10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to         

Commission File Number: 1-7665 

LYDALL INC /DE/

(Exact name of registrant as specified in its charter)

Delaware					06-0865505
(State or Other Jurisdiction of Incorporation or Organization)					(I.R.S. Employer Identification No.)
One Colonial Road	,	Manchester	,	Connecticut	06042
(Address of principal executive offices)					(zip code)

(860) 646-1233

(Registrant’s telephone number, including area code) 

None

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	LDL	New York Stock Exchange

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 a 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐

Smaller reporting company ☐Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock $ .01 par value per share.

Total Shares outstanding July 15, 2019 17,534,626

LYDALL, INC.

INDEX

			Page Number
Cautionary Note Concerning Forward – Looking Statements			3
Part I.	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Statements of Operations (Unaudited)	6
		Condensed Consolidated Statements of Comprehensive Income (Unaudited)	8
		Condensed Consolidated Balance Sheets (Unaudited)	9
		Condensed Consolidated Statements of Cash Flows (Unaudited)	10
		Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)	11
		Notes to Condensed Consolidated Financial Statements (Unaudited)	13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
	Item 4.	Controls and Procedures	42
Part II.	Other Information
	Item 1.	Legal Proceedings	44
	Item 1A.	Risk Factors	44
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 6.	Exhibits	46
Signature			47

2

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.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 this Quarterly Report on Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. 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 assumptions relating to the Company’s business, the economy and 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 Quarterly Report on Form 10-Q include, among others, statements relating to:

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

• Outlook for the third quarter and full year 2019;

• Ability to improve operational effectiveness in the Thermal Acoustical Solutions segment;

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

• Growth opportunities in markets served by the Company;

• Ability to integrate the Interface Performance Materials business, which was acquired in the third quarter of 2018;

• Expected future financial and operating performance of Interface Performance Materials;

• Expected costs and future savings associated with restructuring programs;

• Expected gross margin, operating margin and working capital improvements from cost control and other improvement programs;

• Product development and new business opportunities;

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

• Pension plan funding;

• Future cash flow and uses of cash;

• Future amounts of stock-based compensation expense;

• Future earnings and other measurements of financial performance;

• Ability to meet cash operating requirements;

• Future levels of indebtedness and capital spending;

• Ability to meet financial covenants in the Company's amended revolving credit facility;

• Future impact of the variability of interest rates and foreign currency exchange rates;

• Expected future impact of recently issued accounting pronouncements upon adoption;

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

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

• The expected outcomes of legal proceedings and other contingencies, including environmental matters.

All forward-looking statements are inherently subject to a number of risks and uncertainties that could cause the actual results of the Company to differ materially from those reflected in forward-looking statements made in this Quarterly Report on Form 10-

3

Q, as well as in press releases and other statements made from time to time by the Company’s authorized officers. Such risks and uncertainties include, among others, worldwide economic cycles and political changes and uncertainties 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 Company in the execution of restructuring programs; challenges encountered in the integration of the acquired Interface Performance Materials business; disruptions in the global credit and financial markets, including diminished liquidity and credit availability; changes in international trade agreements and policies, including tariff regulation and trade restrictions; swings in consumer confidence and spending; unstable economic growth; volatility in foreign currency exchange rates; raw material pricing and supply issues; fluctuations in unemployment rates; retention of key employees; increases in fuel prices; and outcomes of legal proceedings, claims and investigations, as well as other risks and uncertainties identified in Part II, Item 1A - Risk Factors of this Quarterly Report on Form 10-Q, and Part I, Item 1A - Risk Factors of Lydall’s Annual Report on Form 10-K for the year ended December 31, 2018. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

	Quarter Ended   June 30,
	2019			2018
	(Unaudited)
Net sales	$	220,811		$	186,413
Cost of sales	175,536			150,286
Gross profit	45,275			36,127
Selling, product development and administrative expenses	32,096			23,878
Operating income	13,179			12,249
Pension plan settlement expense	25,515			—
Interest expense	3,731			572
Other income, net	(873		)	(368		)
(Loss) income before income taxes	(15,194		)	12,045
Income tax (benefit) expense	(8,199		)	1,655
Income from equity method investment	(49		)	(60		)
Net (loss) income	$	(6,946	)	$	10,450
Earnings (loss) per share:
Basic	$	(0.40	)	$	0.61
Diluted	$	(0.40	)	$	0.60
Weighted average number of common shares outstanding:
Basic	17,267			17,196
Diluted	17,267			17,335

See accompanying Notes to Condensed Consolidated Financial Statements.

6

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

	Six Months Ended   June 30,
	2019			2018
	(Unaudited)
Net sales	$	438,836		$	378,073
Cost of sales	351,505			302,439
Gross profit	87,331			75,634
Selling, product development and administrative expenses	65,102			49,349
Operating income	22,229			26,285
Pension plan settlement expense	25,515			—
Interest expense	7,359			1,112
Other income, net	(474		)	(53		)
(Loss) income before income taxes	(10,171		)	25,226
Income tax (benefit) expense	(7,093		)	3,778
Income from equity method investment	(22		)	(56		)
Net (loss) income	$	(3,056	)	$	21,504
Earnings (loss) per share:
Basic	$	(0.18	)	$	1.25
Diluted	$	(0.18	)	$	1.24
Weighted average number of common shares outstanding:
Basic	17,260			17,178
Diluted	17,260			17,334

See accompanying Notes to Condensed Consolidated Financial Statements.

7

LYDALL, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

	Quarter Ended   June 30,						Six Months Ended   June 30,
	2019			2018			2019			2018
	(Unaudited)						(Unaudited)
Net (loss) income	$	(6,946	)	$	10,450		$	(3,056	)	$	21,504
Other comprehensive income (loss):
Foreign currency translation adjustments	2,457			(11,149		)	2,330			(8,604		)
Pension liability adjustment, net of tax	143			199			358			397
Unrealized (loss) gain on hedging activities, net of tax	(1,351		)	(27		)	(2,026		)	75
Comprehensive (loss) income	$	(5,697	)	$	(527	)	$	(2,394	)	$	13,372

See accompanying Notes to Condensed Consolidated Financial Statements.

8

LYDALL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	43,416		$	49,237
Accounts receivable, less allowances (2019 - $2,087; 2018 - $1,440)	147,392			144,938
Contract assets	21,566			23,040
Inventories	88,232			84,465
Taxes receivable	2,745			2,912
Prepaid expenses	5,190			4,707
Other current assets	8,474			7,779
Total current assets	317,015			317,078
Property, plant and equipment, at cost	473,943			458,075
Accumulated depreciation	(255,736		)	(244,706		)
Net, property, plant and equipment	218,207			213,369
Operating lease right-of-use assets	27,070			—
Goodwill	197,796			196,963
Other intangible assets, net	126,696			136,604
Other assets, net	9,650			8,672
Total assets	$	896,434		$	872,686
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	10,001		$	10,172
Accounts payable	81,053			73,265
Accrued payroll and other compensation	15,985			16,621
Deferred revenue	3,446			6,990
Other accrued liabilities	21,382			14,298
Total current liabilities	131,867			121,346
Long-term debt	289,673			314,641
Long-term operating lease liabilities	22,006			—
Deferred tax liabilities	37,640			39,265
Benefit plan liabilities	22,849			22,795
Other long-term liabilities	5,294			5,364
Commitments and Contingencies (Note 16)
Stockholders’ equity:
Preferred stock	—			—
Common stock	253			253
Capital in excess of par value	92,297			90,851
Retained earnings	408,086			411,325
Accumulated other comprehensive loss	(23,007		)	(42,685		)
Treasury stock, at cost	(90,524		)	(90,469		)
Total stockholders’ equity	387,105			369,275
Total liabilities and stockholders’ equity	$	896,434		$	872,686

See accompanying Notes to Condensed Consolidated Financial Statements.

9

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	For the Six Months Ended June 30,
	2019			2018
	(Unaudited)
Cash flows from operating activities:
Net (loss) income	$	(3,056	)	$	21,504
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Gain on divestiture	(1,459		)	—
Depreciation and amortization	24,001			14,248
Deferred income taxes	(12,358		)	1,165
Pension plan settlement expense	25,515			—
Stock-based compensation	1,475			2,580
Income from equity method investment	(22		)	(56		)
Changes in operating assets and liabilities:
Accounts receivable	(1,988		)	(11,934		)
Contract assets	1,231			(7,594		)
Inventories	(4,660		)	(15,643		)
Accounts payable	10,227			7,406
Accrued payroll and other compensation	3,000			(2,408		)
Accrued taxes	308			1,184
Other, net	(5,995		)	(2,478		)
Net cash provided by operating activities	36,219			7,974
Cash flows from investing activities:
Capital expenditures	(20,287		)	(16,355		)
Proceeds from divestiture	2,298			—
Proceeds from the sale of property, plant and equipment	295			217
Business acquisitions, net of cash acquired	869			—
Net cash used for investing activities	(16,825		)	(16,138		)
Cash flows from financing activities:
Debt repayments	(25,169		)	(126		)
Common stock issued	—			666
Common stock repurchased	(43		)	(823		)
Net cash used for financing activities	(25,212		)	(283		)
Effect of exchange rate changes on cash	(3		)	(815		)
Decrease in cash and cash equivalents	(5,821		)	(9,262		)
Cash and cash equivalents at beginning of period	49,237			59,875
Cash and cash equivalents at end of period	$	43,416		$	50,613

Non-cash capital expenditures of $2.3 million and $2.0 million were included in accounts payable at June 30, 2019 and 2018, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

10

LYDALL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

In thousands of dollars and shares	Common Stock Shares		Common Stock Amount			Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance at December 31, 2018	25,254		$	253		$	90,851	$	411,325		$	(42,685	)	$	(90,469	)	$	369,275
Net income								3,890									3,890
Other comprehensive loss, net of tax											(587		)				(587		)
Stock repurchased														(42		)	(42		)
Stock issued (canceled) under employee plans	(26	)	(1		)												(1		)
Stock-based compensation expense						862											862
Adoption of ASC 606 (1)								(183		)							(183		)
Balance at March 31, 2019	25,228		252			91,713		415,032			(43,272		)	(90,511		)	373,214
Net loss								(6,946		)							(6,946		)
Other comprehensive income, net of tax											20,265						20,265
Stock repurchased														(13		)	(13		)
Stock issued (canceled) under employee plans	(3	)	1			12											13
Stock-based compensation expense						332											332
Stock issued to directors	10					240											240
Balance at June 30, 2019	25,235		253			92,297		408,086			(23,007		)	(90,524		)	387,105

(1) During the quarter ended March 31, 2019, the Company recorded an adjustment reducing retained earnings and contract assets by $0.2 million to correct an error in the adoption of ASC 606.

11

In thousands of dollars and shares	Common Stock Shares	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance at December 31, 2017	25,018	$	250	$	88,006	$	374,783	$	(20,148	)	$	(89,495	)	$	353,396
Net income						11,054								11,054
Other comprehensive income, net of tax								2,845						2,845
Stock repurchased											(823		)	(823		)
Stock issued under employee plans	50	1		666										667
Stock-based compensation expense				1,096										1,096
Adoption of ASC 606						1,598								1,598
Balance at March 31, 2018	25,068	251		89,768		387,435		(17,303		)	(90,318		)	369,833
Net income						10,450								10,450
Other comprehensive loss, net of tax								(10,977		)				(10,977		)
Stock issued under employee plans	2													—
Stock-based compensation expense				1,275										1,275
Stock issued to directors				134										134
Balance at June 30, 2018	25,070	251		91,177		397,885		(28,280		)	(90,318		)	370,715

See accompanying Notes to Condensed Consolidated Financial Statements.

12

LYDALL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Financial Statement Presentation

Description of Business

Lydall, Inc. and its subsidiaries (the “Company” or “Lydall”) design and manufacture specialty engineered nonwoven filtration media, industrial thermal insulating solutions, and thermal and acoustical barriers for filtration/separation and heat abatement and sound dampening applications.

On August 31, 2018, the Company acquired an engineered sealing materials business operating under Interface Performance Materials ("Interface"), based in Lancaster, Pennsylvania for $267.0 million, net of cash acquired of $5.2 million. A globally-recognized leader in the delivery of engineered sealing solutions, the Interface operations manufacture wet-laid gasket and specialty materials primarily serving OEM and Tier I manufacturers in the agriculture, construction, earthmoving, industrial, and automotive segments. The acquired business is included in the Company's Performance Materials operating segment.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The operating results of Interface have been included in the Consolidated Statements of Operations beginning on the date of acquisition. The year-end Condensed Consolidated Balance Sheet was derived from the audited financial statements for the year ended December 31, 2018, but does not include all disclosures required by U.S. GAAP. Management believes that all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows for the periods reported, have been included. For further information, refer to the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Recent Accounting Pronouncements

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)", along with several additional clarification ASU's issued during 2018, collectively, "New Lease Standard". The New Lease Standard requires entities that lease assets with lease terms of more than 12 months to recognize right-of-use assets and lease liabilities created by those leases on their balance sheets. This New Lease Standard also requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The Company's adoption of the New Lease Standard was on a modified retrospective basis and did not have any impact on the Company's 2018 financial statements and disclosures. As part of the adoption of the New Lease Standard, the Company elected the package of practical expedients which allowed the Company to not re-assess 1) if any existing arrangements contained a lease, 2) the lease classification of any existing leases and 3) initial direct costs for any existing lease. The Company also elected the practical expedient which allows use of hindsight in determining the lease term for leases in existence at the date of adoption. Effective January 1, 2019, the Company reported lease right-of-use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets. Adoption of the New Lease Standard did not change the balances reported in the Company's 2019 Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows, or Condensed Statements of Comprehensive Income. Please refer to Footnote 8 "Leases" for additional information required as part of the adoption of the New Lease Standard.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Account for Hedging Activities". This ASU provides various improvements revolving around the financial reporting of hedging relationships that requires an entity to amend the presentation and disclosure of hedging activities to better portray the economic results of an entity's risk management activities in its financial statements. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for reclassification of stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings, but does not require the reclassification. The Company elected not to reclassify the income tax effects of the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

13

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2018-07, "Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting". This ASU expands the guidance for stock-based compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)". The new standard amends guidance on reporting credit losses for assets held at amortized cost basis. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement", which adds, amends and removes certain disclosure requirements related to fair value measurements.  Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.  This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Certain amended or eliminated disclosures in this standard may be adopted early, while certain additional disclosure requirements in this standard can be adopted on its effective date.  In addition, certain changes in the standard require retrospective adoption, while other changes must be adopted prospectively.  The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU requires entities to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. This ASU also requires entities to disclose an explanation for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years beginning after December 15, 2020 with early adoption permitted.  The Company is currently evaluating the method and impact the adoption of this ASU will have on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.  The Company is required to adopt this new guidance in the first quarter of 2020.  Early adoption is permitted.  The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1, “Significant Accounting Policies” within Part IV Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to these accounting policies as a result of adopting the New Lease Standard are discussed within Note 8, “Leases”.

2. Revenue from Contracts with Customers

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts from Customers. These revenues are generated from the design and manufacture of specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications. The Company’s revenue recognition policies require the Company to make significant judgments and estimates. In applying the Company’s revenue recognition policy, determinations must be made as to when control of products passes to the Company’s customers which can be either at a point in time or over time. Revenue is generally recognized at a point in time when control passes to customers upon shipment of the Company’s products and revenue is generally recognized over time when control of the Company’s products transfers to customers during the manufacturing process. The Company analyzes several factors, including but not limited to, the nature of the products being sold and contractual terms and conditions in contracts with customers to help the Company make such judgments about revenue recognition.

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Contract Assets and Liabilities

The Company’s contract assets primarily include unbilled amounts typically resulting from sales under contracts when the over time method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. These unbilled accounts receivable in contract assets are transferred to accounts receivable upon invoicing, typically when the right to payment becomes unconditional in which case payment is due based only upon the passage of time.

The Company’s contract liabilities primarily relate to billings and advance payments received from customers, and deferred revenue. These contract liabilities represent the Company’s obligation to transfer its products to its customers for which the Company has received, or is owed consideration from its customers. Contract liabilities are included in deferred revenue on the Company’s Condensed Consolidated Balance Sheets.

Contract assets and liabilities consisted of the following:

In thousands	June 30, 2019		December 31, 2018		Dollar Change
Contract assets	$	21,566	$	23,040	$	(1,474	)
Contract liabilities	$	2,707	$	4,537	$	(1,830	)

The $1.5 million decrease in contract assets from December 31, 2018 to June 30, 2019 was primarily due to timing of billings to customers.

The $1.8 million decrease in contract liabilities from December 31, 2018 to June 30, 2019 was primarily due to $3.4 million of revenue recognized in the first six months of 2019 related to contract liabilities at December 31, 2018, offset by an increase in customer deposits.

