (PM reporting unit) and $4.7 million of goodwill in the Life Sciences Vital Fluids reporting unit (VF reporting unit), included in OPS.

The Company elected to perform the quantitative approach to test the VF reporting unit and the PM reporting unit. For 2013, the Company used both the income approach and market approach in performing step one of the impairment analyses to estimate the fair value of the reporting units. The income approach involved determining the present value of future cash flows from the reporting unit’s projected financial results in 2014 – 2016 and the projected cash flows beyond that three year period computed as the terminal value. The Company believes the income approach was appropriate because it provided a fair value estimate based upon the reporting unit’s expected long-term operations and cash flow performance.

In applying the market approach, valuation multiples were derived from historic and projected operating data of selected guideline companies, which were evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies. The valuation multiples were then applied to the appropriate projected operating data of the reporting unit to arrive at an indication of fair value. The Company believes the market approach was appropriate because it provided a fair value using multiples from companies with operations and economic characteristics similar to its reporting unit.

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The Company determined that the VF reporting unit, with $4.7 million of goodwill, had fair value which exceeded its carrying value by greater than 20%, and as a result, step two of the impairment test was not required. The Company also determined that the PM reporting unit, with $13.9 million of goodwill, had an estimated fair value which substantially exceeded its carrying value, and as a result, step two of the impairment test was not required.

In the event that the Company’s operating results in the future do not meet current expectations, management, based upon conditions at the time, would consider taking restructuring or other actions as necessary to maximize profitability. 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.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on the Company’s judgment and estimates of undiscounted future cash flows resulting from the use of the assets and their eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. If the carrying values of the assets are determined to be impaired, then the carrying values are reduced to their estimated fair values. The fair values of the impaired assets are determined based on market conditions, including independent appraisals when appropriate, the income approach, which utilizes cash flow projections, and other factors.

During the third quarter of 2013, the Company performed an impairment analysis for long-lived assets at the Company’s DSM Solutech B.V. (“Solutech”) operation, included in the Performance Materials segment. Developments with customers caused the Company to determine that it was probable that Solutech net sales would not meet previous expectations for 2013. Due to the lower than expected sales, caused by a delay in commercialization of Solutech products to the market place by Solutech’s customers, negative cash flows were expected in 2013. As a result of these negative cash flows, combined with historical operating losses, the Company determined that it was appropriate to test the Solutech asset group, for recoverability in the third quarter of 2013. Acquisition related intangibles with a remaining useful life of 10 years primarily comprise the carrying value of the asset group of $4.7 million. To determine the recoverability of the Solutech asset group the Company completed an undiscounted cash flow analysis and compared it to the asset group carrying value. This analysis is primarily dependent on the increase in net sales over the period when the business has technological exclusivity provided by the intangible assets.

The Company determined that the Solutech asset group had undiscounted cash flow which was in excess of its carrying value and, as a result, the asset group was not impaired at September 30, 2013. The estimate of undiscounted cash flows of the Solutech long-lived asset group was based on the best information available as of the date of the assessment, which incorporated management assumptions around cash flows generated from future operations, the estimated economic useful life of the primary asset within the Solutech long-lived asset group, as well as other market information. The Company performed various sensitivity analyses noting that a more conservative scenario of high single digit revenue growth and an appropriate related cost structure, the undiscounted cash flows exceeded the carrying value with no impairment indicated. As of December 31, 2013 the Company expects to meet the cash flow forecasts included in the impairment analysis. Future cash flows are dependent on the success of commercialization efforts of Solutech products by OEMs, the quality of Solutech products and technology advancements and management’s ability to manage costs. In the event that Solutech’s cash flows in the future do not meet current expectations, management, based upon conditions at the time, would consider taking actions as necessary to maximize cash flow. Accordingly, the above sensitivity analysis, while a useful tool, should not be used as a sole predictor of future impairment. A thorough analysis of all the facts and circumstances existing at the time would need to be performed to determine if recording an impairment loss was appropriate.

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Pensions

Pension cost and the related obligations recognized in the Consolidated Financial Statements are determined on an actuarial basis. The determination of such amounts is made in consultation with the Company’s outside actuaries based on information and assumptions provided by the Company. A substantial portion of the Company’s pension amounts relate to its domestic defined benefit pension plan. Pension plans outside the United States are not significant at December 31, 2013. The domestic defined benefit pension plan, which covers certain domestic Lydall employees, is noncontributory and benefits are based on either years of service or eligible compensation paid while a participant is in a plan. The plan has been closed to new employees for several years and benefits under the pension plan are no longer accruing.

A significant element in determining the Company’s pension cost is the expected return on plan assets. Based on a review of market trends, actual returns on plan assets and other factors, including the allocation of the Company’s investment between equity and fixed income funds, the Company’s expected long-term rate of return on plan assets was lowered to 7.25% at December 31, 2013, which will be utilized for determining 2014 pension cost. An expected long-term rate of return of 7.50% was used for determining 2013 pension expense and 7.75% and 8.00%, respectively, in determining 2012 and 2011 pension expense. In determining the expected return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of marketable debt and equity securities and economic and other indicators of future performance. Investment management objectives include maintaining an adequate level of diversification to balance market risk and to provide sufficient liquidity for near-term payments of benefits accrued under the plan and to pay the expenses of administration. The investment plan assets are stated at fair value, which is based on quoted market prices in an active market. The expected long-term rate of return on assets is applied to the value of plan assets at the beginning of the year and this produces the expected return on plan assets that is included in the determination of pension cost for that year. The difference between this expected return and the actual return on plan assets is deferred, within certain parameters, as discussed below. The Company continually evaluates its expected long-term rate of return and will adjust such rate as deemed appropriate.

At the end of each year, the Company determines the discount rate to be used to calculate the present value of plan liabilities, as well as the following year’s pension cost. The discount rate is an estimate of the current interest rate at which the pension liabilities could be effectively settled at the end of the year. The Company based its discount rate assumption on an analysis which included the selection of a bond portfolio comprised of high quality fixed income investments whose cash flows would provide for the projected benefit payments of the plan. The discount rate is then developed as the single rate that equates the market value of the bond portfolio to the discounted value of the plan’s benefit payments. At December 31, 2013 and 2012, the Company determined this rate to be 5.09% and 4.16%, respectively. Increases or decreases in the discount rate result in decreases and increases, respectively, in the projected benefit obligation. Actuarial gains, related to the increase in discount rate at December 31, 2013, decreased the pension plan liability $6.9 million and increased other comprehensive income net-of-tax $4.3 million. The net effect on pension liabilities from changes in the discount rate is deferred within certain parameters, as discussed below.

A one-quarter percentage point change in the assumed long-term rate of return on the Company’s domestic pension plan as of December 31, 2013 would impact the Company’s 2014 pre-tax income by approximately $0.1 million annually. A one-quarter percentage point decrease in the discount rate on the Company’s domestic pension plan as of December 31, 2013 would have a minimal impact on the Company’s 2014 pre-tax income annually. The Company reviews these and other assumptions at least annually.

Pension accounting guidance requires that gains or losses be deferred unless the unrecognized net gain or loss at the end of a year exceeds a “corridor” (as defined in the pension accounting guidance). If the deferred gain or loss exceeds the corridor at the end of the year, then the amount in excess of the corridor is amortized over a period equal to the average remaining service period of active employees expected to receive benefits. Since benefit accruals were frozen on certain domestic defined benefit pension plans on June 30, 2006, these plan participants are considered inactive participants. Therefore, the gain/loss amortization for these plans is amortized over the average remaining life expectancy of all plan participants. As of December 31, 2013 and 2012, the net deferred loss exceeded the corridor. Consequently, pension cost for 2014 will include amortization of a portion of the deferred loss in excess of the corridor. The amount of amortization in future years will be dependent on changes in the components of the deferred loss amount, particularly actual return on plan assets in relation to the estimated return on plan assets, as well as future increases or decreases in the discount rate.

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For the year ended December 31, 2013, the Company recognized pension expense related to its domestic defined benefit pension plan of $0.8 million as a result of the expected return on assets being lower than the aggregate of interest cost and the amortization of actuarial loss. As discussed above, the Company’s discount rate was 5.09% at December 31, 2013 and will be used for purposes of determining 2014 pension cost. Pension expense for 2014 is expected to be in the range of $0.2 million to $0.3 million.

The Company contributed $1.2 million to its domestic defined benefit pension plan during 2013 and expects to contribute approximately $4.2 million in 2014.

Income Taxes

The Company accounts for income taxes recognizing deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of a deferred tax asset will not be realized.

In assessing the need for a valuation allowance, the Company analyzes historical financial results by jurisdiction and estimates future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Valuation allowances related to deferred tax assets can be impacted by changes in tax law, changes in statutory tax rates and future levels of taxable income. In the event the Company was to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, the Company would reduce such amounts through a charge to income in the period that such determination was made. Conversely, if the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of the net carrying amounts, the Company would decrease the recorded valuation allowance and record an increase to income in the period that such determination was made. See Note 11 to the Consolidated Financial Statements.

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. The Company is no longer subject to U.S. federal examinations for years before 2010, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2003.

In assessing the need for reserves for uncertainties in income taxes recognized, a significant number of estimates and judgments must be made by the Company. The total amount of net unrecognized tax benefits that would affect the effective tax rate if recognized was $1.1 million as of December 31, 2013.

As of December 31, 2013 the company has not paid U.S. income taxes on approximately $22.2 million of undistributed earnings of international subsidiaries. The Company’s intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. It is not practicable to estimate the amount of tax that might be payable on the undistributed earnings due to a variety of factors including the timing, extent and nature of any repatriation.

Equity Compensation Plans

The Company accounts for awards of equity instruments under the fair value method of accounting and recognizes such amounts in the Consolidated Statements of Operations. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Stock-based compensation expense includes the estimated effects of forfeitures and such estimates of forfeitures are adjusted over the requisite service period to the extent actual forfeitures differ, or are expected to differ, from such estimates. The effect of changes in estimated forfeitures is recognized in the period of change and will also impact the amount of expense to be recognized in future periods. The Company estimates the fair value of option grants based on the Black Scholes option-pricing model. Expected volatility and expected term are based on historical information. The Company believes that future volatility and expected term are not likely to materially differ from the Company’s historical stock price volatility and historical exercise data, respectively.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended December 31:

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	2013		2012			2011
Risk-free interest rate		1.7%		1.4	%		2.6	%
Expected life		5.2 years		5.7 years			5.5 years
Expected volatility		65%		68	%		69	%
Expected dividend yield		0%		0	%		0	%

Recently Issued Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (Topic 740). This ASU requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in their financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The objective of this update is to eliminate the diversity in practice in the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The ASU is effective for fiscal years beginning after December 15, 2013. The Company is currently evaluating this new guidance and believes its adoption will not have a significant impact on its consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220), which requires new disclosures about reclassifications from accumulated other comprehensive loss to net income. These disclosures may be presented on the face of the statements or in the notes to the consolidated financial statements. The ASU was effective for fiscal years beginning after December 15, 2012. The Company adopted this ASU and revised its disclosure, as required, beginning with the first quarter of 2013. See the Consolidated Statements of Comprehensive Income (Loss) in the consolidated financial statements.

In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amends ASC 350, Intangibles-Goodwill and Other. This ASU gives an entity the option to first assess qualitative factors to determine if indefinite-lived intangible assets are impaired. The entity may first determine based on qualitative factors if it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount. If that assessment indicates no impairment, the quantitative impairment test is not required. This standard was effective for financial statements of periods beginning after September 15, 2012, with early adoption permitted. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

OTHER KEY FINANCIAL ITEMS

Cash and Cash Equivalents — Cash and cash equivalents increased to $75.4 million as of December 31, 2013 compared with $63.6 million as of December 31, 2012. This increase of $11.8 million was primarily due to cash generated from operating activities of $30.3 million, which was partially offset by cash used for investing activities of $14.0 million and cash used for financing activities of $5.6 million. Investing activities included $13.8 million used for capital expenditures. Financing activities were primarily attributed to the repurchase of Company stock of $6.6 million. The effect of exchange rate changes on cash was a favorable $1.1 million in 2013 compared to a favorable $0.6 million in 2012.

Accounts Receivable — Accounts receivable, net of the allowance for doubtful receivables, were $52.3 million at December 31, 2013 compared with $47.5 million at December 31, 2012. Net sales in the fourth quarter of 2013 were approximately 10% higher than the fourth quarter of 2012 contributing to the increase in accounts receivable.

Inventories — Inventories were $34.9 million as of December 31, 2013 compared with $31.3 million as of December 31, 2012. Primarily contributing to this increase was higher net tooling inventory of $5.3 million in preparation of new automotive part launches.

Benefit Plan Liabilities — Benefit plan liabilities decreased to $14.1 million at December 31, 2013 compared to $25.1 million at December 31, 2012. The decrease of $11.0 million was primarily due to a decrease in the underfunded status of the Company’s domestic defined benefit pension plan. An actuarial gain from a change in discount rate of $6.9 million, along with returns on plan assets and Company contributions, which aggregated $6.5 million, resulted in the improvement in underfunded status.

34

Long Term Deferred Tax Liabilities  — Long term deferred tax liabilities were $8.7 million as of December 31, 2013 compared with $3.9 million as of December 31, 2012 The increase in this balance was primarily related to a reduction in the Company’s pension underfunded status, causing a reduction in a long-term deferred tax asset that is netted with long-term deferred tax liabilities.

Capital Expenditures — Capital expenditures were $13.8 million in 2013, $11.4 million in 2012, and $8.9 million in 2011. Capital spending for 2014 is expected to be approximately $17 million to $22 million including the expected capital spending associated with the acquisition of the Industrial Filtration business on February 20, 2014.

Total Debt To Total Capitalization — Total debt to total capitalization decreased to 0.8% in 2013 compared with 1.4% in 2012. The decrease was due to lower debt levels and higher stockholders’ equity in 2013 compared to 2012. At December 31, 2013, the Company had domestic and foreign credit facilities with availability of $44.8 million.

Stockholders’ Equity — Stockholders’ equity increased to $200.1 million at December 31, 2013 compared to $174.5 million at December 31, 2012. This increase was primarily due to net income of $19.2 million, and, to a lesser extent, pension liability adjustments of $6.6 million, proceeds from stock issuances, stock-based compensation of $3.5 million and foreign currency translation adjustments of $3.0 million. Partially offsetting this increase were share repurchases of $6.6 million. On a per share basis, calculated as stockholders’ equity divided by shares outstanding at December 31, 2013, stockholders’ equity increased to $11.90 at December 31, 2013 from $10.29 at December 31, 2012.

Off Balance Sheet Arrangements — Other than operating leases, the Company does not have any other material off-balance sheet financing arrangements.

Inflation — Inflation generally affects the Company through its costs of labor, equipment, energy and raw materials. The increased costs of these items have generally been offset by price increases, operating improvements, and other cost-saving initiatives. The Company also has certain arrangements in which it can pass through inflation on raw material costs to its customers.

35

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lydall’s limited market risk exposures relate to changes in foreign currency exchange rates and interest rates.

FOREIGN CURRENCY RISK

Lydall has sales and manufacturing activities in foreign countries. As a result, financial results could be affected by factors such as changes in foreign currency exchange rates or economic conditions in the foreign markets where the Company manufactures and distributes its products. The Company’s primary currency exposure is to the Euro and, to a lesser degree, the Japanese Yen, the Chinese Yuan and the British Pound Sterling.

Lydall’s foreign and domestic operations limit foreign currency exchange transaction risk by completing transactions in local functional currencies whenever practicable. In addition, Lydall periodically enters into foreign currency forward exchange contracts to mitigate exposure to foreign currency volatility. Lydall utilizes bank loans and other debt instruments throughout its operations. To mitigate foreign currency risk, such debt is denominated primarily in the functional currency of the operation maintaining the debt.

INTEREST RATE RISK

The Company’s interest rate exposure is most sensitive to fluctuations in interest rates in the United States and Europe, which impact interest paid on its debt. During 2013, 2012 and 2011, the Company had no loans or borrowings on lines of credit outstanding with variable interest rates, therefore, a 10% change in the weighted average interest rate on the Company’s variable rate debt would not have any impact to the Company’s consolidated financial position, results of operations, or cash flows. In February 2014, the Company borrowed $60.0 million from its amended credit facility, with a variable interest rate, to fund the Industrial Filtration acquisition.

The weighted average interest rate on long-term debt was 5.4% for each of the years ended December 31, 2013, 2012, and 2011.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this Item is contained under Item 15. “Exhibits, Financial Statement Schedules.”

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

36

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, conducted an evaluation as of December 31, 2013 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) of the Exchange Act). Based on that evaluation, the President and Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures were effective.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2013 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. With the participation of the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 utilizing the criteria and framework established by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework (1992). Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2013. Internal control over financial reporting is a process designed by or under the supervision of, the CEO and CFO or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Item 9B. OTHER INFORMATION

None.

37

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item is incorporated by reference from the sections entitled “Proposal 1 — Election of Directors,” “Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance” of the definitive Proxy Statement of Lydall to be filed with the Commission within 120 days of the fiscal year ended December 31, 2013 in connection with the Annual Meeting of Stockholders to be held on April 25, 2014 (the “2014 Proxy Statement”). Information regarding the Executive Officers of the Company is contained in this Annual Report on Form 10-K.

The Company’s Code of Ethics and Business Conduct for all employees and its Code of Ethics for the Chief Executive Officer, Senior Financial Officers and all Accounting and Financial Personnel can be obtained free of charge on the Company’s website under the Corporate Governance section or by contacting the Office of the General Counsel, P.O. Box 151, One Colonial Road, Manchester, CT 06045-0151.

The Company intends to post on its website all disclosures that are required by law or New York Stock Exchange listing standards concerning any amendments to, or waivers from, the provisions of these documents.

Item 11. EXECUTIVE COMPENSATION

Information required by this Item is incorporated by reference from the sections entitled “2013 Director Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation Tables,” “Corporate Governance — Compensation Committee Interlocks and Insider Participation” and “Compensation Discussion and Analysis — Compensation Committee Report on Executive Compensation” of the 2014 Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item is incorporated by reference from the sections entitled “Executive Compensation Tables — Equity Compensation Plan Information” and “Securities Ownership of Directors, Certain Officers and 5% Beneficial Owners” of the 2014 Proxy Statement.

The following table provides information about the Company’s Common Stock that may be issued upon exercise of options and rights under all of the Company’s existing equity compensation plans at December 31, 2013. The number of securities remaining available for issuance at December 31, 2013 was 1,296,869 and includes shares that may be issued as restricted stock, performance shares and other stock awards.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		1,066,549	$	7.34		1,296,869
Equity compensation plans not approved by security holders		—		—		—
Total		1,066,549	$	7.34		1,296,869

38

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this Item is incorporated by reference from the sections entitled “Corporate Governance — Independence Determination,” “Related Party Transactions,” and “Compensation Committee Interlocks and Insider Participation” of the 2014 Proxy Statement.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this Item is incorporated by reference from the sections entitled “Proposal 3 — Ratification of Appointment of Independent Auditors,” and “Principal Fees and Services” of the 2014 Proxy Statement.

39

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

	Page
1. Financial Statements:
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Statements of Operations for the years ended December 31, 2013, 2012, and 2011		F-2
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012, and 2011		F-3
Consolidated Balance Sheets at December 31, 2013 and 2012		F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012, and 2011		F-5
Consolidated Statements of Changes in Stockholders’ Equity for each of the three years in the period ended December 31, 2013		F-6
Notes to Consolidated Financial Statements		F-7
2. Financial Statement Schedule:
Schedule II — Valuation and Qualifying Accounts for the years ended December 31, 2013, 2012, and 2011		S-1

Other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable or are presented in “Notes to Consolidated Financial Statements” and therefore have been omitted.

40

a) 3. Exhibits Included Herein or Incorporated by Reference:

2.1	Sale and Purchase Agreement dated February 20, 2014, by and among the Andrew Industries Limited, Lydall Inc. and Lydall UK Ltd., filed as Exhibit 10.1 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by reference. The Registrant will supplementally furnish any omitted schedules to the Commission upon request.
3.1	Certificate of Incorporation of the Registrant, as amended through the date of filing of this Annual Report on Form 10-K, 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 Form 10-K dated March 12, 2004 and incorporated herein by this reference.
4.1	Certain long-term debt instruments, each representing indebtedness in an amount equal to less than 10 percent of the Registrant’s total consolidated assets, have not been filed as exhibits to this Annual Report on Form 10-K. The Registrant will file these instruments with the Commission upon request.
10.1	Capital lease agreement between Lydall Thermique Acoustique S.A.S., CMCIC Lease and Natiocredimurs Societe en Nom Collectif, filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q dated November 9, 2004 and incorporated herein by reference.
10.2*	Employment Agreement with Dale G. Barnhart dated July 31, 2007, filed as Exhibit 10.1 to the Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by this reference.
10.3*	Employment Agreement with Robert K. Julian dated October 3, 2012, filed as Exhibit 10.1 to the Registrant’s Form 8-K dated October 4, 2012 and incorporated herein by this reference.
10.4*	Employment Agreement with David H. Williams dated June 27, 2012, filed as Exhibit 10.3 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.5*	Employment Agreement with Chad A. McDaniel dated May 8, 2013, filed herewith.
10.6*	Indemnification Agreement with Dale G. Barnhart dated July 31, 2007, filed as Exhibit 10.2 to the Registrant’s Form 8-K dated August 3, 2007 and incorporated herein by this reference.
10.7*	Lydall, Inc. Annual Incentive Performance Bonus Program, filed as Exhibit 10.1 to the Registrant’s Form 8-K dated March 15, 2012 and incorporated herein by this reference.
10.8	Form of Indemnification Agreement between Lydall, Inc. and non-employee directors, filed as Exhibit 10.1 to the Registrant’s Form 8-K dated June 19, 2009 and incorporated herein by this reference.
10.9*	Amended and Restated Lydall 2003 Stock Incentive Compensation Plan, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q dated May 2, 2011 and incorporated herein by this reference.
10.10*	Lydall 2012 Stock Incentive Plan, filed as Exhibit A to the Registrant’s Definitive Proxy Statement dated March 16, 2012 and incorporated herein by this reference.
10.11*	Form of Restricted Share Award Agreement to Non-Employee Directors (Under the Lydall 2012 Stock Incentive Plan), filed as Exhibit 10.9 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.12*	Form of Non-Qualified/Incentive Stock Option Agreement (Under the Lydall 2012 Stock Incentive Plan) for U.S. employees, filed as Exhibit 10.4 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.13*	Form of Restricted Stock Award Agreement (Under the Lydall 2012 Stock Incentive Plan) for U.S. Employees, filed as Exhibit 10.8 to the Registrant’s to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.14*	Form of Non-Qualified Stock Option Agreement (Under the Lydall 2012 Stock Incentive Plan) for Netherland employees, filed as Exhibit 10.10 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.15*	Form of Non-Qualified Stock Option Agreement (Under the Lydall 2012 Stock Incentive Plan) for French employees, filed as Exhibit 10.11 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.16*	Form of Non-Qualified Stock Option Agreement (Under the Lydall 2012 Stock Incentive Plan) for German employees, filed as Exhibit 10.12 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.17*	Form of Lydall, Inc. Performance Share Award Agreement (Three-Year Period) for U.S. employees, filed as Exhibit 10.5 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.18*	Form of Lydall, Inc. Performance Share Award Agreement (Three-Year Period) for French employees, filed as Exhibit 10.6 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.19*	Form of Lydall, Inc. Performance Share Award Agreement (Three-Year Period) for German employees, filed as Exhibit 10.7 to the Registrant’s Form 10-Q dated August 1, 2012 and incorporated herein by this reference.
10.20*	Form of Lydall, Inc. Performance Share Award Agreement (One-Year Period), filed as Exhibit 10.3 to the Registrant’s Annual Report on Form 10-K dated February 26, 2010 and incorporated herein by this reference.

41

10.21	Credit Agreement, dated June 16, 2011, by and between Lydall, Inc., as borrower, and Bank of America, N.A., as lender, filed as Exhibit 10.1 to the Registrant’s Form 8-K dated June 21, 2011 and incorporated herein by this reference.
10.22	Guaranty Agreement, dated June 16, 2011, by and among Lydall Thermal/Acoustical, Inc., Lydall Filtration/Separation, Inc., Lydall International, Inc., and Bank of America, N.A., filed as Exhibit 10.2 to the Registrant’s Form 8-K dated June 21, 2011 and incorporated herein by this reference.
10.23	Security Agreement, dated June 16, 2011 by and between Lydall, Inc., and Bank of America, N.A., filed as Exhibit 10.3 to the Registrant’s Form 8-K dated June 21, 2011 and incorporated herein by this reference.
10.24	Security Agreement, dated June 16, 2011 by and between Lydall Thermal/Acoustical, Inc. and Bank of America, N.A., filed as Exhibit 10.4 to the Registrant’s Form 8-K dated June 21, 2011 and incorporated herein by this reference.
10.25	Security Agreement, dated June 16, 2011 by and between Lydall Filtration/Separation, Inc. and Bank of America, N.A., filed as Exhibit 10.5 to the Registrant’s Form 8-K dated June 21, 2011 and incorporated herein by this reference.
10.26	Security Agreement, dated June 16, 2011 by and between Lydall International, Inc. and Bank of America, N.A., filed as Exhibit 10.6 to the Registrant’s Form 8-K dated June 21, 2011 and incorporated herein by this reference.
10.27	Amended and Restated Credit Agreement, dated February 18, 2014, by and between Lydall, Inc., as borrower, and Bank of America, N.A., as Agent for the Lenders, filed as Exhibit 10.2 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by this reference.
10.28	Amended and Restated Guaranty Agreement, dated February 18, 2014, by and among Lydall Thermal/Acoustical, Inc., Lydall Filtration/Separation, Inc., Lydall International, Inc., and Bank of America, N.A., filed as Exhibit 10.3 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by reference.
10.29	Amended and Restated Security Agreement, dated February 18, 2014, by and between Lydall, Inc., and Bank of America, N.A., filed as Exhibit 10.4 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by reference.
10.30	Amended and Restated Security Agreement, dated February 18, 2014, by and between Lydall Thermal/Acoustical, Inc., and Bank of America, N.A., filed as Exhibit 10.5 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by reference.
10.31	Amended and Restated Security Agreement, dated February 18, 2014, by and between Lydall Filtration/Separation, Inc., and Bank of America, N.A. filed as Exhibit 10.6 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by reference.
10.32	Amended and Restated Security Agreement, dated February 18, 2014, by and between Lydall International, Inc., and Bank of America, N.A., filed as Exhibit 10.7 to the Registrant’s Form 8-K dated February 24, 2014 and incorporated herein by reference.
14.1	Lydall’s Code of Ethics and Business Conduct, as amended, and the supplemental Code of Ethics for the Chief Executive Officer, Senior Financial Officers and All Accounting and Financial Personnel, as amended, each can be accessed on Lydall’s website at www.lydall.com under the Corporate Governance section.
21.1	List of subsidiaries of the Registrant, filed herewith.
23.1	Consent of PricewaterhouseCoopers LLP, filed herewith.
24.1	Power of Attorney, dated February 28, 2014 authorizing Robert K. Julian to sign this Annual Report on Form 10-K on behalf of each member of the Board of Directors indicated therein, filed herewith.
31.1	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934 as principal executive officer, filed herewith.
31.2	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934 as principal executive officer, 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, furnished 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

* Management contract or compensatory plan.

42

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Lydall, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LYDALL, INC.
March 5, 2014	By:	/s/ Robert K. Julian Robert K. Julian Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Lydall, Inc. in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Dale G. Barnhart Dale G. Barnhart	President, Chief Executive Officer and Director (Principal Executive Officer)	March 5, 2014
/s/ Robert K. Julian Robert K. Julian	Executive Vice President, Chief Financial Officer (Principal Financial Officer)	March 5, 2014
/s/ James V. Laughlan James V. Laughlan	Vice President, Chief Accounting Officer, and Treasurer (Principal Accounting Officer)	March 5, 2014
/s/ Robert K. Julian Robert K. Julian		March 5, 2014
Attorney-in-fact for:
Kathleen Burdett	Director
W. Leslie Duffy	Chairman of the Board of Directors
Matthew T. Farrell	Director
Marc T. Giles	Director
William D. Gurley	Director
Suzanne Hammett	Director
S. Carl Soderstrom, Jr.	Director

43

Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Stockholders of Lydall, Inc.:

In our opinion, the consolidated financial statements listed in the index appearing under item 15(a)(1) present fairly, in all material respects, the financial position of Lydall, Inc and its subsidiaries at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Hartford, Connecticut
March 5, 2014

F-1

Lydall, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

	For the years ended December 31,
In thousands except per share data	2013		2012			2011
Net sales	$	397,969	$	378,924		$	383,588
Cost of sales		312,744		301,117			316,082
Gross profit		85,225		77,807			67,506
Selling, product development and administrative expenses		56,512		57,239			52,937
Gain on sale of product line		—		(810	)		(1,619	)
Operating income		28,713		21,378			16,188
Interest expense		304		365			880
Other expense (income), net		67		31			(94	)
Income from continuing operations before income taxes		28,342		20,982			15,402
Income tax expense from continuing operations		9,187		4,176			6,355
Income from continuing operations		19,155		16,806			9,047
Income from discontinued operations, net		—		—			4,732
Net income	$	19,155	$	16,806		$	13,779
Basic earnings per common share:
Continuing operations	$	1.16	$	1.01		$	0.54
Discontinued operations	$	—	$	—		$	0.28
Net income	$	1.16	$	1.01		$	0.82
Weighted average common shares outstanding		16,570		16,717			16,753
Diluted earnings per common share:
Continuing operations	$	1.14	$	0.99		$	0.54
Discontinued operations	$	—	$	—		$	0.28
Net income	$	1.14	$	0.99		$	0.82
Weighted average common shares and equivalents outstanding		16,866		16,973			16,896

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-2

Lydall, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	For the years ended December 31,
In thousands	2013		2012			2011
Net income	$	19,155	$	16,806		$	13,779
Other comprehensive income:
Change in pension plans, net of income taxes of $4,028, $1,832, and $3,712		6,572		(2,989	)		(6,056	)
Foreign currency translation adjustments		2,950		1,241			(2,232	)
Total other comprehensive income (loss), net of tax		9,522		(1,748	)		(8,288	)
Comprehensive income	$	28,677	$	15,058		$	5,491

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-3

Lydall, Inc.
CONSOLIDATED BALANCE SHEETS

	December 31,
In thousands of dollars and shares	2013		2012
Assets
Current assets:
Cash and cash equivalents	$	75,407	$	63,623
Accounts receivable, (net of allowance for doubtful receivables of $480 and $469, respectively)		52,301		47,486
Inventories		34,917		31,292
Taxes receivable		1,632		965
Prepaid expenses and other current assets		8,004		8,435
Total current assets		172,261		151,801
Property, plant and equipment, net		78,863		76,254
Goodwill		18,589		18,282
Other intangible assets		3,510		3,825
Deferred tax assets		574		474
Other assets, net		888		1,280
Total assets	$	274,685	$	251,916
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	663	$	765
Accounts payable		29,768		29,441
Accrued payroll and other compensation		10,393		10,273
Accrued taxes		1,816		1,728
Other accrued liabilities		6,044		4,143
Total current liabilities		48,684		46,350
Long-term debt		1,051		1,646
Deferred tax liabilities		8,747		3,902
Benefit plan liabilities		14,097		25,080
Other long-term liabilities		2,019		442
Commitments and Contingencies (Note 12)
Stockholders’ equity:
Preferred stock (par value $1.00 per share; authorized 500,000 shares; none issued or outstanding)		—		—
Common stock (par value $0.10 per share; authorized 30,000 shares; issued 24,098 and 23,785 shares, respectively)		2,410		2,379
Capital in excess of par value		62,284		58,784
Retained earnings		220,252		201,097
Accumulated other comprehensive loss		(8,844)		(18,366	)
Treasury stock, 7,279 and 6,821 shares of common stock, respectively, at cost		(76,015)		(69,398	)
Total stockholders’ equity		200,087		174,496
Total liabilities and stockholders’ equity	$	274,685	$	251,916

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

Lydall, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended December 31,
In thousands	2013		2012			2011
Cash flows from operating activities:
Net income	$	19,155	$	16,806			13,779
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	)		(1,619	)
Depreciation and amortization		12,593		13,572			14,478
Amortization of debt issuance costs		110		110			525
Deferred income taxes		969		(1,649	)		1,182
Stock based compensation		1,763		1,401			1,288
Impairment and loss on disposition of property, plant and equipment		359		1,977			198
Accounts receivable		(4,101)		(150	)		(4,088	)
Inventories		(3,046)		2,728			(348	)
Taxes Receivable		(640)		(355	)		112
Prepaid expenses and other assets		161		620			(843	)
Accounts payable		(59)		1,118			(3,892	)
Accrued payroll and other compensation		(121)		1,152			573
Accrued taxes		96		(693	)		(667	)
Other liabilities, net		3,041		(1,422	)		(2,164	)
Net cash provided by operating activities		30,280		34,405			14,657
Cash flows from investing activities:
Net proceeds from divestiture		—		—			13,982
Redemption (purchase) of short-term investment		—		12,015			(12,000	)
Capital expenditures		(13,826)		(11,404	)		(8,884	)
Proceeds from sale of a product line		—		1,000			—
Reimbursement of cash from leasing company		—		—			818
Increase in restricted cash		—		—			(225	)
Acquisition earn out payments		(160)		—			—
Net cash (used for) provided by investing activities		(13,986)		1,611			(6,309	)
Cash flows from financing activities:
Debt repayments		(34)		(285	)		(255	)
Capital lease payments		(734)		(771	)		(1,294	)
Common stock issued		1,497		972			128
Common stock repurchased		(6,617)		(3,998	)		(200	)
Excess tax benefit on stock awards		271		211			—
Net cash used for financing activities		(5,617)		(3,871	)		(1,621	)
Effect of exchange rate changes on cash		1,107		573			(810	)
Increase in cash and cash equivalents		11,784		32,718			5,917
Cash and cash equivalents at beginning of period		63,623		30,905			24,988
Cash and cash equivalents at end of period	$	75,407	$	63,623		$	30,905
Supplemental Schedule for Cash Flow Information
Cash paid during the year for:
Interest	$	214	$	255		$	351
Income taxes	$	7,227	$	5,347		$	6,308

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

Lydall, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock Shares			Common Stock Amount			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders' Equity
Balance at December 31, 2010		23,639			2,364			54,799		170,512		(8,330	)		(65,200	)		154,145
Net income										13,779								13,779
Other comprehensive loss, net of tax												(8,288	)					(8,288	)
Stock repurchased															(200	)		(200	)
Stock issued (cancelled) under employee plans		(18	)		(1	)		129										128
Stock based compensation expense								1,036										1,036
Stock issued to directors		24			2			250										252
Balance at December 31, 2011		23,645			2,365			56,214		184,291		(16,618	)		(65,400	)		160,852
Net income										16,806								16,806
Other comprehensive loss, net of tax												(1,748	)					(1,748	)
Stock repurchased															(3,998	)		(3,998	)
Stock issued under employee plans		122			12			960										972
Excess tax benefit on stock awards								211										211
Stock based compensation expense								1,149										1,149
Stock issued to directors		18			2			250										252
Balance at December 31, 2012		23,785			2,379			58,784		201,097		(18,366	)		(69,398	)		174,496
Net Income										19,155								19,155
Other comprehensive income, net of tax												9,522						9,522
Stock repurchased															(6,617	)		(6,617	)
Stock issued under employee plans		297			30			1,467										1,497
Excess tax benefit on stock awards								271										271
Stock based compensation expense								1,511										1,511
Stock issued to directors		16			1			251										252
Balance at December 31, 2013		24,098		$	2,410		$	62,284	$	220,252	$	(8,844)		$	(76,015)		$	200,087

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

Lydall, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

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.

Principles of consolidation — The Consolidated Financial Statements include the accounts of Lydall, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Estimates and assumptions — The preparation of the Company’s Consolidated Financial Statements in conformity 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 the disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Risks and uncertainties — Worldwide economic cycles affect the markets that the Company’s businesses serve and affect demand for Lydall’s products and impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, swings in consumer confidence and spending, unstable economic growth and fluctuations in unemployment rates has caused economic instability that has, and could continue to have, a negative impact on the Company’s results of operations, financial condition and liquidity.

Cash and cash equivalents — Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less at the date of purchase.

Short-term investments — Short-term investments included a certificate of deposit with a banking institution that had an original maturity of six months. This certificate of deposit matured on January 23, 2012 and $12.0 million of proceeds were recorded to cash and cash equivalents.

Concentrations of credit risk — Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments and trade accounts receivable. The Company places its cash and cash equivalents and short-term investments in high-quality financial institutions and instruments with a minimum investment grade rating of BBB or better. Concentrations of credit risk with respect to trade accounts receivable are limited by the large number of customers comprising the Company’s customer base and their dispersion across many different industries and geographies. Foreign and export sales were 45.2% of the Company’s net sales in 2013, 46.7% in 2012, and 49.9% in 2011. Export sales primarily to Europe, Asia, Mexico and Canada were $52.1 million, $49.7 million, and $47.0 million in 2013, 2012, and 2011 respectively. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral. Sales to the automotive market, included in the Thermal/Acoustical Metals and Thermal/Acoustical Fibers segments, were 68.5% of the Company’s net sales in 2013, 65.5% in 2012, and 62.0% in 2011. Sales to Ford Motor Company (“Ford”) were 20.0%, 18.8%, and 16.2% of Lydall’s 2013, 2012, and 2011 net sales, respectively. Sales to Chrysler Group LLC (“Chrysler”) accounted for 10.9% and 10.0% of Lydall’s 2013 and 2012 net sales, respectively. No other customers accounted for more than 10% of total net sales in 2013, 2012, or 2011. At December 31, 2013 and 2012, Ford represented 15.3% and 17.0%, respectively, of total accounts receivable. No other customers accounted for more than 10.0% of total accounts receivable at December 31, 2013 or 2012.

Inventories — Inventories are valued at lower of cost or market, cost being determined using the first-in, first-out (FIFO) cost method. Inventories in excess of requirements for current or anticipated orders have been written down to net realizable value.

F-7

Pre-production design and development costs — The Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). All such tooling contracts relate to parts that the Company will supply to customers under long-term supply agreements. Tooling costs are accumulated in work-in process inventory and are charged to operations as the related revenue from the tooling is recognized. Revenue is recognized as tooling is delivered and accepted by the customer. The Company also may progress bill on certain tooling being constructed. These billings are recorded as progress billings (a reduction of the associated work-in-process inventory) until the appropriate revenue recognition criteria have been met.

Periodically, the Company enters into contractually guaranteed reimbursement arrangements as a mechanism to collect amounts due from customers from tooling sales. Under these arrangements, amounts due from tooling sales are collected as parts are delivered over the part supply arrangement, in accordance with the specific terms of the arrangement. The amounts due from the customer in such transactions are recorded in “Prepaid expenses and other current assets, net” or “Other assets, net” based upon the expected term of the reimbursement arrangement.

The following tooling related assets were included in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December, 31
In thousands	2013		2012
Inventories, net of progress billings and reserves	$	8,793	$	3,482
Prepaid expenses and other current assets, net		52		399
Total tooling related assets	$	8,845	$	3,881

Amounts included in “Prepaid expenses and other current assets, net” include the short-term portion of receivables due under contractually guaranteed reimbursement arrangements. Included in the inventory balance was an offset for progress billings of $1.1 million and $4.6 million at December 31, 2013 and 2012, respectively. Company owned tooling is recorded in “Property, plant and equipment, net” and was not material at December 31, 2013 or December 31, 2012.

Property, plant and equipment — Property, plant, and equipment are stated at cost. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Property, plant and equipment, including property, plant and equipment under capital leases, are depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are depreciated on a straight-line basis over the term of the lease or the life of the asset, whichever is shorter. The cost and accumulated depreciation amounts applicable to assets sold or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any net gain or loss is included in the Consolidated Statements of Operations. Expenses for maintenance and repairs are charged to expense as incurred.

Goodwill and other intangible assets — Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired companies. Goodwill and other intangible assets with indefinite lives are not amortized but are subject to annual impairment tests. All other intangible assets are amortized over their estimated useful lives, which range from 4 to 20 years. In performing impairment tests, the Company considers discounted cash flows and other market factors as best evidence of fair value. There are inherent uncertainties and management judgment required in these analyses.

Valuation of long-lived assets — The Company evaluates the recoverability of long-lived assets, or asset groups, whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. Should such evaluations indicate that the related future undiscounted cash flows are not sufficient to recover the carrying values of the assets, such carrying values would be reduced to fair value and this adjusted carrying value would become the assets’ new cost basis. Fair value is determined primarily using future anticipated cash flows that are directly associated with, and that are expected to arise as a direct result of the use and eventual disposition of the asset, or asset group, as well as market conditions and other factors. There are inherent uncertainties and management judgment required in these analyses.

F-8

Employer sponsored benefit plans — The Company recognizes the funded status of its domestic defined benefit pension plan. Net benefit obligations are calculated based on actuarial valuations using key assumptions related to discount rates and expected return on plan assets.

Derivative instruments — Derivative instruments are measured at fair value and recognized as either assets or liabilities on the Consolidated Balance Sheet in either current or non-current other assets or other accrued liabilities or other long-term liabilities depending upon maturity and commitment. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in the Consolidated Statement of Operations. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods in which the hedge transaction affects earnings. In general, the types of risks being hedged by the Company are related to the variability of future cash flows caused by changes in foreign currency exchange rates and hedging the impact of variability of foreign exchange rates on recorded intercompany assets or liabilities. Lydall’s objective for entering into derivative instruments has always been for risk management purposes. The Company does not engage in derivative instruments for speculative purposes. Lydall has historically not been a party to a significant number of derivative instruments.

Revenue recognition — The Company recognizes revenue (1) once evidence of an arrangement exists; (2) product delivery has occurred; (3) pricing is fixed or determinable; and (4) collection is reasonably assured. The four criteria required to recognize revenue are considered to be met, and the passage of title to the customer occurs, at the respective FOB point and, therefore, revenue is recognized at that time. The Company’s standard sales and shipping terms are FOB shipping point, therefore, substantially all revenue is recognized upon shipment. However, in limited circumstances, the Company conducts business with certain customers on FOB destination terms and in these instances revenue is recognized upon receipt by the customer. The Company generally does not provide specific customer inspection or acceptance provisions in its sales terms, with the exception of tooling sales discussed in “Pre-production design and development costs” above.

Sales returns and allowances are recorded as identified or communicated by the customer and internally approved. The Company does not provide customers with general rights of return for products sold; however, in limited circumstances, the Company will allow sales returns and allowances from customers if the products sold do not conform to specifications.

Shipping and handling costs consist primarily of costs incurred to deliver products to customers and internal costs related to preparing products for shipment and are recorded in cost of sales. Amounts billed to customers as shipping and handling are classified as revenue.

Research and development — Research and development costs are charged to expense as incurred and amounted to $7.6 million in 2013, $7.7 million in 2012, and $8.1 million in 2011. Research and development costs were primarily comprised of development personnel salaries, prototype material costs and testing and trials of new products.

Earnings per share — Basic earnings per common share are equal to net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are equal to net income divided by the weighted average number of common shares outstanding during the period, including the effect of stock options and stock awards, if such effect is dilutive.

Income taxes — The provision for income taxes is based upon income reported in the accompanying Consolidated Financial Statements. Deferred income taxes reflect the impact of temporary differences between the amounts of income and expense recognized for financial reporting purposes and such amounts recognized for tax purposes. In the event the Company was to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, the Company would record a valuation allowance through a charge to income in the period that such determination was made. Conversely, if the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of the net carrying amounts, the Company would decrease the recorded valuation allowance and record an increase to income in the period that such determination was made.

F-9

Translation of foreign currencies — Assets and liabilities of foreign subsidiaries are translated at exchange rates prevailing on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the period. Any resulting translation gains or losses are reported in other comprehensive income (loss).

Stock options and share grants — The Company accounts for awards of equity instruments under the fair value method of accounting and recognizes such amounts in the Consolidated Statements of Operations. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Stock-based compensation expense includes the estimated effects of forfeitures, and such estimates of forfeitures are adjusted over the requisite service period to the extent actual forfeitures differ, or are expected to differ, from such estimates. The effect of changes in estimated forfeitures is recognized in the period of change and also impacts the amount of expense to be recognized in future periods. The Company estimates the fair value of option grants based on the Black Scholes option-pricing model. Expected volatility and expected term are based on historical information. The Company believes that its future volatility and expected term are not likely to materially differ from the Company’s historical stock price volatility and historical exercise data, respectively. Compensation expense for all restricted stock awards is recorded based on the market value of the stock on the grant date and recognized as expense over the vesting period of the award. Compensation expense for performance-based restricted stock is also impacted by the probability of achieving the performance targets.

Recently Adopted Accounting Standards

Effective January 1, 2013, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220), which required new disclosures about reclassifications from accumulated other comprehensive loss to net income. The Company revised its disclosures as required in the Consolidated Statements of Comprehensive Income (Loss) in the consolidated financial statements. Effective January 1, 2013 the Company adopted FASB ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which amends ASC 210, Balance Sheet. This ASU required 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 ASU was applied retrospectively, as required. The adoption of this ASU did not have any effect on the Company’s consolidated financial statements.

2. Inventories

Inventories as of December 31, 2013 and 2012 were as follows:

	December 31,
In thousands	2013		2012
Raw materials	$	11,944	$	12,501
Work in process		14,546		12,800
Finished goods		9,537		10,549
		36,027		35,850
Less: Progress billings		(1,110)		(4,558	)
Total inventories	$	34,917	$	31,292

Included in work in process is gross tooling inventory of $9.9 million and $8.0 million at December 31, 2013 and December 31, 2012, respectively. Tooling inventory, net of progress billings, was $8.8 million and $3.5 million at December 31, 2013 and 2012, respectively.

F-10

3. Property, Plant and Equipment

Property, plant and equipment as of December 31, 2013 and 2012 were as follows:

	Estimated Useful Lives		December 31,
In thousands			2013		2012
Land		—	$	2,215	$	2,164
Buildings and improvements		10 – 35 years		48,779		46,033
Machinery and equipment		5 – 25 years		166,747		156,551
Office equipment		2 – 8 years		33,649		32,939
Vehicles		3 – 6 years		561		565
Assets under capital leases:
Land		—		692		664
Buildings and improvements		10 – 35 years		6,072		5,827
				258,715		244,743
Accumulated depreciation				(183,535)		(170,306	)
Accumulated amortization of capital leases				(3,078)		(2,646	)
				72,102		71,791
Construction in progress				6,761		4,463
Total property, plant and equipment			$	78,863	$	76,254

Depreciation expense was $12.1 million in 2013, $12.8 million in 2012, and $13.6 million in 2011. On February 7, 2013, the Board of Directors of the Company approved a change in the Company’s IT software and systems strategy from a previous project, involving an ERP reimplementation, to a project involving an ERP upgrade and some additional applications software. As a result of this change in IT strategy, the Company recorded a $1.8 million asset impairment charge in the quarter ended December 31, 2012. The original project costs were deemed to have no future fair value, and the Board of Director’s decision was in response to conditions that existed at December 31, 2012.

4. Goodwill and Intangible Assets

Gross and net carrying amounts of goodwill at December 31, 2013 and 2012 are as follows:

In thousands	Performance Materials		Thermal/ Acoustical Metals			Other Products and Services			Totals
Goodwill	$	13,622	$	12,160		$	5,787		$	31,569
Accumulated amortization/impairment		—		(12,160	)		(1,127	)		(13,287	)
Balance at December 31, 2012		13,622		—			4,660			18,282
Goodwill		13,929		12,160			5,787			31,876
Accumulated amortization/impairment		—		(12,160	)		(1,127	)		(13,287	)
Balance at December 31, 2013	$	13,929	$	—		$	4,660		$	18,589

The changes in the carrying amounts of goodwill in 2012 and 2013 are as follows:

In thousands	Performance Materials		Other Products and Services		Totals
Balance at January 1, 2012	$	13,399	$	4,660	$	18,059
Goodwill adjustment		140		—		140
Currency translation adjustment		83		—		83
Balance at December 31, 2012		13,622		4,660		18,282
Goodwill adjustment		110		—		110
Currency translation adjustment		197		—		197
Balance at December 31, 2013	$	13,929	$	4,660	$	18,589

F-11

Goodwill Associated with Acquisitions and Divestitures

The goodwill adjustment of $0.1 million in 2013 and 2012 was related to the acquisition of DSM Solutech B.V. (“Solutech”) in December 2008. Lydall was obligated to pay to the Seller payments based on the net revenues of Solutech for a period of five years beginning on December 1, 2008 and ending on November 30, 2013 (“Contingent Consideration”). This Contingent Consideration equaled 4% of Solutech’s net revenues, as defined, during each of the periods. The value of the Contingent Consideration when paid was added to the original cost of the acquisition and increased 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.

Goodwill Impairment Testing

During the fourth quarter of 2013, the Company performed its annual impairment analysis of the $13.9 million of goodwill in the Performance Materials reporting unit (PM reporting unit) and $4.7 million of goodwill in the Life Sciences Vital Fluids reporting unit (VF reporting unit), included in OPS.

The Company elected to perform a quantitative approach to test the VF reporting unit and the PM reporting unit. For 2013, the Company used both the income approach and market approach in performing step one of the impairment analysis to estimate the fair value of the reporting units. The Company determined that the VF reporting unit, with $4.7 million of goodwill, had excess estimated fair value which exceeded its carrying value by greater than 20%, and as a result, step two of the impairment test was not required. The Company also determined that the PM reporting unit, with $13.9 million of goodwill, had an estimated fair value which substantially exceeded its carrying value , and as a result, step two of the impairment test was not required.

In performing step one of the impairment analysis to estimate the fair value of the reporting units for 2013, the Company used 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 2014-2016 and the projected cash flows beyond that three year period computed as the terminal value. The Company believes the income approach was appropriate because it provided a fair value estimate based upon the reporting unit’s expected long-term operations and cash flow performance.

In applying the market approach, valuation multiples were derived from historic and projected operating data of selected guideline companies, which were evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies. The valuation multiples were then applied to the appropriate projected operating data of the reporting unit to arrive at an indication of fair value. The Company believes the market approach was appropriate because it provided a fair value using multiples from companies with operations and economic characteristics similar to its reporting unit.

Other Intangible Assets

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December 31, 2013				December 31, 2012
In thousands	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
License agreements	$	881	$	(881)	$	860	$	(854	)
Patents		6,766		(3,307)		6,522		(2,781	)
Other		278		(227)		272		(194	)
Total amortized intangible assets	$	7,925	$	(4,415)	$	7,654	$	(3,829	)

Amortization of intangible assets for the years ended December 31, 2013, 2012, and 2011 was $0.4 million, $0.8 million, and $0.9 million, respectively. Estimated amortization expense for intangible assets is expected to be $0.4 million for each of the years ending December 31, 2014 through 2017, and $0.3 million for the year ended December 31, 2018. As of December 31, 2013, the weighted average useful life of intangible assets was approximately 10 years.

F-12

During the third quarter of 2013, the Company performed an impairment analysis for long-lived assets at the Company’s DSM Solutech B.V. (“Solutech”) operation, included in the Performance Materials segment. Developments with customers caused the Company to determine that it was probable that Solutech net sales would not meet previous expectations for 2013. Due to the lower than expected sales, caused by a delay in commercialization of Solutech products to the market place by Solutech’s customers, negative cash flows were expected in 2013. As a result of these negative cash flows, combined with historical operating losses, the Company determined that it was appropriate to test the Solutech asset group for recoverability in the third quarter of 2013. Acquisition related intangibles with a remaining useful life of 10 years primarily comprise the carrying value of the asset group of $4.7 million. To determine the recoverability of the Solutech asset group the Company completed an undiscounted cash flow analysis and compared it to the asset group carrying value. This analysis was primarily dependent on the increase in net sales over the period when the business has technological exclusivity provided by the intangible assets.

The Company determined that the Solutech asset group had undiscounted cash flow which was in excess of its carrying value and, as a result, the asset group was not impaired at September 30, 2013. The estimate of undiscounted cash flows of the Solutech long-lived asset group was based on the best information available as of the date of the assessment, which incorporated management assumptions around cash flows generated from future operations, the estimated economic useful life of the primary asset within the Solutech long-lived asset group, as well as other market information. The Company performed various sensitivity analyses noting that a more conservative scenario of high single digit revenue growth and an appropriate related cost structure, the undiscounted cash flows exceeded the carrying value with no impairment indicated. As of December 31, 2013, the Company expects to meet the cash flow forecasts included in the impairment analysis. Future cash flows are dependent on the success of commercialization efforts of Solutech products by OEMs, the quality of Solutech products and technology advancements and management’s ability to manage costs. In the event that Solutech’s cash flows in the future do not meet current expectations, management, based upon conditions at the time, would consider taking actions as necessary to maximize cash flow. Accordingly, the above sensitivity analysis, while a useful tool, should not be used as a sole predictor of future impairment. A thorough analysis of all the facts and circumstances existing at the time would need to be performed to determine if recording an impairment loss was appropriate.

5. Long-term Debt and Financing Arrangements

On February 18, 2014, the Company amended and restated its $35.0 million senior secured domestic revolving credit facility (“Amended Credit Facility”) with a financial institution and two additional lenders, increasing the available borrowing from $35 million to $100 million. The Amended Credit Facility is secured by substantially all of the assets of the Company. The maturity date for the Amended Credit Facility is January 31, 2019, at which time amounts outstanding under the Amended Credit Facility are due and payable. The Company entered into this Amended Credit Facility in part to fund a majority of the purchase price of the Industrial Filtration acquisition.

Under the terms of the Amended Credit Facility, the lenders are providing a $100 million revolving credit facility to the Company, under which the lenders may make revolving loans and issue letters of credit to or for the benefit of the Company and its subsidiaries. The Amended Credit Facility may be increased by an aggregate amount not to exceed $50 million through an accordion feature, subject to specified conditions.

The Amended Credit Facility contains a number of affirmative and negative covenants, including financial and operational covenants. The Company is required to meet a minimum interest coverage ratio. The interest coverage ratio requires that, at the end of each fiscal quarter, the ratio of consolidated EBIT, to Consolidated Interest Charges, both as defined in the Amended Credit Facility, may not be less than 2.0 to 1.0 for the immediately preceding 12 month period. In addition, the Company must maintain a Consolidated Leverage Ratio, as defined in the Amended Credit Facility, as of the end of each fiscal quarter of no greater than 3.0 to 1.0. The Company must also meet minimum consolidated EBITDA as of the end of each fiscal quarter for the preceding 12 month period of $30.0 million.

Interest is charged on borrowings at the Company’s option of either: (i) Base Rate plus the Applicable Rate, or (ii) the Eurodollar Rate plus the Applicable Rate. The Base Rate is a fluctuating rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by Bank of America, and (c) the Eurocurrency Rate plus 1.00%. The Eurocurrency Rate means (i) if denominated in LIBOR quoted currency, a fluctuating LIBOR per annum rate equal to the London Interbank Offered Rate; (ii) if denominated in Canadian Dollars, the rate per annum equal to the Canadian Dealer Offered Rate; or (iii) the rate per annum as designated with respect to such alternative currency at the time such alternative currency is approved by the Lenders. The Applicable Rate is determined based on the Company’s Consolidated Leverage Ratio

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(as defined in the Amended Credit Agreement). The Applicable Rate added to the Base Rate Committed Loans ranges from 15 basis points to 100 basis points, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 75 basis points to 175 basis points. The Company will pay a quarterly fee ranging from 20 basis points to 30 basis points on the unused portion of the $100 million available under the Amended Credit Agreement.

The Company’s previous $35 million senior secured domestic revolving credit facility (“Domestic Credit Facility”) that was outstanding at December 31, 2013, was entered into on June 16, 2011. The Domestic Credit Facility was secured by substantially all of the assets of the Company. The maturity date for the Domestic Credit Facility was June 15, 2016. The Company had no borrowings under the Domestic Credit Facility during 2013 and no outstanding borrowings at December 31, 2013 or December 31, 2012. At December 31, 2013, the Company had available $32.4 million under the Domestic Credit Facility, net of standby letters of credit outstanding of $2.6 million. The Company was in compliance with all covenants at December 31, 2013 and December 31, 2012.

On September 30, 2011, the Company, through a foreign subsidiary, entered into a new €8.0 million foreign credit facility (“Foreign Credit Facility”), with €6.0 million available for borrowings and €2.0 million available to fund letters of credit. This Foreign Credit Facility replaced the prior foreign credit facility that expired on September 30, 2011. The Foreign Credit Facility, which has a maturity date of September 30, 2014, was completed with the same group of banking institutions and under similar terms and conditions to those in place under the prior credit facility. At December 31, 2013, the Company’s foreign subsidiaries’ various credit arrangements with banks totaled €9.0 million (approximately $12.4 million) all of which was available for borrowings, primarily restricted to borrowings by the respective foreign subsidiary. The Company’s foreign subsidiaries had no borrowings outstanding on any of its credit arrangements at December 31, 2013 and December 31, 2012.

The Company has a capital lease agreement for the land and building at the St. Nazaire, France operating facility, included in the Thermal/Acoustical Metals segment, requiring monthly principal and interest payments through 2016. The capital lease provides an option for the Company to purchase the land and building at the end of the lease for a nominal amount.

Total outstanding debt consists of:

	Effective Rate			Maturity		December 31,
In thousands						2013		2012
Volksbank Meinerzhagen eG		5.95	%		2013	$	—	$	63
Capital Lease, land and building, St. Nazaire, France		5.44	%		2016		1,647		2,246
Capital Lease, manufacturing equipment, Hamptonville, North Carolina		5.00	%		2017		67		102
							1,714		2,411
Less portion due within one year							(663)		(765	)
Total long-term debt						$	1,051	$	1,646

As of December 31, 2013, total debt maturing in 2014, 2015 and 2016 was $0.7 million, $0.7 million, and $0.3 million, respectively. There was no debt outstanding that matures after 2017.

The weighted average interest rate on long-term debt was 5.4% for each of the years ended December 31, 2013, 2012, and 2011.

The fair values of the Company’s long-term debt are determined using discounted cash flows based upon the Company’s estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy. The carrying values of the long-term debt approximate fair market value.

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6. Acquisitions and Divestitures

2011 Transaction

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. The Consolidated Financial Statements reflect Affinity as a discontinued operation for all periods presented.

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

	December 31,
In thousands	2013		2012		2011
Net sales	$	—	$	—	$	13,255
Income before income taxes		—		—		1,374
Income tax expense		—		—		499
Income from discontinued operations		—		—		875
Gain on sale of discontinued operations, net of tax of $2,229		—		—		3,857
Income from discontinued operations, net of tax	$	—	$	—	$	4,732

2010 Transaction

On June 30, 2010, the Company divested its electrical papers product line business, included in the Performance Materials segment, for total consideration of $5.8 million, of which $4.8 million was paid on June 30, 2010, and the remaining $1.0 million paid 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. As part of the sale transaction, the Company transferred its electrical paper products customer list to the buyer, agreed not to compete (the “Non-Compete Agreement”) with the buyer with respect to the manufacture and sale of electrical insulating products for use in the transformer industry for a period of ten years, entered into a contract manufacturing agreement (the “Manufacturing Agreement”) with the buyer pursuant to which the Company was obligated to manufacture and sell electrical paper products to the buyer for a two-year period, and entered into a process technology license agreement (“License Agreement”). Pursuant to the License Agreement, the Company granted the buyer the right to use certain process technology and agreed to provide certain services to the buyer to facilitate the transfer of know-how for the manufacture of electrical paper products.

Gain Recognition

The Company recorded a gross gain on sale of $2.5 million, or a net gain on sale of $1.7 million, after a write-off of $0.8 million of goodwill that was allocated to the electrical papers product line, related to the delivered elements during the quarter ended June 30, 2010, and deferred a gain of $3.2 million as of June 30, 2010. The deferred amount was recognized as income as services under the License Agreement were delivered in periods subsequent to the sale, including the recognition of the remainder of the gain of $0.8 million during 2012, as the Company satisfied its obligations. The Company recognized $1.6 million and $0.8 million of gain during 2011 and 2010, respectively.

7. Capital Stock

Preferred stock — The Company has authorized Serial Preferred Stock with a par value of $1.00. None of the 500,000 authorized shares have been issued.

Common Stock — As of December 31, 2013, 4,763 Lydall stockholders of record held 16,819,240 shares of Common Stock.

Dividend policy — The Company does not pay a cash dividend on its Common Stock. The Company’s Domestic Credit Facility and the Company’s Amended Credit Facility do not place any restrictions on cash dividend payments, so long as the payments do not place the Company in default.

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8. Employer Sponsored Benefit Plan

The Company maintains a domestic defined benefit pension plan, which covers certain domestic Lydall employees, is noncontributory and benefits are based on either years of service or eligible compensation paid while a participant is in a plan. The plan has been closed to new employees for several years and benefits under the pension plan are no longer accruing.

The Company’s funding policy for its domestic defined benefit pension plan 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.

Plan assets and benefit obligations of the domestic defined benefit pension plan are as follows:

	December 31,
In thousands	2013		2012
Change in benefit obligation:
Net benefit obligation at beginning of year	$	60,020	$	52,841
Interest cost		2,453		2,583
Actuarial (gain) loss		(6,900)		6,561
Gross benefits paid		(2,146)		(1,965	)
Net benefit obligation at end of year	$	53,427	$	60,020
Change in plan assets:
Fair value of plan assets at beginning of year	$	36,355	$	32,643
Actual return on plan assets		5,226		3,562
Contributions		1,245		2,115
Gross benefits paid		(2,146)		(1,965	)
Fair value of plan assets at end of year	$	40,680	$	36,355
Net benefit obligation in excess of plan assets	$	(12,747)	$	(23,665	)
Balance sheet amounts:
Noncurrent liabilities	$	(12,747)	$	(23,665	)
Total liabilities	$	(12,747)	$	(23,665	)
Amounts recognized in accumulated other comprehensive income, net of tax consist of:
Net actuarial loss	$	14,830	$	21,342
Net amount recognized	$	14,830	$	21,342

At December 31, 2013, in addition to the accrued benefit liability of $12.7 million recognized for the Company’s domestic defined benefit pension plan, the Company also had foreign regulatory labor agreements with an accrued benefit liability of $1.2 million and accumulated other comprehensive loss, net of tax, of $0.2 million.

At December 31, 2012, in addition to the accrued benefit liability of $23.7 million recognized for the Company’s domestic defined benefit pension plan, the Company also had an accrued benefit liability of $1.2 million and accumulated other comprehensive loss, net of tax, related to foreign regulatory labor agreements of $0.2 million.

The domestic defined benefit pension plan liability, net of tax, included in other comprehensive income decreased by $6.5 million for the year ended December 31, 2013 and increased $2.9 million for the year ended December 31, 2012. These changes are mainly due to changes in pension assumptions, primarily the discount rate.