Disaggregated Revenue

The Company disaggregates revenue from customers by geographic region, as it believes this disclosure best depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic factors. Disaggregated revenue by geographical region for the quarters and six months ended June 30, 2019 and 2018 were as follows:

	Quarter Ended June 30, 2019
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	47,822	$	42,667	$	64,235	$	(6,466	)	$	148,258
Europe	15,729		17,791		25,203		(175		)	58,548
Asia	1,551		8,620		3,834		—			14,005
Total Net Sales	$	65,102	$	69,078	$	93,272	$	(6,641	)	$	220,811

	Quarter Ended June 30, 2018
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	20,879	$	45,564	$	61,922	$	(6,533	)	$	121,832
Europe	10,355		18,053		24,515		(169		)	52,754
Asia	—		8,095		3,732		—			11,827
Total Net Sales	$	31,234	$	71,712	$	90,169	$	(6,702	)	$	186,413

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	Six Months Ended June 30, 2019
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	94,199	$	79,856	$	127,837	$	(12,734	)	$	289,158
Europe	32,386		36,840		51,645		(381		)	120,490
Asia	3,097		17,988		8,103		—			29,188
Total Net Sales	$	129,682	$	134,684	$	187,585	$	(13,115	)	$	438,836

	Six Months Ended June 30, 2018
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	40,040	$	84,697	$	131,901	$	(14,359	)	$	242,279
Europe	21,887		37,439		52,570		(354		)	111,542
Asia	—		17,117		7,135		—			24,252
Total Net Sales	$	61,927	$	139,253	$	191,606	$	(14,713	)	$	378,073

3. Acquisitions and Divestiture

Acquisitions

On August 31, 2018, the Company completed the acquisition of Interface Performance Materials ("Interface"), based in Lancaster, Pennsylvania. A globally-recognized leader in the delivery of engineered sealing solutions, the Interface operations manufacture wet-laid gasket and specialty materials primarily serving OEM and Tier I manufacturers in the Agriculture, Construction, Earthmoving, Industrial, and Automotive segments. The transaction strengthens the Company's position as an industry-leading global provider of filtration and engineered materials and expands the Company's end markets into attractive adjacencies. The Company acquired one hundred percent of Interface for an initial price of $268.4 million, net of cash acquired of $5.2 million. In the second quarter of 2019, the Company recorded a post closing adjustment resulting in a decrease in purchase price of $1.4 million resulting in a purchase price of $267.0 million. The purchase price was financed with a combination of cash on hand and $261.4 million of borrowings from the Company's amended $450 million credit facility. The operating results of the Interface businesses have been included in the Consolidated Statements of Operations since August 31, 2018, the date of acquisition, and are reported within the Performance Materials reporting segment.

For the quarter ended June 30, 2019, Interface reported net sales and operating income of $32.7 million and $0.1 million, respectively. Interface's operating income for the quarter ended June 30, 2019 included $4.0 million of intangible assets amortization expense in selling, product development and administrative expenses. There were no sales or operating income for Interface during the quarter ended June 30, 2018 as the acquisition was completed on August 31, 2018.

For the six months ended June 30, 2019, Interface reported net sales and operating loss of $65.6 million and $0.7 million, respectively. Interface's operating income loss for the six months ended June 30, 2019 included $8.0 million of intangible assets amortization expense in selling, product development and administrative expenses. There were no sales or operating income for Interface during the six months ended June 30, 2018 as the acquisition was completed on August 31, 2018.

The following table presents the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Company's acquisition of Interface. The final determination of the fair value of certain assets and liabilities will be completed within the one year measurement period as required by the FASB ASC Topic 805, “Business Combinations.” As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period within one year of the acquisition date. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations. The finalization of the purchase accounting assessment may result in a change in the

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valuation of assets acquired and liabilities assumed and may have a material impact on the Company's results of operations and financial position.

In thousands
Accounts receivable	$	25,182
Inventories	17,013
Prepaid expenses and other current assets	2,382
Property, plant and equipment	40,902
Goodwill (Note 5)	130,346
Other intangible assets (Note 5)	106,900
Other assets	308
Total assets acquired, net of cash acquired	$	323,033
Current liabilities	$	(11,319	)
Deferred tax liabilities	(24,678		)
Benefit plan liabilities (Note 12)	(19,002		)
Other long-term liabilities	(1,031		)
Total liabilities assumed	(56,030		)
Total purchase price, net of cash acquired	$	267,003

The following table reflects the unaudited actual results of the Company for the quarter and six months ended June 30, 2019 and the pro forma operating results of the Company for the quarter and six months ended June 30, 2018, which gives effect to the acquisition of Interface as if it had occurred on January 1, 2017. The pro forma information includes the historical financial results of the Company and Interface. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2017, nor are they intended to be indicative of results that may occur in the future. The pro forma information does not include the effects of any synergies related to the acquisition.

	Quarter Ended   June 30,					Six Months Ended   June 30,
	(Actual)			(Pro Forma)		(Actual)			(Pro Forma)
In thousands	2019			2018		2019			2018
Net sales	$	220,811		$	226,404	$	438,836		$	457,481
Net (loss) income	$	(6,946	)	$	11,589	$	(3,056	)	$	22,518
Earnings per share:
Basic	$	(0.40	)	$	0.67	$	(0.18	)	$	1.31
Diluted	$	(0.40	)	$	0.67	$	(0.18	)	$	1.30
Basic	17,267			17,196		17,260			17,178
Diluted	17,267			17,335		17,260			17,334

Included in net income during the quarter ended June 30, 2019 was $3.1 million of intangible assets amortization expense related to acquired Interface intangible assets and $2.6 million of interest expense primarily to finance the Interface acquisition.

Pro forma adjustments during the quarter ended June 30, 2018 reduced net income by $0.6 million. Included in net income for the quarter ended June 30, 2018 was $3.0 million of intangible assets amortization expense and $2.1 million of interest expense associated with borrowings under the Company's Amended Credit Facility. Net income was adjusted to exclude items such as corporate strategic initiatives expenses, Interface management fee expenses and tax valuation allowance expenses.

Included in net income during the six months ended June 30, 2019 was $6.1 million of intangible assets amortization expense related to acquired Interface intangible assets and $5.2 million of interest expense to finance the Interface acquisition.

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Pro forma adjustments during the six months ended June 30, 2018 reduced net income by $2.1 million. Included in net income for the six months ended June 30, 2018 was $6.1 million of intangible assets amortization expense and $4.2 million of interest expense associated with borrowings under the Company's Amended Credit Facility. Net income was adjusted to exclude items such as corporate strategic initiatives expenses, Interface management fee expenses and tax valuation allowance expenses.

On July 12, 2018, the Company acquired certain assets and assumed certain liabilities of the Precision Filtration division of Precision Custom Coatings ("PCC") based in Totowa, NJ. Precision Filtration is a producer of high-quality, air filtration media principally serving the commercial and residential HVAC markets with a range of low efficiency through high-performing air filtration media. The Company acquired the assets and liabilities of PCC for $1.6 million in cash with additional cash payments of up to $2.0 million to be made based on the achievement of certain future financial targets through 2022. PCC had a minimal impact on the Company's sales and operating income for the quarter ended June 30, 2019.

Divestiture

On May 9, 2019, the Company sold its Texel Geosol, Inc. ("Geosol") business, a subsidiary of the Company's Texel Technical Materials, Inc. ("Texel") business, for a cash purchase price of $3.0 million, subject to a post-closing adjustment(s) within ninety days of the purchase date. Under the terms of the arrangement, $0.4 million of the total purchase price will be withheld and paid to the Company in three annual payments of approximately $0.1 million. The disposition was completed pursuant to a Sale Agreement, dated May 9, 2019, by and between the Company, and the third-party buyer. The Company recognized a pre-tax gain on the sale of $1.5 million, reported as non-operating income in the second quarter of 2019. Net of income taxes, the Company reported a gain on sale of $1.3 million.

The Company did not report Geosol as a discontinued operation as it would not be considered a strategic shift in Lydall's business. Accordingly, the operating results of Geosol are included in the operating results of the Company through the sale date and in comparable periods.

4. Inventories

Inventories as of June 30, 2019 and December 31, 2018 were as follows:

In thousands	June 30, 2019		December 31, 2018
Raw materials	$	41,108	$	37,731
Work in process	16,527		18,296
Finished goods	30,597		28,438
Total inventories	$	88,232	$	84,465

Included in work in process is gross tooling inventory of $2.5 million and $4.3 million at June 30, 2019 and December 31, 2018, respectively.

5. Goodwill and Other Intangible Assets

Goodwill:

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

The changes in the carrying amount of goodwill by segment as of and for the six months ended June 30, 2019 were as follows:

In thousands	December 31, 2018		Currency translation adjustments			Reductions			June 30, 2019
Performance Materials	$	144,626	$	(84	)	$	(65	)	$	144,477
Technical Nonwovens	52,337		982			—			53,319
Total goodwill	$	196,963	$	898		$	(65	)	$	197,796

Goodwill Associated with Acquisitions

The net goodwill reduction of $0.1 million within the Performance Materials segment was due to a goodwill reduction of $0.7 million as a result of a post-closing purchase price adjustment in the second quarter of 2019 related to the acquisition of Interface

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Performance Materials on August 31, 2018, partially offset by acquisition activity in the second quarter of 2019 resulting in a goodwill addition of $0.6 million.

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 Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018:

	June 30, 2019					December 31, 2018
In thousands	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	142,418	$	(21,134	)	$	141,455	$	(11,453	)
Patents	4,366		(3,841		)	4,333		(3,816		)
Technology	2,500		(898		)	2,500		(810		)
Trade Names	7,302		(4,017		)	7,235		(2,840		)
License Agreements	616		(616		)	619		(619		)
Other	559		(559		)	561		(561		)
Total amortized intangible assets	$	157,761	$	(31,065	)	$	156,703	$	(20,099	)

6. Long-term Debt and Financing Arrangements

On August 31, 2018, the Company amended and restated its $175 million senior secured revolving credit agreement ("Amended Credit Agreement") that increased the available borrowing from $175 million to $450 million, added three additional lenders and extended the maturity date from July 7, 2021 to August 31, 2023.

Under the terms of the Amended Credit Agreement, the lenders are providing up to a $450 million credit facility (the “Facility”) to the Company, under which the lenders provided a term loan commitment of $200 million and revolving loans to or for the benefit of the Company and its subsidiaries of up to $250 million. The Facility may be increased by an aggregate amount not to exceed $150 million through an accordion feature, subject to specified conditions. The Facility is secured by substantially all of the assets of the Company.

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 Dollar 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 0.00% to 1.25%, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 0.75% to 2.00%. The Company pays a quarterly fee ranging from 0.15% to 0.275% on the unused portion of the revolving commitment. The Company has entered into multiple interest rate swaps to convert a portion of the Company's one-month LIBOR-based borrowings from a variable rate to a fixed rate. See Note 7.

The Company is permitted to prepay term and revolving borrowings in whole or in part at any time without premium or penalty, subject to certain minimum payment requirements, and the Company is generally permitted to irrevocably cancel unutilized portions of the revolving commitments under the Amended Credit Agreement. The Company is required to repay the term commitment in an amount of $2.5 million per quarter beginning with the quarter ending December 31, 2018 through the quarter ending June 30, 2023.

The Amended Credit Agreement contains covenants required of the Company and its subsidiaries, including various affirmative and negative financial and operational covenants. The Company is required to meet certain quarterly financial covenants calculated from the four fiscal quarters most recently ended, including: (i) a minimum consolidated fixed charge coverage ratio, which requires that at the end of each fiscal quarter the ratio of (a) consolidated EBITDA to (b) the sum of consolidated interest charges, redemptions, non-financed maintenance capital expenditures, restricted payments and taxes paid, each as defined in the Amended Credit Agreement, may not be lower than 1.25 to 1.0; and (ii) a consolidated net leverage ratio, which requires that at the end of each fiscal quarter the ratio of consolidated funded indebtedness minus consolidated domestic cash to consolidated EBITDA, as defined

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in the Amended Credit Agreement, may not be greater than 3.5 to 1.0. The Company was in compliance with all covenants at June 30, 2019.

At June 30, 2019, the Company had borrowing availability of $108.2 million under the Facility, net of $300.0 million of borrowings outstanding and standby letters of credit outstanding of $3.8 million. The borrowings outstanding included a $162.0 million term loan, net of $0.5 million in debt issuance costs being amortized to interest expense over the debt maturity period.

In addition to the amounts outstanding under the Facility, the Company has various acquired foreign credit facilities totaling approximately $8.2 million. At June 30, 2019, the Company's foreign subsidiaries had $0.1 million in borrowings outstanding as well as $1.8 million in standby letters of credit outstanding.

The Company also has finance lease agreements for machinery and equipment at multiple operations requiring monthly principal and interest payments through 2020.

Total outstanding debt consists of:

In thousands	Effective Rate		Maturity	June 30, 2019			December 31, 2018
Revolver loan	4.40	%	8/31/2023	$	138,000		$	138,000
Term loan, net of debt issuance costs	4.40	%	8/31/2023	161,552			186,498
Finance leases	0.00% - 2.09%		2019 - 2020	122			315
				299,674			324,813
Less portion due within one year				(10,001		)	(10,172		)
Total long-term debt, net of debt issuance costs				$	289,673		$	314,641

The carrying value of the Company’s debt outstanding on its Facility approximates fair value given the variable rate nature of the debt. 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 weighted average interest rate on long-term debt was 4.3% for the six months ended June 30, 2019 and 3.4% for the year ended December 31, 2018.

7. Derivatives

The Company selectively uses financial instruments to manage market risk associated with exposure to fluctuations in interest rates. These financial exposures are monitored and managed by the Company as an integral part of its risk management program. 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. The Company has debt with variable rates of interest based generally on LIBOR. From time to time, the Company enters into interest rate swap agreements to manage interest rate risk. These instruments are designated as cash flow hedges and are recorded at fair value using Level 2 observable market inputs.

Derivative instruments are recognized as either assets or liabilities on the 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 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. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings. The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. The Company does not use derivatives for speculative or trading purposes.

In November 2018, the Company entered into a five-year interest rate swap agreement with a bank which converts the interest on a notional $139.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank which converts the interest on a notional $60.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduces quarterly by $5.0 million through March 31, 2020. These interest rate swap agreements were accounted for as cash flow hedges. Effectiveness of these derivative agreements are assessed quarterly by ensuring that the critical terms of the swaps continue to match the critical terms of the hedged debt.

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The following table sets forth the fair value amounts of derivative instruments held by the Company:

	June 30, 2019				December 31, 2018
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts	$	34	$	5,263	$	179	$	2,738
Total derivatives	$	34	$	5,263	$	179	$	2,738

The following table sets forth the income recorded in accumulated other comprehensive (loss) income, net of tax, for the quarters and six months ended June 30, 2019 and 2018 for derivatives held by the Company and designated as hedging instruments:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Cash flow hedges:
Interest rate contracts	$	(1,351	)	$	(27	)	$	(2,026	)	$	75
	$	(1,351	)	(27		)	$	(2,026	)	$	75

8. Leases

From time to time, the Company enters into arrangements with vendors to provide certain tangible assets used in the Company's operations which qualify as a lease pursuant to ASC Topic 842, Leases. The tangible assets leased include Buildings, Office Equipment, Machinery and Vehicles. The Company's leases have remaining terms of a few months to 14 years, some of which have options to extend for a period of up to 7 years and some of which have options to terminate within 1 year.

At inception of the arrangement, the Company determines if an arrangement is a lease based on assessment of the terms and conditions of the contract. Operating leases are included in Operating lease right-of-use (“ROU”) assets, other accrued liabilities, and Long-term operating lease liabilities in the Company's condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, Current portion of long-term debt, and long-term debt in the Company's condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

While the overwhelming majority of leases have fixed payments schedules, some leases have variable lease schedules based on market indices such as LIBOR or include additional payments based on excess consumption of services. For leases on a variable schedule based on a market index, the current lease payment amount is used in the calculation of the lease liability and corresponding asset included on the balance sheet. For leases with additional payments based on excess consumption of services, no amount is included in the calculation of the lease liability or corresponding asset as it is not probable excess consumption will continue in the future.

As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. At June 30, 2019, the weighted average discount rate used for operating and finance leases is 4.39% and 1.78%, respectively. The implicit rate is used when readily determinable from a lease.

The operating lease ROU asset also includes any lease payments made in advance of the assets use and excludes lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for as one component as permitted by ASC 842.

After consideration of any options to terminate early which are reasonably certain to be executed or any options to extend which are not reasonably certain to be executed, any lease with a term of 12 months or less is considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU Asset and Lease Liability accounts on the condensed consolidated balance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis over the lease term.

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The components of lease expense are as follows:

In thousands	Quarter Ended   June 30, 2019		Six Months Ended   June 30, 2019
Finance lease expense:
Amortization of right-of-use assets	$	16	$	49
Interest on lease liabilities	—		1
Operating lease expense	1,605		3,249
Short-term lease expense	244		468
Variable lease expense	18		54
Total lease expense	$	1,883	$	3,821

Supplemental balance sheet information related to leases are as follows:

In thousands, except lease term	June 30, 2019
Operating leases:
Operating lease right-of-use assets	$	27,070
Short-term lease liabilities, included in "Other accrued liabilities"	$	5,176
Long-term lease liabilities	22,006
Total operating lease liabilities	$	27,182
Finance leases:
Property, plant and equipment	$	740
Accumulated depreciation	(195		)
Property, plant and equipment, net	$	545
Short-term lease liabilities, included in debt	$	109
Long-term lease liabilities, included in debt	13
Total finance lease liabilities	$	122
Weighted average remaining lease term:
Operating leases	7.5 years
Finance leases	12.0 years

Supplemental cash flow information related to leases are as follows:

	Six Months Ended June 30,
In thousands	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,162
Operating cash flows from finance leases	1
Financing cash flows from finance leases	188
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,676
Finance leases	—

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As of June 30, 2019, future lease payments maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	3,223		$	89
2020	5,723			34
2021	4,408			—
2022	3,643			—
2023	2,753			—
Thereafter	12,822			—
Total lease payments	32,572			123
Less imputed interest	(5,390		)	(1		)
Total discounted future lease payments	$	27,182		$	122

As of December 31, 2018, future lease payment maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314

9. Equity Compensation Plans

As of June 30, 2019, 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, authorizes 1.75 million shares of common stock for awards. The 2012 Plan also authorizes an additional 1.2 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 types 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. The Company accounts for forfeitures as they occur. Compensation expense for performance based awards granted prior to December 2018, is recorded based upon the service period and management’s assessment of the probability of achieving the performance goals and will be adjusted based upon actual achievement. In December 2018, the performance metric changed to a 3-year relative Total Shareholder Return (TSR) compared to S&P 600 industrial index instead of a pre-established earnings-per-share target to better align compensation to the long-term interests of shareholders. 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.