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Aggregated information for the domestic defined benefit pension plan with an accumulated benefit obligation in excess of plan assets is provided in the tables below:

	December 31,
In thousands	2013		2012
Projected benefit obligation	$	53,427	$	60,020
Accumulated benefit obligation	$	53,427	$	60,020
Fair value of plan assets	$	40,680	$	36,355

Components of net periodic benefit cost for the domestic pension plan:

	December 31,
In thousands	2013		2012			2011
Interest cost	$	2,453	$	2,583		$	2,589
Expected return on plan assets		(2,691)		(2,559	)		(2,644	)
Amortization of actuarial net loss		1,069		918			582
Total net periodic benefit cost	$	831	$	942		$	527

It is estimated that $0.7 million of actuarial net loss will be amortized from accumulated other comprehensive loss into net periodic benefit costs for the domestic pension plan in 2014.

The major assumptions used in determining the year-end benefit obligation and annual net cost for the domestic pension plan are presented in the following table:

	Benefit Obligation					Net Cost
For the years ended December 31,	2013		2012			2013		2012			2011
Discount rate		5.09%		4.16	%		4.16%		5.00	%		5.74	%
Expected return on plan assets		7.25%		7.50	%		7.50%		7.75	%		8.00	%

Plan Assets

The domestic defined benefit pension plan is administered by an Administrative Committee and an Investment Committee, which are appointed by the Board of Directors. The Investment Committee’s responsibilities are to establish a funding policy for the Lydall Pooled Pension Investment Trust (“the Trust”) and to appoint and oversee the investment advisors responsible for the Trust’s investments. The Investment Committee is a named fiduciary under the plan with respect to management of the Trust’s investments. The assets of the domestic defined benefit pension plan are invested in the Trust for the purpose of investment diversification. In determining the expected return on plan assets, the Investment Committee considers the relative weighting of plan assets, the historical performance of marketable debt and equity securities and economic and other indicators of future performance.

Investment management objectives include maintaining an adequate level of diversification to balance market risk and to provide sufficient liquidity for near-term payments of benefits accrued under the domestic pension plan and to pay the expenses of administration. The long-term investment objective of the Trust is to achieve a total return equal to or greater than the Trust’s actuarially assumed rate of return, currently 7.25%. Though it is the intent of the Investment Committee to achieve income and growth, that intent does not include taking extraordinary risks or engaging in investment activities not commonly considered prudent under the standards imposed by ERISA. The Investment Committee defines risk as the probability of not meeting the Trust’s objectives and the probability of not meeting the Trust’s liability requirements. The allowable investments include: exchange-traded stocks, over-the-counter common and preferred stocks, warrants, rights, convertible securities, depository receipts and shares, trust certificates, limited partnership interests, shares of other investment companies, real estate investment trusts and equity participation, obligations of foreign governments, obligations of international agencies, obligations issued by the U.S. government, mortgage related and other asset-backed securities, corporate debt securities, inflation-index bonds issued by corporations, structured notes, delayed funding loans and revolving credit facilities, bank certificates of deposit, debt securities issued by state of local governments, and money market funds. Prohibited investments include: venture capital investments, direct investment in real estate properties, CMO derivatives, hedge funds, Lydall, Inc. securities, and commodities.

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The Investment Committee’s target asset allocation seeks to control risk through portfolio diversification and takes into account, among other factors, objectives discussed above, current funding levels, cash flow conditions and economic and industry trends. Equity securities include investments in large-cap and mid/small-cap companies primarily located in the United States, non-U.S. equities, and emerging market equities. Fixed income securities include fixed income mutual bond funds and common and collective funds.

The following table presents the target allocation of pension plan assets for 2014 and the actual allocation of plan assets as of December 31, 2013 and 2012 by major asset category:

	Target Allocation		Actual Allocation of Plan Assets December 31,
Asset Category	2014		2013		2012
Equity securities:
U.S. Large Cap		18% – 38%		26%		29%
U.S. Mid/Small Cap		4% – 22%		11%		12%
Non-U.S.		15% – 25%		23%		17%
Emerging Markets		3% – 9%		7%		6%
Fixed income securities:
U.S. Bonds		12% – 38%		26%		26%
Non-U.S. Bonds		2% – 8%		5%		5%
Real estate investment trusts		0% – 8%		0%		1%
Cash and cash equivalents		0% – 5%		2%		4%

The investments of the Trust are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

Equity securities, which consist primarily of common stocks, are valued at the closing price reported in the active market in which individual securities are traded. Short-term cash funds, mutual funds, bond funds and real estate investment trusts are valued at the net asset value of shares held by the plan at year end as reported in the active market in which the funds are traded.

The Trust’s purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

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The following table sets forth by level, within the fair value hierarchy, the Trust’s assets at fair value as of December 31, 2013 and December 31, 2012:

December 31, 2013 In thousands	Level 1		Level 2		Level 3		Total
Equity securities:
U.S. Large Cap	$	10,548	$	—	$	—	$	10,548
U.S. Mid/Small Cap		4,593		—		—		4,593
Non-U.S.		9,465		—		—		9,465
Emerging Markets		2,713		—		—		2,713
Fixed income securities:
U.S. Bonds		10,461		—		—		10,461
Non-U.S. Bonds		1,847		—		—		1,847
Real estate investment trusts		155		—		—		155
Cash and cash equivalents		898		—		—		898
Total Assets at Fair Value	$	40,680	$	—	$	—	$	40,680

December 31, 2012 In thousands	Level 1		Level 2		Level 3		Total
Equity securities:
U.S. Large Cap	$	10,835	$	—	$	—	$	10,835
U.S. Mid/Small Cap		4,256		—		—		4,256
Non-U.S.		6,187		—		—		6,187
Emerging Markets		2,201		—		—		2,201
Fixed income securities:
U.S. Bonds		9,487		—		—		9,487
Non-U.S. Bonds		1,645		—		—		1,645
Real estate investment trusts		184		—		—		184
Cash and cash equivalents		1,560		—		—		1,560
Total Assets at Fair Value	$	36,355	$	—	$	—	$	36,355

Estimated Future Contributions and Benefit Payments

The Company expects to contribute approximately $4.2 million in cash to its domestic defined benefit pension plan in 2014. Estimated future benefit payments for the next 10 years are as follows:

In thousands	2014		2015		2016		2017		2018		2019 – 2023
Benefit payments	$	2,248	$	2,316	$	2,361	$	2,489	$	2,663	$	16,003

Employee Savings Plan

The Company also sponsors a 401(k) Plan. Employer contributions to this plan amounted to $1.7 million in 2013, $1.6 million in 2012, and $1.4 million in 2011. Matching contributions by the Company are made on employee pretax contributions up to five percent of compensation, with the first three percent matched at 100% and the next two percent matched at 50%.

9. Equity Compensation Plans

As of December 31, 2013, the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (the “2003 Plan”) and the 2012 Stock Incentive Plan (the “2012 Plan” and together with the 2003 Plan, 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 1,750,000 shares of common stock for awards. The 2012 Plan also authorizes an

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additional 1,200,000 million shares of common stock 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 accounts for the expense of all share-based compensation by measuring the awards at fair value on the date of grant. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Options issued by the Company under its stock option plans have a term of ten years and generally vest ratably over a period of three to four years. Time-based restricted stock grants are expensed over the vesting period of the award, which is typically two to four years. The number of performance based restricted shares that vest or forfeit depend upon achievement of certain targets during the performance period. Stock-based compensation expense includes the estimated effects of forfeitures. Compensation expense for performance based awards is recorded based upon management’s assessment of the probability of achieving the performance goals and service period and will be adjusted based upon actual achievement. Stock options issued under the current plan must have an exercise price that may not be less than the fair market value of the Company’s Common Stock on the date of grant. The Plans provide for automatic acceleration of vesting in the event of a change in control of the Company. Upon the exercise of a stock option under the Plans, shares are issued from authorized shares or treasury shares held by the Company.

The Company incurred compensation expense of $1.8 million, $1.4 million, and $1.3 million for the years ended December 31, 2013, 2012, and 2011, respectively, for all stock-based compensation plans, including restricted stock awards. No compensation costs were capitalized as part of inventory. The associated tax benefit realized was $1.0 million, $0.5 million, and $0.4 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Stock Options

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended December 31:

	2013		2012			2011
Risk-free interest rate		1.7%		1.4	%		2.6	%
Expected life		5.2 years		5.7 years			5.5 years
Expected volatility		65%		68	%		69	%
Expected dividend yield		0%		0	%		0	%

The following is a summary of the option activity as of December 31, 2013 and changes during the year then ended:

In thousands except per share amounts and years

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012		847	$	9.59
Granted		75	$	16.61
Exercised		(158)	$	9.45
Forfeited/Cancelled		(6)	$	8.21
Outstanding at December 31, 2013		758	$	10.32		6.3	$	5,538
Options exercisable at December 31, 2013		491	$	9.05		4.9	$	4,213
Expected to vest at December 31, 2013		259	$	12.72		8.8	$	1,267

The Company granted 75,279, 146,500, and 177,500 stock options during 2013, 2012, and 2011, respectively. The weighted-average grant-date fair value of options granted during the years 2013, 2012, and 2011 was $9.41, $7.79, and $5.43, respectively. There were 158,322 options exercised in 2013, 129,675 options exercised in 2012, and 35,874 options exercised in 2011. The intrinsic value for options exercised during 2013 was $1.0 million and the associated tax benefit realized from stock options exercised was $0.3 million. The total intrinsic value for options exercised during 2012 was $0.7 million and the associated tax benefit realized from stock options exercised

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was $0.2 million. The total intrinsic value for options exercised during 2011 was $0.1 million and the associated tax benefit realized from stock options exercised was minimal. The amount of cash received from the exercise of stock options was $1.5 million in 2013, $1.0 million in 2012, and $0.1 million in 2011. At December 31, 2013, the total unrecognized compensation cost related to non-vested stock option awards was approximately $1.6 million, with a weighted average expected amortization period of 2.9 years.

Restricted Stock

The following is a summary of the Company’s unvested restricted shares for the year ended and as of December 31, 2013:

In thousands except per share amounts
Outstanding Restricted Shares	Shares		Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2012		290	$	9.71
Granted		124	$	16.01
Vested		(95)	$	5.85
Forfeited/Cancelled		(11)	$	13.27
Outstanding at December 31, 2013		308	$	12.99
Expected to vest at December 31, 2013		282	$	13.71

Restricted stock includes both performance-based and time-based awards. Compensation for restricted stock is recorded based on the market value of the stock on the grant date and amortized to expense over the vesting period of the award. The Company granted 95,090, 114,500, and 22,000 shares of performance-based restricted stock during 2013, 2012, and 2011, respectively. The Company granted 29,480 shares of time-based restricted stock in 2013, 73,750 shares in 2012, and none in 2011. The weighted average fair value per share of restricted stock granted was $16.01, $12.56, and $5.54 during 2013, 2012, and 2011, respectively. During 2013, 2012, and 2011, respectively, there were 10,565, 171,369, and 59,440 shares of restricted stock forfeited. The fair value of awards for which restrictions lapsed during the years ended December 31, 2013, 2012, and 2011 was $1.6 million, $0.6 million, and $0.6 million, respectively. At December 31, 2013, the total unrecognized compensation cost related to non-vested restricted stock awards was approximately $1.6 million, with a weighted average expected amortization period of 2.1 years.

Stock Repurchase Program

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 423,244 shares of its common stock at an average price of $14.30 per share for an aggregate purchase price of $6.1 million during the year ended December 31, 2013 under the 2012 Stock Repurchase Program. As of December 31, 2013, there were 267,089 shares remaining and authorized for repurchase under the 2012 Stock Repurchase Program.

10. 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 the Company’s Filtration, 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.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions for air, fluid power, and industrial applications (“Filtration”), air and liquid life science applications (“Life Sciences Filtration”), and thermal insulation solutions for building products, appliances, and energy and industrial markets (“Thermal Insulation”). 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^TM Membrane Composite Media. These products constitute the critical media components of clean-air systems for applications in clean-space, commercial, industrial and

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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 series address a variety of application needs in fluid power, including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes and diesel fuel filtration.

Life Sciences Filtration products have been 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.

Thermal Insulation products are high performance non-woven veils, papers, mats and specialty composites for the building products, appliance, and energy and industrial fields. The Manniglas® Thermal Insulation brand is diverse in its product application, ranging from high temperature seals and gaskets in ovens to specialty veils for HVAC and cavity wall insulation. The appLY® 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^TM 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 range of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the underbody (tunnel, fuel tank, exhaust, rear muffler, and spare tire) and under hood (engine compartment, turbo charger, and manifolds) of cars, trucks, SUVs, 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 using aluminized and stainless steel with high performance heat absorbing metals. Additionally, a patented CLD (constraint layer damped) material is a lightweight material with characteristics to reduce vibration and parasitic noise on powertrain mounted heat shields.

Thermal/Acoustical Fibers Segment

The Thermal/Acoustical Fibers segment offers a 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, and exhaust) and under hood (engine compartment) of cars, vans, trucks, SUVs, 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^® composite 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^® barrier 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.

F-22

Other Products and Services

The Life Sciences Vital Fluids business offers specialty products for blood filtration devices, blood transfusion single-use containers and the design and manufacture of single-use solutions for cell growth, frozen storage and fluid handling, as well as equipment for bioprocessing applications.

Net sales by segment and for OPS, as well as reconciling items, to equal to consolidated net sales for the years ended December 31, 2013, 2012, and 2011 were as follows:

Consolidated Net Sales	For the Years Ended December 31,
In thousands	2013		2012			2011
Performance Materials Segment:
Filtration	$	64,752	$	68,379		$	72,888
Thermal Insulation		36,929		38,449			47,299
Life Sciences Filtration		10,320		11,207			13,872
Performance Materials Segment net sales		112,001		118,035			134,059
Thermal/Acoustical Metals Segment
Metal parts		135,833		136,276			142,646
Tooling		22,573		17,645			13,290
Thermal/Acoustical Metals Segment net sales		158,406		153,921			155,936
Thermal/Acoustical Fibers Segment:
Fiber parts		105,876		93,519			79,631
Tooling		8,444		917			2,116
Thermal/Acoustical Fibers Segment net sales		114,320		94,436			81,747
Other Products and Services:
Life Sciences Vital Fluids		17,175		16,853			14,670
Other Products and Services net sales		17,175		16,853			14,670
Eliminations and Other		(3,933)		(4,321	)		(2,824	)
Consolidated Net Sales	$	397,969	$	378,924		$	383,588

Operating income from continuing operations by segment and for OPS and Corporate Office Expenses for the years ended December 31, 2013, 2012, and 2011 were as follows:

Operating Income from Continuing Operations	For the Years Ended December 31,
In thousands	2013		2012			2011
Performance Materials Segment	$	9,462	$	10,400		$	18,194
Thermal/Acoustical Metals Segment		14,088		14,708			15,915
Thermal/Acoustical Fibers Segment		21,486		12,851			(3,055	)
Other Products and Services:
Life Sciences Vital Fluids		778		1,190			(1,040	)
Corporate Office Expenses		(17,101)		(17,771	)		(13,826	)
Consolidated Operating Income from Continuing Operations	$	28,713	$	21,378		$	16,188

F-23

Operating results were impacted by a net gain on sale of a product line in the Performance Materials segment of $0.8 million in 2012 and $1.6 million in 2011 and a loss on disposal of assets in Corporate Office Expenses and the Performance Materials segment of $1.5 million and $0.3 million in 2012, respectively. Total assets by segment and for OPS and the Corporate Office were as follows at December 31, 2013, 2012 and 2011:

Total Assets	December 31,
In thousands	2013		2012		2011
Performance Materials Segment	$	74,838	$	74,119	$	71,379
Thermal/Acoustical Metals Segment		104,908		96,019		93,921
Thermal/Acoustical Fibers Segment		30,176		26,830		28,844
Other Products and Services		11,866		11,195		11,064
Corporate Office		52,897		43,753		29,977
Total Assets	$	274,685	$	251,916	$	235,185

Total capital expenditures and depreciation and amortization by segment and for OPS and the Corporate Office for the years ended December 31, 2013, 2012 and 2011 were as follows:

	Capital Expenditures						Depreciation and Amortization
In thousands	2013		2012		2011		2013		2012		2011
Performance Materials Segment	$	4,604	$	5,231	$	3,801	$	4,667	$	5,290	$	5,718
Thermal/Acoustical Metals Segment		6,027		4,063		2,413		4,777		5,019		5,210
Thermal/Acoustical Fibers Segment		1,887		1,033		1,148		2,217		2,324		2,536
Other Products and Services		243		128		270		588		596		726
Corporate Office		1,065		949		1,252		344		343		288
Total	$	13,826	$	11,404	$	8,884	$	12,593	$	13,572	$	14,478

Net sales by geographic area for the years ended December 31, 2013, 2012 and 2011 and long-lived asset information by geographic area as of December 31, 2013, 2012, and 2011 were as follows:

	Net Sales						Long-Lived Assets
In thousands	2013		2012		2011		2013		2012		2011
United States	$	269,989	$	251,695	$	239,101	$	48,787	$	45,979	$	48,803
France		47,831		52,517		58,974		16,436		17,463		17,621
Germany		77,229		71,896		81,424		13,287		13,542		14,065
Other		2,920		2,816		4,089		1,815		1,024		1,280
Total	$	397,969	$	378,924	$	383,588	$	80,325	$	78,008	$	81,769

Foreign sales are based on the country in which the sales originated (i.e., where the Company’s legal entity is domiciled). Sales to Ford Motor Company in 2013, 2012, and 2011 were $79.7 million, $71.2 million, and $62.2 million respectively and accounted for 20.0%, 18.8%, and 16.2% of Lydall’s net sales in the years ended December 31, 2013, 2012, and 2011, respectively. Sales to Chrysler Group LLC in 2013 and 2012 were $43.5 million and $38.0 million, respectively and accounted for 10.9% and 10.0% of Lydall’s net sales in the years ended December 31, 2013 and 2012, respectively. These sales were reported in the Thermal/Acoustical Metal and Thermal/Acoustical Fiber segments. No other customers accounted for more than 10.0% of total net sales in 2013, 2012, and 2011.

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11. Income Taxes

The provision for income taxes from continuing operations consists of the following:

	For the years ended December 31,
In thousands	2013		2012			2011
Current:
Federal	$	5,477	$	3,208		$	1,534
State		709		265			15
Foreign		2,032		2,352			3,623
Total Current		8,218		5,825			5,172
Deferred:
Federal	$	1,609	$	(2,031	)	$	503
State		(1,144)		(291	)		108
Foreign		504		673			572
Total Deferred		969		(1,649	)		1,183
Provision for income taxes	$	9,187	$	4,176		$	6,355

The following is a reconciliation of the difference between the actual provision for income taxes from continuing operations and the provision computed by applying the federal statutory tax rate on earnings:

	For the years ended December 31,
In thousands	2013		2012			2011
Statutory federal income tax rate		35.0%		35.0	%		34.0	%
State income taxes		2.9		2.2			3.3
Valuation allowances for deferred tax assets, including state		(1.8)		(17.8	)		0.8
Foreign dividends		0.5		0.9			1.7
Reserve for tax contingencies		(0.6)		0.1			0.6
Manufacturing deduction		(2.7)		(2.4	)		(1.3	)
Other		(0.9)		1.9			2.2
Effective income tax rate		32.4%		19.9	%		41.3	%

The other line item above includes research credits, nondeductible expenses, and other income and expense items.

The Company’s effective tax rate from continuing operations for 2013 was 32.4% compared to 19.9% in 2012 and 41.3% in 2011. For 2013, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by the release of valuation allowances against state tax credit carryovers of $1.1 million, $0.8 million of permanent benefit relating to Domestic Production Activities Deduction, and a tax benefit of $0.5 million related to the conclusion of certain U.S. federal income tax matters through the year ended December 31, 2009. These favorable tax adjustments are partially offset by an increase in valuation allowance established against a foreign net deferred tax asset. The $1.1 million reversal of valuation allowances against state tax credit carryovers included $0.3 million of state tax credits expected to offset 2013 state income taxes and $0.8 million expected to benefit future periods. The company currently maintains a full valuation allowance against a foreign deferred tax asset in the Netherlands as future realization of the asset is not reasonably assured due to consistent historical losses since 2008. During 2013, the Company increased this valuation allowance by $0.6 million in order to reserve against additional loss carryforwards that were generated in the Netherlands during the current year.

For 2012, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by the release of valuation allowances against foreign tax credit carryovers of $3.9 million and state net operating loss carryovers, partially offset by an increase in valuation allowance established against a foreign net deferred tax asset. The Company’s state income taxes in 2012 were offset by the reversal of valuation allowances against state net operating loss carryovers of $0.5 million as the

F-25

Company used certain state net operating loss carryovers to offset 2012 state income taxes. During 2012, the Company increased its valuation allowance against a foreign deferred tax asset in the Netherlands by $0.7 million as future realization of such tax benefit was not reasonably assured.

For 2011, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by valuation allowances against foreign tax credit carryovers, a valuation allowance against a foreign net deferred tax asset, and dividends from a foreign subsidiary.

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 following schedule presents net current and net long-term deferred tax assets and liabilities by tax jurisdiction as of December 31, 2013 and 2012:

	2013				2012
	Deferred Tax Assets				Deferred Tax Assets
In thousands	Current		Long-term		Current		Long-term
Federal	$	3,219	$	—	$	3,862	$	—
State		321		479		348		—
Foreign		398		95		289		474
Totals	$	3,938	$	574	$	4,499	$	474

	2013				2012
	Deferred Tax Liabilities				Deferred Tax Liabilities
In thousands	Current		Long-term		Current		Long-term
Federal	$	—	$	7,780	$	—	$	2,935
State		—		—		—		205
Foreign		—		967		26		762
Totals	$	—	$	8,747	$	26	$	3,902

Net deferred tax assets (liabilities) consist of the following as of December 31, 2013 and 2012:

	December 31,
In thousands	2013		2012
Deferred tax assets:
Accounts receivable	$	127	$	108
Inventories		939		591
Net operating loss carryforwards		4,566		4,268
Other accrued liabilities		2,020		1,679
Pension		5,268		9,454
Tax Credits		1,953		3,442
Total deferred tax assets		14,873		19,542
Deferred tax liabilities:
Domestic liability of foreign assets	$	96	$	448
Intangible assets		6,066		6,121
Property, plant and equipment		9,631		8,341
Total deferred tax liabilities		15,793		14,910
Valuation allowance		3,315		3,587
Net deferred tax (liabilities) assets	$	(4,235)	$	1,045

F-26

For the years ended December 31, 2013, 2012 and 2011, income from continuing operations before income taxes was derived from the following sources:

	For the years ended December 31,
In thousands	2013		2012		2011
United States	$	23,433	$	14,573	$	4,767
Foreign		4,909		6,409		10,635
Total income from continuing operations before income taxes	$	28,342	$	20,982	$	15,402

At December 31, 2013, the Company had approximately $9.9 million of state net operating loss carryforwards which expire between 2015 and 2033. In addition, at December 31, 2013, the Company had $3.0 million of state tax credit carryfowards that expire between 2014 and 2025. As of December 31, 2013, the Company had provided a valuation reserve against all of its state net operating loss carryforwards and $1.7 million on its state tax credits carryforwards. The Company also had $4.5 million of foreign net operating loss carryovers in France and $9.6 million of net operating loss carryovers in the Netherlands. The French net operating loss carryforwards have no expiration. The Company concluded it was more likely than not that the French net operating loss carryforwards will be fully realized and no valuation allowance was necessary as of December 31, 2013. The Netherlands’ net operating losses expire between the years 2017 and 2023. The Company has recorded a valuation allowance against the net deferred tax asset in the Netherlands as future realization is not reasonably assured due to consistent historical losses since 2008. The Company evaluates and weighs the positive and negative evidence present at each period. The Company will continue to monitor the realization criteria based on future operating results.

As of December 31, 2013, the company has not paid U.S. income taxes on approximately $22.2 million of undistributed earnings of international subsidiaries. The Company’s intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. It is not practicable to estimate the amount of tax that might be payable on the undistributed earnings due to a variety of factors including the timing, extent and nature of any repatriation.

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 fiscal year, the Company expects to conclude certain income tax matters through the year ended December 31, 2010 and it is reasonably expected that net unrecognized benefits of $0.2 million may be recognized. The total amount of net unrecognized tax benefits that would affect the effective tax rate if recognized was $1.1 million as of December 31, 2013. The Company is no longer subject to U.S. federal examinations for years before 2010, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2003.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

In thousands	2013		2012
Unrecognized tax benefits at beginning of year	$	1,029	$	870
Increases relating to positions taken in prior periods		678		336
Increases relating to current period		586		14
Decreases due to settlements with tax authorities		—		(106	)
Decreases due to lapse of statute of limitations		(429)		(85	)
Unrecognized tax benefits at end of year	$	1,864	$	1,029

The Company recognizes the interest accrued and the penalties related to unrecognized tax benefits as a component of tax expense. The amount of accrued interest and penalties as of December 31, 2013 was not material.

F-27

12. Commitments and Contingencies

Leases

The Company has operating leases that resulted in expense of $4.0 million in 2013, $4.0 million in 2012, and $4.4 million in 2011. These contracts include building, office equipment, vehicle and machinery leases that require payment of property taxes, insurance, repairs and other operating costs.

The Company has a capital lease agreement for the land and building at the St. Nazaire, France operating facility requiring monthly principal and interest payments until 2016 (See Note 5).

Approximate future minimum lease payments under noncancelable leases are:

	Payments due by period
In thousands	Operating Lease Payments		Capital Lease Payments			Total
2014	$	3,900	$	736		$	4,636
2015		2,813		731			3,544
2016		2,434		358			2,792
2017		2,243		—			2,243
2018		886		—			886
Thereafter		1,302		—			1,302
Total		13,578		1,825			15,403
Interest on capital leases		—		(112	)		(112	)
Total	$	13,578	$	1,713		$	15,291

Commitments and Contingencies

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, actions with respect to commercial, intellectual property, employment, personal injury and environmental matters. While the outcome of any matter is inherently uncertain and the Company cannot be sure that it will prevail in any of the cases, the Company is not aware of any matters pending that are expected to be material with respect to the Company’s financial position, results of operations or cash flows.

13. Earnings Per Share

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

	For the years ended December 31,
In thousands	2013		2012		2011
Basic average common shares outstanding		16,570		16,717		16,753
Effect of dilutive options and restricted stock awards		296		256		143
Diluted average common shares outstanding		16,866		16,973		16,896

For the years ended December 31, 2013, 2012 and 2011, stock options for 0.2 million, 0.2 million and 0.5 million shares of Common Stock, respectively, were not considered in computing diluted earnings per common share as the stock options were considered anti-dilutive.

F-28

14. Quarterly Financial Information (Unaudited)

The following table summarizes quarterly financial results for 2013 and 2012. In management’s opinion, all material adjustments necessary for a fair statement of the information for such quarters have been reflected.

	1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
In thousands except per share data	2013		2012		2013		2012		2013		2012		2013		2012
Net sales	$	99,029	$	96,754	$	101,051	$	97,535	$	97,995	$	94,167	$	99,894	$	90,468
Gross profit	$	21,365	$	19,241	$	23,037	$	21,993	$	20,494		19,269	$	20,329	$	17,304
Net income	$	4,492	$	3,912	$	5,955	$	6,592	$	4,575	$	3,875	$	4,133	$	2,427
Basic earnings per share:
Continuing operations	$	0.27	$	0.23	$	0.36	$	0.39	$	0.28	$	0.23	$	0.25	$	0.15
Net income	$	0.27	$	0.23	$	0.36	$	0.39	$	0.28	$	0.23	$	0.25	$	0.15
Diluted earnings per share:
Continuing operations	$	0.26	$	0.23	$	0.35	$	0.39	$	0.27	$	0.23	$	0.25	$	0.14
Net income	$	0.26	$	0.23	$	0.35	$	0.39	$	0.27	$	0.23	$	0.25	$	0.14

Gross profit in the first quarter of 2013 included a completed pricing negotiation and a non-recurring customer project which contributed to an increase in gross profit of $1.8 million.

Net income during the quarters ended March 31, 2013 and June 30, 2013 were positively impacted by discrete tax benefits of $0.5 million and $0.3 million, respectively, related to the conclusion of certain U.S. federal income tax matters. Net income during the quarter ended December 31, 2013 was positively impacted by the reversal of valuation allowances associated with state tax credit carryovers of $0.9 million. (See Note 11)

Net income in each quarter of 2012 was positively impacted by the reversal of valuation allowances associated with foreign tax credit carryovers, impacting the first, second, third and fourth quarters by $0.8 million, $1.3 million, $0.5 million and $1.3 million, respectively. (See Note 11)

As a result of a change in information technology strategy and approach, the Company recorded a $1.8 million asset impairment charge in the fourth quarter of 2012 related to impairment of previously capitalized software development costs. (See Note 3)

During the quarter ended September 30, 2012, the Company identified an error within its Thermal/Acoustical Metals segment related to customer pricing that resulted in the overstatement of consolidated net sales for the quarters ended March 31, 2012 and June 30, 2012 of $0.3 million and $0.2 million, respectively. The correction of this error was recorded as a reduction in net sales and accounts receivable of $0.5 million during the quarter ended September 30, 2012. Also, in the Thermal/Acoustical Metals segment, an additional $0.1 million error was identified in the quarter ended December 31, 2012 which resulted in the overstatement of consolidated cost of sales and accounts payable for the quarter ended September 30, 2012, which was corrected in the quarter ended December 31, 2012. These errors were quantitatively and qualitatively immaterial to all quarters impacted.

15. Recently Issued Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (Topic 740). This ASU requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in their financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The objective of this update is to eliminate the diversity in practice in the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The ASU is effective for fiscal years beginning after December 15, 2013. The Company is currently evaluating this new guidance and believes its adoption will not have a significant impact on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220), which requires new disclosures about reclassifications from accumulated other comprehensive loss to net income. These disclosures may be presented on the face of the statements or in the notes to the consolidated financial statements. The ASU was effective

F-29

for fiscal years beginning after December 15, 2012. The Company adopted this ASU and revised its disclosure, as required, beginning with the first quarter of 2013. See the Consolidated Statements of Comprehensive Income (Loss) in the consolidated financial statements.

In July 2012, the FASB” issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amends ASC 350, Intangibles-Goodwill and Other. This ASU gives an entity the option to first assess qualitative factors to determine if indefinite-lived intangible assets are impaired. The entity may first determine based on qualitative factors if it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount. If that assessment indicates no impairment, the quantitative impairment test is not required. This standard was effective for financial statements of periods beginning after September 15, 2012, with early adoption permitted. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

16. Changes in Accumulated Other Comprehensive Income (Loss)

The following table discloses the changes by classification within accumulated other comprehensive income (loss) for the period ended December 31, 2013, 2012 and 2011:

In thousands	Foreign Currency Translation Adjustment			Defined Benefit Pension Adjustment			Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2010	$	4,169		$	(12,499	)	$	(8,330	)
Other Comprehensive loss		(2,232	)		(6,403	)(a)		(8,635	)
Amounts reclassified from accumulated other comprehensive income		—			347	(b)		347
Balance at December 31, 2011	$	1,937		$	(18,555	)	$	(16,618	)
Other Comprehensive income (loss)		1,241			(3,558	)(a)		(2,317	)
Amounts reclassified from accumulated other comprehensive income		—			569	(b)		569
Balance at December 31, 2012	$	3,178		$	(21,544	)	$	(18,366	)
Other Comprehensive income		2,950			5,909	(a)		8,859
Amounts reclassified from accumulated other comprehensive income		—			663	(b)		663
Balance at December 31, 2013	$	6,128		$	(14,972	)	$	(8,844	)

(a) Amount represents actuarial gains (losses) arising from the Company’s postretirement benefit obligation. This amount was $5.9 million, net of $3.6 million tax expense, for 2013, $(3.6) million, net of a $2.1 million tax benefit, for 2012 and $(6.4) million, net of $3.9 million tax benefit in 2011. See Note 8, Employer Sponsored Benefit Plans.