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The Company incurred equity compensation expense of $0.5 million and $1.4 million for the quarters ended June 30, 2019 and June 30, 2018, respectively, and $1.5 million and $2.6 million for the six months ended June 30, 2019 and June 30, 2018, respectively, for the Plans, including restricted stock awards. No equity compensation costs were capitalized as part of inventory.

Stock Options

The following table is a summary of outstanding and exercisable options as of June 30, 2019:

In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Aggregate Intrinsic Value
Outstanding at June 30, 2019	599	$	30.32	$	644
Exercisable at June 30, 2019	256	$	29.89	$	635
Unvested at June 30, 2019	343	$	30.64	$	9

There were no stock options granted and 3,325 stock options exercised during the quarter and six months ended June 30, 2019. There was no cash received from the exercise of stock options during the quarter and six months ended June 30, 2019. The intrinsic value of stock options exercised was $0.1 million with a tax benefit of less than $0.1 million during the quarter and six months ended June 30, 2019.

There were no stock options granted and no stock options exercised during the quarter ended June 30, 2018. There were 11,180 stock options granted and 27,041 stock options exercised during the six months ended June 30, 2018. The amount of cash received from the exercise of stock options was $0.7 million during the six months ended June 30, 2018. The intrinsic value of stock options exercised was $0.7 million with a tax benefit of $0.1 million during the six months ended June 30, 2018.

At June 30, 2019, the total unrecognized compensation cost related to non-vested stock option awards was approximately $3.0 million, with a weighted average expected amortization period of 2.7 years.

Restricted Stock

Restricted stock includes both performance-based and time-based awards. There were no time-based restricted stock shares granted during the quarter ended June 30, 2019 and 33,932 time-based restricted stock shares granted during the six months ended June 30, 2019. There were no performance-based restricted shares granted during the quarter and six months ended June 30, 2019. There were no performance-based restricted shares that vested during the quarter and six months ended June 30, 2019. There were no time-based restricted shares that vested during the quarter ended June 30, 2019 and 5,468 time-based restricted shares that vested during the six months ended June 30, 2019.

There were no time-based restricted stock shares granted during the quarter ended June 30, 2018 and 8,106 time-based restricted stock shares granted during the six months ended June 30, 2018. There were no performance-based restricted stock shares granted during the quarter ended June 30, 2018 and 15,190 performance-based restricted shares granted during the six months ended June 30, 2018. There were no performance-based restricted stock shares that vested during the quarter ended June 30, 2018 and 48,035 performance-based restricted shares that vested during the six months ended June 30, 2018. There were no time-based restricted stock shares that vested during the quarter ended June 30, 2018 and 5,164 time-based restricted shares that vested during the six months ended June 30, 2018.

At June 30, 2019, there were 265,816 unvested restricted stock awards with total unrecognized compensation cost related to these awards of $3.9 million with a weighted average expected amortization period of 1.9 years. Compensation expense for performance based awards is recorded based on the service period and management’s assessment of the probability of achieving the performance goals.

10. Stock Repurchases

During the six months ended June 30, 2019, the Company purchased 2,124 shares of common stock valued at $0.1 million, through withholding, pursuant to provisions in agreements with recipients of restricted stock granted under the Company’s equity compensation plans, in which the Company withholds that number of shares having fair value equal to each recipient’s minimum tax withholding due.

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11. Restructuring

In 2017, the Company commenced a restructuring plan in the Technical Nonwovens segment which includes plant consolidations and transfer of equipment to other facilities within the segment's Europe and China operations. The consolidation of certain plants, which is expected to conclude in 2019, is expected to reduce operating costs, increase efficiency and enhance the Company’s flexibility by better aligning its manufacturing footprint with the segment's customer base. Accordingly, the Company expects to record pre-tax expenses of approximately $4.2 million, in connection with this restructuring plan, of which approximately $3.7 million is expected to result in cash expenditures over the period of consolidation. The Company also expects to incur cash expenditures of approximately $3.8 million for capital expenditures associated with this plan.

During the quarter ended June 30, 2019, the Company recorded pre-tax restructuring expenses of $0.1 million, primarily related to severance costs in selling, product development and administrative expenses. During the six months ended June 30, 2019, the Company recorded pre-tax restructuring expenses of $0.5 million, primarily related to equipment move costs in cost of sales. The Company expects to record approximately $0.8 million of restructuring expenses for the remainder of 2019.

Actual pre-tax expenses incurred and total estimated pre-tax expenses for the restructuring program by type are as follows:

In thousands	Severance and Related Expenses	Contract Termination Expenses	Facility Exit, Move and Set-up Expenses	Total
Total estimated expenses	1,250	450	2,500	4,200
Expenses incurred through December 31, 2018	787	290	1,882	2,959
Estimated remaining expense at December 31, 2018	463	160	618	1,241
Expense incurred during quarter ended:
March 31, 2019	16	—	360	376
June 30, 2019	53	—	44	97
Total pre-tax expense incurred	856	290	2,286	3,432
Estimated remaining expense at June 30, 2019	394	160	214	768

There were cash outflows of $0.2 million and $0.5 million for the restructuring program for the quarter and six months ended June 30, 2019, respectively.

Accrued restructuring costs were as follows at June 30, 2019:

In thousands	Total
Balance as of December 31, 2018	$	147
Pre-tax restructuring expenses, excluding depreciation	473
Cash paid	(534		)
Balance as of June 30, 2019	$	86

12. Employer Sponsored Benefit Plans

Prior to the quarter ended June 30, 2019, the Company maintained a defined benefit pension plan ("U.S. Lydall Pension Plan") and two domestic pension plans acquired in the Interface acquisition ("Interface Pension Plans"), (collectively the "domestic defined benefit pension plans"). During the quarter ended June 30, 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan through lump sum distributions to participants or by irrevocably transferring pension liabilities to two insurance companies through the purchase of group annuity contracts. These purchases, funded with pension assets, resulted in a pre-tax settlement loss of $25.5 million in the quarter ended June 30, 2019, related to the recognition of accumulated deferred actuarial losses. The settlement loss was included as non-operating expense in the condensed consolidated statements of operations. No contributions were made to the U.S. Lydall Pension Plan during the quarter and six months ended June 30, 2019 and contributions of $3.0 million and $4.2 million were made during the quarter and six months ended June 30, 2018, respectively.

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The Interface Pension Plans cover Interface's union and non-union employees. The plans are closed to new employees and benefits are no longer accruing for the majority of participants. The Company expects to make a required contribution of approximately $1.0 million to $2.0 million to the Interface Pension Plans during 2019. Contributions of $0.3 million and $0.9 million were made during the quarter and six months ended June 30, 2019, respectively.

The following is a summary of the components of net periodic benefit cost for the domestic defined benefit pension plans for the quarters and six months ended June 30, 2019 and 2018:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Components of employer benefit cost
Service cost	$	30		$	—		$	60		$	—
Interest cost	833			470			1,827			940
Expected return on assets	(744		)	(650		)	(1,616		)	(1,300		)
Amortization of actuarial loss	186			256			464			512
Net periodic benefit cost	$	305		$	76		$	735		$	152
Settlement loss	25,515			—			25,515			—
Total employer benefit plan cost	$	25,820		$	76		$	26,250		$	152

The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in other income.

13. Income Taxes

For the quarter ended June 30, 2019 the Company recorded a tax benefit of $8.2 million compared to tax expense of $1.7 million for the quarter ended June 30, 2018. The tax benefit was driven by $10.5 million of tax benefit related to the pension plan settlement and resulted in an effective tax rate for the quarter ended June 30, 2019 of 54.0%. This is compared to an effective tax rate of 13.7% for the quarter ended June 30, 2018. The pension plan settlement tax benefit included a $4.5 million benefit related to the reclassification of stranded tax effects from accumulated other comprehensive income. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the quarter ended June 30, 2019 was 22.7%. This was negatively impacted by valuation allowance activity of $0.9 million partially offset by the Company's geographical mix of earnings. The second quarter of 2018 effective tax rate was positively impacted by discretionary pension plan contributions and geographical mix of earnings.

For the six months ended June 30, 2019 the Company recorded a tax benefit of $7.1 million compared to tax expense of $3.8 million for the six months ended June 30, 2018. The tax benefit was driven by $10.5 million of tax benefit related to the pension plan settlement and resulted in an effective tax rate for the six months ended June 30, 2019 of 69.7%. This is compared to an effective tax rate of 15.0% for the six months ended June 30, 2018. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the six months ended June 30, 2019 was 22.5%. This was negatively impacted by valuation allowance activity of $1.2 million partially offset by the Company's geographical mix of earnings.

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, China, the United Kingdom, Canada and the Netherlands. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2015, state and local examinations for years before 2013, and non-U.S. income tax examinations for years before 2003.

The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, stock vesting, pension plan terminations, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of ongoing tax planning strategies and audits.

14. Earnings (Loss) Per Share

For the quarters and six months ended June 30, 2019 and 2018, basic earnings per share were computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method as long as their effect is not antidilutive.

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

	Quarter Ended   June 30,		Six Months Ended   June 30,
In thousands	2019	2018	2019	2018
Basic average common shares outstanding	17,267	17,196	17,260	17,178
Effect of dilutive options and restricted stock awards	—	139	—	156
Diluted average common shares outstanding	17,267	17,335	17,260	17,334

Dilutive stock options totaling 54,713 and 69,730 shares of Common Stock were excluded from the diluted per share computation for the quarter and six months ended June 30, 2019, respectively, as the Company reported a net loss during those periods and, therefore, the effect of including these options would be antidilutive.

For each of the quarters ended June 30, 2019 and 2018, stock options for 520,189 shares and 162,830 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

For each of the six months ended June 30, 2019 and 2018, stock options for 521,293 shares and 149,940 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

15. Segment Information

As of June 30, 2019, the Company’s reportable segments were Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions.

Effective September 30, 2018, as a result of the Interface acquisition, the Performance Materials segment changed the disaggregation of revenue at the product level to be categorized as "Filtration" and "Sealing and Advanced Solutions". Prior period product level amounts throughout the Notes to the Condensed Consolidated Financial Statements have been recast to reflect the results of the new product level structure. The recast of historical product level information had no impact on the consolidated financial results.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions primarily for air, fluid power, life science and industrial applications (“Filtration”), and sealing and gasket solutions, thermal insulation, energy storage, and other engineered products (“Sealing and Advanced Solutions”).

Filtration products include LydAir® MG (Micro-Glass) Air Filtration Media, LydAir® MB (Melt Blown) Air Filtration Media, LydAir® SC (Synthetic Composite) Air Filtration Media, and Arioso® Membrane Composite Media. These products constitute the critical media component of clean-air systems for applications in clean-space, commercial, industrial and residential HVAC, power generation, respiratory protection, 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 transportation 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. LyPore® media and Solupor® ultra-high molecular weight polyethylene membranes also serve critical liquid filtration/separation applications such as biopharmaceutical pre-filtration and clarification, lateral flow diagnostic and analytical testing, potable water filtration and high purity process filtration such as those found in food and beverage and medical applications.

Sealing and Advanced Solutions products include nonwoven specialty engineered materials for a multitude of applications. Interface fiber-reinforced gasket materials serve the heavy-duty diesel, automobile, small engine, transmission and compressor markets. These products handle demanding sealing challenges with a diverse range of metallic, non-metallic, rubber-coated and laminate materials that comprise the extensive Sealing materials portfolio. Interface Engineered Components are ready to use soft and hard gasket parts sold directly to OEMs and aftermarket applications. An example is Select-a-Seal® rubber-edged composite (REC) technology that provides robust sealing, compression, adhesion, and shear strength for driveline applications. Advanced Solutions’ nonwoven veils, papers and specialty composites for the building products, appliance, energy and industrial markets include Manniglas® Thermal Insulation Papers, and Lytherm® Insulation Media for high temperature technology applications. Lydall’s Cryotherm® Super-Insulating Media, CRS-Wrap® Super-Insulating Media and Cryo-Lite® 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. Additional specialty composite materials include specialty fiber calendar bowl products to service the printing and textile industries and press pad materials for industrial lamination processes.

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Technical Nonwovens Segment

The Technical Nonwovens segment primarily produces needle punch nonwoven solutions for a multitude of industries and applications. Products are manufactured and sold globally under the leading brands of Lydall Industrial Filtration, Southern Felt, Gutsche, and Texel. Industrial Filtration products include nonwoven rolled-good felt media and filter bags used primarily in industrial air and liquid filtration applications. Nonwoven filter media is an effective solution to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, mining, food, and pharmaceutical. Advanced Materials products include nonwoven rolled-good media used in commercial applications and predominantly serves the geosynthetics, automotive, industrial, medical, and safety apparel markets. Automotive media is provided to Tier I/II suppliers as well as the Company's Thermal Acoustical Solutions segment.

Technical Nonwovens segment products include air and liquid filtration media sold under the brand names Fiberlox® high performance filtration felts, Checkstatic™ conductive filtration felts, Microfelt® high efficiency filtration felts, Pleatlox® pleatable filtration felts, Ultratech™ PTFE filtration felts, Powertech® and Powerlox® power generation filtration felts, Microcap® high efficiency liquid filtration felts, Duotech membrane composite filtration felts, along with our porotex® family of high temperature filtration felts including microvel® and optivel® products. Technical Nonwovens Advanced Materials products are sold under the brand names Thermofit® thermo-formable products, Ecoduo® recycled content materials, Duotex® floor protection products, and Versaflex® composite molding materials. Technical Nonwovens also offers extensive finishing and coating capabilities which provide custom engineered properties tailored to meet the most demanding applications. The business leverages a wide range of fiber types and extensive technical capabilities to provide products that meet our customers’ needs across a variety of applications providing both high performance and durability.

Thermal Acoustical Solutions Segment 

The Thermal Acoustical Solutions segment offers a full range of innovative engineered products tailored for the transportation and industrial sectors to thermally shield sensitive components from high heat, improve exhaust gas treatment and lower harmful emissions as well as assist in the reduction of noise, vibration and harshness (NVH). Within the transportation sector, Lydall’s products are found in the interior (dash insulators, cabin flooring), underbody (wheel well, aerodynamic belly pan, fuel tank, exhaust, tunnel, spare tire) and under hood (engine compartment, outer dash, powertrain, catalytic converter, turbo charger, manifolds) of cars, trucks, SUVs, heavy duty trucks and recreational vehicles.

Thermal Acoustical Solutions segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites that provide weight reduction, superior noise suppression and increased durability over conventional designs, as well as products that efficiently combine multiple layers of metal and thermal - acoustical insulation media to provide an engineered shielding solution for an array of application areas. 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 used to protect vehicle components from excessive heat. Lydall’s flux® product family includes several patented or IP-rich products that address applications which include: Direct Exhaust Mount heat shields, which are assembled to high temperature components like catalytic converters, turbochargers or exhaust manifolds using aluminized and stainless steel and high performance and high temperature heat insulating materials; Powertrain heat shields that absorb noise at the source and do not contribute to the engine's noise budget; and durable, thermally robust solutions for temperature sensitive plastic components such as fuel tanks that are in proximity to high temperature heat sources.

The tables below present net sales and operating income by segment for the quarters and six months ended June 30, 2019 and 2018, and also a reconciliation of total segment net sales and operating income to total consolidated net sales and operating income.

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Consolidated net sales by segment:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Performance Materials Segment (1):
Filtration	$	24,732		$	23,061		$	48,666		$	46,203
Sealing and Advanced Solutions	40,370			8,173			81,016			15,724
Performance Materials Segment net sales	65,102			31,234			129,682			61,927
Technical Nonwovens Segment:
Industrial Filtration	38,706			39,170			81,070			79,401
Advanced Materials (2)	30,372			32,542			53,614			59,852
Technical Nonwovens Segment net sales	69,078			71,712			134,684			139,253
Thermal Acoustical Solutions Segment:
Parts	85,705			82,920			170,281			171,041
Tooling	7,567			7,249			17,304			20,565
Thermal Acoustical Solutions Segment net sales	93,272			90,169			187,585			191,606
Eliminations and Other (2)	(6,641		)	(6,702		)	(13,115		)	(14,713		)
Consolidated Net Sales	$	220,811		$	186,413		$	438,836		$	378,073

 Operating income by segment:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Performance Materials (1)	$	3,303		$	3,649		$	4,762		$	6,290
Technical Nonwovens	7,844			6,118			12,578			11,124
Thermal Acoustical Solutions	7,357			8,820			16,848			21,434
Corporate Office Expenses	(5,325		)	(6,338		)	(11,959		)	(12,563		)
Consolidated Operating Income	$	13,179		$	12,249		$	22,229		$	26,285

(1) The Performance Materials segment reports the results of Interface and PCC for the period following the date of acquisitions of August 31, 2018 and July 12, 2018, respectively, and included $4.0 million and $8.0 million of incremental intangible assets amortization for the quarter and six months ended June 30, 2019, respectively.

(2) Included in the Technical Nonwovens segment and Eliminations and Other is $4.6 million and $5.8 million in intercompany sales to the Thermal Acoustical Solutions segment for the quarters ended June 30, 2019 and 2018, respectively, and $9.3 million and $12.9 million for the six months ended June 30, 2019 and 2018, respectively.

16. Commitments and Contingencies

Environmental Remediation

In the fourth quarter of 2016, as part of a groundwater discharging permitting process, water samples collected from wells and process water basins at the Company’s Rochester New Hampshire manufacturing facility, within the Performance Materials segment, showed concentrations of Per and Polyfluorinated Substances (“PFAS”) in excess of state ambient groundwater quality standards. In January 2017, the Company received a notification from the State of New Hampshire Department of Environmental Services (“NHDES”) naming Lydall Performance Materials, Inc. a responsible party with respect to the discharge of regulated contaminants and, as such, is required to take action to investigate and remediate the impacts in accordance with standards established by the NHDES. The Company conducted a site investigation, the scope of which was reviewed by the NHDES, in order to assess the extent of potential soil and groundwater contamination and develop a remedial action. Based on input received from NHDES in March 2017 with regard to the scope of the site investigation, the Company recorded $0.2 million of expense. In 2018, the Company received a response from the NHDES to the site investigation report outlining proposed remedial actions.

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The Company recorded an additional $0.1 million of expense in 2018 associated with the expected costs to remediate the impacts of the discharge of regulated contaminants in accordance with standards established by the NHDES. During 2018 the environmental liability was fully reduced reflecting payments made to vendors, resulting in no balance at December 31, 2018. Additionally, the Company incurred $0.2 million of capital expenditures in 2018, in relation to the lining of the Company's fresh water lagoons. The site investigation is ongoing. The Company cannot be sure that costs will not exceed the current estimates until this matter is closed with the NHDES, nor that any future corrective action at this location would not have a material effect on the Company’s financial condition, results of operations or liquidity.

Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly impact any estimates of environmental remediation costs.

17. Changes in Accumulated Other Comprehensive Income (Loss)

The following table discloses the changes by classification within accumulated other comprehensive income (loss) for the six months ended June 30, 2019 and 2018:

In thousands	Foreign Currency Translation Adjustment			Defined Benefit Pension Adjustment				Gains and Losses on Cash Flow Hedges				Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(2,221	)	$	(18,049	)		$	122			$	(20,148	)
Other comprehensive income	(8,604		)	—				75			(c)	(8,529		)
Amounts reclassified from accumulated other comprehensive loss	—			397			(a)	—				397
Balance at June 30, 2018	(10,825		)	(17,652		)		197				(28,280		)
Balance at December 31, 2018	(18,458		)	(22,253		)		(1,974		)		(42,685		)
Other comprehensive loss	2,330			—				(2,026		)	(c)	304
Amounts reclassified from accumulated other comprehensive loss	—			19,374			(b)	—				19,374
Balance at June 30, 2019	$	(16,128	)	$	(2,879	)		$	(4,000	)		$	(23,007	)

(a) Amount represents amortization of actuarial losses, a component of net periodic benefit cost. This amount was $0.4 million, net of $0.1 million tax benefit, for the six months ended June 30, 2018.

(b) Amount represents the settlement of the Lydall Pension Plan in the second quarter of 2019. This amount was $19.0 million, net of $11.5 million tax benefit, for the six months ended June 30, 2019. Amount also represents amortization of actuarial losses, a component of net periodic benefit cost during the first five months of fiscal year 2019 prior to the plan termination. This amount was $0.4 million, net of $0.1 million tax benefit.

(c) Amount represents unrealized gains (losses) on the fair value of hedging activities, net of taxes, for the six months ended June 30, 2019 and 2018.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW AND OUTLOOK

Business

Lydall, Inc. and its subsidiaries (collectively, the “Company” or “Lydall”) design and manufacture specialty engineered nonwoven filtration media, industrial thermal insulating solutions, and thermal and acoustical barriers for filtration/separation and heat abatement and sound dampening applications. Lydall principally conducts its business through three reportable segments: Performance Materials, Technical Nonwovens and Thermal Acoustical Solutions, with sales globally. The Performance Materials ("PM") segment includes filtration media solutions primarily for air, fluid power, life science and industrial applications (“Filtration”), and gasket and sealing solutions, thermal insulation, energy storage, and other engineered products (“Sealing and Advanced Solutions”). The Technical Nonwovens ("TNW") segment consists of Industrial Filtration products that include nonwoven rolled-goods felt media and filter bags used primarily in industrial air and liquid filtration applications as well as Advanced Materials products that include nonwoven rolled-good media that is used in other commercial applications and predominantly serves the geosynthetics, automotive, industrial and medical markets. Advanced Materials products also include automotive rolled-good material for use in the Thermal Acoustical Solutions segment manufacturing process. Nonwoven filter media is used to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, food, and pharmaceutical. The Thermal Acoustical Solutions ("TAS") segment offers innovative engineered products to assist in noise and heat abatement within the transportation and industrial sectors.

Second Quarter 2019 Highlights

Below are financial highlights comparing Lydall’s quarter ended June 30, 2019 (“Q2 2019”) results to its quarter ended June 30, 2018 (“Q2 2018”) results:

• Net sales were $220.8 million in Q2 2019, compared to $186.4 million in Q2 2018, an increase of $34.4 million, or 18.5%. The change in consolidated net sales is summarized in the following table:

Components (in thousands)	Change in Net Sales			Percent Change
Acquisitions and divestitures	$	31,843		17.1	%
Parts volume and pricing change	6,943			3.7	%
Change in tooling sales	646			0.3	%
Foreign currency translation	(5,034		)	(2.6	)%
Total	$	34,398		18.5	%

• Gross margin was 20.5% in the second quarter of 2019, compared to 19.4% in the second quarter of 2018. The PM segment favorably impacted consolidated gross margin by approximately 330 basis points, due to higher gross margin sealing product sales. Gross margin from the TAS segment lowered consolidated gross margin by approximately 150 basis points primarily due to increased labor costs, primarily related to increased headcount and temporary labor, particularly in North America and Europe, coupled with increased outsourcing and expedited freight expenses caused by equipment downtime and other inefficiencies in Europe to meet customer delivery requirements. The TNW segment reported improved gross margin from increased pricing and lower restructuring related expenses, but based on segment mix, was negative to consolidated gross margin in the quarter by approximately 70 basis points.

• Operating income was $13.2 million, or 6.0% of net sales, in Q2 2019, compared to $12.2 million, or 6.6% of net sales, in Q2 2018. Operating margin declined 60 basis points primarily due to incremental intangible assets amortization of 170 basis points, partially offset by improved consolidated gross margins of 110 basis points due to higher gross margin Interface sales.

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The following components are included in operating income for Q2 2019 and Q2 2018 and impact the comparability of each quarter:

	Q2 2019					Q2 2018
Components (in thousands except per share amounts)	Operating income effect		EPS impact			Operating income effect		EPS impact
TNW restructuring expenses	(97	)	$	(0.01	)	(885	)	$	(0.04	)
Strategic initiatives expenses	(405	)	$	(0.01	)	(1,167	)	$	(0.06	)
Intangible assets amortization expenses	(5,369	)	$	(0.24	)	(1,476	)	$	(0.06	)

• During the quarter ended June 30, 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan ("pension settlement") through lump sum distributions to participants or by irrevocably transferring pension liabilities to insurance companies through the purchase of group annuity contracts. The settlement was funded by the Pension Plan assets and resulted in a non-cash settlement expense of $25.5 million in the second quarter of 2019, related to the recognition of accumulated deferred actuarial losses.

• Net loss was $6.9 million, or $0.40 per diluted share, in Q2 2019 compared to net income of $10.5 million, or $0.60 per diluted share, in Q2 2018. The pension settlement and incremental intangible assets amortization expense negatively impacted earnings by $0.86 per diluted share and $0.18 per diluted share, respectively, in the second quarter of 2019, partially offset by a gain on sale from a divestiture of $0.07 per diluted share.

Liquidity

Cash was $43.4 million at June 30, 2019, compared to $49.2 million at December 31, 2018. Net cash provided by operations was $21.8 million in the second quarter of 2019 compared to $11.9 million in the second quarter of 2018, primarily driven by improved working capital management. During the second quarter of 2019, the Company re-paid $18.0 million of outstanding borrowings on its credit facility. As of June 30, 2019, there was approximately $108 million of availability under the Company's credit facility.

Outlook

Entering the third quarter, the Performance Materials segment is experiencing favorable conditions in filtration markets and demand consistent with the first half of the year for sealing products. In the Thermal Acoustical Solutions segment, demand remains generally steady in the North American market, but the segment is expected to be impacted by typical seasonal customer shut-downs, as well as softness in the European automotive market. The Company expects demand to continue to be steady in the Technical Nonwovens segment. Overall, the Company continues to focus on margin improvement and cash flow generation.

Results of Operations

All of the following tabular comparisons, unless otherwise indicated, are for the quarters ended June 30, 2019 (Q2-19) and June 30, 2018 (Q2-18) and the six months ended June 30, 2019 (YTD-19) and June 30, 2018 (YTD-18).

Net Sales

	Quarter Ended						Six Months Ended
In thousands	Q2-19		Q2-18		Percent Change		YTD-19		YTD-18		Percent Change
Net sales	$	220,811	$	186,413	18.5	%	$	438,836	$	378,073	16.1	%

Net sales for the second quarter of 2019 increased by $34.4 million, or 18.5%, compared to the second quarter of 2018. This increase was due to greater net sales in the Performance Materials segment of $33.9 million, or 18.2% of consolidated net sales. Acquisitions contributed $33.8 million in increased net sales, including $32.7 million from the Interface acquisition. Net sales increased in the Thermal Acoustical Solutions segment by $3.1 million, primarily due to increased parts sales in North America coupled with increased tooling sales in Europe and Asia. The Technical Nonwovens segment reported a decrease in net sales of $1.5 million, net of intercompany sales, primarily driven by $2.0 million less of sales due to the divestiture of the Geosol business in the second quarter of 2019. Foreign currency translation had a negative impact on net sales of $5.0 million, or 2.6% of consolidated net sales, primarily impacting the Technical Nonwovens segment by $2.6 million, or 1.4% of consolidated net sales, and the Thermal Acoustical Solutions segment by $1.8 million, or 1.0% of consolidated net sales.

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Net sales for the six months ended June 30, 2019 increased by $60.8 million, or 16.1%, compared to the six months ended June 30, 2018. This increase was due to greater net sales in the Performance Materials segment of $67.8 million, or 17.9% of consolidated net sales. Acquisitions contributed $67.5 million in increased net sales, including $65.6 million from the Interface acquisition. Net sales decreased in the Technical Nonwovens segment by $1.0 million net of intercompany sales, primarily driven by $2.0 million less of sales due to the divestiture of the Geosol business in the second quarter of 2019. Net sales decreased by $4.0 million in the Thermal Acoustical Solutions segment, including decreased tooling net sales of $3.3 million. Foreign currency translation had a negative impact on net sales of $11.5 million, or 3.0% of consolidated net sales, primarily impacting the Technical Nonwovens segment by $5.5 million, or 1.5% of consolidated net sales, and the Thermal Acoustical Solutions segment by $4.3 million, or 1.1% of consolidated net sales.

Cost of Sales

	Quarter Ended						Six Months Ended
In thousands	Q2-19		Q2-18		Percent Change		YTD-19		YTD-18		Percent Change
Cost of sales	$	175,536	$	150,286	16.8	%	$	351,505	$	302,439	16.2	%

Cost of sales for the second quarter of 2019 increased by $25.3 million, or 16.8%, compared to the second quarter of 2018. The increase was related to increased sales volumes of $33.9 million in the Performance Materials segment, primarily sealing and advanced solutions products from the Interface acquisition. Increased labor costs across all segments, principally in the Thermal Acoustical Solutions segment, and outsourcing costs associated with program launches, drove increased cost of sales in the second quarter of 2019 compared to the second quarter of 2018. Partially offsetting the increase was foreign currency translation which decreased cost of sales by $4.4 million, or 2.9%, in the second quarter of 2019 compared to the second quarter of 2018.

Cost of sales for the first six months of 2019 increased by $49.1 million, or 16.2%, compared to the first six months of 2018. The increase was related to increased sales volumes of $65.6 million in the Performance Materials segment, primarily sealing and advance solutions products from the Interface acquisition. Increased labor and overhead costs in the Thermal Acoustical Solutions segment primarily due to excess overtime and outsourcing costs associated with program launches and, to a lesser extent, in the Performance Materials segment, drove increased cost of sales in the first six months of 2019 compared to the first six months of 2018. Additionally, unfavorable product mix across all segments and increased raw material costs in the Technical Nonwovens segment related to increased commodity costs and in the Thermal Acoustical Solutions segment from lower scrap recovery from reduced aluminum index pricing drove increased cost of sales. Partially offsetting the increase was foreign currency translation which decreased cost of sales by $9.9 million, or 3.3%, in the first six months of 2019 compared to the first six months of 2018.

Gross Profit

	Quarter Ended								Six Months Ended
In thousands	Q2-19			Q2-18			Percent Change		YTD-19			YTD-18			Percent Change
Gross profit	$	45,275		$	36,127		25.3	%	$	87,331		$	75,634		15.5	%
Gross margin	20.5		%	19.4		%			19.9		%	20.0		%

Gross margin for the second quarter of 2019 increased 110 basis points compared to the second quarter of 2018. The Performance Materials segment favorably impacted consolidated gross margin by approximately 330 basis points driven by the inclusion of higher margin Interface sealing and advanced solutions products sales. The Thermal Acoustical Solutions segment negatively impacted consolidated gross margin by approximately 150 basis points primarily due to increased labor and variable overhead costs, primarily related to increased headcount and temporary labor, particularly in North America and Europe, coupled with increased outsourcing and expedited freight expenses caused by equipment downtime and other inefficiencies in Europe to meet customer delivery requirements. The Technical Nonwovens segment reported improved segment gross margin due to increased pricing and lower segment restructuring charges in the second quarter of 2019 compared to the second quarter of 2018, but negatively impacted consolidated gross margin by approximately 70 basis points due to consolidated segment mix.

Gross margin for the first six months of 2019 was essentially flat with the first six months of 2018. The Performance Materials segment favorably impacted consolidated gross margin by approximately 310 basis points driven by the inclusion of higher margin Interface sealing and advanced solutions products sales. The Thermal Acoustical Solutions segment negatively impacted consolidated gross margin by approximately 230 basis points primarily due to higher labor costs associated with increased headcount and temporary labor, particularly in North America and Europe to meet customer demand. Additionally, increased raw material costs, unfavorable product mix and lower customer pricing drove further gross margin reduction in the first six months of 2019 compared to the first six months of 2018. The Technical Nonwovens segment reported improved segment gross margin due to

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lower segment restructuring charges of $1.0 million, favorable absorption of fixed costs related to cost savings from segment restructuring activities and increased pricing in the first six months of 2019 compared to the first six months of 2018, partially offset by negative product mix, but negatively impacted consolidated gross margin by approximately 100 basis points due to consolidated segment mix.

Selling, Product Development and Administrative Expenses

	Quarter Ended								Six Months Ended
In thousands	Q2-19			Q2-18			Percent Change		YTD-19			YTD-18			Percent Change
Selling, product development and administrative expenses	$	32,096		$	23,878		34.4	%	$	65,102		$	49,349		31.9	%
Percentage of sales	14.5		%	12.8		%			14.8		%	13.1		%

Selling, product development and administrative expenses for the second quarter of 2019 increased by $8.2 million, or 170 basis points as a percentage of net sales, compared to the second quarter of 2018. This increase was primarily related to the Performance Materials segment acquisition of Interface, contributing $9.7 million of expense, including $4.0 million, or 180 basis points, of increased intangible asset amortization as a percentage of consolidated net sales. Remaining selling, product development and administrative expenses were lower by $1.5 million, or 90 basis points, primarily due to lower stock and cash incentive compensation expense of $1.2 million, decreased corporate strategic initiatives expenses of $0.8 million and lower salaries of $0.3 million. These decreases were partially offset by increased severance of $0.8 million, primarily in the Thermal Acoustical Solutions segment.

Selling, product development and administrative expenses for the first six months of 2019 increased by $15.8 million, or 170 basis points, compared to the first six months of 2018. This increase was primarily related to the Performance Materials segment acquisition of Interface, contributing $19.1 million of expense, including $8.0 million, or 180 basis points, of increased intangible asset amortization as a percentage of consolidated net sales. Remaining selling, product development and administrative expenses were lower by $3.3 million, or 80 basis points, due to decreased stock and cash incentive compensation expense of $1.5 million, lower salaries, benefits and sales commissions of $1.4 million and reduced travel expenses of $0.5 million. These decreases were partially offset by increased severance of $0.9 million, primarily in the Thermal Acoustical Solutions segment in the first six months of 2019 compared to the first six months of 2018.

Pension Plan Settlement Expense

	Quarter Ended						Six Months Ended
In thousands	Q2-19		Q2-18		Dollar Change		YTD-19		YTD-18		Dollar Change
Pension plan settlement expense	$	25,515	$	—	$	25,515	$	25,515	$	—	$	25,515

During the quarter ended June 30, 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan ("pension settlement") through lump sum distributions to participants or by irrevocably transferring pension liabilities to two insurance companies through the purchase of group annuity contracts. The settlement, funded with Pension Plan assets, resulted in a non-cash settlement expense of $25.5 million in the second quarter of 2019 related to the recognition of accumulated deferred actuarial losses.