(b) Amount represents the amortization of actuarial losses to pension expense arising from the Company’s postretirement benefit obligation. This amount was $0.7 million, net of $0.4 million tax benefit, for 2013, $0.6 million, net of $0.3 million tax benefit, for 2012 and $0.3 million, net of $0.2 million tax benefit in 2011. See Note 8.

17. Subsequent Events

On February 20, 2014 the Company completed an acquisition of certain industrial filtration businesses (“Industrial Filtration”) of Andrew Industries Limited, an Altham, United Kingdom based corporation pursuant to the terms of a Sale and Purchase Agreement (the “Sale and Purchase Agreement”) for $83.0 million in cash. The Industrial Filtration business has products sold under the brands Southern Felt in the United States, Andrew Webron in the United Kingdom, and China Felt in Asia, serves a global customer base in the manufacture of non-woven felt filtration media and filter bags used primarily in industrial air filtration applications including power, cement, asphalt, incineration, food and pharmaceutical. The final purchase price, subject to certain customary post-closing adjustments, was financed with a combination of cash on hand and $60.0 million of borrowings through the Company’s amended $100 million credit facility.

On February 18, 2014 the Company amended and restated its $35.0 million senior secured revolving domestic credit facility to increase the available borrowing under this agreement to $100 million. The amended credit facility, secured by substantially all of the assets of the

F-30

Company, has a maturity date of January 31, 2019 and was completed with the same financial institution as well as two additional financial institutions. The Company entered into this amended facility in part to fund the majority of the purchase price of the Industrial Filtration acquisition.

F-31

Schedule II

LYDALL, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

In thousands	Balance at January 1,		Charges to Costs and Expenses		Charges (Deductions) to Other Accounts		Deductions		Balance at December 31,
2013
Allowance for doubtful receivables	$	469	$	60	$	152	$	(64)1	$	480
Tax valuation allowances		3,587		855		—		(1,127)3		3,315
2012
Allowance for doubtful receivables	$	622	$	162	$	72	$	(322)1	$	469
Allowance for note receivable		480		—		—		(480)4		—
Tax valuation allowances		7,132		854		—		(4,399)3		3,587
2011
Allowance for doubtful receivables	$	945	$	79	$	(75) 2, 5	$	(327) 1	$	622
Allowance for note receivable		480		—		—		—		4804
Tax valuation allowances		6,023		1,359		—		(250)3		7,132

1 Uncollected receivables written off and recoveries.

2 Foreign currency translation and other adjustments.

3 Reduction to income tax expense.

4 A reserve for $0.5 million was recorded during 2004 for the remaining balance of the note receivable associated with the sale of certain assets of the fiberboard operation in 2001, which was included within “Prepaid expenses and other current assets” on the Consolidated Balance Sheets as of December 31, 2011. The receivable was written off against the reserve in 2012.

5 Includes deduction of $66,000 relating to sale of Affinity business in June, 2011.

S-1

EX-10.5

Exhibit 10.5

AGREEMENT

THIS AGREEMENT is made and entered by and between LYDALL, INC., a Delaware corporation (the "Company"), and Chad A. McDaniel (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.

1.1Termination 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.

1.2Termination 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 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.

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2. Termination of Employment by the Employee.

(a) 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.

(b) Good Reason. Only following a Change of Control, the Executive may terminate his employment for Good Reason (as defined below) by giving the Company a written notice of termination at least 30 days before the date of such termination (or such lesser notice period as the Company may agree to) specifying in reasonable detail the circumstances constituting such Good Reason. In the event of the Executive's termination of his employment for Good Reason within 18 months following a Change of Control, the Executive shall be entitled to receive the benefits described in Section 4 if such termination of employment occurs. For purposes of this Agreement, Good Reason shall mean, without the Executive's written consent, (i) a significant reduction in the scope of the Executive's authority, functions, duties or responsibilities from that which is contemplated by this Agreement; provided that a change in scope solely as a result of the Company no longer being public or becoming a subsidiary of another corporation shall not constitute Good Reason, (ii) any reduction in the Executive's base salary, other than an across-the-board reduction affecting substantially all members of senior management of the Company on substantially the same proportional basis, (iii) any material breach by the Company of any provision of this Agreement without the Executive having committed any material breach of the Executive's obligations hereunder or under the Confidentiality Agreement, in each case, which breach is not cured within thirty days following written notice thereof to the Company of such breach or (iv) the relocation of the Executive's office location to a location more than 50 miles away from the Executive's then current principal place of employment. If an event constituting a ground for termination of employment for Good Reason occurs, and the Executive fails to give notice of termination within 30 days after the occurrence of such event, the Executive shall be deemed to have waived his right to terminate employment for Good Reason in connection with such event (but not for any other event for which the 30-day period has not expired).

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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.

(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.

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(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").

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 or because of termination by the Employee for Good Reason pursuant to Section 2 (b) 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:

(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 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.

(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, and if reasonably commercially available through nationally reputable insurance carriers, executive life and 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. In the event that the Employee's participation in any such plan is barred, the Company shall arrange to provide the Employee (and, if applicable, his spouse and dependent children) with comparable benefits to the extent available at a cost not to exceed 125% of the cost of providing benefits to the Employee under the Company's plan or plans. 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.

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(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 allowance at the time of termination, each month for 24 months following 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.

(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.

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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.

(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.

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(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.

8.1No 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.

8.2Deductions 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.

8.3Notices. 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:

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

To the Employee:                                 Chad A. McDaniel
(REDACTED)

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.

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8.4No 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.

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

8.6Covenant 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.

8.7Amendments 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.

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 his 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.

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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.

8.11Choice 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.

8.12Statute 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.

8.13Right to Injunctive and Equitable Relief. The Employee's obligations under Section 8.4 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.

8.14Severability 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.

8.15Entire 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.

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8.16Counterparts. 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 G. Barnhart Dale G. Barnhart Date President and Chief Executive Officer	May 6, 2013        Date
By:	/s/ Chad A. McDaniel Chad A. McDaniel	May 8, 2013        Date

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EXHIBIT A

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 (Lydall Inc. or affiliate together the “Company”), the compensation and other benefits to be received by me from the Company, I agree that:

1. 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.

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2. 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.

3. 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 information belonging to a former employer or other person and which has been classified by the former employer or other person as a trade secret or confidential information. 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.

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,

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(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.

5. 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.

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, and will remain so unless a written agreement for a specific term is entered into and executed by me and the Company’s CEO. No other representations or agreements have been made regarding the term or termination of my employment. I understand that no employee of the Company other than its CEO has the authority to enter into any agreement, commitment or guarantees binding on the Company regarding my employment and then only by a signed, written document.

-16-

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:	/s/ Chad A. McDaniel	By:	Dale G. Barnhart
Name Printed	Chad A. McDaniel	Name/Title:	Dale G. Barnhart, President and CEO
Date:	May 8, 2013	Date:	May 6, 2013

-17-

EXHIBIT B

TERMINATION, VOLUNTARY RELEASE AND WAIVER OF RIGHTS AGREEMENT

I, Chad A. McDaniel, unqualifiedly accept and agree to the relinquishment of my title, responsibilities and obligations as an employee of Lydall, Inc. ("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 1 of the Severance Agreement dated as of ______ __, 2____ 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 __ 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, attorneys 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.

-19-

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 Employment Agreement as Exhibit A and is made a part hereof.)

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.

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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, Chad A. McDaniel, warrant that I am competent to execute this Termination, Voluntary Release and Waiver of Rights Agreement and that I accept full responsibility thereof.

I, Chad A. McDaniel, 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, Chad A. McDaniel, 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.

-21-

Executed this               day of                      , 2013, at                                   .

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                                     , 20132, under the pains and penalties of perjury.

, Notary Public

My Commission Expires:

County of Residence:

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES AS OF DECEMBER 31, 2013

I. Parent Company

Lydall, Inc.

II. First tier

Lydall Thermal/Acoustical, Inc.

Lydall Filtration/Separation, Inc.

Lydall International, Inc.

LDL C.V.

Lydall Deutschland Holding GmbH

III. Second tier

Charter Medical, Ltd.

Lydall Asia Limited

Lydall Thermal/Acoustical Sales, LLC

Lydall Gerhardi GmbH & Co. KG

Lydall Gerhardi Verwaltungs GmbH

Lydall Netherlands B.V.

IV. Third tier

Lydall Shanghai Trading Company

Lydall Thermal/Acoustical (Tiacang) Company Limited

Lydall France S.A.S.

Lydall Solutech B.V.

V. Fourth tier

Lydall Filtration/Separation S.A.S.

Lydall Thermique/Acoustique S.A.S.

Charter Medical S.A.S.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 333-08886, 333-109500, 333-160511, and 333-181139) of Lydall Inc. of our report dated March 5, 2014 relating to the consolidated financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Hartford, Connecticut

March 5, 2014

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of Lydall, Inc. (the “Corporation”), does hereby constitute and appoint Dale G. Barnhart and Robert K. Julian, and each of them singly, as his agent and attorney-in-fact to do any and all things and acts in his/her name and in the capacities indicated below and to execute any and all instruments for him/her and in his/her name in the capacities indicated below which said Dale G. Barnhart and Robert K. Julian, or either of them, may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the preparation and filing of the Corporation’s Annual Report on Form 10-K (the “Annual Report”) respecting the fiscal year ended December 31, 2013, including specifically, but not limited to, power and authority to sign for him/her in his/her name in the capacities indicated below the Annual Report and any and all amendments thereto, and each of the undersigned does hereby ratify and confirm all that said Dale G. Barnhart and Robert K. Julian, or either of them, shall do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated opposite his or her name.

/s/   W. Leslie Duffy	Chairman of the Board	February 28, 2014
W. Leslie Duffy	and Director

/s/ Dale G. Barnhart	President, Chief	February 28, 2014
Dale G. Barnhart	Executive Officer
	and Director

/s/ Kathleen Burdett	Director	February 28, 2014
Kathleen Burdett

/s/ Matthew T. Farrell	Director	February 28, 2014
Matthew T. Farrell

/s/ Marc T. Giles	Director	February 28, 2014
Marc T. Giles

/s/ William D. Gurley	Director	February 28, 2014
William D. Gurley

/s/ Suzanne Hammett	Director	February 28, 2014
Suzanne Hammett

/s/ S. Carl Soderstrom, Jr.	Director	February 28, 2014
S. Carl Soderstrom, Jr.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Dale G. Barnhart, certify that:

1. I have reviewed this annual report on Form 10-K 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) (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.

March 5, 2014	/s/    Dale G. Barnhart
	Dale G. Barnhart President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert K. Julian, certify that:

1. I have reviewed this annual report on Form 10-K 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.

March 5, 2014	/s/    Robert K. Julian
	Robert K. Julian Executive Vice President and Chief Financial Officer

EX-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 Annual Report of Lydall, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his 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-K 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-K or as a separate disclosure document.

March 5, 2014	/s/    Dale G. Barnhart
	Dale G. Barnhart President and Chief Executive Officer
March 5, 2014	/s/    Robert K. Julian
	Robert K. Julian Executive Vice President and Chief Financial Officer

XML

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Reconciliation of Weighted Average Shares Used to Determine Basic and Diluted Earnings Per Share

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

	For the years ended  December 31,
In thousands	2013	2012	2011
Basic average common shares outstanding	16,570	16,717	16,753
Effect of dilutive options and restricted stock awards	296	256	143
Diluted average common shares outstanding	16,866	16,973	16,896

XML

Acquisitions and Divestitures (Summary of Results of Discontinued Operations) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	$ 0	$ 0	$ 13,255
Income before income taxes	0	0	1,374
Income tax expense	0	0	499
Income from discontinued operations	0	0	875
Gain on sale of discontinued operations, net of tax of $2,229	0	0	3,857
Income from discontinued operations, net of tax	$ 0	$ 0	$ 4,732

XML

Goodwill and Intangible Assets (Gross and Net Carrying Amounts of Goodwill) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Line Items]
Goodwill	$ 31,876	$ 31,569
Accumulated amortization/impairment	(13,287)	(13,287)
Goodwill	18,589	18,282	18,059
Performance Material Segment [Member]
Goodwill [Line Items]
Goodwill	13,929	13,622
Accumulated amortization/impairment	0	0
Goodwill	13,929	13,622
Thermal Segment [Member]
Goodwill [Line Items]
Goodwill	12,160	12,160
Accumulated amortization/impairment	(12,160)	(12,160)
Goodwill	0	0
Other Products and Services Segment [Member]
Goodwill [Line Items]
Goodwill	5,787	5,787
Accumulated amortization/impairment	(1,127)	(1,127)
Goodwill	$ 4,660	$ 4,660

XML

Segment Information (Net Sales By Segment) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 397,969	$ 378,924	$ 383,588
Eliminations and Other	(3,933)	(4,321)	(2,824)
Performance Materials Segment [Member]
Segment Reporting Information [Line Items]
Net sales	112,001	118,035	134,059
Performance Materials Segment [Member] | Industrial Filtration
Segment Reporting Information [Line Items]
Net sales	64,752	68,379	72,888
Performance Materials Segment [Member] | Industrial Thermal Insulation
Segment Reporting Information [Line Items]
Net sales	36,929	38,449	47,299
Performance Materials Segment [Member] | Life Sciences Filtration
Segment Reporting Information [Line Items]
Net sales	10,320	11,207	13,872
Other Products and Services Segment [Member]
Segment Reporting Information [Line Items]
Net sales	17,175	16,853	14,670
Other Products and Services Segment [Member] | Life Sciences Vital Fluids
Segment Reporting Information [Line Items]
Net sales	17,175	16,853	14,670
Thermal Acoustical Fibers Segments [Member]
Segment Reporting Information [Line Items]
Net sales	114,320	94,436	81,747
Thermal Acoustical Fibers Segments [Member] | Fiber Parts
Segment Reporting Information [Line Items]
Net sales	105,876	93,519	79,631
Thermal Acoustical Fibers Segments [Member] | Tooling
Segment Reporting Information [Line Items]
Net sales	8,444	917	2,116
Thermal Acoustical Metals Segments [Member]
Segment Reporting Information [Line Items]
Net sales	158,406	153,921	155,936
Thermal Acoustical Metals Segments [Member] | Metal Parts
Segment Reporting Information [Line Items]
Net sales	135,833	136,276	142,646
Thermal Acoustical Metals Segments [Member] | Tooling
Segment Reporting Information [Line Items]
Net sales	$ 22,573	$ 17,645	$ 13,290

XML

Acquisitions and Divestitures (Summary of Results of Discontinued Operations (Parenthetical)) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of discontinued operations, tax	$ 2,229

XML

Income Taxes (Schedule of Income from Continuing Operations before Income Taxes) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
United States	$ 23,433	$ 14,573	$ 4,767
Foreign	4,909	6,409	10,635
Total income from continuing operations before income taxes	$ 28,342	$ 20,982	$ 15,402

XML

Property, Plant and Equipment (Detail) (USD $) In Thousands, unless otherwise specified									12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Land [Member]	Dec. 31, 2012 Land [Member]	Dec. 31, 2013 Land [Member] Assets Held Under Capital Leases [Member]	Dec. 31, 2012 Land [Member] Assets Held Under Capital Leases [Member]	Dec. 31, 2013 Building and Building Improvements [Member]	Dec. 31, 2012 Building and Building Improvements [Member]	Dec. 31, 2013 Building and Building Improvements [Member] Maximum [Member]	Dec. 31, 2013 Building and Building Improvements [Member] Minimum [Member]	Dec. 31, 2013 Building and Building Improvements [Member] Assets Held Under Capital Leases [Member]	Dec. 31, 2012 Building and Building Improvements [Member] Assets Held Under Capital Leases [Member]	Dec. 31, 2013 Building and Building Improvements [Member] Assets Held Under Capital Leases [Member] Maximum [Member]	Dec. 31, 2013 Building and Building Improvements [Member] Assets Held Under Capital Leases [Member] Minimum [Member]	Dec. 31, 2013 Machinery and Equipment [Member]	Dec. 31, 2012 Machinery and Equipment [Member]	Dec. 31, 2013 Machinery and Equipment [Member] Maximum [Member]	Dec. 31, 2013 Machinery and Equipment [Member] Minimum [Member]	Dec. 31, 2013 Office Equipment [Member]	Dec. 31, 2012 Office Equipment [Member]	Dec. 31, 2013 Office Equipment [Member] Maximum [Member]	Dec. 31, 2013 Office Equipment [Member] Minimum [Member]	Dec. 31, 2013 Vehicles [Member]	Dec. 31, 2012 Vehicles [Member]	Dec. 31, 2013 Vehicles [Member] Maximum [Member]	Dec. 31, 2013 Vehicles [Member] Minimum [Member]
Property, Plant and Equipment, Gross [Abstract]
Property, plant and equipment, at cost	$ 258,715	$ 244,743	$ 2,215	$ 2,164	$ 692	$ 664	$ 48,779	$ 46,033			$ 6,072	$ 5,827			$ 166,747	$ 156,551			$ 33,649	$ 32,939			$ 561	$ 565
Accumulated depreciation	(183,535)	(170,306)
Accumulated amortization of capital leases	(3,078)	(2,646)
Property And Equipment Net Excluding Work In Progress	72,102	71,791
Construction in progress	6,761	4,463
Total property, plant and equipment	$ 78,863	$ 76,254
Property, Plant and Equipment, Estimated Useful Lives									35	10			35	10			25	5			8	2			6	3

XML

Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Summary of Results of Discontinued Operations

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

	December 31,
In thousands	2013		2012		2011
Net sales	$	—	$	—	$	13,255
Income before income taxes		—		—		1,374
Income tax expense		—		—		499
Income from discontinued operations		—		—		875
Gain on sale of discontinued operations, net of tax of $2,229		—		—		3,857
Income from discontinued operations, net of tax	$	—	$	—	$	4,732

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Income Taxes (Reconciliation of Unrecognized Tax Benefits) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Unrecognized tax benefits at beginning of year	$ 1,029	$ 870
Increases relating to positions taken in prior periods	678	336
Increases relating to current period	586	14
Decreases due to settlements with tax authorities	0	(106)
Decreases due to lapse of statute of limitations	(429)	(85)
Unrecognized tax benefits at end of year	$ 1,864	$ 1,029

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Segment Information (Additional Information) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 397,969,000	$ 378,924,000	$ 383,588,000
Entity Wide Revenue Other Customers Percentage Description	No other customers accounted for more than 10.0% of total net sales in 2013, 2012, and 2011.
Ford Motor Company [Member]
Segment Reporting Information [Line Items]
Net sales	79,700,000	71,200,000	62,200,000
Entity-Wide Revenue, Major Customer, Percentage	20.00%	18.80%	16.20%
Chrysler Group Llc [Member]
Segment Reporting Information [Line Items]
Net sales	43,500,000	38,000,000
Entity-Wide Revenue, Major Customer, Percentage	10.90%	10.00%
Performance Materials Segment
Segment Reporting Information [Line Items]
Gain (Loss) on Sale of Business		800,000	1,600,000
Asset impairment charges		300,000
Corprates [Member]
Segment Reporting Information [Line Items]
Asset impairment charges		$ 1,500,000

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Subsequent Events (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified		12 Months Ended	1 Months Ended
	Dec. 31, 2013	Dec. 31, 2013 Domestic Credit Facility [Member]	Feb. 18, 2014 Subsequent Event [Member] Domestic Credit Facility [Member]	Feb. 20, 2014 Subsequent Event [Member] Industrial Filtration [Member]
Subsequent Event [Line Items]
Payments to Acquire Businesses, Gross				$ 83.0
Business Combination, Consideration Transferred, Liabilities Incurred				100
Line Of Credit Facility Maximum Borrowing Capacity		35.0	35.0
Line of Credit Facility, Expiration Date		Jun. 15, 2016	Jan. 31, 2019
Line Of Credit Facility Maximum Borrowing Capacity Increased Value			100
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Liabilities	$ 60.0

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Capital Stock (Additional Information) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013 Number	Dec. 31, 2012
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, authorized	500,000,000	500,000,000
Common Stock, Shares, Outstanding	16,819,240
Number of Shareholders	4,763

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Income Taxes (Schedule Presents Net Current and Net Long-Term Deferred Tax Assets and Liabilities by Tax Jurisdiction) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred Tax Assets and Liabilities [Line Items]
Deferred Tax Assets, Current	$ 3,938	$ 4,499
Deferred Tax Assets, Long-term	574	474
Deferred Tax Liabilities, Current	0	26
Deferred Tax Liabilities, Long-term	8,747	3,902
Federal [Member]
Deferred Tax Assets and Liabilities [Line Items]
Deferred Tax Assets, Current	3,219	3,862
Deferred Tax Assets, Long-term	0	0
Deferred Tax Liabilities, Current	0	0
Deferred Tax Liabilities, Long-term	7,780	2,935
State [Member]
Deferred Tax Assets and Liabilities [Line Items]
Deferred Tax Assets, Current	321	348
Deferred Tax Assets, Long-term	479	0
Deferred Tax Liabilities, Current	0	0
Deferred Tax Liabilities, Long-term	0	205
Foreign [Member]
Deferred Tax Assets and Liabilities [Line Items]
Deferred Tax Assets, Current	398	289
Deferred Tax Assets, Long-term	95	474
Deferred Tax Liabilities, Current	0	26
Deferred Tax Liabilities, Long-term	$ 967	$ 762

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Quarterly Financial Information (Unaudited) (Additional Information) (Detail) (USD $)	3 Months Ended
	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012
Quarterly Financial Information Disclosure [Line Items]
Impact On Net Income Due To Reversal Of Valuation Allowances	$ 900,000			$ 1,300,000	$ 500,000	$ 1,300,000	$ 800,000
Overstatement Of Consolidated Net Sales				100,000		200,000	300,000
Reduction In Net Sales and Accounts Receivable					500,000
Increase Decrease In Operating Income Nonrecurring			1,800,000
Increase Decrease In Operating Income By Discrete Tax Benefits		300,000	500,000
Computer Software, Intangible Asset [Member]
Quarterly Financial Information Disclosure [Line Items]
impairment of long lived assets to be disposed off				$ 1.8

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Commitments and Contingencies (Future Minimum Lease Payments) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Operating Lease Payments, 2014	$ 3,900
Operating Lease Payments, 2015	2,813
Operating Lease Payments, 2016	2,434
Operating Lease Payments, 2017	2,243
Operating Lease Payments, 2018	886
Operating Lease Payments, Thereafter	1,302
Operating Lease Payments, Total	13,578
Capital Lease Payments, 2014	736
Capital Lease Payments, 2015	731
Capital Lease Payments, 2016	358
Capital Lease Payments, 2017	0
Capital Lease Payments, 2018	0
Capital Lease Payments, Thereafter	0
Capital Lease Payments, Total	1,825
Interest on capital leases	(112)
Capital Lease Payments, Total	1,713
2014	4,636
2015	3,544
2016	2,792
2017	2,243
2018	886
Thereafter	1,302
Total Operating and Capital Lease Payments	15,403
Interest on capital leases	(112)
Total	$ 15,291

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Changes In Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Balance, Foreign Currency Translation Adjustment	$ 3,178		$ 1,937		$ 4,169
Other comprehensive income, Foreign Currency Translation Adjustment	2,950		1,241		(2,232)
Amounts reclassified from accumulated other comprehensive income, Foreign Currency Translation Adjustment	0		0		0
Balance, Foreign Currency Translation Adjustment	6,128		3,178		1,937
Balance, Defined Benefit Pension Adjustment	(21,544)		(18,555)		(12,499)
Other comprehensive income, Defined Benefit Pension Adjustment	5,909	[1]	(3,558)	[1]	(6,403)	[1]
Amounts reclassified from accumulated other comprehensive income, Defined Benefit Pension Adjustment	663	[2]	569	[2]	347	[2]
Balance, Defined Benefit Pension Adjustment	(14,972)		(21,544)		(18,555)
Balance, Total Accumulated Other Comprehensive (Loss) Income	(18,366)		(16,618)		(8,330)
Other Comprehensive income, Total Accumulated Other Comprehensive (Loss) Income	8,859		(2,317)		(8,635)
Amounts reclassified from accumulated other comprehensive income, Total Accumulated Other Comprehensive (Loss) Income	663		569		347
Balance, Total Accumulated Other Comprehensive (Loss) Income	$ (8,844)		$ (18,366)		$ (16,618)

[1] Amount represents actuarial gains (losses) arising from the Company’s postretirement benefit obligation. This amount was $5.9 million, net of $3.6 million tax expense, for 2013, $(3.6) million, net of a $2.1 million tax benefit, for 2012 and $(6.4) million, net of $3.9 million tax benefit in 2011. See Note 8, Employer Sponsored Benefit Plans.

[2] Amount represents the amortization of actuarial losses to pension expense arising from the Company’s postretirement benefit obligation. This amount was $0.7 million, net of $0.4 million tax benefit, for 2013, $0.6 million, net of $0.3 million tax benefit, for 2012 and $0.3 million, net of $0.2 million tax benefit in 2011. See Note 8, Employer Sponsored Benefit Plans.

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Income Taxes (Components of Deferred Tax Asset and Liability) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Accounts receivable	$ 127	$ 108
Inventories	939	591
Net operating loss carryforwards	4,566	4,268
Other accrued liabilities	2,020	1,679
Pension	5,268	9,454
Tax Credits	1,953	3,442
Total deferred tax assets	14,873	19,542
Deferred tax liabilities:
Domestic liability of foreign assets	96	448
Intangible assets	6,066	6,121
Property, plant and equipment	9,631	8,341
Total deferred tax liabilities	15,793	14,910
Valuation allowance	3,315	3,587
Net deferred tax (liabilities) assets	$ (4,235)	$ 1,045

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Segment Information (Classification of Segments) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Operating Income (Loss) from Continuing Operations	$ 28,713	$ 21,378	$ 16,188
Total assets	274,685	251,916	235,185
Capital expenditures	13,826	11,404	8,884
Depreciation and amortization	12,593	13,572	14,478
Performance Materials Segment [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss) from Continuing Operations	9,462	10,400	18,194
Total assets	74,838	74,119	71,379
Capital expenditures	4,604	5,231	3,801
Depreciation and amortization	4,667	5,290	5,718
Thermal/Acoustical Metals Segment [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss) from Continuing Operations	14,088	14,708	15,915
Total assets	104,908	96,019	93,921
Capital expenditures	6,027	4,063	2,413
Depreciation and amortization	4,777	5,019	5,210
Thermal/Acoustical Fibers Segment [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss) from Continuing Operations	21,486	12,851	(3,055)
Total assets	30,176	26,830	28,844
Capital expenditures	1,887	1,033	1,148
Depreciation and amortization	2,217	2,324	2,536
Other Products and Services Segment [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss) from Continuing Operations	778	1,190	(1,040)
Total assets	11,866	11,195	11,064
Capital expenditures	243	128	270
Depreciation and amortization	588	596	726
Corporate Office [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss) from Continuing Operations	(17,101)	(17,771)	(13,826)
Total assets	52,897	43,753	29,977
Capital expenditures	1,065	949	1,252
Depreciation and amortization	$ 344	$ 343	$ 288

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Subsequent Events

12 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

 17. Subsequent Events

On February 20, 2014 the Company completed an acquisition of certain industrial filtration businesses (“Industrial Filtration”) of Andrew Industries Limited, an Altham, United Kingdom based corporation pursuant to the terms of a Sale and Purchase Agreement (the “Sale and Purchase Agreement”) for $83.0 million in cash. The Industrial Filtration business has products sold under the brands Southern Felt in the United States, Andrew Webron in the United Kingdom, and China Felt in Asia, serves a global customer base in the manufacture of non-woven felt filtration media and filter bags used primarily in industrial air filtration applications including power, cement, asphalt, incineration, food and pharmaceutical. The final purchase price, subject to certain customary post-closing adjustments, was financed with a combination of cash on hand and $60.0 million of borrowings through the Company’s amended  $100 million credit facility.

On February 18, 2014 the Company amended and restated its $35.0 million senior secured revolving domestic credit facility to increase the available borrowing under this agreement to $100 million. The amended credit facility, secured by substantially all of the assets of the Company, has a maturity date of January 31, 2019 and was completed with the same financial institution as well as two additional financial institutions. The Company entered into this amended facility in part to fund the majority of the purchase price of the Industrial Filtration acquisition.