Interest Expense

	Quarter Ended								Six Months Ended
In thousands	Q2-19			Q2-18			Percent Change		YTD-19			YTD-18			Percent Change
Interest expense	$	3,731		$	572		552.3	%	$	7,359		$	1,112		561.8	%
Weighted average interest rate	4.4		%	2.9		%			4.3		%	2.8		%

The increase in interest expense for the quarter and six months ended June 30, 2019 compared to the quarter and six months ended June 30, 2018 was due to higher borrowings incurred to finance the Interface acquisition and increased interest rates.

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Other Income/Expense, net

	Quarter Ended									Six Months Ended
In thousands	Q2-19			Q2-18			Dollar Change			YTD-19			YTD-18			Dollar Change
Other income, net	$	(873	)	$	(368	)	$	(505	)	$	(474	)	$	(53	)	$	(421	)

The increase in other income, net, for the quarter and six months ended June 30, 2019 compared to the quarter and six months ended June 30, 2018 was primarily related to the gain on sale from a divestiture of $1.5 million, partially offset by incremental pension expense from the Interface pension plans and foreign currency losses recognized on the revaluation of cash, trade payables and receivables and intercompany loans denominated in currencies other than the functional currencies of the Company's subsidiaries.

Income Taxes

For the quarter ended June 30, 2019 the Company recorded a tax benefit of $8.2 million compared to tax expense of $1.7 million for the quarter ended June 30, 2018. The tax benefit was driven by $10.5 million of tax benefit related to the pension plan settlement and resulted in an effective tax rate for the quarter ended June 30, 2019 of 54.0%. This is compared to an effective tax rate of 13.7% for the quarter ended June 30, 2018. The pension plan settlement tax benefit included a $4.5 million benefit related to the reclassification of stranded tax effects from accumulated other comprehensive income. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the quarter ended June 30, 2019 was 22.7%. This was negatively impacted by valuation allowance activity of $0.9 million partially offset by the Company's geographical mix of earnings. The second quarter of 2018 effective tax rate was positively impacted by discretionary pension plan contributions and geographical mix of earnings.

For the six months ended June 30, 2019 the Company recorded a tax benefit of $7.1 million compared to tax expense of $3.8 million for the six months ended June 30, 2018. The tax benefit was driven by $10.5 million of tax benefit related to the pension plan settlement and resulted in an effective tax rate for the six months ended June 30, 2019 of 69.7%. This is compared to an effective tax rate of 15.0% for the six months ended June 30, 2018. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the six months ended June 30, 2019 was 22.5%. This was negatively impacted by valuation allowance activity of $1.2 million partially offset by the Company's geographical mix of earnings.

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, China, the United Kingdom, Canada and the Netherlands. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2015, state and local examinations for years before 2013, and non-U.S. income tax examinations for years before 2003.

The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, stock vesting, pension plan terminations, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of ongoing tax planning strategies and audits.

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Segment Results

The following tables present net sales information for the key product and service groups included within each operating segment as well as other products and services and operating income by segment, for the quarter ended June 30, 2019 compared with the quarter ended June 30, 2018 and the six months ended June 30, 2019 compared with the six months ended June 30, 2018:

Net sales by segment:

	Quarter Ended
In thousands	Q2-19			Q2-18			Dollar Change
Performance Materials Segment (1):
Filtration	$	24,732		$	23,061		$	1,671
Sealing and Advanced Solutions	40,370			8,173			32,197
Performance Materials Segment net sales	65,102			31,234			33,868
Technical Nonwovens Segment:
Industrial Filtration	38,706			39,170			(464		)
Advanced Materials (2)	30,372			32,542			(2,170		)
Technical Nonwovens Segment net sales	69,078			71,712			(2,634		)
Thermal Acoustical Solutions Segment:
Parts	85,705			82,920			2,785
Tooling	7,567			7,249			318
Thermal Acoustical Solutions Segment net sales	93,272			90,169			3,103
Eliminations and Other (2)	(6,641		)	(6,702		)	61
Consolidated Net Sales	$	220,811		$	186,413		$	34,398

	Six Months Ended
In thousands	YTD-19			YTD-18			Dollar Change
Performance Materials Segment (1):
Filtration	$	48,666		$	46,203		$	2,463
Sealing and Advanced Solutions	81,016			15,724			65,292
Performance Materials Segment net sales	129,682			61,927			67,755
Technical Nonwovens Segment:
Industrial Filtration	81,070			79,401			1,669
Advanced Materials (2)	53,614			59,852			(6,238		)
Technical Nonwovens Segment net sales	134,684			139,253			(4,569		)
Thermal Acoustical Solutions Segment:
Parts	170,281			171,041			(760		)
Tooling	17,304			20,565			(3,261		)
Thermal Acoustical Solutions Segment net sales	187,585			191,606			(4,021		)
Eliminations and Other (2)	(13,115		)	(14,713		)	1,598
Consolidated Net Sales	$	438,836		$	378,073		$	60,763

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Operating income by segment:

	Quarter Ended
	Q2-19				Q2-18
In thousands	Operating Income			Operating Margin %	Operating Income			Operating Margin %	Dollar Change
Performance Materials (1)	$	3,303		5.1%	$	3,649		11.7%	$	(346	)
Technical Nonwovens	7,844			11.4%	6,118			8.5%	1,726
Thermal Acoustical Solutions	7,357			7.9%	8,820			9.8%	(1,463		)
Corporate Office Expenses	(5,325		)		(6,338		)		1,013
Consolidated Operating Income	$	13,179		6.0%	$	12,249		6.6%	$	930

	Six Months Ended
	YTD-19				YTD-18
In thousands	Operating Income			Operating Margin %	Operating Income			Operating Margin %	Dollar Change
Performance Materials (1)	$	4,762		3.7%	$	6,290		10.2%	$	(1,528	)
Technical Nonwovens	12,578			9.3%	11,124			8.0%	1,454
Thermal Acoustical Solutions	16,848			9.0%	21,434			11.2%	(4,586		)
Corporate Office Expenses	(11,959		)		(12,563		)		604
Consolidated Operating Income	$	22,229		5.1%	$	26,285		7.0%	$	(4,056	)

(1) The Performance Materials segment reports results of Interface and PCC for the period following the date of acquisitions of August 31, 2018 and July 12, 2018, respectively, and included $4.0 million and $8.0 million of incremental intangible assets amortization for the quarter and six months ended June 30, 2019, respectively.

(2) Included in the Technical Nonwovens segment and Eliminations and Other is $4.6 million and $5.8 million in intercompany sales to the Thermal Acoustical Solutions segment for the quarters ended June 30, 2019 and 2018, respectively, and $9.3 million and $12.9 million for the six months ended June 30, 2019 and 2018, respectively.

Performance Materials

Segment net sales increased $33.9 million in the second quarter of 2019 compared to the second quarter of 2018. The increase was primarily due to acquisitions which contributed $33.8 million in net sales in the second quarter of 2019. Remaining Performance Materials net sales were relatively flat compared to the second quarter of 2018, as increased net sales of filtration products were nearly offset by unfavorable foreign currency translation of $0.6 million, or 2.1%.

The Performance Materials segment reported operating income of $3.3 million, or 5.1% of net sales, in the second quarter of 2019, compared to operating income of $3.6 million, or 11.7% of net sales, in the second quarter of 2018. Increased intangible asset amortization of $4.0 million from the Interface acquisition resulted in a reduction of 610 basis points of operating margin in the second quarter of 2019. Remaining Performance Materials businesses reported a reduction in operating margin of 160 basis points, primarily due to lower gross margin of 390 basis points, partially offset by lower selling, product development and administrative expenses of 240 basis points as a percentage of net sales. Reduced gross margin included 150 basis points of start-up costs associated with a new product line, unfavorable product mix and increased overhead costs. Selling, product development and administrative expenses as a percentage of net sales were lower due to decreased accrued cash incentive compensation expense and lower bad debt expense.

Segment net sales increased $67.8 million in the first six months of 2019 compared to the first six months of 2018. The increase was primarily due to acquisitions which contributed $67.5 million in net sales in the first six months of 2019. Remaining Performance Materials net sales increased $0.3 million, as increased net sales of filtration products were nearly offset by unfavorable foreign currency translation of $1.6 million, or 2.6%.

The Performance Materials segment reported operating income of $4.8 million, or 3.7% of net sales, in the first six months of 2019, compared to operating income of $6.3 million, or 10.2% of net sales, in the first six months of 2018. Increased intangible asset amortization of $8.0 million from the Interface acquisition resulted in a reduction of 620 basis points of operating margin in the first six months of 2019. Remaining Performance Materials businesses reported a reduction in operating margin of 160 basis points, primarily due to lower gross margin of 390 basis points. Lower gross margin was driven by 190 basis points of start-up

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costs associated with a new product line, under absorption of fixed costs and unfavorable product mix, which was partially offset by a decrease in selling, product development and administrative expenses of 230 basis points as a percentage of net sales, primarily related to decreased accrued cash incentive compensation expense and reduced travel costs.

Technical Nonwovens

Segment net sales decreased $2.6 million, or 3.7%, in the second quarter of 2019 compared to the second quarter of 2018. Foreign currency translation had a negative impact on segment net sales of $2.6 million, or 3.6%, in the second quarter of 2019 compared to the second quarter of 2018. Advanced materials sales decreased $2.2 million, or 6.7%, primarily driven by $1.2 million less in sales of automotive rolled-good material for use in the Thermal Acoustical Solutions segment manufacturing process and $2.0 million less in sales due to the divestiture of the Geosol business in the second quarter of 2019, partially offset by increased geosynthetic sales in Canada. Industrial filtration net sales decreased $0.5 million, or 1.2%, driven by decreased demand, primarily in North America, coupled with the negative impact of foreign currency. This decrease was partially offset by increased sales in Asia in the second quarter of 2019 compared to the second quarter of 2018.

The Technical Nonwovens segment reported operating income of $7.8 million, or 11.4% of net sales, in the second quarter of 2019, compared to $6.1 million, or 8.5% of net sales, in the second quarter of 2018. The increase in operating income of $1.7 million and operating margin of 290 basis points was primarily attributable to higher gross margin of 230 basis points. Gross margin was favorably impacted by reduced restructuring costs of $0.8 million, or 130 basis points, in the second quarter of 2019 compared to the second quarter of 2018. Also, increased pricing and favorable absorption of fixed costs, primarily related to cost savings from segment restructuring activities, contributed to increased gross margins. Additionally contributing to increased operating margin was a reduction in selling, product development and administrative expenses of $0.7 million, or 50 basis points as a percentage of net sales, in the second quarter of 2019 compared to the first quarter of 2018. The decrease was primarily related to decreased salaries and stock compensation expense of $0.5 million in the second quarter of 2019 compared to the second quarter of 2018.

Segment net sales decreased $4.6 million, or 3.3%, in the first six months of 2019 compared to the first six months of 2018. Foreign currency translation had a negative impact on segment net sales of $5.5 million, or 4.0%, in the first six months of 2019 compared to the first six months of 2018. Advanced materials sales decreased $6.2 million, or 10.4%, primarily driven by $3.6 million less sales of automotive rolled-good material for use in the Thermal Acoustical Solutions segment manufacturing process and $2.0 million less of sales due to the divestiture of the Geosol business in the second quarter of 2019. This decrease was partially offset by increased industrial filtration net sales of $1.7 million, or 2.1%, particularly from increased demand in North America and Asia, in the first six months of 2019 compared to the first six months of 2018.

The Technical Nonwovens segment reported operating income of $12.6 million, or 9.3% of net sales, in the first six months of 2019, compared to $11.1 million, or 8.0% of net sales, in the first six months of 2018. The increase in operating income of $1.5 million and operating margin of 130 basis points was attributable to improved gross margin of 60 basis points and a reduction in selling, product development and administrative expenses of $1.4 million, or 70 basis points as a percentage of net sales in the first six months of 2019 compared to the first six months of 2018. Gross margin was favorably impacted by reduced restructuring costs of $1.0 million, or 70 basis points, in the first six months of 2019 compared to the first six months of 2018. Favorable absorption of fixed costs, primarily related to cost savings from segment restructuring activities, contributed to increased gross margin. Also, increased customer pricing, partially offset by higher aramid raw material costs, lead to improved gross margin in the first six months of 2019 compared to the first six months of 2018. The decrease in selling, product development and administrative expenses was primarily related to decreased salaries and stock compensation expense of $0.8 million and reduced intangible amortization expense of $0.3 million.

Thermal Acoustical Solutions

Segment net sales increased $3.1 million, or 3.4%, in the second quarter of 2019 compared to the second quarter of 2018. The increase was primarily related to increased parts sales of $2.8 million, or 3.4%, or $4.4 million, or 5.3%, when excluding foreign currency translation. Increased parts sales in North America were partially offset by decreased demand in Asia in the second quarter of 2019 compared to the second quarter of 2018. Tooling net sales increased $0.3 million, primarily in Europe and Asia, partially offset in North America, due to the timing of new platform launches. Foreign currency translation had a negative impact on total segment net sales of $1.8 million, or 2.0%, in the second quarter of 2019 compared to the second quarter of 2018.

The Thermal Acoustical Solutions segment reported operating income of $7.4 million, or 7.9% of net sales, in the second quarter of 2019, compared to operating income of $8.8 million, or 9.8% of net sales, in the second quarter of 2018. The decrease in operating income of $1.4 million and operating margin of 190 basis points was primarily due to lower gross margin of 140 basis points. Labor and variable overhead costs increased by approximately 140 basis points, primarily related to increased headcount and temporary labor, particularly in North America and Europe, coupled with increased outsourcing and expedited freight expenses

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caused by equipment downtime and other inefficiencies in Europe to meet customer delivery requirements. Selling, product development and administrative expenses increased $0.6 million, or 50 basis points as a percentage of net sales. This increase was primarily related to increased severance expense of $0.8 million in the second quarter of 2019 compared to the second quarter of 2018.

Segment net sales decreased $4.0 million, or 2.1%, in the first six months of 2019 compared to the first six months of 2018. The decrease was primarily related to decreased tooling sales of $3.3 million, or 15.9%, due to the timing of new platform launches, primarily in North America and Europe. Parts net sales decreased $0.8 million, or 0.4%, or increased $2.9 million, or 1.7% when excluding foreign currency translation. Improved demand in North America and Asia, and relatively stable demand in Europe were more than offset by the negative impact of foreign currency translation. Foreign currency translation had a negative impact on total segment net sales of $4.3 million, or 2.2%, in the first six months of 2019 compared to the first six months of 2018.

The Thermal Acoustical Solutions segment reported operating income of $16.8 million, or 9.0% of net sales, in the first six months of 2019, compared to operating income of $21.4 million, or 11.2% of net sales, in the first six months of 2018. The decrease in operating income of $4.6 million and operating margin of 220 basis points was due to lower gross margin of 220 basis points. Labor costs increased by approximately 120 basis points, primarily related to increased headcount and temporary labor, particularly in North America and Europe to meet customer demand. Increased raw material costs, primarily due to less scrap recovery from reduced aluminum index pricing, negatively impacted gross margin by approximately 50 basis points. Finally, unfavorable product mix and lower customer pricing drove further gross margin reduction. Selling, product development and administrative expenses were relatively flat in the first six months of 2019 compared to the first six months of 2018.

Corporate Office Expenses

Corporate office expenses for the second quarter of 2019 were $5.3 million, compared to $6.3 million in the second quarter of 2018. The decrease of $1.0 million was primarily due to decreased strategic initiatives expenses of $0.8 million and lower stock and accrued cash incentive compensation expenses of $0.6 million, partially offset by increased other professional service costs of $0.6 million in the second quarter of 2019 compared to the second quarter of 2018.

Corporate office expenses for the first six months of 2019 were $12.0 million, compared to $12.6 million in the first six months of 2018. The decrease of $0.6 million was primarily due to lower stock and accrued cash incentive compensation expense of $0.8 million and salaries and benefits of $0.4 million, partially offset by increased professional service costs of $0.7 million in the first six months of 2019 compared to the first six months of 2018.

Liquidity and Capital Resources

The Company assesses its liquidity in terms of its ability to generate cash to fund operating, investing and financing activities. The principal source of liquidity is operating cash flows. In addition to operating cash flows, other significant factors that affect the overall management of liquidity include capital expenditures, investments in businesses, strategic transactions, income tax payments, debt service payments, outcomes of contingencies, foreign currency exchange rates and employee benefit plan funding. The Company manages worldwide cash requirements by considering available funds among domestic and foreign subsidiaries. The Company expects to finance its 2019 operating cash and capital spending requirements from existing cash balances, cash provided by operating activities and through borrowings under the Amended Credit Facility, as needed.

At June 30, 2019, the Company held $43.4 million in cash and cash equivalents, including $7.3 million in the U.S. with the remaining held by foreign subsidiaries.

Financing Arrangements

On August 31, 2018, the Company amended and restated its $175 million senior secured credit agreement ("Amended Credit Agreement") that increased the available borrowing from $175 million to $450 million, added three additional lenders and extended the maturity date from July 7, 2021 to August 31, 2023.

Under the terms of the Amended Credit Agreement, the lenders are providing up to a $450 million credit facility (the “Facility”) to the Company, under which the lenders provided a term loan commitment of $200 million and revolving loans to or for the benefit of the Company and its subsidiaries of up to $250 million. The Facility may be increased by an aggregate amount not to exceed $150 million through an accordion feature, subject to specified conditions. The Facility is secured by substantially all of the assets of the Company.

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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 Dollar 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 0.00% to 1.25%, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 0.75% to 2.00%. The Company pays a quarterly fee ranging from 0.15% to 0.275% on the unused portion of the revolving commitment.

The Company is permitted to prepay term and revolving borrowings in whole or in part at any time without premium or penalty, subject to certain minimum payment requirements, and the Company is generally permitted to irrevocably cancel unutilized portions of the revolving commitments under the Amended Credit Agreement. The Company is required to repay the term commitment in an amount of $2.5 million per quarter beginning with the quarter ending December 31, 2018 through the quarter ending June 30, 2023.

The Amended Credit Agreement contains covenants required of the Company and its subsidiaries, including various affirmative and negative financial and operational covenants. The Company is required to meet certain quarterly financial covenants calculated from the four fiscal quarters most recently ended, including: (i) a minimum consolidated fixed charge coverage ratio, which requires that at the end of each fiscal quarter the ratio of (a) consolidated EBITDA to (b) the sum of consolidated interest charges, redemptions, non-financed maintenance capital expenditures, restricted payments and taxes paid, each as defined in the Amended Credit Agreement, may not be lower than 1.25 to 1.0; and (ii) a consolidated net leverage ratio, which requires that at the end of each fiscal quarter the ratio of consolidated funded indebtedness minus consolidated domestic cash to consolidated EBITDA, as defined in the Amended Credit Agreement, may not be greater than 3.5 to 1.0. The Company was in compliance with all covenants at June 30, 2019.

At June 30, 2019, the Company had borrowing availability of $108.2 million under the Facility, net of $300.0 million of borrowings outstanding and standby letters of credit outstanding of $3.8 million. The borrowings outstanding included a $162.0 million term loan, net of $0.5 million in debt issuance costs being amortized to expense over the debt maturity period.

In addition to the amounts outstanding under the Facility, the Company has various acquired foreign credit facilities totaling approximately $8.2 million. At June 30, 2019, the Company's foreign subsidiaries had $0.1 million in borrowings outstanding as well as $1.8 million in standby letters of credit outstanding.

In November 2018, the Company entered into a five year interest rate swap agreement with a bank which converts the interest on a notional $139.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank which converts the interest on a notional $60.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduces quarterly by $5.0 million through March 31, 2020. These interest rate swap agreements were accounted for as cash flow hedges. Effectiveness of these derivative agreements are assessed quarterly by ensuring that the critical terms of the swaps continue to match the critical terms of the hedged debt.

Operating Cash Flows

Net cash provided by operating activities in the first six months of 2019 was $36.2 million compared with $8.0 million in the first six months of 2018. In the first six months of 2019, net loss and non-cash adjustments were $34.1 million compared to net income and non-cash adjustments of $39.4 million in the first six months of 2018. Since December 31, 2018, net operating assets and liabilities decreased by $2.1 million, compared to the first six months of 2018 when net operating assets and liabilities increased $31.5 million from December 31, 2017. The decrease since December 31, 2018 was primarily due to an increase of $10.2 million in accounts payable and $3.0 million in accrued payroll and other compensation, partially offset by increases of $4.7 million in inventories and $6.0 million in other, net. The increase in accounts payable was primarily driven by the timing of vendor payments, including capital expenditures within the Thermal Acoustical Solutions and Technical Nonwovens segments during the first six months of 2019. The increase in inventory was principally due to strategic purchases within the Technical Nonwovens segment to ensure sufficient levels of inventory to meet seasonal demands. The increase in other, net, was primarily be driven by lower deferred revenue based on timing of deposits by customers.

40

Investing Cash Flows

In the first six months of 2019, net cash used for investing activities was $16.8 million compared to $16.1 million in the first six months of 2018. In the first six months of 2019 and 2018, net cash used for investing activities consisted of capital expenditures of $20.3 million and $16.4 million, respectively. Capital spending for 2019 is expected to be approximately $40 million to $45 million. In addition, in the first six months of 2019 and 2018, cash proceeds from the sale of property and equipment totaled $0.3 million and $0.2 million, respectively. In the first six months of 2019, net cash used for investing activities included cash proceeds of $1.4 million from a final purchase price adjustment for the Interface acquisition less cash outflows of $0.5 million to fund an acquisition. The Company also received proceeds of $2.3 million from the divestiture of the Geosol business during the second quarter of 2019.

Financing Cash Flows

In the first six months of 2019, net cash used for financing activities was $25.2 million compared to $0.3 million in the first six months of 2018. The Company made debt repayments of $25.2 million and $0.1 million in the first six months of 2019 and 2018, respectively. During the first six months of 2018, the Company acquired $0.8 million in company stock through its equity compensation plans and received $0.7 million from the exercise of stock options.

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 of the “Notes to Consolidated Financial Statements” and Critical Accounting Estimates in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and the “Notes to Condensed Consolidated Financial Statements” of this report describe the significant accounting policies and critical accounting estimates used in the preparation of the consolidated financial statements. The Company’s management is required to make judgments and estimates about the effect of matters that are inherently uncertain. Actual results could differ from management’s estimates.

As a result of the market changes experienced within the automotive sector during 2018 and the significant decrease in the Company's stock price such that the net book value of the Company exceeded total market capitalization for the Company, an impairment analysis was performed in the fourth quarter of 2018 for the long-lived assets within the Thermal Acoustical Solutions segment, which is the segment most impacted by the automotive sector market changes. As a result of this impairment analysis, the Company concluded the asset groups were not impaired. During 2019, the Company continues to monitor the recoverability of the long-lived assets within the Thermal Acoustical Solutions segment taking into consideration the Company's stock price in relation to book value, on-going financial results and automotive market conditions.

There have been no significant changes in the Company’s critical accounting estimates during the quarter ended June 30, 2019, except for those described in Note 8 of this report in relation to the Company's adoption of ASC 842.

41

Item 3. 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

The Company has operations in France, Germany, China, the United Kingdom, Canada, India and the Netherlands, in addition to the United States. As a result of this, the Company’s financial results are 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 currency exposure is to the US Dollar, the Euro, the Chinese Yuan, the British Pound Sterling, the Canadian Dollar, the Japanese Yen, the Indian Rupee and the Hong Kong Dollar. The Company’s foreign and domestic operations attempt to limit foreign currency exchange transaction risk by completing transactions in local functional currencies, whenever practicable. The Company may periodically enter into foreign currency forward exchange contracts to mitigate exposure to foreign currency volatility. In addition, the Company 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.

The Company also has exposure to fluctuations in currency risk on intercompany loans that the Company makes to certain of its subsidiaries. The Company may periodically enter into foreign currency forward contracts which are intended to offset the impact of foreign currency movements on the underlying intercompany loan obligations.

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. The Company has borrowings outstanding of $300.0 million from its Amended Credit Facility at June 30, 2019, with variable rates of interest based generally on LIBOR. Increases in interest rates could therefore significantly increase the associated interest payments that the Company is required to make on this debt. From time to time, the Company may enter into interest rate swap or other hedging agreements to manage interest rate risk.

In November 2018, the Company entered into a five year interest rate swap agreement with a bank which converts the interest on a notional $139.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank which converts the interest on a notional $60.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduces quarterly by $5.0 million through March 31, 2020. These interest rate swap agreements were accounted for as cash flow hedges. Effectiveness of these derivative agreements are assessed quarterly by ensuring that the critical terms of the swaps continue to match the critical terms of the hedged debt.

The Company has assessed its exposure to changes in interest rates by analyzing the sensitivity to Lydall’s earnings assuming various changes in market interest rates. Assuming a hypothetical increase of one percentage point in interest rates on the variable portion of the $300.0 million outstanding borrowings as of June 30, 2019, the Company’s net income would decrease by an estimated $1.2 million over a twelve-month period.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Company’s President and Chief Executive Officer (the “CEO”) and the Executive Vice President and Chief Financial Officer (the "CFO"), conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the "SEC"), and that such information is accumulated and communicated to management of the Company, with the participation of its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the CEO and CFO

42

have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2019 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

On August 31, 2018, the Company completed the acquisition of Interface Performance Materials ("Interface"). Management considers this transaction to be material to the Company’s consolidated financial statements. The Company is currently in the process of evaluating the existing controls and procedures of Interface and integrating the business into our Section 404 compliance program under the Sarbanes-Oxley Act of 2002 (the “Act”) and the applicable rules and regulations under such Act. The Company will report on its assessment of the effectiveness of internal control over financial reporting of its consolidated operations (including the Interface business) within the time period provided by the Act and the applicable SEC rules and regulations concerning business combinations.

Subject to the foregoing, 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) under the Exchange Act) during the quarter ended June 30, 2019 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.      OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to legal proceedings, claims, investigations and inquiries that arise in the ordinary course of business such as, but not limited to, actions with respect to commercial, intellectual property, employment, personal injury, and environmental matters. The Company believes that it has meritorious defenses against the claims currently asserted against it and intends to defend them vigorously. While the outcome of litigation is inherently uncertain and the Company cannot be sure that it will prevail in any of the cases, subject to the matter referenced below, the Company is not aware of any matters pending that are expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

In the fourth quarter of 2016, as part of a groundwater discharging permitting process, water samples collected from wells and process water basins at the Company’s Rochester New Hampshire manufacturing facility, within the Performance Materials segment, showed concentrations of Per and Polyfluorinated Substances (“PFAS”) in excess of state ambient groundwater quality standards. In January 2017, the Company received a notification from the State of New Hampshire Department of Environmental Services (“NHDES”) naming Lydall Performance Materials, Inc. a responsible party with respect to the discharge of regulated contaminants and, as such, is required to take action to investigate and remediate the impacts in accordance with standards established by the NHDES. The Company conducted a site investigation, the scope of which was reviewed by the NHDES, in order to assess the extent of potential soil and groundwater contamination and develop a remedial action. Based on input received from NHDES in March 2017 with regard to the scope of the site investigation, the Company recorded $0.2 million of expense. In 2018, the Company received a response from the NHDES to the site investigation report outlining proposed remedial actions. The Company recorded an additional $0.1 million of expense in 2018 associated with the expected costs to remediate the impacts of the discharge of regulated contaminants in accordance with standards established by the NHDES. During 2018 the environmental liability was fully reduced reflecting payments made to vendors, resulting in $0.0 million balance at December 31, 2018. Additionally, the Company incurred $0.2 million of capital expenditures in 2018, in relation to the lining of the Company's fresh water lagoons. The site investigation is ongoing. The Company cannot be sure that costs will not exceed the current estimates until this matter is closed with the NHDES, nor that any future corrective action at this location would not have a material effect on the Company’s financial condition, results of operations or liquidity.

In December 2018, the New York State Department of Environmental Conservation (“NYDEC”) informed the Company that the newly acquired Interface site located at Hoosick Falls, NY will be the subject of an investigation in to the possibility of it being an inactive hazardous disposable waste site.  The letter specifically references perflourinated compounds or per- and polyfluoroalkyl substances (“PFAS”) that have been detected in a nearby water supply, soil and/or surface water.  The PFAS contamination has been identified in the Hoosick Falls area for some time and other large manufacturers in the area have previously been identified as a source.  The Company will conduct a site investigation in the third quarter of 2019, the scope of which is in the planning stage with the NYDEC, in order to assess the extent of the potential contamination and develop a remedial action, if necessary. The Company does not know the scope or extent of its future obligations, if any, that may arise from the site investigation and therefore is unable to estimate the cost of any corrective action. Accordingly, the Company cannot assure that the costs of any future corrective at this location would not have a material effect on the Company's financial condition, results of operations or liquidity.

Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly impact any estimates of environmental remediation costs.

Item 1A. Risk Factors

See Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as updated by Part II, Item 1, Legal Proceedings, of this Report. The risks described in the Annual Report on Form 10-K, and the “Cautionary Note Concerning Forward-Looking Statements” in this report, are not the only risks faced by the Company. Additional risks and uncertainties not currently known or that are currently judged to be immaterial may also materially affect the Company’s business, financial position, results of operations or cash flows.

44

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

During the three months ended June 30, 2019, the Company acquired 488 shares of common stock 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.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares That May Yet Be Purchased Under the Program
April 1, 2019 - April 30, 2019	488	$	25.01	—	—
May 1, 2019 - May 31, 2019	—	$	—	—	—
June 1, 2019 - June 30, 2019	—	$	—	—	—
	488	$	25.01	—	—

45

Item 6. Exhibits

Exhibit Number	Description
31.1	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, of 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, of principal financial 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, filed herewith.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document

46

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LYDALL, INC.
July 30, 2019	By:	/s/ Randall B. Gonzales
		Randall B. Gonzales Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

47

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Dale G. Barnhart, certify that:

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

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

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

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

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

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

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

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

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

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

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

July 30, 2019	/s/    Dale G. Barnhart
	Dale G. Barnhart President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Randall B. Gonzales, certify that:

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

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

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

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

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

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

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

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

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

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

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

July 30, 2019	/s/ Randall B. Gonzales
	Randall B. Gonzales Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal 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 Quarterly Report of Lydall, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2019 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-Q solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code) and are not being filed as a part of this Form 10-Q or as a separate disclosure document.

July 30, 2019	/s/    Dale G. Barnhart
	Dale G. Barnhart President and Chief Executive Officer
July 30, 2019	/s/ Randall B. Gonzales
	Randall B. Gonzales Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2019	Jul. 15, 2019
Cover page.
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000060977
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2019
Document Transition Report	false
Entity File Number	1-7665
Entity Registrant Name	LYDALL INC /DE/
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	06-0865505
Entity Address, Address Line One	One Colonial Road
Entity Address, City or Town	Manchester
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06042
City Area Code	860
Local Phone Number	646-1233
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	LDL
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Small Business	false
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		17,534,626

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Net sales	$ 220,811	$ 186,413	$ 438,836	$ 378,073
Cost of sales	175,536	150,286	351,505	302,439
Gross profit	45,275	36,127	87,331	75,634
Selling, product development and administrative expenses	32,096	23,878	65,102	49,349
Operating income	13,179	12,249	22,229	26,285
Pension plan settlement expense	25,515	0	25,515	0
Interest expense	3,731	572	7,359	1,112
Other income, net	(873)	(368)	(474)	(53)
(Loss) income before income taxes	(15,194)	12,045	(10,171)	25,226
Income tax (benefit) expense	(8,199)	1,655	(7,093)	3,778
Income from equity method investment	(49)	(60)	(22)	(56)
Net (loss) income	$ (6,946)	$ 10,450	$ (3,056)	$ 21,504
Earnings (loss) per share:
Basic (USD per share)	$ (0.40)	$ 0.61	$ (0.18)	$ 1.25
Diluted (USD per share)	$ (0.40)	$ 0.60	$ (0.18)	$ 1.24
Weighted average number of common shares outstanding:
Basic (shares)	17,267	17,196	17,260	17,178
Diluted (shares)	17,267	17,335	17,260	17,334

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (6,946)	$ 10,450	$ (3,056)	$ 21,504
Other comprehensive income (loss):
Foreign currency translation adjustments	2,457	(11,149)	2,330	(8,604)
Pension liability adjustment, net of tax	143	199	358	397
Unrealized (loss) gain on hedging activities, net of tax	(1,351)	(27)	(2,026)	75
Comprehensive (loss) income	$ (5,697)	$ (527)	$ (2,394)	$ 13,372

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 43,416	$ 49,237
Accounts receivable, less allowances (2019 - $2,087; 2018 - $1,440)	147,392	144,938
Contract assets	21,566	23,040
Inventories	88,232	84,465
Taxes receivable	2,745	2,912
Prepaid expenses	5,190	4,707
Other current assets	8,474	7,779
Total current assets	317,015	317,078
Property, plant and equipment, at cost	473,943	458,075
Accumulated depreciation	(255,736)	(244,706)
Net, property, plant and equipment	218,207	213,369
Operating lease right-of-use assets	27,070	0
Goodwill	197,796	196,963
Other intangible assets, net	126,696	136,604
Other assets, net	9,650	8,672
Total assets	896,434	872,686
Current liabilities:
Current portion of long-term debt	10,001	10,172
Accounts payable	81,053	73,265
Accrued payroll and other compensation	15,985	16,621
Deferred revenue	3,446	6,990
Other accrued liabilities	21,382	14,298
Total current liabilities	131,867	121,346
Long-term debt	289,673	314,641
Long-term operating lease liabilities	22,006	0
Deferred tax liabilities	37,640	39,265
Benefit plan liabilities	22,849	22,795
Other long-term liabilities	5,294	5,364
Commitments and Contingencies (Note 16)
Stockholders’ equity:
Preferred stock	0	0
Common stock	253	253
Capital in excess of par value	92,297	90,851
Retained earnings	408,086	411,325
Accumulated other comprehensive loss	(23,007)	(42,685)
Treasury stock, at cost	(90,524)	(90,469)
Total stockholders’ equity	387,105	369,275
Total liabilities and stockholders’ equity	$ 896,434	$ 872,686

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowances of accounts receivable	$ 2,087	$ 1,440