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Goodwill and Intangible Assets (Other Intangible Assets) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Amortized intangible assets
License agreements	$ 881	$ 860
Patents	6,766	6,522
Other	278	272
Finite-Lived Intangible Assets, Gross	7,925	7,654
Finite-Lived Intangible Assets, Accumulated Amortization	(4,415)	(3,829)
Licensing Agreements [Member]
Amortized intangible assets
Finite-Lived Intangible Assets, Accumulated Amortization	(881)	(854)
Patents [Member]
Amortized intangible assets
Finite-Lived Intangible Assets, Accumulated Amortization	(3,307)	(2,781)
Other Intangible Assets [Member]
Amortized intangible assets
Finite-Lived Intangible Assets, Accumulated Amortization	$ (227)	$ (194)

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Significant Accounting Policies (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Accounting Policies [Line Items]
Total tooling related assets	$ 8,845	$ 3,881
Inventories Net Of Progress Billings And Reserves [Member]
Accounting Policies [Line Items]
Total tooling related assets	8,793	3,482
Prepaid Expenses And Other Current Assets Net [Member]
Accounting Policies [Line Items]
Total tooling related assets	$ 52	$ 399

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Income Taxes (Reconciliation of the Difference between the Actual Provisions for Income Taxes) (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statutory federal income tax rate	35.00%	35.00%	34.00%
State income taxes	2.90%	2.20%	3.30%
Valuation allowances for deferred tax assets, including state	(1.80%)	(17.80%)	0.80%
Foreign dividends	0.50%	0.90%	1.70%
Reserve for tax contingencies	(0.60%)	0.10%	0.60%
Manufacturing deduction	(2.70%)	(2.40%)	(1.30%)
Other	(0.90%)	1.90%	2.20%
Effective income tax rate	32.40%	19.90%	41.30%

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Components of Provision for Income Taxes

The provision for income taxes from continuing operations consists of the following:

	For the years ended December 31,
In thousands	2013		2012		2011
Current:
Federal	$	5,477	$	3,208	$	1,534
State		709		265		15
Foreign		2,032		2,352		3,623
Total Current		8,218		5,825		5,172
Deferred:
Federal	$	1,609	$	(2,031)	$	503
State		(1,144)		(291)		108
Foreign		504		673		572
Total Deferred		969		(1,649)		1,183
Provision for income taxes	$	9,187	$	4,176	$	6,355

Reconciliation of the Difference between the Actual Provisions for Income Taxes

The following is a reconciliation of the difference between the actual provision for income taxes from continuing operations and the provision computed by applying the federal statutory tax rate on earnings:

	For the years ended December 31,
In thousands	2013		2012		2011
Statutory federal income tax rate	35.0	%	35.0	%	34.0	%
State income taxes	2.9		2.2		3.3
Valuation allowances for deferred tax assets, including state	(1.8)		(17.8)		0.8
Foreign dividends	0.5		0.9		1.7
Reserve for tax contingencies	(0.6)		0.1		0.6
Manufacturing deduction	(2.7)		(2.4)		(1.3)
Other	(0.9)		1.9		2.2
Effective income tax rate	32.4	%	19.9	%	41.3	%

Schedule Presents Net Current and Net Long-Term Deferred Tax Assets and Liabilities by Tax Jurisdiction

The following schedule presents net current and net long-term deferred tax assets and liabilities by tax jurisdiction as of December 31, 2013 and 2012:

	2013				2012
	Deferred Tax Assets				Deferred Tax Assets
In thousands	Current		Long-term		Current		Long-term
Federal	$	3,219	$	—	$	3,862	$	—
State		321		479		348		—
Foreign		398		95		289		474
Totals	$	3,938	$	574	$	4,499	$	474

	2013				2012
	Deferred Tax Liabilities				Deferred Tax Liabilities
In thousands	Current		Long-term		Current		Long-term
Federal	$	—	$	7,780	$	—	$	2,935
State		—		—		—		205
Foreign		—		967		26		762
Totals	$	—	$	8,747	$	26	$	3,902

Components of Deferred Tax Asset and Liability

Net deferred tax assets (liabilities) consist of the following as of December 31, 2013 and 2012:

	December 31,
In thousands	2013		2012
Deferred tax assets:
Accounts receivable	$	127	$	108
Inventories		939		591
Net operating loss carryforwards		4,566		4,268
Other accrued liabilities		2,020		1,679
Pension		5,268		9,454
Tax Credits		1,953		3,442
Total deferred tax assets		14,873		19,542
Deferred tax liabilities:
Domestic liability of foreign assets	$	96	$	448
Intangible assets		6,066		6,121
Property, plant and equipment		9,631		8,341
Total deferred tax liabilities		15,793		14,910
Valuation allowance		3,315		3,587
Net deferred tax (liabilities) assets	$	(4,235)	$	1,045

Schedule of Income from Continuing Operations before Income Taxes

For the years ended December 31, 2013, 2012 and 2011, income from continuing operations before income taxes was derived from the following sources:

	For the years ended December 31,
In thousands	2013		2012		2011
United States	$	23,433	$	14,573	$	4,767
Foreign		4,909		6,409		10,635
Total income from continuing operations before income taxes	$	28,342	$	20,982	$	15,402

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

In thousands	2013		2012
Unrecognized tax benefits at beginning of year	$	1,029	$	870
Increases relating to positions taken in prior periods		678		336
Increases relating to current period		586		14
Decreases due to settlements with tax authorities		—		(106)
Decreases due to lapse of statute of limitations		(429)		(85)
Unrecognized tax benefits at end of year	$	1,864	$	1,029

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Long-term Debt and Financing Arrangements (Total Outstanding Debt) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 1,714	$ 2,411
Other Long-term Debt, Current	(663)	(765)
Long-term Debt	1,051	1,646
Volksbank Meinerzhagen Eg [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	5.95%
Long-term Debt, Gross	0	63
Debt Instrument Maturity Year	2013
Capital Lease Land and Building, St Nazaire, France [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	5.44%
Long-term Debt, Gross	1,647	2,246
Debt Instrument Maturity Year	2016
Capital Lease Forklifts Hamptonville North Carolina [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	5.00%
Long-term Debt, Gross	$ 67	$ 102
Debt Instrument Maturity Year	2017

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Equity Compensation Plans (Summary of Option Activity) (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Shares Outstanding, Beginning balance	847,000
Shares granted	75,000	146,500	177,500
Shares Exercised	(158,000)	129,675	35,874
Shares Forfeited/Cancelled	(6,000)
Shares Outstanding, Ending balance	758,000	847,000
Shares Options exercisable	491,000
Shares Expected to vest	259,000
Weighted-Average Exercise Price Outstanding, Beginning balance	$ 9.59
Weighted-Average Exercise Price Granted	$ 16.61
Weighted-Average Exercise Price Exercised	$ 9.45
Weighted-Average Exercise Price Forfeited/Cancelled	$ 8.21
Weighted-Average Exercise Price Outstanding, Ending balance	$ 10.32	$ 9.59
Weighted-Average Exercise Price Options exercisable	$ 9.05
Weighted-Average Exercise Price Expeceted to vest	$ 12.72
Weighted average remaining contractual term	6 years 3 months 18 days
Weighted Average Remaing Contractual Term Options exercisable	4 years 10 months 24 days
Weighted Average Remaining Contractual Term Expected to Vest	8 years 9 months 18 days
Aggregate Intrinsic Value Outstanding	$ 5,538
Aggregate Intrinsic Value Options exercisable	4,213
Aggregate Instrinsic Value Options Expected to Vest	$ 1,267

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Employer Sponsored Benefit Plan (Assumptions Used in Determining the Year-End Benefit Obligation and Annual Net Cost) (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Discount rate, Benefit Obligation	5.09%	4.16%
Expected return on plan assets, Benefit Obligation	7.25%	7.50%
Discount rate, Net Cost	4.16%	5.00%	5.74%
Expected return on plan assets, Net Cost	7.50%	7.75%	8.00%

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Property, Plant and Equipment (Additional Information) (Detail) (USD $)	12 Months Ended			3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Computer Software, Intangible Asset [Member]
Property, Plant and Equipment [Line Items]
Depreciation	$ 12,100,000	$ 12,800,000	$ 13,600,000
Impairment of long lived assets to be disposed off				$ 1,800,000

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

1. Significant Accounting Policies

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.

Principles of consolidation — The Consolidated Financial Statements include the accounts of Lydall, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Estimates and assumptions — The preparation of the Company’s Consolidated Financial Statements in conformity 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 the disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Risks and uncertainties — Worldwide economic cycles affect the markets that the Company’s businesses serve and affect demand for Lydall’s products and impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, swings in consumer confidence and spending, unstable economic growth and fluctuations in unemployment rates has caused economic instability that has, and could continue to have, a negative impact on the Company’s results of operations, financial condition and liquidity.

Cash and cash equivalents — Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less at the date of purchase.

Short-term investments — Short-term investments included a certificate of deposit with a banking institution that had an original maturity of six months. This certificate of deposit matured on January 23, 2012 and $ 12.0 million of proceeds were recorded to cash and cash equivalents.

Concentrations of credit risk — Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments and trade accounts receivable. The Company places its cash and cash equivalents and short-term investments in high-quality financial institutions and instruments with a minimum investment grade rating of BBB or better. Concentrations of credit risk with respect to trade accounts receivable are limited by the large number of customers comprising the Company’s customer base and their dispersion across many different industries and geographies. Foreign and export sales were 45.2% of the Company’s net sales in 2013, 46.7% in 2012, and 49.9% in 2011. Export sales primarily to Europe, Asia, Mexico and Canada were $ 52.1 million, $ 49.7 million, and $ 47.0 million in 2013, 2012, and 2011 respectively. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral. Sales to the automotive market, included in the Thermal/Acoustical Metals and Thermal/Acoustical Fibers segments, were 68.5% of the Company’s net sales in 2013, 65.5% in 2012, and 62.0% in 2011. Sales to Ford Motor Company (“Ford”) were 20.0%, 18.8%, and 16.2% of Lydall’s 2013, 2012, and 2011 net sales, respectively. Sales to Chrysler Group LLC (“Chrysler”) accounted for 10.9% and 10.0% of Lydall’s 2013 and 2012 net sales, respectively. No other customers accounted for more than 10% of total net sales in 2013, 2012, or 2011. At December 31, 2013 and 2012, Ford represented 15.3% and 17.0%, respectively, of total accounts receivable. No other customers accounted for more than 10.0% of total accounts receivable at December 31, 2013 or 2012.

Inventories — Inventories are valued at lower of cost or market, cost being determined using the first-in, first-out (FIFO) cost method. Inventories in excess of requirements for current or anticipated orders have been written down to net realizable value.

Pre-production design and development costs — The Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). All such tooling contracts relate to parts that the Company will supply to customers under long-term supply agreements. Tooling costs are accumulated in work-in process inventory and are charged to operations as the related revenue from the tooling is recognized. Revenue is recognized as tooling is delivered and accepted by the customer. The Company also may progress bill on certain tooling being constructed. These billings are recorded as progress billings (a reduction of the associated work-in-process inventory) until the appropriate revenue recognition criteria have been met.

Periodically, the Company enters into contractually guaranteed reimbursement arrangements as a mechanism to collect amounts due from customers from tooling sales. Under these arrangements, amounts due from tooling sales are collected as parts are delivered over the part supply arrangement, in accordance with the specific terms of the arrangement. The amounts due from the customer in such transactions are recorded in “Prepaid expenses and other current assets, net” or “Other assets, net” based upon the expected term of the reimbursement arrangement.

The following tooling related assets were included in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December, 31
In thousands	2013		2012
Inventories, net of progress billings and reserves	$	8,793	$	3,482
Prepaid expenses and other current assets, net		52		399
Total tooling related assets	$	8,845	$	3,881

Amounts included in “Prepaid expenses and other current assets, net” include the short-term portion of receivables due under contractually guaranteed reimbursement arrangements. Included in the inventory balance was an offset for progress billings of $ 1.1 million and $ 4.6 million at December 31, 2013 and 2012, respectively. Company owned tooling is recorded in “Property, plant and equipment, net” and was not material at December 31, 2013 or December 31, 2012.

Property, plant and equipment — Property, plant, and equipment are stated at cost. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Property, plant and equipment, including property, plant and equipment under capital leases, are depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are depreciated on a straight-line basis over the term of the lease or the life of the asset, whichever is shorter. The cost and accumulated depreciation amounts applicable to assets sold or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any net gain or loss is included in the Consolidated Statements of Operations. Expenses for maintenance and repairs are charged to expense as incurred.

Goodwill and other intangible assets — Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired companies. Goodwill and other intangible assets with indefinite lives are not amortized but are subject to annual impairment tests. All other intangible assets are amortized over their estimated useful lives, which range from 4 to 20 years. In performing impairment tests, the Company considers discounted cash flows and other market factors as best evidence of fair value. There are inherent uncertainties and management judgment required in these analyses.

Valuation of long-lived assets — The Company evaluates the recoverability of long-lived assets, or asset groups, whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. Should such evaluations indicate that the related future undiscounted cash flows are not sufficient to recover the carrying values of the assets, such carrying values would be reduced to fair value and this adjusted carrying value would become the assets’ new cost basis. Fair value is determined primarily using future anticipated cash flows that are directly associated with, and that are expected to arise as a direct result of the use and eventual disposition of the asset, or asset group, as well as market conditions and other factors. There are inherent uncertainties and management judgment required in these analyses.

Employer sponsored benefit plans — The Company recognizes the funded status of its domestic defined benefit pension plan. Net benefit obligations are calculated based on actuarial valuations using key assumptions related to discount rates and expected return on plan assets.

Derivative instruments — Derivative instruments are measured at fair value and recognized as either assets or liabilities on the Consolidated Balance Sheet in either current or non-current other assets or other accrued liabilities or other long-term liabilities depending upon maturity and commitment. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in the Consolidated Statement of Operations. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods in which the hedge transaction affects earnings. In general, the types of risks being hedged by the Company are related to the variability of future cash flows caused by changes in foreign currency exchange rates and hedging the impact of variability of foreign exchange rates on recorded intercompany assets or liabilities. Lydall’s objective for entering into derivative instruments has always been for risk management purposes. The Company does not engage in derivative instruments for speculative purposes. Lydall has historically not been a party to a significant number of derivative instruments.

Revenue recognition — The Company recognizes revenue (1) once evidence of an arrangement exists; (2) product delivery has occurred; (3) pricing is fixed or determinable; and (4) collection is reasonably assured. The four criteria required to recognize revenue are considered to be met, and the passage of title to the customer occurs, at the respective FOB point and, therefore, revenue is recognized at that time. The Company’s standard sales and shipping terms are FOB shipping point, therefore, substantially all revenue is recognized upon shipment. However, in limited circumstances, the Company conducts business with certain customers on FOB destination terms and in these instances revenue is recognized upon receipt by the customer. The Company generally does not provide specific customer inspection or acceptance provisions in its sales terms, with the exception of tooling sales discussed in “Pre-production design and development costs” above.

Sales returns and allowances are recorded as identified or communicated by the customer and internally approved. The Company does not provide customers with general rights of return for products sold; however, in limited circumstances, the Company will allow sales returns and allowances from customers if the products sold do not conform to specifications.

Shipping and handling costs consist primarily of costs incurred to deliver products to customers and internal costs related to preparing products for shipment and are recorded in cost of sales. Amounts billed to customers as shipping and handling are classified as revenue.

Research and development — Research and development costs are charged to expense as incurred and amounted to $ 7.6 million in 2013, $ 7.7 million in 2012, and $ 8.1 million in 2011. Research and development costs were primarily comprised of development personnel salaries, prototype material costs and testing and trials of new products.

Earnings per share — Basic earnings per common share are equal to net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are equal to net income divided by the weighted average number of common shares outstanding during the period, including the effect of stock options and stock awards, if such effect is dilutive.

Income taxes — The provision for income taxes is based upon income reported in the accompanying Consolidated Financial Statements. Deferred income taxes reflect the impact of temporary differences between the amounts of income and expense recognized for financial reporting purposes and such amounts recognized for tax purposes. In the event the Company was to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, the Company would record a valuation allowance through a charge to income in the period that such determination was made. Conversely, if the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of the net carrying amounts, the Company would decrease the recorded valuation allowance and record an increase to income in the period that such determination was made.

Translation of foreign currencies — Assets and liabilities of foreign subsidiaries are translated at exchange rates prevailing on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the period. Any resulting translation gains or losses are reported in other comprehensive income (loss).

Stock options and share grants — The Company accounts for awards of equity instruments under the fair value method of accounting and recognizes such amounts in the Consolidated Statements of Operations. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Stock-based compensation expense includes the estimated effects of forfeitures, and such estimates of forfeitures are adjusted over the requisite service period to the extent actual forfeitures differ, or are expected to differ, from such estimates. The effect of changes in estimated forfeitures is recognized in the period of change and also impacts the amount of expense to be recognized in future periods. The Company estimates the fair value of option grants based on the Black Scholes option-pricing model. Expected volatility and expected term are based on historical information. The Company believes that its future volatility and expected term are not likely to materially differ from the Company’s historical stock price volatility and historical exercise data, respectively. Compensation expense for all restricted stock awards is recorded based on the market value of the stock on the grant date and recognized as expense over the vesting period of the award. Compensation expense for performance-based restricted stock is also impacted by the probability of achieving the performance targets.

Recently Adopted Accounting Standards

Effective January 1, 2013, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220), which required new disclosures about reclassifications from accumulated other comprehensive loss to net income. The Company revised its disclosures as required in the Consolidated Statements of Comprehensive Income (Loss) in the consolidated financial statements. Effective January 1, 2013 the Company adopted FASB ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which amends ASC 210, Balance Sheet. This ASU required 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 ASU was applied retrospectively, as required. The adoption of this ASU did not have any effect on the Company’s consolidated financial statements.

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Employer Sponsored Benefit Plan (Target Allocation and the Actual Allocation of Plan Assets) (Detail)																			12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Us Large Cap [Member]	Dec. 31, 2012 Us Large Cap [Member]	Dec. 31, 2013 Us Mid Cap [Member]	Dec. 31, 2012 Us Mid Cap [Member]	Dec. 31, 2013 Non Us Cap [Member]	Dec. 31, 2012 Non Us Cap [Member]	Dec. 31, 2013 Emerging Markets [Member]	Dec. 31, 2012 Emerging Markets [Member]	Dec. 31, 2013 Us Bonds [Member]	Dec. 31, 2012 Us Bonds [Member]	Dec. 31, 2013 Non Us Bonds [Member]	Dec. 31, 2012 Non Us Bonds [Member]	Dec. 31, 2013 Real Estate [Member]	Dec. 31, 2012 Real Estate [Member]	Dec. 31, 2013 Cash and Cash Equivalents [Member]	Dec. 31, 2012 Cash and Cash Equivalents [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Us Large Cap [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Us Mid Cap [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Non Us Cap [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Emerging Markets [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Us Bonds [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Non Us Bonds [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Real Estate [Member]	Dec. 31, 2013 Target Allocation 2014 Maximum [Member] Cash and Cash Equivalents [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Us Large Cap [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Us Mid Cap [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Non Us Cap [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Emerging Markets [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Us Bonds [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Non Us Bonds [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Real Estate [Member]	Dec. 31, 2013 Target Allocation 2014 Minimum [Member] Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Target Allocation																			38.00%	22.00%	25.00%	9.00%	38.00%	8.00%	8.00%	5.00%	18.00%	4.00%	15.00%	3.00%	12.00%	2.00%	0.00%	0.00%
Actual Allocation of Plan Assets	2013.00%	2012.00%	26.00%	29.00%	11.00%	12.00%	23.00%	17.00%	7.00%	6.00%	26.00%	26.00%	5.00%	5.00%	0.00%	1.00%	2.00%	4.00%

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Significant Accounting Policies (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Line Items]
Export Sales	$ 52.1	$ 49.7	$ 47.0
Percentage Of Sales To Automotive Market	68.50%	65.50%	62.00%
Percentage Of Foreign And Export Sales	45.20%	46.70%	49.90%
Percentage Of Accounts Receivable From Significant Customer	15.30%	17.00%
Proceeds from Customers for Progress Payments	1.1	4.6
Finite-Lived Intangible Asset, Useful Life	10 years
Research and Development Expense	7.6	7.7	8.1
Certificate of deposit included in short-term investment	$ 12.0
Maximum [Member]
Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life	20 years
Minimum [Member]
Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life	4 years
Ford Motor Company [Member]
Accounting Policies [Line Items]
Percentage Of Foreign And Export Sales	20.00%	18.80%	16.20%
Chrysler Group Llc [Member]
Accounting Policies [Line Items]
Percentage Of Foreign And Export Sales	10.90%	10.00%

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Inventories (Tables)

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories as of December 31, 2013 and 2012 were as follows:

	December 31,
In thousands	2013		2012
Raw materials	$	11,944	$	12,501
Work in process		14,546		12,800
Finished goods		9,537		10,549
		36,027		35,850
Less: Progress billings		(1,110)		(4,558)
Total inventories	$	34,917	$	31,292

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Schedule of Condensed Balance Sheet

The following tooling related assets were included in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December, 31
In thousands	2013		2012
Inventories, net of progress billings and reserves	$	8,793	$	3,482
Prepaid expenses and other current assets, net		52		399
Total tooling related assets	$	8,845	$	3,881

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Acquisitions and Divestitures (Additional Information) (Detail) (USD $)	12 Months Ended			3 Months Ended		0 Months Ended	1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2011 Lydall Industrial Thermal Solutions Inc	Jun. 29, 2011 Lydall Industrial Thermal Solutions Inc	Jul. 02, 2012 Performance Materials Segment [Member] Electrical Paper Product [Member]	Jun. 30, 2010 Performance Materials Segment [Member] Electrical Paper Product [Member]	Jun. 30, 2010 Performance Materials Segment [Member] Electrical Paper Product [Member]	Dec. 31, 2012 License Agreement [Member]	Dec. 31, 2011 License Agreement [Member]	Dec. 31, 2010 License Agreement [Member]	Jun. 30, 2010 License Agreement [Member]
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	0	0	3,857,000	3,900,000
Proceeds from Divestiture of Businesses and Interests in Affiliates							5,800,000
Gain (Loss) on Sale of Business								2,500,000
Part Proceeds From Divestiture Of Businesses and Interests In Affiliates							4,800,000
Additional Proceeds From Divestiture Of Businesses and Interests In Affiliates						1,000,000
Net Gain Loss On Sale Of Business								1,700,000
Deferred Income On Sale								800,000		1,600,000	800,000
Remainder Of Gain Loss On Sale Of Business									800,000
Estimated Selling Price Of Business												$ 3,200,000

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Inventories (Summary of Inventories) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Inventory, Net [Abstract]
Raw materials	$ 11,944	$ 12,501
Work in process	14,546	12,800
Finished goods	9,537	10,549
Inventory, Gross, Total	36,027	35,850
Less: Progress billings	(1,110)	(4,558)
Total inventories	$ 34,917	$ 31,292

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment as of December 31, 2013 and 2012 were as follows:

		December 31,
In thousands	Estimated Useful Lives	2013		2012
Land	—	$	2,215	$	2,164
Buildings and improvements	10 – 35 years		48,779		46,033
Machinery and equipment	5 – 25 years		166,747		156,551
Office equipment	2 – 8 years		33,649		32,939
Vehicles	3 – 6 years		561		565
Assets under capital leases:
Land	—		692		664
Buildings and improvements	10 – 35 years		6,072		5,827
			258,715		244,743
Accumulated depreciation			(183,535)		(170,306)
Accumulated amortization of capital leases			(3,078)		(2,646)
			72,102		71,791
Construction in progress			6,761		4,463
Total property, plant and equipment		$	78,863	$	76,254

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Gross and net Carrying Amounts of Goodwill

Gross and net carrying amounts of goodwill at December 31, 2013 and 2012 are as follows:

In thousands	Performance Materials		Thermal/ Acoustical Metals		Other Products and Services		Totals
Goodwill	$	13,622	$	12,160	$	5,787	$	31,569
Accumulated amortization/impairment		—		(12,160)		(1,127)		(13,287)
Balance at December 31, 2012		13,622		—		4,660		18,282
Goodwill		13,929		12,160		5,787		31,876
Accumulated amortization/impairment		—		(12,160)		(1,127)		(13,287)
Balance at December 31, 2013	$	13,929	$	—	$	4,660	$	18,589

Changes in the Carrying Amounts of Goodwill

The changes in the carrying amounts of goodwill in 2012 and 2013 are as follows:

In thousands	Performance Materials		Other Products and Services		Totals
Balance at January 1, 2012	$	13,399	$	4,660	$	18,059
Goodwill adjustment		140		—		140
Currency translation adjustment		83		—		83
Balance at December 31, 2012		13,622		4,660		18,282
Goodwill adjustment		110		—		110
Currency translation adjustment		197		—		197
Balance at December 31, 2013	$	13,929	$	4,660	$	18,589

Amortization of the Companys Acquired Intangible Assets other than Goodwill

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December 31, 2013				December 31, 2012
In thousands	Gross Carrying Amount		Accumulated  Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
License agreements	$	881	$	(881)	$	860	$	(854)
Patents		6,766		(3,307)		6,522		(2,781)
Other		278		(227)		272		(194)
Total amortized intangible assets	$	7,925	$	(4,415)	$	7,654	$	(3,829)

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	Common Stock	Capital in excess of par value	Retained earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
Beginning Balance at Dec. 31, 2010	$ 154,145	$ 2,364	$ 54,799	$ 170,512	$ (8,330)	$ (65,200)
Beginning Balance (in shares) at Dec. 31, 2010		23,639
Net income	13,779			13,779
Other comprehensive income (loss), net of tax	(8,288)				(8,288)
Stock repurchased	(200)					(200)
Stock issued (cancelled) under employee plans (in shares)		(18)
Stock issued (cancelled) under employee plans	128	(1)	129
Excess tax benefit on stock awards	0
Stock based compensation expense	1,036		1,036
Stock issued to directors (in shares)		24
Stock issued to directors	252	2	250
Ending Balance at Dec. 31, 2011	160,852	2,365	56,214	184,291	(16,618)	(65,400)
Ending Balance (in shares) at Dec. 31, 2011		23,645
Net income	16,806			16,806
Other comprehensive income (loss), net of tax	(1,748)				(1,748)
Stock repurchased	(3,998)					(3,998)
Stock issued (cancelled) under employee plans (in shares)		122
Stock issued (cancelled) under employee plans	972	12	960
Excess tax benefit on stock awards	211		211
Stock based compensation expense	1,149		1,149
Stock issued to directors (in shares)		18
Stock issued to directors	252	2	250
Ending Balance at Dec. 31, 2012	174,496	2,379	58,784	201,097	(18,366)	(69,398)
Ending Balance (in shares) at Dec. 31, 2012	23,785	23,785
Net income	19,155			19,155
Other comprehensive income (loss), net of tax	9,522				9,522
Stock repurchased	(6,617)					(6,617)
Stock issued (cancelled) under employee plans (in shares)		297
Stock issued (cancelled) under employee plans	1,497	30	1,467
Excess tax benefit on stock awards	271		271
Stock based compensation expense	1,511		1,511
Stock issued to directors (in shares)		16
Stock issued to directors	252	1	251
Ending Balance at Dec. 31, 2013	$ 200,087	$ 2,410	$ 62,284	$ 220,252	$ (8,844)	$ (76,015)
Ending Balance (in shares) at Dec. 31, 2013	24,098	24,098

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Long-term Debt and Financing Arrangements (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

Total outstanding debt consists of:

					December 31,
In thousands	Effective Rate		Maturity		2013		2012
Volksbank Meinerzhagen eG	5.95	%		2013	$	—	$	63
Capital Lease, land and building, St. Nazaire, France	5.44	%		2016		1,647		2,246
Capital Lease, manufacturing equipment, Hamptonville, North Carolina	5.00	%		2017		67		102
						1,714		2,411
Less portion due within one year						(663)		(765)
Total long-term debt					$	1,051	$	1,646

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Earnings Per Share (Reconciliation of Weighted Average Shares Used to Determine Basic and Diluted Earnings Per Share) (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share Disclosure [Line Items]
Basic average common shares outstanding	16,570	16,717	16,753
Effect of dilutive options and restricted stock awards	296,000	256,000	143,000
Diluted average common shares outstanding	16,866	16,973	16,896

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Summarizes Quarterly Financial Results

The following table summarizes quarterly financial results for 2013 and 2012. In management’s opinion, all material adjustments necessary for a fair statement of the information for such quarters have been reflected.

	1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
In thousands except per share data	2013		2012		2013		2012		2013		2012		2013		2012
Net sales	$	99,029	$	96,754	$	101,051	$	97,535	$	97,995	$	94,167	$	99,894	$	90,468
Gross profit	$	21,365	$	19,241	$	23,037	$	21,993	$	20,494		19,269	$	20,329	$	17,304
Net income	$	4,492	$	3,912	$	5,955	$	6,592	$	4,575	$	3,875	$	4,133	$	2,427
Basic earnings per share:
Continuing operations	$	0.27	$	0.23	$	0.36	$	0.39	$	0.28	$	0.23	$	0.25	$	0.15
Net income	$	0.27	$	0.23	$	0.36	$	0.39	$	0.28	$	0.23	$	0.25	$	0.15
Diluted earnings per share:
Continuing operations	$	0.26	$	0.23	$	0.35	$	0.39	$	0.27	$	0.23	$	0.25	$	0.14
Net income	$	0.26	$	0.23	$	0.35	$	0.39	$	0.27	$	0.23	$	0.25	$	0.14

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Long-term Debt and Financing Arrangements (Additional Information) (Detail)	12 Months Ended					12 Months Ended					12 Months Ended		1 Months Ended				1 Months Ended
	Dec. 31, 2013 USD ($)	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2011 EUR (€)	Dec. 31, 2013 Standby Letters of Credit [Member] USD ($)	Dec. 31, 2013 Variable Income Interest Rate [Member] Type1 [Member]	Dec. 31, 2013 Variable Income Interest Rate [Member] Type2 [Member]	Sep. 30, 2011 Letter Of Credit [Member] EUR (€)	Dec. 31, 2013 Minimum	Dec. 31, 2013 Maximum	Dec. 31, 2013 Domestic Credit Facility USD ($)	Dec. 31, 2012 Domestic Credit Facility USD ($)	Feb. 18, 2014 Domestic Credit Facility Subsequent Event [Member] USD ($)	Dec. 31, 2013 Foreign Credit Facility USD ($)	Dec. 31, 2013 Foreign Credit Facility EUR (€)	Sep. 30, 2011 Foreign Credit Facility EUR (€)	Feb. 18, 2014 Amended Credit Facility [Member] Subsequent Event [Member] USD ($)
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity											$ 35,000,000		$ 35,000,000
Required consolidated leverage ratio as of end of each fiscal quarter									2.0	3.0
Required Consolidated EBITDA	30,000,000
Debt instrument, covenant compliance	The Company was in compliance with all covenants at December 31, 2013 and December 31, 2012.
Line of credit facility, remaining borrowing capacity											32,400,000
Line of credit facility, amount available for borrowings														12,400,000	9,000,000
Foreign credit facility, maximum borrowing capacity				8,000,000				2,000,000								6,000,000
Credit facility interest rate description						the federal funds rate plus 0.50%	the Eurocurrency Rate plus 1.00%
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months	700,000
Long-term Debt, Maturities, Repayments of Principal in Year Two	700,000
Long-term Debt, Maturities, Repayments of Principal in Year Three	300,000
Debt, Weighted Average Interest Rate	5.40%	5.40%	5.40%
Line of Credit Facility, Amount Outstanding											0	0
Letters of Credit Outstanding, Amount					2,600,000
Line Of Credit Facility Maximum Borrowing Capacity Increased Value													100,000,000				100,000,000
Line of Credit Facility, Expiration Date											Jun. 15, 2016		Jan. 31, 2019
Line Of Credit Facility Maximum Borrowing Capacity Possible Value Of Increase																	$ 50,000,000

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Segment Information (Net Sales by Geographic Area) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 397,969	$ 378,924	$ 383,588
Long-Lived Assets	80,325	78,008	81,769
United States [Member]
Segment Reporting Information [Line Items]
Net sales	269,989	251,695	239,101
Long-Lived Assets	48,787	45,979	48,803
France [Member]
Segment Reporting Information [Line Items]
Net sales	47,831	52,517	58,974
Long-Lived Assets	16,436	17,463	17,621
Germany [Member]
Segment Reporting Information [Line Items]
Net sales	77,229	71,896	81,424
Long-Lived Assets	13,287	13,542	14,065
Others [Member]
Segment Reporting Information [Line Items]
Net sales	2,920	2,816	4,089
Long-Lived Assets	$ 1,815	$ 1,024	$ 1,280

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net sales	$ 397,969	$ 378,924	$ 383,588
Cost of sales	312,744	301,117	316,082
Gross profit	85,225	77,807	67,506
Selling, product development and administrative expenses	56,512	57,239	52,937
Gain on sale of product line	0	(810)	(1,619)
Operating income	28,713	21,378	16,188
Interest expense	304	365	880
Other expense (income), net	67	31	(94)
Income from continuing operations before income taxes	28,342	20,982	15,402
Income tax expense from continuing operations	9,187	4,176	6,355
Income from continuing operations	19,155	16,806	9,047
Income from discontinued operations, net	0	0	4,732
Net income	$ 19,155	$ 16,806	$ 13,779
Basic earnings per common share:
Continuing operations	$ 1.16	$ 1.01	$ 0.54
Discontinued operations	$ 0	$ 0	$ 0.28
Net income	$ 1.16	$ 1.01	$ 0.82
Weighted average common shares outstanding	16,570	16,717	16,753
Diluted earnings per common share:
Continuing operations	$ 1.14	$ 0.99	$ 0.54
Discontinued operations	$ 0	$ 0	$ 0.28
Net income	$ 1.14	$ 0.99	$ 0.82
Weighted average common shares and equivalents outstanding	16,866	16,973	16,896

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Inventories (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Inventory [Line Items]
Gross Tooling Inventory	$ 9.9	$ 8.0
Tooling Inventory Net Of Progress Billings	$ 8.8	$ 3.5

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Accounts receivable, allowance for doubtful receivables	$ 480	$ 469
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, authorized	500,000	500,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$ 0.10	$ 0.10
Common stock, authorized	30,000	30,000
Common stock, issued	24,098	23,785
Treasury stock, shares	7,279	6,821

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Employer Sponsored Benefit Plan (Defined Benefit Pension Plan with an Accumulated Benefit Obligation In Excess of Plan Assets) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Projected benefit obligation	$ 53,427	$ 60,020
Accumulated benefit obligation	53,427	60,020
Fair value of plan assets	$ 40,680	$ 36,355

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Equity Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended December 31:

	2013		2012		2011
Risk-free interest rate	1.7	%	1.4	%	2.6	%
Expected life	5.2 years		5.7 years		5.5 years
Expected volatility	65	%	68	%	69	%
Expected dividend yield	0	%	0	%	0	%

Schedule of Nonvested Share Activity

The following is a summary of the option activity as of December 31, 2013 and changes during the year then ended:

In thousands except per share amounts and years

	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012	847	$	9.59
Granted	75	$	16.61
Exercised	(158)	$	9.45
Forfeited/Cancelled	(6)	$	8.21
Outstanding at December 31, 2013	758	$	10.32		6.3	$	5,538
Options exercisable at December 31, 2013	491	$	9.05		4.9	$	4,213
Expected to vest at December 31, 2013	259	$	12.72		8.8	$	1,267

Schedule of Nonvested Restricted Stock Units Activity

The following is a summary of the Company’s unvested restricted shares for the year ended and as of December 31, 2013:

In thousands except per share amounts
Outstanding Restricted Shares	Shares	Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2012	290	$	9.71
Granted	124	$	16.01
Vested	(95)	$	5.85
Forfeited/Cancelled	(11)	$	13.27
Outstanding at December 31, 2013	308	$	12.99
Expected to vest at December 31, 2013	282	$	13.71

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Employer Sponsored Benefit Plan (Additional Information) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Estimated actuarial net loss to be amortized in 2014	$ (1,069,000)	$ (918,000)	$ (582,000)
Expected return on plan assets, Benefit Obligation	7.25%	7.50%
Defined Contribution Plan Employer Contribution	1,700,000	1,600,000	1,400,000
Accumulated other comprehensive loss	14,830,000	21,342,000
Defined Contribution Plan Employer Matching Contribution Percent Of Match Description	Matching contributions by the Company are made on employee pretax contributions up to five percent of compensation, with the first three percent matched at 100% and the next two percent matched at 50%.
United States Pension Plans Of Us Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Accrued Benefit Liability	12,700,000	23,700,000
Foreign Operations
Defined Benefit Plan Disclosure [Line Items]
Accrued Benefit Liability	1,200,000	1,200,000
Accumulated other comprehensive loss	200,000	200,000
Domestic Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Increase or decrease in pension liability included in other comprehensive income	6,500,000	2,900,000
Estimated actuarial net loss to be amortized in 2014	700,000
Cash	$ 4,200,000

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Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (Unaudited)

14. Quarterly Financial Information (Unaudited)

The following table summarizes quarterly financial results for 2013 and 2012. In management’s opinion, all material adjustments necessary for a fair statement of the information for such quarters have been reflected.