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net (loss) income	$ (3,056)	$ 21,504
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Gain on divestiture	(1,459)	0
Depreciation and amortization	24,001	14,248
Deferred income taxes	(12,358)	1,165
Pension plan settlement expense	25,515	0
Stock-based compensation	1,475	2,580
Income from equity method investment	(22)	(56)
Changes in operating assets and liabilities:
Accounts receivable	(1,988)	(11,934)
Contract assets	1,231	(7,594)
Inventories	(4,660)	(15,643)
Accounts payable	10,227	7,406
Accrued payroll and other compensation	3,000	(2,408)
Accrued taxes	308	1,184
Other, net	(5,995)	(2,478)
Net cash provided by operating activities	36,219	7,974
Cash flows from investing activities:
Capital expenditures	(20,287)	(16,355)
Proceeds from divestiture	2,298	0
Proceeds from the sale of property, plant and equipment	295	217
Business acquisitions, net of cash acquired	869	0
Net cash used for investing activities	(16,825)	(16,138)
Cash flows from financing activities:
Debt repayments	(25,169)	(126)
Common stock issued	0	666
Common stock repurchased	(43)	(823)
Net cash used for financing activities	(25,212)	(283)
Effect of exchange rate changes on cash	(3)	(815)
Decrease in cash and cash equivalents	(5,821)	(9,262)
Cash and cash equivalents at beginning of period	49,237	59,875
Cash and cash equivalents at end of period	$ 43,416	$ 50,613

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Statement of Cash Flows [Abstract]
Non-cash capital expenditures	$ 2.3	$ 2.0

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock
Balance at beginning of period (shares) at Dec. 31, 2017		25,018
Balance at beginning of period at Dec. 31, 2017	$ 353,396	$ 250	$ 88,006	$ 374,783	$ (20,148)	$ (89,495)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	11,054			11,054
Other comprehensive income (loss), net of tax	2,845				2,845
Stock repurchased	(823)					(823)
Stock issued (canceled) under employee plans (shares)		50
Stock issued (canceled) under employee plans	667	$ 1	666
Stock-based compensation expense	1,096		1,096
Balance at end of period (shares) at Mar. 31, 2018		25,068
Balance at end of period at Mar. 31, 2018	369,833	$ 251	89,768	387,435	(17,303)	(90,318)
Balance at beginning of period (shares) at Dec. 31, 2017		25,018
Balance at beginning of period at Dec. 31, 2017	353,396	$ 250	88,006	374,783	(20,148)	(89,495)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	21,504
Balance at end of period (shares) at Jun. 30, 2018		25,070
Balance at end of period at Jun. 30, 2018	370,715	$ 251	91,177	397,885	(28,280)	(90,318)
Balance at beginning of period (shares) at Mar. 31, 2018		25,068
Balance at beginning of period at Mar. 31, 2018	369,833	$ 251	89,768	387,435	(17,303)	(90,318)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	10,450			10,450
Other comprehensive income (loss), net of tax	(10,977)				(10,977)
Stock issued (canceled) under employee plans (shares)		2
Stock issued (canceled) under employee plans	0
Stock-based compensation expense	1,275		1,275
Stock issued to directors	134		134
Balance at end of period (shares) at Jun. 30, 2018		25,070
Balance at end of period at Jun. 30, 2018	370,715	$ 251	91,177	397,885	(28,280)	(90,318)
Balance at beginning of period (shares) at Dec. 31, 2018		25,254
Balance at beginning of period at Dec. 31, 2018	369,275	$ 253	90,851	411,325	(42,685)	(90,469)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	3,890			3,890
Other comprehensive income (loss), net of tax	(587)				(587)
Stock repurchased	(42)					(42)
Stock issued (canceled) under employee plans (shares)		(26)
Stock issued (canceled) under employee plans	(1)	$ (1)
Stock-based compensation expense	862		862
Balance at end of period (shares) at Mar. 31, 2019		25,228
Balance at end of period at Mar. 31, 2019	373,214	$ 252	91,713	415,032	(43,272)	(90,511)
Balance at beginning of period (shares) at Dec. 31, 2018		25,254
Balance at beginning of period at Dec. 31, 2018	369,275	$ 253	90,851	411,325	(42,685)	(90,469)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(3,056)
Balance at end of period (shares) at Jun. 30, 2019		25,235
Balance at end of period at Jun. 30, 2019	387,105	$ 253	92,297	408,086	(23,007)	(90,524)
Balance at beginning of period (shares) at Mar. 31, 2019		25,228
Balance at beginning of period at Mar. 31, 2019	373,214	$ 252	91,713	415,032	(43,272)	(90,511)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(6,946)			(6,946)
Other comprehensive income (loss), net of tax	20,265				20,265
Stock repurchased	(13)					(13)
Stock issued (canceled) under employee plans (shares)		(3)
Stock issued (canceled) under employee plans	13	$ 1	12
Stock-based compensation expense	332		332
Stock issued to directors (shares)		10
Stock issued to directors	240		240
Balance at end of period (shares) at Jun. 30, 2019		25,235
Balance at end of period at Jun. 30, 2019	$ 387,105	$ 253	$ 92,297	$ 408,086	$ (23,007)	$ (90,524)

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Basis of Financial Statement Presentation

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation

Description of Business

Lydall, Inc. and its subsidiaries (the “Company” or “Lydall”) design and manufacture specialty engineered nonwoven filtration media, industrial thermal insulating solutions, and thermal and acoustical barriers for filtration/separation and heat abatement and sound dampening applications.

On August 31, 2018, the Company acquired an engineered sealing materials business operating under Interface Performance Materials ("Interface"), based in Lancaster, Pennsylvania for $267.0 million, net of cash acquired of $5.2 million. A globally-recognized leader in the delivery of engineered sealing solutions, the Interface operations manufacture wet-laid gasket and specialty materials primarily serving OEM and Tier I manufacturers in the agriculture, construction, earthmoving, industrial, and automotive segments. The acquired business is included in the Company's Performance Materials operating segment.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The operating results of Interface have been included in the Consolidated Statements of Operations beginning on the date of acquisition. The year-end Condensed Consolidated Balance Sheet was derived from the audited financial statements for the year ended December 31, 2018, but does not include all disclosures required by U.S. GAAP. Management believes that all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows for the periods reported, have been included. For further information, refer to the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Recent Accounting Pronouncements

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)", along with several additional clarification ASU's issued during 2018, collectively, "New Lease Standard". The New Lease Standard requires entities that lease assets with lease terms of more than 12 months to recognize right-of-use assets and lease liabilities created by those leases on their balance sheets. This New Lease Standard also requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The Company's adoption of the New Lease Standard was on a modified retrospective basis and did not have any impact on the Company's 2018 financial statements and disclosures. As part of the adoption of the New Lease Standard, the Company elected the package of practical expedients which allowed the Company to not re-assess 1) if any existing arrangements contained a lease, 2) the lease classification of any existing leases and 3) initial direct costs for any existing lease. The Company also elected the practical expedient which allows use of hindsight in determining the lease term for leases in existence at the date of adoption. Effective January 1, 2019, the Company reported lease right-of-use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets. Adoption of the New Lease Standard did not change the balances reported in the Company's 2019 Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows, or Condensed Statements of Comprehensive Income. Please refer to Footnote 8 "Leases" for additional information required as part of the adoption of the New Lease Standard.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Account for Hedging Activities". This ASU provides various improvements revolving around the financial reporting of hedging relationships that requires an entity to amend the presentation and disclosure of hedging activities to better portray the economic results of an entity's risk management activities in its financial statements. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for reclassification of stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings, but does not require the reclassification. The Company elected not to reclassify the income tax effects of the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2018-07, "Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting". This ASU expands the guidance for stock-based compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)". The new standard amends guidance on reporting credit losses for assets held at amortized cost basis. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement", which adds, amends and removes certain disclosure requirements related to fair value measurements.  Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.  This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Certain amended or eliminated disclosures in this standard may be adopted early, while certain additional disclosure requirements in this standard can be adopted on its effective date.  In addition, certain changes in the standard require retrospective adoption, while other changes must be adopted prospectively.  The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU requires entities to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. This ASU also requires entities to disclose an explanation for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years beginning after December 15, 2020 with early adoption permitted.  The Company is currently evaluating the method and impact the adoption of this ASU will have on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.  The Company is required to adopt this new guidance in the first quarter of 2020.  Early adoption is permitted.  The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1, “Significant Accounting Policies” within Part IV Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to these accounting policies as a result of adopting the New Lease Standard are discussed within Note 8, “Leases”.

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts from Customers. These revenues are generated from the design and manufacture of specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications. The Company’s revenue recognition policies require the Company to make significant judgments and estimates. In applying the Company’s revenue recognition policy, determinations must be made as to when control of products passes to the Company’s customers which can be either at a point in time or over time. Revenue is generally recognized at a point in time when control passes to customers upon shipment of the Company’s products and revenue is generally recognized over time when control of the Company’s products transfers to customers during the manufacturing process. The Company analyzes several factors, including but not limited to, the nature of the products being sold and contractual terms and conditions in contracts with customers to help the Company make such judgments about revenue recognition.

Contract Assets and Liabilities

The Company’s contract assets primarily include unbilled amounts typically resulting from sales under contracts when the over time method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. These unbilled accounts receivable in contract assets are transferred to accounts receivable upon invoicing, typically when the right to payment becomes unconditional in which case payment is due based only upon the passage of time.

The Company’s contract liabilities primarily relate to billings and advance payments received from customers, and deferred revenue. These contract liabilities represent the Company’s obligation to transfer its products to its customers for which the Company has received, or is owed consideration from its customers. Contract liabilities are included in deferred revenue on the Company’s Condensed Consolidated Balance Sheets.

Contract assets and liabilities consisted of the following:

In thousands	June 30, 2019		December 31, 2018		Dollar Change
Contract assets	$	21,566	$	23,040	$	(1,474	)
Contract liabilities	$	2,707	$	4,537	$	(1,830	)

The $1.5 million decrease in contract assets from December 31, 2018 to June 30, 2019 was primarily due to timing of billings to customers.

The $1.8 million decrease in contract liabilities from December 31, 2018 to June 30, 2019 was primarily due to $3.4 million of revenue recognized in the first six months of 2019 related to contract liabilities at December 31, 2018, offset by an increase in customer deposits.

Disaggregated Revenue

The Company disaggregates revenue from customers by geographic region, as it believes this disclosure best depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic factors. Disaggregated revenue by geographical region for the quarters and six months ended June 30, 2019 and 2018 were as follows:

	Quarter Ended June 30, 2019
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	47,822	$	42,667	$	64,235	$	(6,466	)	$	148,258
Europe	15,729		17,791		25,203		(175		)	58,548
Asia	1,551		8,620		3,834		—			14,005
Total Net Sales	$	65,102	$	69,078	$	93,272	$	(6,641	)	$	220,811

	Quarter Ended June 30, 2018
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	20,879	$	45,564	$	61,922	$	(6,533	)	$	121,832
Europe	10,355		18,053		24,515		(169		)	52,754
Asia	—		8,095		3,732		—			11,827
Total Net Sales	$	31,234	$	71,712	$	90,169	$	(6,702	)	$	186,413

	Six Months Ended June 30, 2019
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	94,199	$	79,856	$	127,837	$	(12,734	)	$	289,158
Europe	32,386		36,840		51,645		(381		)	120,490
Asia	3,097		17,988		8,103		—			29,188
Total Net Sales	$	129,682	$	134,684	$	187,585	$	(13,115	)	$	438,836

	Six Months Ended June 30, 2018
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	40,040	$	84,697	$	131,901	$	(14,359	)	$	242,279
Europe	21,887		37,439		52,570		(354		)	111,542
Asia	—		17,117		7,135		—			24,252
Total Net Sales	$	61,927	$	139,253	$	191,606	$	(14,713	)	$	378,073

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Acquisitions and Divestiture

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisitions and Divestiture

Acquisitions and Divestiture

Acquisitions

On August 31, 2018, the Company completed the acquisition of Interface Performance Materials ("Interface"), based in Lancaster, Pennsylvania. A globally-recognized leader in the delivery of engineered sealing solutions, the Interface operations manufacture wet-laid gasket and specialty materials primarily serving OEM and Tier I manufacturers in the Agriculture, Construction, Earthmoving, Industrial, and Automotive segments. The transaction strengthens the Company's position as an industry-leading global provider of filtration and engineered materials and expands the Company's end markets into attractive adjacencies. The Company acquired one hundred percent of Interface for an initial price of $268.4 million, net of cash acquired of $5.2 million. In the second quarter of 2019, the Company recorded a post closing adjustment resulting in a decrease in purchase price of $1.4 million resulting in a purchase price of $267.0 million. The purchase price was financed with a combination of cash on hand and $261.4 million of borrowings from the Company's amended $450 million credit facility. The operating results of the Interface businesses have been included in the Consolidated Statements of Operations since August 31, 2018, the date of acquisition, and are reported within the Performance Materials reporting segment.

For the quarter ended June 30, 2019, Interface reported net sales and operating income of $32.7 million and $0.1 million, respectively. Interface's operating income for the quarter ended June 30, 2019 included $4.0 million of intangible assets amortization expense in selling, product development and administrative expenses. There were no sales or operating income for Interface during the quarter ended June 30, 2018 as the acquisition was completed on August 31, 2018.

For the six months ended June 30, 2019, Interface reported net sales and operating loss of $65.6 million and $0.7 million, respectively. Interface's operating income loss for the six months ended June 30, 2019 included $8.0 million of intangible assets amortization expense in selling, product development and administrative expenses. There were no sales or operating income for Interface during the six months ended June 30, 2018 as the acquisition was completed on August 31, 2018.

The following table presents the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Company's acquisition of Interface. The final determination of the fair value of certain assets and liabilities will be completed within the one year measurement period as required by the FASB ASC Topic 805, “Business Combinations.” As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period within one year of the acquisition date. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations. The finalization of the purchase accounting assessment may result in a change in the

valuation of assets acquired and liabilities assumed and may have a material impact on the Company's results of operations and financial position.

In thousands
Accounts receivable	$	25,182
Inventories	17,013
Prepaid expenses and other current assets	2,382
Property, plant and equipment	40,902
Goodwill (Note 5)	130,346
Other intangible assets (Note 5)	106,900
Other assets	308
Total assets acquired, net of cash acquired	$	323,033
Current liabilities	$	(11,319	)
Deferred tax liabilities	(24,678		)
Benefit plan liabilities (Note 12)	(19,002		)
Other long-term liabilities	(1,031		)
Total liabilities assumed	(56,030		)
Total purchase price, net of cash acquired	$	267,003

The following table reflects the unaudited actual results of the Company for the quarter and six months ended June 30, 2019 and the pro forma operating results of the Company for the quarter and six months ended June 30, 2018, which gives effect to the acquisition of Interface as if it had occurred on January 1, 2017. The pro forma information includes the historical financial results of the Company and Interface. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2017, nor are they intended to be indicative of results that may occur in the future. The pro forma information does not include the effects of any synergies related to the acquisition.

	Quarter Ended   June 30,					Six Months Ended   June 30,
	(Actual)			(Pro Forma)		(Actual)			(Pro Forma)
In thousands	2019			2018		2019			2018
Net sales	$	220,811		$	226,404	$	438,836		$	457,481
Net (loss) income	$	(6,946	)	$	11,589	$	(3,056	)	$	22,518
Earnings per share:
Basic	$	(0.40	)	$	0.67	$	(0.18	)	$	1.31
Diluted	$	(0.40	)	$	0.67	$	(0.18	)	$	1.30
Basic	17,267			17,196		17,260			17,178
Diluted	17,267			17,335		17,260			17,334

Included in net income during the quarter ended June 30, 2019 was $3.1 million of intangible assets amortization expense related to acquired Interface intangible assets and $2.6 million of interest expense primarily to finance the Interface acquisition.

Pro forma adjustments during the quarter ended June 30, 2018 reduced net income by $0.6 million. Included in net income for the quarter ended June 30, 2018 was $3.0 million of intangible assets amortization expense and $2.1 million of interest expense associated with borrowings under the Company's Amended Credit Facility. Net income was adjusted to exclude items such as corporate strategic initiatives expenses, Interface management fee expenses and tax valuation allowance expenses.

Included in net income during the six months ended June 30, 2019 was $6.1 million of intangible assets amortization expense related to acquired Interface intangible assets and $5.2 million of interest expense to finance the Interface acquisition.

Pro forma adjustments during the six months ended June 30, 2018 reduced net income by $2.1 million. Included in net income for the six months ended June 30, 2018 was $6.1 million of intangible assets amortization expense and $4.2 million of interest expense associated with borrowings under the Company's Amended Credit Facility. Net income was adjusted to exclude items such as corporate strategic initiatives expenses, Interface management fee expenses and tax valuation allowance expenses.

On July 12, 2018, the Company acquired certain assets and assumed certain liabilities of the Precision Filtration division of Precision Custom Coatings ("PCC") based in Totowa, NJ. Precision Filtration is a producer of high-quality, air filtration media principally serving the commercial and residential HVAC markets with a range of low efficiency through high-performing air filtration media. The Company acquired the assets and liabilities of PCC for $1.6 million in cash with additional cash payments of up to $2.0 million to be made based on the achievement of certain future financial targets through 2022. PCC had a minimal impact on the Company's sales and operating income for the quarter ended June 30, 2019.

Divestiture

On May 9, 2019, the Company sold its Texel Geosol, Inc. ("Geosol") business, a subsidiary of the Company's Texel Technical Materials, Inc. ("Texel") business, for a cash purchase price of $3.0 million, subject to a post-closing adjustment(s) within ninety days of the purchase date. Under the terms of the arrangement, $0.4 million of the total purchase price will be withheld and paid to the Company in three annual payments of approximately $0.1 million. The disposition was completed pursuant to a Sale Agreement, dated May 9, 2019, by and between the Company, and the third-party buyer. The Company recognized a pre-tax gain on the sale of $1.5 million, reported as non-operating income in the second quarter of 2019. Net of income taxes, the Company reported a gain on sale of $1.3 million.