	1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
In thousands except per share data	2013		2012		2013		2012		2013		2012		2013		2012
Net sales	$	99,029	$	96,754	$	101,051	$	97,535	$	97,995	$	94,167	$	99,894	$	90,468
Gross profit	$	21,365	$	19,241	$	23,037	$	21,993	$	20,494		19,269	$	20,329	$	17,304
Net income	$	4,492	$	3,912	$	5,955	$	6,592	$	4,575	$	3,875	$	4,133	$	2,427
Basic earnings per share:
Continuing operations	$	0.27	$	0.23	$	0.36	$	0.39	$	0.28	$	0.23	$	0.25	$	0.15
Net income	$	0.27	$	0.23	$	0.36	$	0.39	$	0.28	$	0.23	$	0.25	$	0.15
Diluted earnings per share:
Continuing operations	$	0.26	$	0.23	$	0.35	$	0.39	$	0.27	$	0.23	$	0.25	$	0.14
Net income	$	0.26	$	0.23	$	0.35	$	0.39	$	0.27	$	0.23	$	0.25	$	0.14

Gross profit in the first quarter of 2013 included a completed pricing negotiation and a non-recurring customer project which contributed to an increase in gross profit of $ 1.8 million.

Net income during the quarters ended March 31, 2013 and June 30, 2013 were positively impacted by discrete tax benefits of $ 0.5 million and $ 0.3 million, respectively, related to the conclusion of certain U.S. federal income tax matters. Net income during the quarter ended December 31, 2013 was positively impacted by the reversal of valuation allowances associated with state tax credit carryovers of $ 0.9 million. (See Note 11)

Net income in each quarter of 2012 was positively impacted by the reversal of valuation allowances associated with foreign tax credit carryovers, impacting the first, second, third and fourth quarters by $ 0.8 million, $ 1.3 million, $ 0.5 million and $ 1.3 million, respectively. (See Note 11)

As a result of a change in information technology strategy and approach, the Company recorded a $ 1.8 million asset impairment charge in the fourth quarter of 2012 related to impairment of previously capitalized software development costs. (See Note 3)

During the quarter ended September 30, 2012, the Company identified an error within its Thermal/Acoustical Metals segment related to customer pricing that resulted in the overstatement of consolidated net sales for the quarters ended March 31, 2012 and June 30, 2012 of $ 0.3 million and $ 0.2 million, respectively. The correction of this error was recorded as a reduction in net sales and accounts receivable of $ 0.5 million during the quarter ended September 30, 2012. Also, in the Thermal/Acoustical Metals segment, an additional $ 0.1 million error was identified in the quarter ended December 31, 2012 which resulted in the overstatement of consolidated cost of sales and accounts payable for the quarter ended September 30, 2012, which was corrected in the quarter ended December 31, 2012. These errors were quantitatively and qualitatively immaterial to all quarters impacted.

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Net sales by segment and for OPS, as well as reconciling items, to equal to consolidated net sales for the years ended December 31, 2013, 2012, and 2011 were as follows:

Consolidated Net Sales	For the Years Ended December 31,
In thousands	2013		2012		2011
Performance Materials Segment:
Filtration	$	64,752	$	68,379	$	72,888
Thermal Insulation		36,929		38,449		47,299
Life Sciences Filtration		10,320		11,207		13,872
Performance Materials Segment net sales		112,001		118,035		134,059
Thermal/Acoustical Metals Segment
Metal parts		135,833		136,276		142,646
Tooling		22,573		17,645		13,290
Thermal/Acoustical Metals Segment net sales		158,406		153,921		155,936
Thermal/Acoustical Fibers Segment:
Fiber parts		105,876		93,519		79,631
Tooling		8,444		917		2,116
Thermal/Acoustical Fibers Segment net sales		114,320		94,436		81,747
Other Products and Services:
Life Sciences Vital Fluids		17,175		16,853		14,670
Other Products and Services net sales		17,175		16,853		14,670
Eliminations and Other		(3,933)		(4,321)		(2,824)
Consolidated Net Sales	$	397,969	$	378,924	$	383,588

Operating income from continuing operations by segment and for OPS and Corporate Office Expenses for the years ended December 31, 2013, 2012, and 2011 were as follows:

Operating Income from Continuing Operations	For the Years Ended December 31,
In thousands	2013		2012		2011
Performance Materials Segment	$	9,462	$	10,400	$	18,194
Thermal/Acoustical Metals Segment		14,088		14,708		15,915
Thermal/Acoustical Fibers Segment		21,486		12,851		(3,055)
Other Products and Services:
Life Sciences Vital Fluids		778		1,190		(1,040)
Corporate Office Expenses		(17,101)		(17,771)		(13,826)
Consolidated Operating Income from Continuing Operations	$	28,713	$	21,378	$	16,188

Total Assets By Segment

Total assets by segment and for OPS and the Corporate Office were as follows at December 31, 2013, 2012 and 2011:

Total Assets	December 31,
In thousands	2013		2012		2011
Performance Materials Segment	$	74,838	$	74,119	$	71,379
Thermal/Acoustical Metals Segment		104,908		96,019		93,921
Thermal/Acoustical Fibers Segment		30,176		26,830		28,844
Other Products and Services		11,866		11,195		11,064
Corporate Office		52,897		43,753		29,977
Total Assets	$	274,685	$	251,916	$	235,185

Total capital expenditures and depreciation and amortization by segment and for OPS and the Corporate Office for the years ended December 31, 2013, 2012 and 2011 were as follows:

	Capital Expenditures						Depreciation and Amortization
In thousands	2013		2012		2011		2013		2012		2011
Performance Materials Segment	$	4,604	$	5,231	$	3,801	$	4,667	$	5,290	$	5,718
Thermal/Acoustical Metals Segment		6,027		4,063		2,413		4,777		5,019		5,210
Thermal/Acoustical Fibers Segment		1,887		1,033		1,148		2,217		2,324		2,536
Other Products and Services		243		128		270		588		596		726
Corporate Office		1,065		949		1,252		344		343		288
Total	$	13,826	$	11,404	$	8,884	$	12,593	$	13,572	$	14,478

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country

Net sales by geographic area for the years ended December 31, 2013, 2012 and 2011 and long-lived asset information by geographic area as of December 31, 2013, 2012, and 2011 were as follows:

	Net Sales						Long-Lived Assets
In thousands	2013		2012		2011		2013		2012		2011
United States	$	269,989	$	251,695	$	239,101	$	48,787	$	45,979	$	48,803
France		47,831		52,517		58,974		16,436		17,463		17,621
Germany		77,229		71,896		81,424		13,287		13,542		14,065
Other		2,920		2,816		4,089		1,815		1,024		1,280
Total	$	397,969	$	378,924	$	383,588	$	80,325	$	78,008	$	81,769

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Changes in Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss)

16. Changes in Accumulated Other Comprehensive Income (Loss)

The following table discloses the changes by classification within accumulated other comprehensive income (loss) for the period ended December 31, 2013, 2012 and 2011:

In thousands	Foreign Currency Translation Adjustment		Defined Benefit Pension Adjustment			Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2010	$	4,169	$	(12,499)		$	(8,330)
Other Comprehensive loss		(2,232)		(6,403)	(a)		(8,635)
Amounts reclassified from accumulated other comprehensive income		—		347	(b)		347
Balance at December 31, 2011	$	1,937	$	(18,555)		$	(16,618)
Other Comprehensive income (loss)		1,241		(3,558)	(a)		(2,317)
Amounts reclassified from accumulated other comprehensive income		—		569	(b)		569
Balance at December 31, 2012	$	3,178	$	(21,544)		$	(18,366)
Other Comprehensive income		2,950		5,909	(a)		8,859
Amounts reclassified from accumulated other comprehensive income		—		663	(b)		663
Balance at December 31, 2013	$	6,128	$	(14,972)		$	(8,844)

(a) Amount represents actuarial gains (losses) arising from the Company’s postretirement benefit obligation. This amount was $ 5.9 million, net of $ 3.6 million tax expense, for 2013, $ (3.6) million, net of a $ 2.1 million tax benefit, for 2012 and $ (6.4) million, net of $ 3.9 million tax benefit in 2011. See Note 8, Employer Sponsored Benefit Plans.

(b) Amount represents the amortization of actuarial losses to pension expense arising from the Company’s postretirement benefit obligation. This amount was $ 0.7 million, net of  $ 0.4 million tax benefit, for 2013, $ 0.6 million, net of  $ 0.3 million tax benefit, for 2012 and $ 0.3 million, net of $ 0.2 million tax benefit in 2011. See Note 8.

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Equity Compensation Plans (Summary of Unvested Restricted Shares) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Restricted stock awards Outstanding	290
Restricted shares Granted	124
Restricted shares Vested	(95)
Restricted Stock Forfeited/Cancelled	(11)
Restricted stock awards Outstanding	308
Restricted Shares Expected to Vest	282
Weighted-Average Exercise Price, Outstanding	$ 9.71
Weighted-Average Exercise Price, Granted	$ 16.01
Weighted-Average Exercise Price, Exercised	$ 5.85
Weighted-Average Exercise Price, Forfeited/Cancelled	$ 13.27
Weighted-Average Exercise Price, Outstanding	$ 12.99
Weighted-Average Grant-Date Fair Value, Expected To Vest	$ 13.71

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net income	$ 19,155	$ 16,806	$ 13,779
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of discontinued operations, net of tax	0	0	(3,857)
Gain on sale of product line	0	(810)	(1,619)
Depreciation and amortization	12,593	13,572	14,478
Amortization of debt issuance costs	110	110	525
Deferred income taxes	969	(1,649)	1,182
Stock based compensation	1,763	1,401	1,288
Impairment and loss on disposition of property, plant and equipment	359	1,977	198
Accounts receivable	(4,101)	(150)	(4,088)
Inventories	(3,046)	2,728	(348)
Taxes Receivable	(640)	(355)	112
Prepaid expenses and other assets	161	620	(843)
Accounts payable	(59)	1,118	(3,892)
Accrued payroll and other compensation	(121)	1,152	573
Accrued taxes	96	(693)	(667)
Other liabilities, net	3,041	(1,422)	(2,164)
Net cash provided by operating activities	30,280	34,405	14,657
Cash flows from investing activities:
Net proceeds from divestiture	0	0	13,982
Redemption (purchase) of short-term investment	0	12,015	(12,000)
Capital expenditures	(13,826)	(11,404)	(8,884)
Proceeds from sale of a product line	0	1,000	0
Reimbursement of cash from leasing company	0	0	818
Increase in restricted cash	0	0	(225)
Acquisition earn out payments	(160)	0	0
Net cash (used for) provided by investing activities	(13,986)	1,611	(6,309)
Cash flows from financing activities:
Debt repayments	(34)	(285)	(255)
Capital lease payments	(734)	(771)	(1,294)
Common stock issued	1,497	972	128
Common stock repurchased	(6,617)	(3,998)	(200)
Excess tax benefit on stock awards	271	211	0
Net cash used for financing activities	(5,617)	(3,871)	(1,621)
Effect of exchange rate changes on cash	1,107	573	(810)
Increase in cash and cash equivalents	11,784	32,718	5,917
Cash and cash equivalents at beginning of period	63,623	30,905	24,988
Cash and cash equivalents at end of period	75,407	63,623	30,905
Cash paid during the year for:
Interest	214	255	351
Income taxes	$ 7,227	$ 5,347	$ 6,308

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net income	$ 19,155	$ 16,806	$ 13,779
Other comprehensive income:
Change in pension plans, net of income taxes of $4,028, $1,832, and $3,712	6,572	(2,989)	(6,056)
Foreign currency translation adjustments	2,950	1,241	(2,232)
Total other comprehensive income (loss), net of tax	9,522	(1,748)	(8,288)
Comprehensive income	$ 28,677	$ 15,058	$ 5,491

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Equity Compensation Plans

12 Months Ended

Dec. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Equity Compensation Plans

9. Equity Compensation Plans

As of December 31, 2013, the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (the “2003 Plan”) and the 2012 Stock Incentive Plan (the “2012 Plan” and together with the 2003 Plan, 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 1,750,000 shares of common stock for awards. The 2012 Plan also authorizes an additional 1,200,000 million shares of common stock 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 accounts for the expense of all share-based compensation by measuring the awards at fair value on the date of grant. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Options issued by the Company under its stock option plans have a term of ten years and generally vest ratably over a period of three to four years. Time-based restricted stock grants are expensed over the vesting period of the award, which is typically two to four years. The number of performance based restricted shares that vest or forfeit depend upon achievement of certain targets during the performance period. Stock-based compensation expense includes the estimated effects of forfeitures. Compensation expense for performance based awards is recorded based upon management’s assessment of the probability of achieving the performance goals and service period and will be adjusted based upon actual achievement. Stock options issued under the current plan must have an exercise price that may not be less than the fair market value of the Company’s Common Stock on the date of grant. The Plans provide for automatic acceleration of vesting in the event of a change in control of the Company. Upon the exercise of a stock option under the Plans, shares are issued from authorized shares or treasury shares held by the Company.

The Company incurred compensation expense of $ 1.8 million, $ 1.4 million, and $ 1.3 million for the years ended December 31, 2013, 2012, and 2011, respectively, for all stock-based compensation plans, including restricted stock awards. No compensation costs were capitalized as part of inventory. The associated tax benefit realized was $ 1.0 million, $ 0.5 million, and $ 0.4 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Stock Options

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended December 31:

	2013		2012		2011
Risk-free interest rate	1.7	%	1.4	%	2.6	%
Expected life	5.2 years		5.7 years		5.5 years
Expected volatility	65	%	68	%	69	%
Expected dividend yield	0	%	0	%	0	%

The following is a summary of the option activity as of December 31, 2013 and changes during the year then ended:

In thousands except per share amounts and years

	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012	847	$	9.59
Granted	75	$	16.61
Exercised	(158)	$	9.45
Forfeited/Cancelled	(6)	$	8.21
Outstanding at December 31, 2013	758	$	10.32		6.3	$	5,538
Options exercisable at December 31, 2013	491	$	9.05		4.9	$	4,213
Expected to vest at December 31, 2013	259	$	12.72		8.8	$	1,267

The Company granted 75,279, 146,500, and 177,500 stock options during 2013, 2012, and 2011, respectively. The weighted-average grant-date fair value of options granted during the years 2013, 2012, and 2011 was $9.41, $7.79, and $5.43, respectively. There were 158,322 options exercised in 2013, 129,675 options exercised in 2012, and 35,874 options exercised in 2011. The intrinsic value for options exercised during 2013 was $ 1.0 million and the associated tax benefit realized from stock options exercised was $ 0.3 million. The total intrinsic value for options exercised during 2012 was $0.7 million and the associated tax benefit realized from stock options exercised was $ 0.2 million. The total intrinsic value for options exercised during 2011 was $0.1 million and the associated tax benefit realized from stock options exercised was minimal. The amount of cash received from the exercise of stock options was $1.5 million in 2013, $1.0 million in 2012, and $0.1 million in 2011. At December 31, 2013, the total unrecognized compensation cost related to non-vested stock option awards was approximately $1.6 million, with a weighted average expected amortization period of 2.9 years.

Restricted Stock

The following is a summary of the Company’s unvested restricted shares for the year ended and as of December 31, 2013:

In thousands except per share amounts
Outstanding Restricted Shares	Shares	Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2012	290	$	9.71
Granted	124	$	16.01
Vested	(95)	$	5.85
Forfeited/Cancelled	(11)	$	13.27
Outstanding at December 31, 2013	308	$	12.99
Expected to vest at December 31, 2013	282	$	13.71

Restricted stock includes both performance-based and time-based awards. Compensation for restricted stock is recorded based on the market value of the stock on the grant date and amortized to expense over the vesting period of the award. The Company granted 95,090, 114,500, and 22,000 shares of performance-based restricted stock during 2013, 2012, and 2011, respectively. The Company granted 29,480 shares of time-based restricted stock in 2013, 73,750 shares in 2012, and none in 2011. The weighted average fair value per share of restricted stock granted was $16.01, $12.56, and $5.54 during 2013, 2012, and 2011, respectively. During 2013, 2012, and 2011, respectively, there were 10,565, 171,369, and 59,440 shares of restricted stock forfeited. The fair value of awards for which restrictions lapsed during the years ended December 31, 2013, 2012, and 2011 was $1.6 million, $0.6 million, and $0.6 million, respectively. At December 31, 2013, the total unrecognized compensation cost related to non-vested restricted stock awards was approximately $1.6 million, with a weighted average expected amortization period of 2.1 years.

Stock Repurchase Program

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 423,244 shares of its common stock at an average price of $14.30 per share for an aggregate purchase price of $6.1 million during the year ended December 31, 2013 under the 2012 Stock Repurchase Program. As of December 31, 2013, there were 267,089 shares remaining and authorized for repurchase under the 2012 Stock Repurchase Program.

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Schedule II - Valuation and Qualifying Accounts Additional Information (Detail) (USD $)	12 Months Ended	1 Months Ended
	Dec. 31, 2004	Jun. 30, 2011 Affinity Business [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Reserve On Note Receivable	$ 500,000
Reduction In Reserve Due To Sale Of Business		$ 66,000

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Feb. 18, 2014	Jun. 28, 2013
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	LDL
Entity Registrant Name	LYDALL INC /DE/
Entity Central Index Key	0000060977
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		16,820,109
Entity Public Float			$ 235,067,855

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Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

10. 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 the Company’s Filtration, 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.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions for air, fluid power, and industrial applications (“Filtration”), air and liquid life science applications (“Life Sciences Filtration”), and thermal insulation solutions for building products, appliances, and energy and industrial markets (“Thermal Insulation”). 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^TM Membrane Composite Media. These products constitute the critical media components 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 series address a variety of application needs in fluid power, including hydraulic filters, air-water and air-oil coalescing, industrial fluid processes and diesel fuel filtration.

Life Sciences Filtration products have been 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.

Thermal Insulation products are high performance non-woven veils, papers, mats and specialty composites for the building products, appliance, and energy and industrial fields. The Manniglas® Thermal Insulation brand is diverse in its product application, ranging from high temperature seals and gaskets in ovens to specialty veils for HVAC and cavity wall insulation. The appLY® 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^TM 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 range of innovative engineered products to assist in noise and heat abatement within the transportation sector. Lydall products are found in the underbody (tunnel, fuel tank, exhaust, rear muffler, and spare tire) and under hood (engine compartment, turbo charger, and manifolds) of cars, trucks, SUVs, 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 using aluminized and stainless steel with high performance heat absorbing metals. Additionally, a patented CLD (constraint layer damped) material is a lightweight material with characteristics to reduce vibration and parasitic noise on powertrain mounted heat shields.

Thermal/Acoustical Fibers Segment

The Thermal/Acoustical Fibers segment offers a 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, and exhaust) and under hood (engine compartment) of cars, vans, trucks, SUVs, 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^® composite 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^® barrier 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 the design and manufacture of single-use solutions for cell growth, frozen storage and fluid handling, as well as equipment for bioprocessing applications.

Net sales by segment and for OPS, as well as reconciling items, to equal to consolidated net sales for the years ended December 31, 2013, 2012, and 2011 were as follows:

Consolidated Net Sales	For the Years Ended December 31,
In thousands	2013		2012		2011
Performance Materials Segment:
Filtration	$	64,752	$	68,379	$	72,888
Thermal Insulation		36,929		38,449		47,299
Life Sciences Filtration		10,320		11,207		13,872
Performance Materials Segment net sales		112,001		118,035		134,059
Thermal/Acoustical Metals Segment
Metal parts		135,833		136,276		142,646
Tooling		22,573		17,645		13,290
Thermal/Acoustical Metals Segment net sales		158,406		153,921		155,936
Thermal/Acoustical Fibers Segment:
Fiber parts		105,876		93,519		79,631
Tooling		8,444		917		2,116
Thermal/Acoustical Fibers Segment net sales		114,320		94,436		81,747
Other Products and Services:
Life Sciences Vital Fluids		17,175		16,853		14,670
Other Products and Services net sales		17,175		16,853		14,670
Eliminations and Other		(3,933)		(4,321)		(2,824)
Consolidated Net Sales	$	397,969	$	378,924	$	383,588

Operating income from continuing operations by segment and for OPS and Corporate Office Expenses for the years ended December 31, 2013, 2012, and 2011 were as follows:

Operating Income from Continuing Operations	For the Years Ended December 31,
In thousands	2013		2012		2011
Performance Materials Segment	$	9,462	$	10,400	$	18,194
Thermal/Acoustical Metals Segment		14,088		14,708		15,915
Thermal/Acoustical Fibers Segment		21,486		12,851		(3,055)
Other Products and Services:
Life Sciences Vital Fluids		778		1,190		(1,040)
Corporate Office Expenses		(17,101)		(17,771)		(13,826)
Consolidated Operating Income from Continuing Operations	$	28,713	$	21,378	$	16,188

Operating results were impacted by a net gain on sale of a product line in the Performance Materials segment of $ 0.8 million in 2012 and $ 1.6 million in 2011 and a loss on disposal of assets in Corporate Office Expenses and the Performance Materials segment of $ 1.5 million and $ 0.3 million in 2012, respectively. Total assets by segment and for OPS and the Corporate Office were as follows at December 31, 2013, 2012 and 2011:

Total Assets	December 31,
In thousands	2013		2012		2011
Performance Materials Segment	$	74,838	$	74,119	$	71,379
Thermal/Acoustical Metals Segment		104,908		96,019		93,921
Thermal/Acoustical Fibers Segment		30,176		26,830		28,844
Other Products and Services		11,866		11,195		11,064
Corporate Office		52,897		43,753		29,977
Total Assets	$	274,685	$	251,916	$	235,185

Total capital expenditures and depreciation and amortization by segment and for OPS and the Corporate Office for the years ended December 31, 2013, 2012 and 2011 were as follows:

	Capital Expenditures						Depreciation and Amortization
In thousands	2013		2012		2011		2013		2012		2011
Performance Materials Segment	$	4,604	$	5,231	$	3,801	$	4,667	$	5,290	$	5,718
Thermal/Acoustical Metals Segment		6,027		4,063		2,413		4,777		5,019		5,210
Thermal/Acoustical Fibers Segment		1,887		1,033		1,148		2,217		2,324		2,536
Other Products and Services		243		128		270		588		596		726
Corporate Office		1,065		949		1,252		344		343		288
Total	$	13,826	$	11,404	$	8,884	$	12,593	$	13,572	$	14,478

Net sales by geographic area for the years ended December 31, 2013, 2012 and 2011 and long-lived asset information by geographic area as of December 31, 2013, 2012, and 2011 were as follows:

	Net Sales						Long-Lived Assets
In thousands	2013		2012		2011		2013		2012		2011
United States	$	269,989	$	251,695	$	239,101	$	48,787	$	45,979	$	48,803
France		47,831		52,517		58,974		16,436		17,463		17,621
Germany		77,229		71,896		81,424		13,287		13,542		14,065
Other		2,920		2,816		4,089		1,815		1,024		1,280
Total	$	397,969	$	378,924	$	383,588	$	80,325	$	78,008	$	81,769

Foreign sales are based on the country in which the sales originated (i.e., where the Company’s legal entity is domiciled). Sales to Ford Motor Company in 2013, 2012, and 2011 were $ 79.7 million, $ 71.2 million, and $ 62.2 million respectively and accounted for 20.0%, 18.8%, and 16.2% of Lydall’s net sales in the years ended December 31, 2013, 2012, and 2011, respectively. Sales to Chrysler Group LLC in 2013 and 2012 were $ 43.5 million and $ 38.0 million, respectively and accounted for 10.9% and 10.0% of Lydall’s net sales in the years ended December 31, 2013 and 2012, respectively. These sales were reported in the Thermal/Acoustical Metal and Thermal/Acoustical Fiber segments. No other customers accounted for more than 10.0% of total net sales in 2013, 2012, and 2011.

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Income Taxes (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Line Items]
Effective tax rate for income from continuing operations	32.40%	19.90%	41.30%
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	$ 9.9
Income Tax Reconciliation, State and Local Income Taxes	1.1
Tax Credit Carry forward Reversal Of Valuation Allowance	1.1	3.9
Reversal Of Valuation Allowances State Net Operating Loss Carryovers	0.2
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	1.1
Income Tax Reconciliation Domestic Production Activities	0.8
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount	0.5
Valuation Allowance, Deferred Tax Asset, Change in Amount	0.6	0.5
Unpaid income taxes on undistributed earnings of international subsidiaries	22.2
State and Local Jurisdiction [Member]
Income Taxes [Line Items]
Tax credit carryforward, amount	3.0
Income Tax Reconciliation State And Local Income Taxes Expected To Offset In Current Year	0.3
Valuation Reserve Against Net Operating Loss Carry forwards	1.7
Future Benefits [Member]
Income Taxes [Line Items]
Income Tax Reconciliation State And Local Income Taxes Expected To Benefit Future Periods	0.8
Frances [Member]
Income Taxes [Line Items]
Valuation Reserve Against Net Operating Loss Carry forwards	4.5
Netherlands [Member]
Income Taxes [Line Items]
Valuation Allowance, Deferred Tax Asset, Change in Amount		0.7
Valuation Reserve Against Net Operating Loss Carry forwards	$ 9.6

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Schedule II - Valuation and Qualifying Accounts (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Allowance for Doubtful Receivables [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Valuation Allowances and Reserves, Beginning Balance	$ 469		$ 622		$ 945
Charges to Costs and Expenses	60		162		79
Charges (Deductions) to Other Accounts	15	[1]	7	[1]	(75)	[1],[2]
Deductions	(64)	[3]	(322)	[3]	(327)	[3]
Valuation Allowances and Reserves, Ending balance	480		469		622
Allowance for Note Receivable [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Valuation Allowances and Reserves, Beginning Balance			480	[4]	480
Charges to Costs and Expenses			0		0
Charges (Deductions) to Other Accounts			0		0
Deductions			(480)	[4]	0
Valuation Allowances and Reserves, Ending balance			0	[4]	480	[4]
Tax Valuation Allowances [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Valuation Allowances and Reserves, Beginning Balance	3,587		7,132		6,023
Charges to Costs and Expenses	855		854		1,359
Charges (Deductions) to Other Accounts	0		0		0
Deductions	(1,127)	[5]	(4,399)	[5]	(250)	[5]
Valuation Allowances and Reserves, Ending balance	$ 3,315		$ 3,587		$ 7,132

[1] Foreign currency translation and other adjustments.

[2] Includes deduction of $66,000 relating to sale of Affinity business in June, 2011.

[3] Uncollected receivables written off and recoveries.

[4] A reserve for $0.5 million was recorded during 2004 for the remaining balance of the note receivable associated with the sale of certain assets of the fiberboard operation in 2001, which was included within “Prepaid expenses and other current assets” on the Consolidated Balance Sheets as of December 31, 2011 and 2010. The receivable was written off against the reserve in 2012.

[5] Reduction to income tax expense.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Change in pension plans, net of income taxes	$ 4,028	$ 1,832	$ 3,712

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

4. Goodwill and Intangible Assets

Gross and net carrying amounts of goodwill at December 31, 2013 and 2012 are as follows:

In thousands	Performance Materials		Thermal/ Acoustical Metals		Other Products and Services		Totals
Goodwill	$	13,622	$	12,160	$	5,787	$	31,569
Accumulated amortization/impairment		—		(12,160)		(1,127)		(13,287)
Balance at December 31, 2012		13,622		—		4,660		18,282
Goodwill		13,929		12,160		5,787		31,876
Accumulated amortization/impairment		—		(12,160)		(1,127)		(13,287)
Balance at December 31, 2013	$	13,929	$	—	$	4,660	$	18,589

The changes in the carrying amounts of goodwill in 2012 and 2013 are as follows:

In thousands	Performance Materials		Other Products and Services		Totals
Balance at January 1, 2012	$	13,399	$	4,660	$	18,059
Goodwill adjustment		140		—		140
Currency translation adjustment		83		—		83
Balance at December 31, 2012		13,622		4,660		18,282
Goodwill adjustment		110		—		110
Currency translation adjustment		197		—		197
Balance at December 31, 2013	$	13,929	$	4,660	$	18,589

Goodwill Associated with Acquisitions and Divestitures

The goodwill adjustment of $ 0.1 million in 2013 and 2012 was related to the acquisition of DSM Solutech B.V. (“Solutech”) in December 2008. Lydall was obligated to pay to the Seller payments based on the net revenues of Solutech for a period of five years beginning on December 1, 2008 and ending on November 30, 2013 (“Contingent Consideration”). This Contingent Consideration equaled 4% of Solutech’s net revenues, as defined, during each of the periods. The value of the Contingent Consideration when paid was added to the original cost of the acquisition and increased 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.

Goodwill Impairment Testing

During the fourth quarter of 2013, the Company performed its annual impairment analysis of the $ 13.9 million of goodwill in the Performance Materials reporting unit (PM reporting unit) and $ 4.7 million of goodwill in the Life Sciences Vital Fluids reporting unit (VF reporting unit), included in OPS.

The Company elected to perform a quantitative approach to test the VF reporting unit and the PM reporting unit. For 2013, the Company used both the income approach and market approach in performing step one of the impairment analysis to estimate the fair value of the reporting units. The Company determined that the VF reporting unit, with $ 4.7 million of goodwill, had excess estimated fair value which exceeded its carrying value by greater than 20%, and as a result, step two of the impairment test was not required. The Company also determined that the PM reporting unit, with $ 13.9 million of goodwill, had an estimated fair value which substantially exceeded its carrying value, and as a result, step two of the impairment test was not required.

In performing step one of the impairment analysis to estimate the fair value of the reporting units for 2013, the Company used 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 2014-2016 and the projected cash flows beyond that three year period computed as the terminal value. The Company believes the income approach was appropriate because it provided a fair value estimate based upon the reporting unit’s expected long-term operations and cash flow performance.

In applying the market approach, valuation multiples were derived from historic and projected operating data of selected guideline companies, which were evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies. The valuation multiples were then applied to the appropriate projected operating data of the reporting unit to arrive at an indication of fair value. The Company believes the market approach was appropriate because it provided a fair value using multiples from companies with operations and economic characteristics similar to its reporting unit.

Other Intangible Assets

The table below presents the gross carrying amount and, as applicable, the accumulated amortization of the Company’s acquired intangible assets other than goodwill included in “Other intangible assets, net” in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December 31, 2013				December 31, 2012
In thousands	Gross Carrying Amount		Accumulated  Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
License agreements	$	881	$	(881)	$	860	$	(854)
Patents		6,766		(3,307)		6,522		(2,781)
Other		278		(227)		272		(194)
Total amortized intangible assets	$	7,925	$	(4,415)	$	7,654	$	(3,829)

Amortization of intangible assets for the years ended December 31, 2013, 2012, and 2011 was $ 0.4 million, $ 0.8 million, and $ 0.9 million, respectively. Estimated amortization expense for intangible assets is expected to be $ 0.4 million for each of the years ending December 31, 2014 through 2017, and $ 0.3 million for the year ended December 31, 2018. As of December 31, 2013, the weighted average useful life of intangible assets was approximately 10 years.

During the third quarter of 2013, the Company performed an impairment analysis for long-lived assets at the Company’s DSM Solutech B.V. (“Solutech”) operation, included in the Performance Materials segment. Developments with customers caused the Company to determine that it was probable that Solutech net sales would not meet previous expectations for 2013. Due to the lower than expected sales, caused by a delay in commercialization of Solutech products to the market place by Solutech’s customers, negative cash flows were expected in 2013. As a result of these negative cash flows, combined with historical operating losses, the Company determined that it was appropriate to test the Solutech asset group for recoverability in the third quarter of 2013. Acquisition related intangibles with a remaining useful life of 10 years primarily comprise the carrying value of the asset group of $ 4.7 million. To determine the recoverability of the Solutech asset group the Company completed an undiscounted cash flow analysis and compared it to the asset group carrying value. This analysis was primarily dependent on the increase in net sales over the period when the business has technological exclusivity provided by the intangible assets.

The Company determined that the Solutech asset group had undiscounted cash flow which was in excess of its carrying value and, as a result, the asset group was not impaired at September 30, 2013. The estimate of undiscounted cash flows of the Solutech long-lived asset group was based on the best information available as of the date of the assessment, which incorporated management assumptions around cash flows generated from future operations, the estimated economic useful life of the primary asset within the Solutech long-lived asset group, as well as other market information. The Company performed various sensitivity analyses noting that a more conservative scenario of high single digit revenue growth and an appropriate related cost structure, the undiscounted cash flows exceeded the carrying value with no impairment indicated. As of December 31, 2013, the Company expects to meet the cash flow forecasts included in the impairment analysis. Future cash flows are dependent on the success of commercialization efforts of Solutech products by OEMs, the quality of Solutech products and technology advancements and management’s ability to manage costs. In the event that Solutech’s cash flows in the future do not meet current expectations, management, based upon conditions at the time, would consider taking actions as necessary to maximize cash flow. Accordingly, the above sensitivity analysis, while a useful tool, should not be used as a sole predictor of future impairment. A thorough analysis of all the facts and circumstances existing at the time would need to be performed to determine if recording an impairment loss was appropriate.

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

3. Property, Plant and Equipment

Property, plant and equipment as of December 31, 2013 and 2012 were as follows:

		December 31,
In thousands	Estimated Useful Lives	2013		2012
Land	—	$	2,215	$	2,164
Buildings and improvements	10 – 35 years		48,779		46,033
Machinery and equipment	5 – 25 years		166,747		156,551
Office equipment	2 – 8 years		33,649		32,939
Vehicles	3 – 6 years		561		565
Assets under capital leases:
Land	—		692		664
Buildings and improvements	10 – 35 years		6,072		5,827
			258,715		244,743
Accumulated depreciation			(183,535)		(170,306)
Accumulated amortization of capital leases			(3,078)		(2,646)
			72,102		71,791
Construction in progress			6,761		4,463
Total property, plant and equipment		$	78,863	$	76,254

Depreciation expense was $ 12.1 million in 2013, $ 12.8 million in 2012, and $ 13.6 million in 2011. On February 7, 2013, the Board of Directors of the Company approved a change in the Company’s IT software and systems strategy from a previous project, involving an ERP reimplementation, to a project involving an ERP upgrade and some additional applications software. As a result of this change in IT strategy, the Company recorded a $ 1.8 million asset impairment charge in the quarter ended December 31, 2012. The original project costs were deemed to have no future fair value, and the Board of Director’s decision was in response to conditions that existed at December 31, 2012.

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Recently Issued Accounting Standards

12 Months Ended

Dec. 31, 2013

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Standards

15. Recently Issued Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (Topic 740). This ASU requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in their financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The objective of this update is to eliminate the diversity in practice in the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The ASU is effective for fiscal years beginning after December 15, 2013. The Company is currently evaluating this new guidance and believes its adoption will not have a significant impact on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220), which requires new disclosures about reclassifications from accumulated other comprehensive loss to net income. These disclosures may be presented on the face of the statements or in the notes to the consolidated financial statements. The ASU was effective for fiscal years beginning after December 15, 2012. The Company adopted this ASU and revised its disclosure, as required, beginning with the first quarter of 2013. See the Consolidated Statements of Comprehensive Income (Loss) in the consolidated financial statements.

In July 2012, the FASB” issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amends ASC 350, Intangibles-Goodwill and Other. This ASU gives an entity the option to first assess qualitative factors to determine if indefinite-lived intangible assets are impaired. The entity may first determine based on qualitative factors if it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount. If that assessment indicates no impairment, the quantitative impairment test is not required. This standard was effective for financial statements of periods beginning after September 15, 2012, with early adoption permitted. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The provision for income taxes from continuing operations consists of the following:

	For the years ended December 31,
In thousands	2013		2012		2011
Current:
Federal	$	5,477	$	3,208	$	1,534
State		709		265		15
Foreign		2,032		2,352		3,623
Total Current		8,218		5,825		5,172
Deferred:
Federal	$	1,609	$	(2,031)	$	503
State		(1,144)		(291)		108
Foreign		504		673		572
Total Deferred		969		(1,649)		1,183
Provision for income taxes	$	9,187	$	4,176	$	6,355

The following is a reconciliation of the difference between the actual provision for income taxes from continuing operations and the provision computed by applying the federal statutory tax rate on earnings:

	For the years ended December 31,
In thousands	2013		2012		2011
Statutory federal income tax rate	35.0	%	35.0	%	34.0	%
State income taxes	2.9		2.2		3.3
Valuation allowances for deferred tax assets, including state	(1.8)		(17.8)		0.8
Foreign dividends	0.5		0.9		1.7
Reserve for tax contingencies	(0.6)		0.1		0.6
Manufacturing deduction	(2.7)		(2.4)		(1.3)
Other	(0.9)		1.9		2.2
Effective income tax rate	32.4	%	19.9	%	41.3	%

The other line item above includes research credits, nondeductible expenses, and other income and expense items.

The Company’s effective tax rate from continuing operations for 2013 was 32.4% compared to 19.9% in 2012 and 41.3% in 2011. For 2013, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by the release of valuation allowances against state tax credit carryovers of $ 1.1 million, $ 0.8 million of permanent benefit relating to Domestic Production Activities Deduction, and a tax benefit of $ 0.5 million related to the conclusion of certain U.S. federal income tax matters through the year ended December 31, 2009. These favorable tax adjustments are partially offset by an increase in valuation allowance established against a foreign net deferred tax asset. The $ 1.1 million reversal of valuation allowances against state tax credit carryovers included $ 0.3 million of state tax credits expected to offset 2013 state income taxes and $ 0.8 million expected to benefit future periods. The company currently maintains a full valuation allowance against a foreign deferred tax asset in the Netherlands as future realization of the asset is not reasonably assured due to consistent historical losses since 2008. During 2013, the Company increased this valuation allowance by $ 0.6 million in order to reserve against additional loss carryforwards that were generated in the Netherlands during the current year.

For 2012, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by the release of valuation allowances against foreign tax credit carryovers of $ 3.9 million and state net operating loss carryovers, partially offset by an increase in valuation allowance established against a foreign net deferred tax asset. The Company’s state income taxes in 2012 were offset by the reversal of valuation allowances against state net operating loss carryovers of $ 0.5 million as the Company used certain state net operating loss carryovers to offset 2012 state income taxes. During 2012, the Company increased its valuation allowance against a foreign deferred tax asset in the Netherlands by $ 0.7 million as future realization of such tax benefit was not reasonably assured.

For 2011, the difference between the Company’s effective tax rate from continuing operations and the statutory federal income tax rate was primarily caused by valuation allowances against foreign tax credit carryovers, a valuation allowance against a foreign net deferred tax asset, and dividends from a foreign subsidiary.

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 following schedule presents net current and net long-term deferred tax assets and liabilities by tax jurisdiction as of December 31, 2013 and 2012:

	2013				2012
	Deferred Tax Assets				Deferred Tax Assets
In thousands	Current		Long-term		Current		Long-term
Federal	$	3,219	$	—	$	3,862	$	—
State		321		479		348		—
Foreign		398		95		289		474
Totals	$	3,938	$	574	$	4,499	$	474

	2013				2012
	Deferred Tax Liabilities				Deferred Tax Liabilities
In thousands	Current		Long-term		Current		Long-term
Federal	$	—	$	7,780	$	—	$	2,935
State		—		—		—		205
Foreign		—		967		26		762
Totals	$	—	$	8,747	$	26	$	3,902

Net deferred tax assets (liabilities) consist of the following as of December 31, 2013 and 2012:

	December 31,
In thousands	2013		2012
Deferred tax assets:
Accounts receivable	$	127	$	108
Inventories		939		591
Net operating loss carryforwards		4,566		4,268
Other accrued liabilities		2,020		1,679
Pension		5,268		9,454
Tax Credits		1,953		3,442
Total deferred tax assets		14,873		19,542
Deferred tax liabilities:
Domestic liability of foreign assets	$	96	$	448
Intangible assets		6,066		6,121
Property, plant and equipment		9,631		8,341
Total deferred tax liabilities		15,793		14,910
Valuation allowance		3,315		3,587
Net deferred tax (liabilities) assets	$	(4,235)	$	1,045

For the years ended December 31, 2013, 2012 and 2011, income from continuing operations before income taxes was derived from the following sources:

	For the years ended December 31,
In thousands	2013		2012		2011
United States	$	23,433	$	14,573	$	4,767
Foreign		4,909		6,409		10,635
Total income from continuing operations before income taxes	$	28,342	$	20,982	$	15,402

At December 31, 2013, the Company had approximately $ 9.9 million of state net operating loss carryforwards which expire between 2015 and 2033. In addition, at December 31, 2013, the Company had $ 3.0 million of state tax credit carryfowards that expire between 2014 and 2025. As of December 31, 2013, the Company had provided a valuation reserve against all of its state net operating loss carryforwards and $ 1.7 million on its state tax credits carryforwards. The Company also had $ 4.5 million of foreign net operating loss carryovers in France and $ 9.6 million of net operating loss carryovers in the Netherlands. The French net operating loss carryforwards have no expiration. The Company concluded it was more likely than not that the French net operating loss carryforwards will be fully realized and no valuation allowance was necessary as of December 31, 2013. The Netherlands’ net operating losses expire between the years 2017 and 2023. The Company has recorded a valuation allowance against the net deferred tax asset in the Netherlands as future realization is not reasonably assured due to consistent historical losses since 2008. The Company evaluates and weighs the positive and negative evidence present at each period. The Company will continue to monitor the realization criteria based on future operating results.

As of December 31, 2013, the company has not paid U.S. income taxes on approximately $ 22.2 million of undistributed earnings of international subsidiaries. The Company’s intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. It is not practicable to estimate the amount of tax that might be payable on the undistributed earnings due to a variety of factors including the timing, extent and nature of any repatriation.

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 fiscal year, the Company expects to conclude certain income tax matters through the year ended December 31, 2010 and it is reasonably expected that net unrecognized benefits of $ 0.2 million may be recognized. The total amount of net unrecognized tax benefits that would affect the effective tax rate if recognized was $ 1.1 million as of December 31, 2013. The Company is no longer subject to U.S. federal examinations for years before 2010, state and local examinations for years before 2002, and non-U.S. income tax examinations for years before 2003.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

In thousands	2013		2012
Unrecognized tax benefits at beginning of year	$	1,029	$	870
Increases relating to positions taken in prior periods		678		336
Increases relating to current period		586		14
Decreases due to settlements with tax authorities		—		(106)
Decreases due to lapse of statute of limitations		(429)		(85)
Unrecognized tax benefits at end of year	$	1,864	$	1,029

The Company recognizes the interest accrued and the penalties related to unrecognized tax benefits as a component of tax expense. The amount of accrued interest and penalties as of December 31, 2013 was not material.

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Earnings Per Share (Additional Information) (Detail) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from computation of diluted earnings per share	0.2	0.2	0.5

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Capital Stock

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Capital Stock

7. Capital Stock

Preferred stock — The Company has authorized Serial Preferred Stock with a par value of $ 1.00. None of the 500,000 authorized shares have been issued.

Common Stock — As of December 31, 2013, 4,763 Lydall stockholders of record held 16,819,240 shares of Common Stock.

Dividend policy — The Company does not pay a cash dividend on its Common Stock. The Company’s Domestic Credit Facility and the Company’s Amended Credit Facility do not place any restrictions on cash dividend payments, so long as the payments do not place the Company in default.

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Employer Sponsored Benefit Plan (Components of Net Periodic Benefit Cost) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Interest cost	$ 2,453	$ 2,583	$ 2,589
Expected return on plan assets	(2,691)	(2,559)	(2,644)
Amortization of actuarial net loss	1,069	918	582
Total net periodic benefit cost	$ 831	$ 942	$ 527

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Long-term Debt and Financing Arrangements

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Long-term Debt and Financing Arrangements

5. Long-term Debt and Financing Arrangements

On February 18, 2014, the Company amended and restated its $ 35.0 million senior secured domestic revolving credit facility (“Amended Credit Facility”) with a financial institution and two additional lenders, increasing the available borrowing from $35 million to $ 100 million. The Amended Credit Facility is secured by substantially all of the assets of the Company. The maturity date for the Amended Credit Facility is January 31, 2019, at which time amounts outstanding under the Amended Credit Facility are due and payable. The Company entered into this Amended Credit Facility in part to fund a majority of the purchase price of the Industrial Filtration acquisition.

Under the terms of the Amended Credit Facility, the lenders are providing a $ 100 million revolving credit facility to the Company, under which the lenders may make revolving loans and issue letters of credit to or for the benefit of the Company and its subsidiaries. The Amended Credit Facility may be increased by an aggregate amount not to exceed $ 50 million through an accordion feature, subject to specified conditions.

The Amended Credit Facility contains a number of affirmative and negative covenants, including financial and operational covenants. The Company is required to meet a minimum interest coverage ratio. The interest coverage ratio requires that, at the end of each fiscal quarter, the ratio of consolidated EBIT, to Consolidated Interest Charges, both as defined in the Amended Credit Facility, may not be less than 2.0 to 1.0 for the immediately preceding 12 month period. In addition, the Company must maintain a Consolidated Leverage Ratio, as defined in the Amended Credit Facility, as of the end of each fiscal quarter of no greater than 3.0 to 1.0. The Company must also meet minimum consolidated EBITDA as of the end of each fiscal quarter for the preceding 12 month period of $ 30.0 million.

Interest is charged on borrowings at the Company’s option of either: (i) Base Rate plus the Applicable Rate, or (ii) the Eurodollar Rate plus the Applicable Rate. The Base Rate is a fluctuating rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by Bank of America, and (c) the Eurocurrency Rate plus 1.00%. The Eurocurrency Rate means (i) if denominated in LIBOR quoted currency, a fluctuating LIBOR per annum rate equal to the London Interbank Offered Rate; (ii) if denominated in Canadian Dollars, the rate per annum equal to the Canadian Dealer Offered Rate; or (iii) the rate per annum as designated with respect to such alternative currency at the time such alternative currency is approved by the Lenders. The Applicable Rate is determined based on the Company’s Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). The Applicable Rate added to the Base Rate Committed Loans ranges from 15 basis points to 100 basis points, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 75 basis points to 175 basis points. The Company will pay a quarterly fee ranging from 20 basis points to 30 basis points on the unused portion of the $100 million available under the Amended Credit Agreement.

The Company’s previous $ 35 million senior secured domestic revolving credit facility (“Domestic Credit Facility”) that was outstanding at December 31, 2013, was entered into on June 16, 2011. The Domestic Credit Facility was secured by substantially all of the assets of the Company. The maturity date for the Domestic Credit Facility was June 15, 2016. The Company had no borrowings under the Domestic Credit Facility during 2013 and no outstanding borrowings at December 31, 2013 or December 31, 2012. At December 31, 2013, the Company had available $ 32.4 million under the Domestic Credit Facility, net of standby letters of credit outstanding of $ 2.6 million. The Company was in compliance with all covenants at December 31, 2013 and December 31, 2012.

On September 30, 2011, the Company, through a foreign subsidiary, entered into a new € 8.0 million foreign credit facility (“Foreign Credit Facility”), with € 6.0 million available for borrowings and € 2.0 million available to fund letters of credit. This Foreign Credit Facility replaced the prior foreign credit facility that expired on September 30, 2011. The Foreign Credit Facility, which has a maturity date of September 30, 2014, was completed with the same group of banking institutions and under similar terms and conditions to those in place under the prior credit facility. At December 31, 2013, the Company’s foreign subsidiaries’ various credit arrangements with banks totaled € 9.0 million (approximately $ 12.4 million) all of which was available for borrowings, primarily restricted to borrowings by the respective foreign subsidiary. The Company’s foreign subsidiaries had no borrowings outstanding on any of its credit arrangements at December 31, 2013 and December 31, 2012.

The Company has a capital lease agreement for the land and building at the St. Nazaire, France operating facility, included in the Thermal/Acoustical Metals segment, requiring monthly principal and interest payments through 2016. The capital lease provides an option for the Company to purchase the land and building at the end of the lease for a nominal amount.

Total outstanding debt consists of:

					December 31,
In thousands	Effective Rate		Maturity		2013		2012
Volksbank Meinerzhagen eG	5.95	%		2013	$	—	$	63
Capital Lease, land and building, St. Nazaire, France	5.44	%		2016		1,647		2,246
Capital Lease, manufacturing equipment, Hamptonville, North Carolina	5.00	%		2017		67		102
						1,714		2,411
Less portion due within one year						(663)		(765)
Total long-term debt					$	1,051	$	1,646

As of December 31, 2013, total debt maturing in 2014, 2015 and 2016 was $ 0.7 million, $ 0.7 million, and $ 0.3 million, respectively. There was no debt outstanding that matures after 2017.

The weighted average interest rate on long-term debt was 5.4% for each of the years ended December 31, 2013, 2012, and 2011.

The fair values of the Company’s long-term debt are determined using discounted cash flows based upon the Company’s estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy. The carrying values of the long-term debt approximate fair market value.

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Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Acquisitions and Divestitures

6. Acquisitions and Divestitures

2011 Transaction

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. The Consolidated Financial Statements reflect Affinity as a discontinued operation for all periods presented.

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

	December 31,
In thousands	2013		2012		2011
Net sales	$	—	$	—	$	13,255
Income before income taxes		—		—		1,374
Income tax expense		—		—		499
Income from discontinued operations		—		—		875
Gain on sale of discontinued operations, net of tax of $2,229		—		—		3,857
Income from discontinued operations, net of tax	$	—	$	—	$	4,732

2010 Transaction

On June 30, 2010, the Company divested its electrical papers product line business, included in the Performance Materials segment, for total consideration of $ 5.8 million, of which $ 4.8 million was paid on June 30, 2010, and the remaining $ 1.0 million paid 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. As part of the sale transaction, the Company transferred its electrical paper products customer list to the buyer, agreed not to compete (the “Non-Compete Agreement”) with the buyer with respect to the manufacture and sale of electrical insulating products for use in the transformer industry for a period of ten years, entered into a contract manufacturing agreement (the “Manufacturing Agreement”) with the buyer pursuant to which the Company was obligated to manufacture and sell electrical paper products to the buyer for a two-year period, and entered into a process technology license agreement (“License Agreement”). Pursuant to the License Agreement, the Company granted the buyer the right to use certain process technology and agreed to provide certain services to the buyer to facilitate the transfer of know-how for the manufacture of electrical paper products.

Gain Recognition

The Company recorded a gross gain on sale of $ 2.5 million, or a net gain on sale of $ 1.7 million, after a write-off of $ 0.8 million of goodwill that was allocated to the electrical papers product line, related to the delivered elements during the quarter ended June 30, 2010, and deferred a gain of $ 3.2 million as of June 30, 2010. The deferred amount was recognized as income as services under the License Agreement were delivered in periods subsequent to the sale, including the recognition of the remainder of the gain of $ 0.8 million during 2012, as the Company satisfied its obligations. The Company recognized $ 1.6 million and $ 0.8 million of gain during 2011 and 2010, respectively.

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Employer Sponsored Benefit Plan

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Employer Sponsored Benefit Plan

8. Employer Sponsored Benefit Plan

The Company maintains a domestic defined benefit pension plan, which covers certain domestic Lydall employees, is noncontributory and benefits are based on either years of service or eligible compensation paid while a participant is in a plan. The plan has been closed to new employees for several years and benefits under the pension plan are no longer accruing.

The Company’s funding policy for its domestic defined benefit pension plan 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.

Plan assets and benefit obligations of the domestic defined benefit pension plan are as follows:

	December 31,
In thousands	2013		2012
Change in benefit obligation:
Net benefit obligation at beginning of year	$	60,020	$	52,841
Interest cost		2,453		2,583
Actuarial (gain) loss		(6,900)		6,561
Gross benefits paid		(2,146)		(1,965)
Net benefit obligation at end of year	$	53,427	$	60,020
Change in plan assets:
Fair value of plan assets at beginning of year	$	36,355	$	32,643
Actual return on plan assets		5,226		3,562
Contributions		1,245		2,115
Gross benefits paid		(2,146)		(1,965)
Fair value of plan assets at end of year	$	40,680	$	36,355
Net benefit obligation in excess of plan assets	$	(12,747)	$	(23,665)
Balance sheet amounts:
Noncurrent liabilities	$	(12,747)	$	(23,665)
Total liabilities	$	(12,747)	$	(23,665)
Amounts recognized in accumulated other comprehensive income, net of tax consist of:
Net actuarial loss	$	14,830	$	21,342
Net amount recognized	$	14,830	$	21,342

At December 31, 2013, in addition to the accrued benefit liability of $ 12.7 million recognized for the Company’s domestic defined benefit pension plan, the Company also had foreign regulatory labor agreements with an accrued benefit liability of $ 1.2 million and accumulated other comprehensive loss, net of tax, of $ 0.2 million.

At December 31, 2012, in addition to the accrued benefit liability of $ 23.7 million recognized for the Company’s domestic defined benefit pension plan, the Company also had an accrued benefit liability of $ 1.2 million and accumulated other comprehensive loss, net of tax, related to foreign regulatory labor agreements of $ 0.2 million.

The domestic defined benefit pension plan liability, net of tax, included in other comprehensive income decreased by $ 6.5 million for the year ended December 31, 2013 and increased $ 2.9 million for the year ended December 31, 2012. These changes are mainly due to changes in pension assumptions, primarily the discount rate.

Aggregated information for the domestic defined benefit pension plan with an accumulated benefit obligation in excess of plan assets is provided in the tables below:

	December 31,
In thousands	2013		2012
Projected benefit obligation	$	53,427	$	60,020
Accumulated benefit obligation	$	53,427	$	60,020
Fair value of plan assets	$	40,680	$	36,355

Components of net periodic benefit cost for the domestic pension plan:

	December 31,
In thousands	2013		2012		2011
Interest cost	$	2,453	$	2,583	$	2,589
Expected return on plan assets		(2,691)		(2,559)		(2,644)
Amortization of actuarial net loss		1,069		918		582
Total net periodic benefit cost	$	831	$	942	$	527

It is estimated that $ 0.7 million of actuarial net loss will be amortized from accumulated other comprehensive loss into net periodic benefit costs for the domestic pension plan in 2014.

The major assumptions used in determining the year-end benefit obligation and annual net cost for the domestic pension plan are presented in the following table:

	Benefit Obligation						Net Cost
For the years ended December 31,	2013			2012			2013			2012			2011
Discount rate		5.09	%		4.16	%		4.16	%		5.00	%		5.74	%
Expected return on plan assets		7.25	%		7.50	%		7.50	%		7.75	%		8.00	%

Plan Assets

The domestic defined benefit pension plan is administered by an Administrative Committee and an Investment Committee, which are appointed by the Board of Directors. The Investment Committee’s responsibilities are to establish a funding policy for the Lydall Pooled Pension Investment Trust (“the Trust”) and to appoint and oversee the investment advisors responsible for the Trust’s investments. The Investment Committee is a named fiduciary under the plan with respect to management of the Trust’s investments. The assets of the domestic defined benefit pension plan are invested in the Trust for the purpose of investment diversification. In determining the expected return on plan assets, the Investment Committee considers the relative weighting of plan assets, the historical performance of marketable debt and equity securities and economic and other indicators of future performance.

Investment management objectives include maintaining an adequate level of diversification to balance market risk and to provide sufficient liquidity for near-term payments of benefits accrued under the domestic pension plan and to pay the expenses of administration. The long-term investment objective of the Trust is to achieve a total return equal to or greater than the Trust’s actuarially assumed rate of return, currently 7.25%. Though it is the intent of the Investment Committee to achieve income and growth, that intent does not include taking extraordinary risks or engaging in investment activities not commonly considered prudent under the standards imposed by ERISA. The Investment Committee defines risk as the probability of not meeting the Trust’s objectives and the probability of not meeting the Trust’s liability requirements. The allowable investments include: exchange-traded stocks, over-the-counter common and preferred stocks, warrants, rights, convertible securities, depository receipts and shares, trust certificates, limited partnership interests, shares of other investment companies, real estate investment trusts and equity participation, obligations of foreign governments, obligations of international agencies, obligations issued by the U.S. government, mortgage related and other asset-backed securities, corporate debt securities, inflation-index bonds issued by corporations, structured notes, delayed funding loans and revolving credit facilities, bank certificates of deposit, debt securities issued by state of local governments, and money market funds. Prohibited investments include: venture capital investments, direct investment in real estate properties, CMO derivatives, hedge funds, Lydall, Inc. securities, and commodities.

The Investment Committee’s target asset allocation seeks to control risk through portfolio diversification and takes into account, among other factors, objectives discussed above, current funding levels, cash flow conditions and economic and industry trends. Equity securities include investments in large-cap and mid/small-cap companies primarily located in the United States, non-U.S. equities, and emerging market equities. Fixed income securities include fixed income mutual bond funds and common and collective funds.

The following table presents the target allocation of pension plan assets for 2014 and the actual allocation of plan assets as of December 31, 2013 and 2012 by major asset category:

	Target Allocation	Actual Allocation of Plan Assets December 31,
Asset Category	2014	2013		2012
Equity securities:
U.S. Large Cap	18% – 38%	26	%	29	%
U.S. Mid/Small Cap	4% – 22%	11	%	12	%
Non-U.S.	15% – 25%	23	%	17	%
Emerging Markets	3% – 9%	7	%	6	%
Fixed income securities:
U.S. Bonds	12% – 38%	26	%	26	%
Non-U.S. Bonds	2% – 8%	5	%	5	%
Real estate investment trusts	0% – 8%	0	%	1	%
Cash and cash equivalents	0% – 5%	2	%	4	%

The investments of the Trust are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

Equity securities, which consist primarily of common stocks, are valued at the closing price reported in the active market in which individual securities are traded. Short-term cash funds, mutual funds, bond funds and real estate investment trusts are valued at the net asset value of shares held by the plan at year end as reported in the active market in which the funds are traded.

The Trust’s purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

The following table sets forth by level, within the fair value hierarchy, the Trust’s assets at fair value as of December 31, 2013 and December 31, 2012:

December 31, 2013 In thousands	Level 1		Level 2		Level 3		Total
Equity securities:
U.S. Large Cap	$	10,548	$	—	$	—	$	10,548
U.S. Mid/Small Cap		4,593		—		—		4,593
Non-U.S.		9,465		—		—		9,465
Emerging Markets		2,713		—		—		2,713
Fixed income securities:
U.S. Bonds		10,461		—		—		10,461
Non-U.S. Bonds		1,847		—		—		1,847
Real estate investment trusts		155		—		—		155
Cash and cash equivalents		898		—		—		898
Total Assets at Fair Value	$	40,680	$	—	$	—	$	40,680

December 31, 2012 In thousands	Level 1		Level 2		Level 3		Total
Equity securities:
U.S. Large Cap	$	10,835	$	—	$	—	$	10,835
U.S. Mid/Small Cap		4,256		—		—		4,256
Non-U.S.		6,187		—		—		6,187
Emerging Markets		2,201		—		—		2,201
Fixed income securities:
U.S. Bonds		9,487		—		—		9,487
Non-U.S. Bonds		1,645		—		—		1,645
Real estate investment trusts		184		—		—		184
Cash and cash equivalents		1,560		—		—		1,560
Total Assets at Fair Value	$	36,355	$	—	$	—	$	36,355

Estimated Future Contributions and Benefit Payments

The Company expects to contribute approximately $ 4.2 million in cash to its domestic defined benefit pension plan in 2014. Estimated future benefit payments for the next 10 years are as follows:

In thousands	2014		2015		2016		2017		2018		2019 – 2023
Benefit payments	$	2,248	$	2,316	$	2,361	$	2,489	$	2,663	$	16,003

Employee Savings Plan

The Company also sponsors a 401(k) Plan. Employer contributions to this plan amounted to $ 1.7 million in 2013, $ 1.6 million in 2012, and $ 1.4 million in 2011. Matching contributions by the Company are made on employee pretax contributions up to five percent of compensation, with the first three percent matched at 100% and the next two percent matched at 50%.

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Employer Sponsored Benefit Plan (Estimated Future Benefit Payments) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
2014	$ 2,248
2015	2,316
2016	2,361
2017	2,489
2018	2,663
2019-2023	$ 16,003

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Quarterly Financial Information (Unaudited) (Summary of Quarterly Financial Results) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Jun. 30, 2013	Jun. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net sales	$ 99,894	$ 99,029	$ 90,468	$ 96,754	$ 101,051	$ 97,535	$ 97,995	$ 94,167	$ 397,969	$ 378,924	$ 383,588
Gross profit	20,329	21,365	17,304	19,241	23,037	21,993	20,494	19,269	85,225	77,807	67,506
Net income	$ 4,133	$ 4,492	$ 2,427	$ 3,912	$ 5,955	$ 6,592	$ 4,575	$ 3,875	$ 19,155	$ 16,806	$ 13,779
Basic earnings per share:
Continuing operations	$ 0.25	$ 0.27	$ 0.15	$ 0.23	$ 0.36	$ 0.39	$ 0.28	$ 0.23	$ 1.16	$ 1.01	$ 0.54
Net income	$ 0.25	$ 0.27	$ 0.15	$ 0.23	$ 0.36	$ 0.39	$ 0.28	$ 0.23	$ 1.16	$ 1.01	$ 0.82
Diluted earnings per share:
Continuing operations	$ 0.25	$ 0.26	$ 0.14	$ 0.23	$ 0.35	$ 0.39	$ 0.27	$ 0.23	$ 1.14	$ 0.99	$ 0.54
Net income	$ 0.25	$ 0.26	$ 0.14	$ 0.23	$ 0.35	$ 0.39	$ 0.27	$ 0.23	$ 1.14	$ 0.99	$ 0.82

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Equity Compensation Plans (Weighted - Average Assumptions) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Risk-free interest rate	1.70%	1.40%	2.60%
Expected life	5 years 2 months 12 days	5 years 8 months 12 days	5 years 6 months
Expected volatility	65.00%	68.00%	69.00%
Expected dividend yield	$ 0	$ 0	$ 0

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Employer Sponsored Benefit Plan (Trust's Assets at Fair Value) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	$ 40,680	$ 36,355	$ 32,643
Us Large Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	10,548	10,835
Us Mid Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	4,593	4,256
Non Us Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	9,465	6,187
Emerging Markets [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	2,713	2,201
Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	10,461	9,487
Non Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	1,847	1,645
Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	155	184
Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	898	1,560
Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	40,680	36,355
Fair Value, Inputs, Level 1 [Member] | Us Large Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	10,548	10,835
Fair Value, Inputs, Level 1 [Member] | Us Mid Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	4,593	4,256
Fair Value, Inputs, Level 1 [Member] | Non Us Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	9,465	6,187
Fair Value, Inputs, Level 1 [Member] | Emerging Markets [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	2,713	2,201
Fair Value, Inputs, Level 1 [Member] | Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	10,461	9,487
Fair Value, Inputs, Level 1 [Member] | Non Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	1,847	1,645
Fair Value, Inputs, Level 1 [Member] | Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	155	184
Fair Value, Inputs, Level 1 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	898	1,560
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Us Large Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Us Mid Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Non Us Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Emerging Markets [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Non Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Us Large Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Us Mid Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Non Us Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Emerging Markets [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Non Us Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Total Assets at Fair Value	$ 0	$ 0

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Employer Sponsored Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Funded Status

Plan assets and benefit obligations of the domestic defined benefit pension plan are as follows:

	December 31,
In thousands	2013		2012
Change in benefit obligation:
Net benefit obligation at beginning of year	$	60,020	$	52,841
Interest cost		2,453		2,583
Actuarial (gain) loss		(6,900)		6,561
Gross benefits paid		(2,146)		(1,965)
Net benefit obligation at end of year	$	53,427	$	60,020
Change in plan assets:
Fair value of plan assets at beginning of year	$	36,355	$	32,643
Actual return on plan assets		5,226		3,562
Contributions		1,245		2,115
Gross benefits paid		(2,146)		(1,965)
Fair value of plan assets at end of year	$	40,680	$	36,355
Net benefit obligation in excess of plan assets	$	(12,747)	$	(23,665)
Balance sheet amounts:
Noncurrent liabilities	$	(12,747)	$	(23,665)
Total liabilities	$	(12,747)	$	(23,665)
Amounts recognized in accumulated other comprehensive income, net of tax consist of:
Net actuarial loss	$	14,830	$	21,342
Net amount recognized	$	14,830	$	21,342

Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets

Aggregated information for the domestic defined benefit pension plan with an accumulated benefit obligation in excess of plan assets is provided in the tables below:

	December 31,
In thousands	2013		2012
Projected benefit obligation	$	53,427	$	60,020
Accumulated benefit obligation	$	53,427	$	60,020
Fair value of plan assets	$	40,680	$	36,355

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

Components of net periodic benefit cost for the domestic pension plan:

	December 31,
In thousands	2013		2012		2011
Interest cost	$	2,453	$	2,583	$	2,589
Expected return on plan assets		(2,691)		(2,559)		(2,644)
Amortization of actuarial net loss		1,069		918		582
Total net periodic benefit cost	$	831	$	942	$	527

Schedule of Net Periodic Benefit Cost Not yet Recognized

The major assumptions used in determining the year-end benefit obligation and annual net cost for the domestic pension plan are presented in the following table:

	Benefit Obligation						Net Cost
For the years ended December 31,	2013			2012			2013			2012			2011
Discount rate		5.09	%		4.16	%		4.16	%		5.00	%		5.74	%
Expected return on plan assets		7.25	%		7.50	%		7.50	%		7.75	%		8.00	%

Schedule of Allocation of Plan Assets

The following table presents the target allocation of pension plan assets for 2014 and the actual allocation of plan assets as of December 31, 2013 and 2012 by major asset category:

	Target Allocation	Actual Allocation of Plan Assets December 31,
Asset Category	2014	2013		2012
Equity securities:
U.S. Large Cap	18% – 38%	26	%	29	%
U.S. Mid/Small Cap	4% – 22%	11	%	12	%
Non-U.S.	15% – 25%	23	%	17	%
Emerging Markets	3% – 9%	7	%	6	%
Fixed income securities:
U.S. Bonds	12% – 38%	26	%	26	%
Non-U.S. Bonds	2% – 8%	5	%	5	%
Real estate investment trusts	0% – 8%	0	%	1	%
Cash and cash equivalents	0% – 5%	2	%	4	%

Schedule of Changes in Fair Value of Plan Assets

The following table sets forth by level, within the fair value hierarchy, the Trust’s assets at fair value as of December 31, 2013 and December 31, 2012:

December 31, 2013 In thousands	Level 1		Level 2		Level 3		Total
Equity securities:
U.S. Large Cap	$	10,548	$	—	$	—	$	10,548
U.S. Mid/Small Cap		4,593		—		—		4,593
Non-U.S.		9,465		—		—		9,465
Emerging Markets		2,713		—		—		2,713
Fixed income securities:
U.S. Bonds		10,461		—		—		10,461
Non-U.S. Bonds		1,847		—		—		1,847
Real estate investment trusts		155		—		—		155
Cash and cash equivalents		898		—		—		898
Total Assets at Fair Value	$	40,680	$	—	$	—	$	40,680

December 31, 2012 In thousands	Level 1		Level 2		Level 3		Total
Equity securities:
U.S. Large Cap	$	10,835	$	—	$	—	$	10,835
U.S. Mid/Small Cap		4,256		—		—		4,256
Non-U.S.		6,187		—		—		6,187
Emerging Markets		2,201		—		—		2,201
Fixed income securities:
U.S. Bonds		9,487		—		—		9,487
Non-U.S. Bonds		1,645		—		—		1,645
Real estate investment trusts		184		—		—		184
Cash and cash equivalents		1,560		—		—		1,560
Total Assets at Fair Value	$	36,355	$	—	$	—	$	36,355

Schedule of Expected Benefit Payments

Estimated future benefit payments for the next 10 years are as follows:

In thousands	2014		2015		2016		2017		2018		2019 – 2023
Benefit payments	$	2,248	$	2,316	$	2,361	$	2,489	$	2,663	$	16,003

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Goodwill and Intangible Assets (Additional Information) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Line Items]
Contingent consideration as percentage of revenue for acquisition	4.00%
Goodwill	$ 18,589,000	$ 18,282,000	$ 18,059,000
Amortization of Intangible Assets	400,000	800,000	900,000
Finite-Lived Intangible Asset, Useful Life	10 years
Carrying Values Of Acquisition Related Intangibles	4,700,000
Goodwill, Purchase Accounting Adjustments	100,000	100,000
Period One [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	400,000
Period Two [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	300,000
Performance Materials Segment [Member]
Goodwill [Line Items]
Goodwill	13,900,000
Other Products and Services Segment [Member]
Goodwill [Line Items]
Goodwill	4,660,000	4,660,000
Other Products and Services Segment [Member] | Life Sciences Vital Fluids
Goodwill [Line Items]
Goodwill	4,700,000
VF reporting unit [Member]
Goodwill [Line Items]
Goodwill, Fair Value Disclosure	4,700,000
Goodwill Excess Of Fair Value Over Carrying Value Percentage	20.00%
PM reporting unit [Member]
Goodwill [Line Items]
Goodwill, Fair Value Disclosure	$ 13,900,000

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Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

13. Earnings Per Share

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

	For the years ended  December 31,
In thousands	2013	2012	2011
Basic average common shares outstanding	16,570	16,717	16,753
Effect of dilutive options and restricted stock awards	296	256	143
Diluted average common shares outstanding	16,866	16,973	16,896

For the years ended December 31, 2013, 2012 and 2011, stock options for 0.2 million, 0.2 million and 0.5 million shares of Common Stock, respectively, were not considered in computing diluted earnings per common share as the stock options were considered anti-dilutive.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2013

Valuation and Qualifying Accounts [Abstract]

Schedule II LYDALL, INC. VALUATION AND QUALIFYING ACCOUNTS

Schedule II

LYDALL, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

In thousands	Balance at January 1,		Charges to Costs and Expenses		Charges (Deductions) to Other Accounts			Deductions			Balance at December 31,
2013
Allowance for doubtful receivables	$	469	$	60	$	15	2	$	(64)	1	$	480
Tax valuation allowances		3,587		855		—			(1,127)	3		3,315
2012
Allowance for doubtful receivables	$	622	$	162	$	7	2	$	(322)	1	$	469
Allowance for note receivable		480		—		—			(480)	4		—
Tax valuation allowances		7,132		854		—			(4,399)	3		3,587
2011
Allowance for doubtful receivables	$	945	$	79	$	(75)	2, 5	$	(327)	1	$	622
Allowance for note receivable		480		—		—			—			480	4
Tax valuation allowances		6,023		1,359		—			(250)	3		7,132

1 Uncollected receivables written off and recoveries.

2 Foreign currency translation and other adjustments.

3 Reduction to income tax expense.

4 A reserve for $0.5 million was recorded during 2004 for the remaining balance of the note receivable associated with the sale of certain assets of the fiberboard operation in 2001, which was included within “Prepaid expenses and other current assets” on the Consolidated Balance Sheets as of December 31, 2011 and 2010. The receivable was written off against the reserve in 2012.

5 Includes deduction of $ 66,000 relating to sale of Affinity business in June, 2011.

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Goodwill and Intangible Assets (Changes in Carrying Amount of Goodwill by Reporting Unit) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Goodwill [Line Items]
Beginning Balance	$ 18,282	$ 18,059
Goodwill adjustment	110	140
Currency translation adjustments	197	83
Ending Balance	18,589	18,282
Performance Materials Segment
Goodwill [Line Items]
Beginning Balance	13,622	13,399
Goodwill adjustment	110	140
Currency translation adjustments	197	83
Ending Balance	13,929	13,622
Other Products and Services
Goodwill [Line Items]
Beginning Balance	4,660	4,660
Goodwill adjustment	0	0
Currency translation adjustments	0	0
Ending Balance	$ 4,660	$ 4,660

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Changes in Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Changes By Classification Within Accumulated Other Comprehensive Income (Loss)

The following table discloses the changes by classification within accumulated other comprehensive income (loss) for the period ended December 31, 2013, 2012 and 2011:

In thousands	Foreign Currency Translation Adjustment		Defined Benefit Pension Adjustment			Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2010	$	4,169	$	(12,499)		$	(8,330)
Other Comprehensive loss		(2,232)		(6,403)	(a)		(8,635)
Amounts reclassified from accumulated other comprehensive income		—		347	(b)		347
Balance at December 31, 2011	$	1,937	$	(18,555)		$	(16,618)
Other Comprehensive income (loss)		1,241		(3,558)	(a)		(2,317)
Amounts reclassified from accumulated other comprehensive income		—		569	(b)		569
Balance at December 31, 2012	$	3,178	$	(21,544)		$	(18,366)
Other Comprehensive income		2,950		5,909	(a)		8,859
Amounts reclassified from accumulated other comprehensive income		—		663	(b)		663
Balance at December 31, 2013	$	6,128	$	(14,972)		$	(8,844)

(a) Amount represents actuarial gains (losses) arising from the Company’s postretirement benefit obligation. This amount was $ 5.9 million, net of $ 3.6 million tax expense, for 2013, $ (3.6) million, net of a $ 2.1 million tax benefit, for 2012 and $ (6.4) million, net of $ 3.9 million tax benefit in 2011. See Note 8, Employer Sponsored Benefit Plans.

(b) Amount represents the amortization of actuarial losses to pension expense arising from the Company’s postretirement benefit obligation. This amount was $ 0.7 million, net of  $ 0.4 million tax benefit, for 2013, $ 0.6 million, net of  $ 0.3 million tax benefit, for 2012 and $ 0.3 million, net of $ 0.2 million tax benefit in 2011. See Note 8.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 75,407	$ 63,623
Accounts receivable, (net of allowance for doubtful receivables of $480 and $469, respectively)	52,301	47,486
Inventories	34,917	31,292
Taxes receivable	1,632	965
Prepaid expenses and other current assets	8,004	8,435
Total current assets	172,261	151,801
Property, plant and equipment, net	78,863	76,254
Goodwill	18,589	18,282
Other intangible assets	3,510	3,825
Deferred tax assets	574	474
Other assets, net	888	1,280
Total assets	274,685	251,916
Current liabilities:
Current portion of long-term debt	663	765
Accounts payable	29,768	29,441
Accrued payroll and other compensation	10,393	10,273
Accrued taxes	1,816	1,728
Other accrued liabilities	6,044	4,143
Total current liabilities	48,684	46,350
Long-term debt	1,051	1,646
Deferred tax liabilities	8,747	3,902
Benefit plan liabilities	14,097	25,080
Other long-term liabilities	2,019	442
Commitments and Contingencies (Note 12)
Stockholders' equity:
Preferred stock (par value $1.00 per share; authorized 500,000 shares; none issued or outstanding)	0	0
Common stock (par value $0.10 per share; authorized 30,000 shares; issued 24,098 and 23,785 shares, respectively)	2,410	2,379
Capital in excess of par value	62,284	58,784
Retained earnings	220,252	201,097
Accumulated other comprehensive loss	(8,844)	(18,366)
Treasury stock, 7,279 and 6,821 shares of common stock, respectively, at cost	(76,015)	(69,398)
Total stockholders' equity	200,087	174,496
Total liabilities and stockholders' equity	$ 274,685	$ 251,916

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Changes in Accumulated Other Comprehensive Income (Loss) (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net periodic benefit cost, net of tax	$ 0.7	$ 0.6	$ 0.3
Net periodic benefit cost, tax portion	0.4	0.3	0.2
Actuarial gains losses, net of tax	5.9	(3.6)	(6.4)
Actuarial gains losses, tax portion	$ 3.6	$ 2.1	$ 3.9

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Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

2. Inventories

Inventories as of December 31, 2013 and 2012 were as follows:

	December 31,
In thousands	2013		2012
Raw materials	$	11,944	$	12,501
Work in process		14,546		12,800
Finished goods		9,537		10,549
		36,027		35,850
Less: Progress billings		(1,110)		(4,558)
Total inventories	$	34,917	$	31,292

Included in work in process is gross tooling inventory of $ 9.9 million and $ 8.0 million at December 31, 2013 and December 31, 2012, respectively. Tooling inventory, net of progress billings, was $ 8.8 million and $ 3.5 million at December 31, 2013 and 2012, respectively.

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Employer Sponsored Benefit Plan (Plan Assets and Benefit Obligations) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Change in benefit obligation:
Net benefit obligation at beginning of year	$ 60,020	$ 52,841
Interest cost	2,453	2,583	2,589
Actuarial (gain) loss	(6,900)	6,561
Gross benefits paid	(2,146)	(1,965)
Net benefit obligation at end of year	53,427	60,020	52,841
Change in plan assets:
Fair value of plan assets at beginning of year	36,355	32,643
Actual return on plan assets	5,226	3,562
Contributions	1,245	2,115
Gross benefits paid	(2,146)	(1,965)
Fair value of plan assets at end of year	40,680	36,355	32,643
Net benefit obligation in excess of plan assets	(12,747)	(23,665)
Balance sheet amounts:
Noncurrent liabilities	(12,747)	(23,665)
Total liabilities	(12,747)	(23,665)
Amounts recognized in accumulated other comprehensive income, net of tax consist of:
Net actuarial loss	14,830	21,342
Net amount recognized	$ 14,830	$ 21,342

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Commitments and Contingencies (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Leased Assets [Line Items]
Operating Leases, Rent Expense	$ 4.0	$ 4.0	$ 4.4

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Equity Compensation Plans (Additional Information) (Detail) (USD $)	12 Months Ended					12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Stock Option Plan 2012	Apr. 30, 2012 Stock Option Plan 2012	Dec. 31, 2013 Performance Based Restricted Stock Awards	Dec. 31, 2012 Performance Based Restricted Stock Awards	Dec. 31, 2011 Performance Based Restricted Stock Awards	Dec. 31, 2013 Restricted Stock	Dec. 31, 2012 Restricted Stock	Dec. 31, 2011 Restricted Stock	Dec. 31, 2013 Time Based Restricted Stock [Member]	Dec. 31, 2012 Time Based Restricted Stock [Member]	Dec. 31, 2013 Stock Options	Dec. 31, 2012 Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share options and restricted shares authorized				1,750,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	1,200,000
Stock based compensation expense	$ 1,800,000	$ 1,400,000	$ 1,300,000
Cash received from exercise of stock option	1,500,000	1,000,000	100,000
Total intrinsic value for options exercised	1,000,000	700,000	100,000
Number of options granted	75,000	146,500	177,500
Total unrecognized compensation cost									1,600,000
Weighted average expected amortization period	2 years 10 months 24 days								2 years 1 month 6 days
Restricted shares Granted	124,000					95,090	114,500	22,000				29,480	73,750
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 9.41	$ 7.79	$ 5.43						$ 16.01	$ 12.56	$ 5.54
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period									10,565	171,369	59,440
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options	1,600,000
Stock Repurchased During Period, Shares				423,244
Stock Repurchased During Period, Value	6,617,000	3,998,000	200,000	6,100,000
Share Price				$ 14.30
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				267,089	1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	1,600,000	600,000	600,000
Shares Exercised	(158,000)	129,675	35,874
Realized Income Tax Benefit	$ 1,000,000	$ 500,000	$ 400,000											$ 300,000	$ 200,000

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Business Description and Accounting Policies [Text Block]

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.

Consolidation, Policy [Policy Text Block]

Principles of consolidation — The Consolidated Financial Statements include the accounts of Lydall, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates, Policy [Policy Text Block]

Estimates and assumptions — The preparation of the Company’s Consolidated Financial Statements in conformity 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 the disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Risks and Uncertainties [Policy Text Block]

Risks and uncertainties — Worldwide economic cycles affect the markets that the Company’s businesses serve and affect demand for Lydall’s products and impact profitability. Among other factors, disruptions in the global credit and financial markets, including diminished liquidity and credit availability, swings in consumer confidence and spending, unstable economic growth and fluctuations in unemployment rates has caused economic instability that has, and could continue to have, a negative impact on the Company’s results of operations, financial condition and liquidity.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and cash equivalents — Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less at the date of purchase.

Short Term Investments [Policy Text Block]

Short-term investments — Short-term investments included a certificate of deposit with a banking institution that had an original maturity of six months. This certificate of deposit matured on January 23, 2012 and $ 12.0 million of proceeds were recorded to cash and cash equivalents.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of credit risk — Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments and trade accounts receivable. The Company places its cash and cash equivalents and short-term investments in high-quality financial institutions and instruments with a minimum investment grade rating of BBB or better. Concentrations of credit risk with respect to trade accounts receivable are limited by the large number of customers comprising the Company’s customer base and their dispersion across many different industries and geographies. Foreign and export sales were 45.2% of the Company’s net sales in 2013, 46.7% in 2012, and 49.9% in 2011. Export sales primarily to Europe, Asia, Mexico and Canada were $ 52.1 million, $ 49.7 million, and $ 47.0 million in 2013, 2012, and 2011 respectively. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral. Sales to the automotive market, included in the Thermal/Acoustical Metals and Thermal/Acoustical Fibers segments, were 68.5% of the Company’s net sales in 2013, 65.5% in 2012, and 62.0% in 2011. Sales to Ford Motor Company (“Ford”) were 20.0%, 18.8%, and 16.2% of Lydall’s 2013, 2012, and 2011 net sales, respectively. Sales to Chrysler Group LLC (“Chrysler”) accounted for 10.9% and 10.0% of Lydall’s 2013 and 2012 net sales, respectively. No other customers accounted for more than 10% of total net sales in 2013, 2012, or 2011. At December 31, 2013 and 2012, Ford represented 15.3% and 17.0%, respectively, of total accounts receivable. No other customers accounted for more than 10.0% of total accounts receivable at December 31, 2013 or 2012.

Inventory, Policy [Policy Text Block]

Inventories — Inventories are valued at lower of cost or market, cost being determined using the first-in, first-out (FIFO) cost method. Inventories in excess of requirements for current or anticipated orders have been written down to net realizable value.

Property, Plant and Equipment, Preproduction Design and Development Costs [Policy Text Block]

Pre-production design and development costs — The Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). All such tooling contracts relate to parts that the Company will supply to customers under long-term supply agreements. Tooling costs are accumulated in work-in process inventory and are charged to operations as the related revenue from the tooling is recognized. Revenue is recognized as tooling is delivered and accepted by the customer. The Company also may progress bill on certain tooling being constructed. These billings are recorded as progress billings (a reduction of the associated work-in-process inventory) until the appropriate revenue recognition criteria have been met.

Periodically, the Company enters into contractually guaranteed reimbursement arrangements as a mechanism to collect amounts due from customers from tooling sales. Under these arrangements, amounts due from tooling sales are collected as parts are delivered over the part supply arrangement, in accordance with the specific terms of the arrangement. The amounts due from the customer in such transactions are recorded in “Prepaid expenses and other current assets, net” or “Other assets, net” based upon the expected term of the reimbursement arrangement.

The following tooling related assets were included in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

	December, 31
In thousands	2013		2012
Inventories, net of progress billings and reserves	$	8,793	$	3,482
Prepaid expenses and other current assets, net		52		399
Total tooling related assets	$	8,845	$	3,881

Amounts included in “Prepaid expenses and other current assets, net” include the short-term portion of receivables due under contractually guaranteed reimbursement arrangements. Included in the inventory balance was an offset for progress billings of $ 1.1 million and $ 4.6 million at December 31, 2013 and 2012, respectively. Company owned tooling is recorded in “Property, plant and equipment, net” and was not material at December 31, 2013 or December 31, 2012.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, plant and equipment — Property, plant, and equipment are stated at cost. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Property, plant and equipment, including property, plant and equipment under capital leases, are depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are depreciated on a straight-line basis over the term of the lease or the life of the asset, whichever is shorter. The cost and accumulated depreciation amounts applicable to assets sold or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any net gain or loss is included in the Consolidated Statements of Operations. Expenses for maintenance and repairs are charged to expense as incurred.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and other intangible assets — Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired companies. Goodwill and other intangible assets with indefinite lives are not amortized but are subject to annual impairment tests. All other intangible assets are amortized over their estimated useful lives, which range from 4 to 20 years. In performing impairment tests, the Company considers discounted cash flows and other market factors as best evidence of fair value. There are inherent uncertainties and management judgment required in these analyses.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Valuation of long-lived assets — The Company evaluates the recoverability of long-lived assets, or asset groups, whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. Should such evaluations indicate that the related future undiscounted cash flows are not sufficient to recover the carrying values of the assets, such carrying values would be reduced to fair value and this adjusted carrying value would become the assets’ new cost basis. Fair value is determined primarily using future anticipated cash flows that are directly associated with, and that are expected to arise as a direct result of the use and eventual disposition of the asset, or asset group, as well as market conditions and other factors. There are inherent uncertainties and management judgment required in these analyses.

Pension and Other Postretirement Plans, Pensions, Policy [Policy Text Block]

Employer sponsored benefit plans — The Company recognizes the funded status of its domestic defined benefit pension plan. Net benefit obligations are calculated based on actuarial valuations using key assumptions related to discount rates and expected return on plan assets.

Derivatives, Policy [Policy Text Block]

Derivative instruments — Derivative instruments are measured at fair value and recognized as either assets or liabilities on the Consolidated Balance Sheet in either current or non-current other assets or other accrued liabilities or other long-term liabilities depending upon maturity and commitment. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in the Consolidated Statement of Operations. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods in which the hedge transaction affects earnings. In general, the types of risks being hedged by the Company are related to the variability of future cash flows caused by changes in foreign currency exchange rates and hedging the impact of variability of foreign exchange rates on recorded intercompany assets or liabilities. Lydall’s objective for entering into derivative instruments has always been for risk management purposes. The Company does not engage in derivative instruments for speculative purposes. Lydall has historically not been a party to a significant number of derivative instruments.

Revenue Recognition, Policy [Policy Text Block]

Revenue recognition — The Company recognizes revenue (1) once evidence of an arrangement exists; (2) product delivery has occurred; (3) pricing is fixed or determinable; and (4) collection is reasonably assured. The four criteria required to recognize revenue are considered to be met, and the passage of title to the customer occurs, at the respective FOB point and, therefore, revenue is recognized at that time. The Company’s standard sales and shipping terms are FOB shipping point, therefore, substantially all revenue is recognized upon shipment. However, in limited circumstances, the Company conducts business with certain customers on FOB destination terms and in these instances revenue is recognized upon receipt by the customer. The Company generally does not provide specific customer inspection or acceptance provisions in its sales terms, with the exception of tooling sales discussed in “Pre-production design and development costs” above.

Sales returns and allowances are recorded as identified or communicated by the customer and internally approved. The Company does not provide customers with general rights of return for products sold; however, in limited circumstances, the Company will allow sales returns and allowances from customers if the products sold do not conform to specifications.

Shipping and handling costs consist primarily of costs incurred to deliver products to customers and internal costs related to preparing products for shipment and are recorded in cost of sales. Amounts billed to customers as shipping and handling are classified as revenue.

Research and Development Expense, Policy [Policy Text Block]

Research and development — Research and development costs are charged to expense as incurred and amounted to $ 7.6 million in 2013, $ 7.7 million in 2012, and $ 8.1 million in 2011. Research and development costs were primarily comprised of development personnel salaries, prototype material costs and testing and trials of new products.

Earnings Per Share, Policy [Policy Text Block]

Earnings per share — Basic earnings per common share are equal to net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are equal to net income divided by the weighted average number of common shares outstanding during the period, including the effect of stock options and stock awards, if such effect is dilutive.

Income Tax, Policy [Policy Text Block]

Income taxes — The provision for income taxes is based upon income reported in the accompanying Consolidated Financial Statements. Deferred income taxes reflect the impact of temporary differences between the amounts of income and expense recognized for financial reporting purposes and such amounts recognized for tax purposes. In the event the Company was to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, the Company would record a valuation allowance through a charge to income in the period that such determination was made. Conversely, if the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of the net carrying amounts, the Company would decrease the recorded valuation allowance and record an increase to income in the period that such determination was made.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Translation of foreign currencies — Assets and liabilities of foreign subsidiaries are translated at exchange rates prevailing on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the period. Any resulting translation gains or losses are reported in other comprehensive income (loss).

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock options and share grants — The Company accounts for awards of equity instruments under the fair value method of accounting and recognizes such amounts in the Consolidated Statements of Operations. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Stock-based compensation expense includes the estimated effects of forfeitures, and such estimates of forfeitures are adjusted over the requisite service period to the extent actual forfeitures differ, or are expected to differ, from such estimates. The effect of changes in estimated forfeitures is recognized in the period of change and also impacts the amount of expense to be recognized in future periods. The Company estimates the fair value of option grants based on the Black Scholes option-pricing model. Expected volatility and expected term are based on historical information. The Company believes that its future volatility and expected term are not likely to materially differ from the Company’s historical stock price volatility and historical exercise data, respectively. Compensation expense for all restricted stock awards is recorded based on the market value of the stock on the grant date and recognized as expense over the vesting period of the award. Compensation expense for performance-based restricted stock is also impacted by the probability of achieving the performance targets.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

Effective January 1, 2013, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220), which required new disclosures about reclassifications from accumulated other comprehensive loss to net income. The Company revised its disclosures as required in the Consolidated Statements of Comprehensive Income (Loss) in the consolidated financial statements. Effective January 1, 2013 the Company adopted FASB ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which amends ASC 210, Balance Sheet. This ASU required 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 ASU was applied retrospectively, as required. The adoption of this ASU did not have any effect on the Company’s consolidated financial statements.

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Income Taxes (Components of Provision for Income Taxes) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current:
Federal	$ 5,477	$ 3,208	$ 1,534
State	709	265	15
Foreign	2,032	2,352	3,623
Total Current	8,218	5,825	5,172
Deferred:
Federal	1,609	(2,031)	503
State	(1,144)	(291)	108
Foreign	504	673	572
Total Deferred	969	(1,649)	1,183
Provision for income taxes	$ 9,187	$ 4,176	$ 6,355

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Lease Payments

Approximate future minimum lease payments under noncancelable leases are:

	Payments due by period
In thousands	Operating Lease Payments		Capital Lease Payments		Total
2014	$	3,900	$	736	$	4,636
2015		2,813		731		3,544
2016		2,434		358		2,792
2017		2,243		—		2,243
2018		886		—		886
Thereafter		1,302		—		1,302
Total		13,578		1,825		15,403
Interest on capital leases		—		(112)		(112)
Total	$	13,578	$	1,713	$	15,291

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

Leases

The Company has operating leases that resulted in expense of $ 4.0 million in 2013, $ 4.0 million in 2012, and $ 4.4 million in 2011. These contracts include building, office equipment, vehicle and machinery leases that require payment of property taxes, insurance, repairs and other operating costs.

The Company has a capital lease agreement for the land and building at the St. Nazaire, France operating facility requiring monthly principal and interest payments until 2016 (See Note 5).

Approximate future minimum lease payments under noncancelable leases are:

	Payments due by period
In thousands	Operating Lease Payments		Capital Lease Payments		Total
2014	$	3,900	$	736	$	4,636
2015		2,813		731		3,544
2016		2,434		358		2,792
2017		2,243		—		2,243
2018		886		—		886
Thereafter		1,302		—		1,302
Total		13,578		1,825		15,403
Interest on capital leases		—		(112)		(112)
Total	$	13,578	$	1,713	$	15,291

Commitments and Contingencies

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, actions with respect to commercial, intellectual property, employment, personal injury and environmental matters. While the outcome of any matter is inherently uncertain and the Company cannot be sure that it will prevail in any of the cases, the Company is not aware of any matters pending that are expected to be material with respect to the Company’s financial position, results of operations or cash flows.