The Company did not report Geosol as a discontinued operation as it would not be considered a strategic shift in Lydall's business. Accordingly, the operating results of Geosol are included in the operating results of the Company through the sale date and in comparable periods.

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Inventories

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories as of June 30, 2019 and December 31, 2018 were as follows:

In thousands	June 30, 2019		December 31, 2018
Raw materials	$	41,108	$	37,731
Work in process	16,527		18,296
Finished goods	30,597		28,438
Total inventories	$	88,232	$	84,465

Included in work in process is gross tooling inventory of $2.5 million and $4.3 million at June 30, 2019 and December 31, 2018, respectively.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill:

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

The changes in the carrying amount of goodwill by segment as of and for the six months ended June 30, 2019 were as follows:

In thousands	December 31, 2018		Currency translation adjustments			Reductions			June 30, 2019
Performance Materials	$	144,626	$	(84	)	$	(65	)	$	144,477
Technical Nonwovens	52,337		982			—			53,319
Total goodwill	$	196,963	$	898		$	(65	)	$	197,796

Goodwill Associated with Acquisitions

The net goodwill reduction of $0.1 million within the Performance Materials segment was due to a goodwill reduction of $0.7 million as a result of a post-closing purchase price adjustment in the second quarter of 2019 related to the acquisition of Interface

Performance Materials on August 31, 2018, partially offset by acquisition activity in the second quarter of 2019 resulting in a goodwill addition of $0.6 million.

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 Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018:

	June 30, 2019					December 31, 2018
In thousands	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	142,418	$	(21,134	)	$	141,455	$	(11,453	)
Patents	4,366		(3,841		)	4,333		(3,816		)
Technology	2,500		(898		)	2,500		(810		)
Trade Names	7,302		(4,017		)	7,235		(2,840		)
License Agreements	616		(616		)	619		(619		)
Other	559		(559		)	561		(561		)
Total amortized intangible assets	$	157,761	$	(31,065	)	$	156,703	$	(20,099	)

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Long-term Debt and Financing Arrangements

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-term Debt and Financing Arrangements

Long-term Debt and Financing Arrangements

On August 31, 2018, the Company amended and restated its $175 million senior secured revolving credit agreement ("Amended Credit Agreement") that increased the available borrowing from $175 million to $450 million, added three additional lenders and extended the maturity date from July 7, 2021 to August 31, 2023.

Under the terms of the Amended Credit Agreement, the lenders are providing up to a $450 million credit facility (the “Facility”) to the Company, under which the lenders provided a term loan commitment of $200 million and revolving loans to or for the benefit of the Company and its subsidiaries of up to $250 million. The Facility may be increased by an aggregate amount not to exceed $150 million through an accordion feature, subject to specified conditions. The Facility is secured by substantially all of the assets of the Company.

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 Dollar 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 0.00% to 1.25%, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 0.75% to 2.00%. The Company pays a quarterly fee ranging from 0.15% to 0.275% on the unused portion of the revolving commitment. The Company has entered into multiple interest rate swaps to convert a portion of the Company's one-month LIBOR-based borrowings from a variable rate to a fixed rate. See Note 7.

The Company is permitted to prepay term and revolving borrowings in whole or in part at any time without premium or penalty, subject to certain minimum payment requirements, and the Company is generally permitted to irrevocably cancel unutilized portions of the revolving commitments under the Amended Credit Agreement. The Company is required to repay the term commitment in an amount of $2.5 million per quarter beginning with the quarter ending December 31, 2018 through the quarter ending June 30, 2023.

The Amended Credit Agreement contains covenants required of the Company and its subsidiaries, including various affirmative and negative financial and operational covenants. The Company is required to meet certain quarterly financial covenants calculated from the four fiscal quarters most recently ended, including: (i) a minimum consolidated fixed charge coverage ratio, which requires that at the end of each fiscal quarter the ratio of (a) consolidated EBITDA to (b) the sum of consolidated interest charges, redemptions, non-financed maintenance capital expenditures, restricted payments and taxes paid, each as defined in the Amended Credit Agreement, may not be lower than 1.25 to 1.0; and (ii) a consolidated net leverage ratio, which requires that at the end of each fiscal quarter the ratio of consolidated funded indebtedness minus consolidated domestic cash to consolidated EBITDA, as defined

in the Amended Credit Agreement, may not be greater than 3.5 to 1.0. The Company was in compliance with all covenants at June 30, 2019.

At June 30, 2019, the Company had borrowing availability of $108.2 million under the Facility, net of $300.0 million of borrowings outstanding and standby letters of credit outstanding of $3.8 million. The borrowings outstanding included a $162.0 million term loan, net of $0.5 million in debt issuance costs being amortized to interest expense over the debt maturity period.

In addition to the amounts outstanding under the Facility, the Company has various acquired foreign credit facilities totaling approximately $8.2 million. At June 30, 2019, the Company's foreign subsidiaries had $0.1 million in borrowings outstanding as well as $1.8 million in standby letters of credit outstanding.

The Company also has finance lease agreements for machinery and equipment at multiple operations requiring monthly principal and interest payments through 2020.

Total outstanding debt consists of:

In thousands	Effective Rate		Maturity	June 30, 2019			December 31, 2018
Revolver loan	4.40	%	8/31/2023	$	138,000		$	138,000
Term loan, net of debt issuance costs	4.40	%	8/31/2023	161,552			186,498
Finance leases	0.00% - 2.09%		2019 - 2020	122			315
				299,674			324,813
Less portion due within one year				(10,001		)	(10,172		)
Total long-term debt, net of debt issuance costs				$	289,673		$	314,641

The carrying value of the Company’s debt outstanding on its Facility approximates fair value given the variable rate nature of the debt. 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 weighted average interest rate on long-term debt was 4.3% for the six months ended June 30, 2019 and 3.4% for the year ended December 31, 2018.

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Derivatives

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

The Company selectively uses financial instruments to manage market risk associated with exposure to fluctuations in interest rates. These financial exposures are monitored and managed by the Company as an integral part of its risk management program. 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. The Company has debt with variable rates of interest based generally on LIBOR. From time to time, the Company enters into interest rate swap agreements to manage interest rate risk. These instruments are designated as cash flow hedges and are recorded at fair value using Level 2 observable market inputs.

Derivative instruments are recognized as either assets or liabilities on the 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 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. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings. The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. The Company does not use derivatives for speculative or trading purposes.

In November 2018, the Company entered into a five-year interest rate swap agreement with a bank which converts the interest on a notional $139.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 3.09% plus the borrowing spread. The notional amount reduces quarterly by fluctuating amounts through August 2023. In April 2017, the Company entered into a three-year interest rate swap agreement with a bank which converts the interest on a notional $60.0 million of the Company's one-month LIBOR-based borrowings under its Amended Credit Agreement from a variable rate, plus the borrowing spread, to a fixed rate of 1.58% plus the borrowing spread. The notional amount reduces quarterly by $5.0 million through March 31, 2020. These interest rate swap agreements were accounted for as cash flow hedges. Effectiveness of these derivative agreements are assessed quarterly by ensuring that the critical terms of the swaps continue to match the critical terms of the hedged debt.

The following table sets forth the fair value amounts of derivative instruments held by the Company:

	June 30, 2019				December 31, 2018
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts	$	34	$	5,263	$	179	$	2,738
Total derivatives	$	34	$	5,263	$	179	$	2,738

The following table sets forth the income recorded in accumulated other comprehensive (loss) income, net of tax, for the quarters and six months ended June 30, 2019 and 2018 for derivatives held by the Company and designated as hedging instruments:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Cash flow hedges:
Interest rate contracts	$	(1,351	)	$	(27	)	$	(2,026	)	$	75
	$	(1,351	)	(27		)	$	(2,026	)	$	75

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

From time to time, the Company enters into arrangements with vendors to provide certain tangible assets used in the Company's operations which qualify as a lease pursuant to ASC Topic 842, Leases. The tangible assets leased include Buildings, Office Equipment, Machinery and Vehicles. The Company's leases have remaining terms of a few months to 14 years, some of which have options to extend for a period of up to 7 years and some of which have options to terminate within 1 year.

At inception of the arrangement, the Company determines if an arrangement is a lease based on assessment of the terms and conditions of the contract. Operating leases are included in Operating lease right-of-use (“ROU”) assets, other accrued liabilities, and Long-term operating lease liabilities in the Company's condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, Current portion of long-term debt, and long-term debt in the Company's condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

While the overwhelming majority of leases have fixed payments schedules, some leases have variable lease schedules based on market indices such as LIBOR or include additional payments based on excess consumption of services. For leases on a variable schedule based on a market index, the current lease payment amount is used in the calculation of the lease liability and corresponding asset included on the balance sheet. For leases with additional payments based on excess consumption of services, no amount is included in the calculation of the lease liability or corresponding asset as it is not probable excess consumption will continue in the future.

As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. At June 30, 2019, the weighted average discount rate used for operating and finance leases is 4.39% and 1.78%, respectively. The implicit rate is used when readily determinable from a lease.

The operating lease ROU asset also includes any lease payments made in advance of the assets use and excludes lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for as one component as permitted by ASC 842.

After consideration of any options to terminate early which are reasonably certain to be executed or any options to extend which are not reasonably certain to be executed, any lease with a term of 12 months or less is considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU Asset and Lease Liability accounts on the condensed consolidated balance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis over the lease term.

The components of lease expense are as follows:

In thousands	Quarter Ended   June 30, 2019		Six Months Ended   June 30, 2019
Finance lease expense:
Amortization of right-of-use assets	$	16	$	49
Interest on lease liabilities	—		1
Operating lease expense	1,605		3,249
Short-term lease expense	244		468
Variable lease expense	18		54
Total lease expense	$	1,883	$	3,821

Supplemental balance sheet information related to leases are as follows:

In thousands, except lease term	June 30, 2019
Operating leases:
Operating lease right-of-use assets	$	27,070
Short-term lease liabilities, included in "Other accrued liabilities"	$	5,176
Long-term lease liabilities	22,006
Total operating lease liabilities	$	27,182
Finance leases:
Property, plant and equipment	$	740
Accumulated depreciation	(195		)
Property, plant and equipment, net	$	545
Short-term lease liabilities, included in debt	$	109
Long-term lease liabilities, included in debt	13
Total finance lease liabilities	$	122
Weighted average remaining lease term:
Operating leases	7.5 years
Finance leases	12.0 years

Supplemental cash flow information related to leases are as follows:

	Six Months Ended June 30,
In thousands	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,162
Operating cash flows from finance leases	1
Financing cash flows from finance leases	188
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,676
Finance leases	—

As of June 30, 2019, future lease payments maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	3,223		$	89
2020	5,723			34
2021	4,408			—
2022	3,643			—
2023	2,753			—
Thereafter	12,822			—
Total lease payments	32,572			123
Less imputed interest	(5,390		)	(1		)
Total discounted future lease payments	$	27,182		$	122

As of December 31, 2018, future lease payment maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314

Leases

Leases

From time to time, the Company enters into arrangements with vendors to provide certain tangible assets used in the Company's operations which qualify as a lease pursuant to ASC Topic 842, Leases. The tangible assets leased include Buildings, Office Equipment, Machinery and Vehicles. The Company's leases have remaining terms of a few months to 14 years, some of which have options to extend for a period of up to 7 years and some of which have options to terminate within 1 year.

At inception of the arrangement, the Company determines if an arrangement is a lease based on assessment of the terms and conditions of the contract. Operating leases are included in Operating lease right-of-use (“ROU”) assets, other accrued liabilities, and Long-term operating lease liabilities in the Company's condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, Current portion of long-term debt, and long-term debt in the Company's condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

While the overwhelming majority of leases have fixed payments schedules, some leases have variable lease schedules based on market indices such as LIBOR or include additional payments based on excess consumption of services. For leases on a variable schedule based on a market index, the current lease payment amount is used in the calculation of the lease liability and corresponding asset included on the balance sheet. For leases with additional payments based on excess consumption of services, no amount is included in the calculation of the lease liability or corresponding asset as it is not probable excess consumption will continue in the future.

As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. At June 30, 2019, the weighted average discount rate used for operating and finance leases is 4.39% and 1.78%, respectively. The implicit rate is used when readily determinable from a lease.

The operating lease ROU asset also includes any lease payments made in advance of the assets use and excludes lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for as one component as permitted by ASC 842.

After consideration of any options to terminate early which are reasonably certain to be executed or any options to extend which are not reasonably certain to be executed, any lease with a term of 12 months or less is considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU Asset and Lease Liability accounts on the condensed consolidated balance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis over the lease term.

The components of lease expense are as follows:

In thousands	Quarter Ended   June 30, 2019		Six Months Ended   June 30, 2019
Finance lease expense:
Amortization of right-of-use assets	$	16	$	49
Interest on lease liabilities	—		1
Operating lease expense	1,605		3,249
Short-term lease expense	244		468
Variable lease expense	18		54
Total lease expense	$	1,883	$	3,821

Supplemental balance sheet information related to leases are as follows:

In thousands, except lease term	June 30, 2019
Operating leases:
Operating lease right-of-use assets	$	27,070
Short-term lease liabilities, included in "Other accrued liabilities"	$	5,176
Long-term lease liabilities	22,006
Total operating lease liabilities	$	27,182
Finance leases:
Property, plant and equipment	$	740
Accumulated depreciation	(195		)
Property, plant and equipment, net	$	545
Short-term lease liabilities, included in debt	$	109
Long-term lease liabilities, included in debt	13
Total finance lease liabilities	$	122
Weighted average remaining lease term:
Operating leases	7.5 years
Finance leases	12.0 years

Supplemental cash flow information related to leases are as follows:

	Six Months Ended June 30,
In thousands	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,162
Operating cash flows from finance leases	1
Financing cash flows from finance leases	188
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,676
Finance leases	—

As of June 30, 2019, future lease payments maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	3,223		$	89
2020	5,723			34
2021	4,408			—
2022	3,643			—
2023	2,753			—
Thereafter	12,822			—
Total lease payments	32,572			123
Less imputed interest	(5,390		)	(1		)
Total discounted future lease payments	$	27,182		$	122

As of December 31, 2018, future lease payment maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314

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Equity Compensation Plans

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Equity Compensation Plans

Equity Compensation Plans

As of June 30, 2019, 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, authorizes 1.75 million shares of common stock for awards. The 2012 Plan also authorizes an additional 1.2 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 types 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. The Company accounts for forfeitures as they occur. Compensation expense for performance based awards granted prior to December 2018, is recorded based upon the service period and management’s assessment of the probability of achieving the performance goals and will be adjusted based upon actual achievement. In December 2018, the performance metric changed to a 3-year relative Total Shareholder Return (TSR) compared to S&P 600 industrial index instead of a pre-established earnings-per-share target to better align compensation to the long-term interests of shareholders. 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 equity compensation expense of $0.5 million and $1.4 million for the quarters ended June 30, 2019 and June 30, 2018, respectively, and $1.5 million and $2.6 million for the six months ended June 30, 2019 and June 30, 2018, respectively, for the Plans, including restricted stock awards. No equity compensation costs were capitalized as part of inventory.

Stock Options

The following table is a summary of outstanding and exercisable options as of June 30, 2019:

In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Aggregate Intrinsic Value
Outstanding at June 30, 2019	599	$	30.32	$	644
Exercisable at June 30, 2019	256	$	29.89	$	635
Unvested at June 30, 2019	343	$	30.64	$	9

There were no stock options granted and 3,325 stock options exercised during the quarter and six months ended June 30, 2019. There was no cash received from the exercise of stock options during the quarter and six months ended June 30, 2019. The intrinsic value of stock options exercised was $0.1 million with a tax benefit of less than $0.1 million during the quarter and six months ended June 30, 2019.

There were no stock options granted and no stock options exercised during the quarter ended June 30, 2018. There were 11,180 stock options granted and 27,041 stock options exercised during the six months ended June 30, 2018. The amount of cash received from the exercise of stock options was $0.7 million during the six months ended June 30, 2018. The intrinsic value of stock options exercised was $0.7 million with a tax benefit of $0.1 million during the six months ended June 30, 2018.

At June 30, 2019, the total unrecognized compensation cost related to non-vested stock option awards was approximately $3.0 million, with a weighted average expected amortization period of 2.7 years.

Restricted Stock

Restricted stock includes both performance-based and time-based awards. There were no time-based restricted stock shares granted during the quarter ended June 30, 2019 and 33,932 time-based restricted stock shares granted during the six months ended June 30, 2019. There were no performance-based restricted shares granted during the quarter and six months ended June 30, 2019. There were no performance-based restricted shares that vested during the quarter and six months ended June 30, 2019. There were no time-based restricted shares that vested during the quarter ended June 30, 2019 and 5,468 time-based restricted shares that vested during the six months ended June 30, 2019.

There were no time-based restricted stock shares granted during the quarter ended June 30, 2018 and 8,106 time-based restricted stock shares granted during the six months ended June 30, 2018. There were no performance-based restricted stock shares granted during the quarter ended June 30, 2018 and 15,190 performance-based restricted shares granted during the six months ended June 30, 2018. There were no performance-based restricted stock shares that vested during the quarter ended June 30, 2018 and 48,035 performance-based restricted shares that vested during the six months ended June 30, 2018. There were no time-based restricted stock shares that vested during the quarter ended June 30, 2018 and 5,164 time-based restricted shares that vested during the six months ended June 30, 2018.

At June 30, 2019, there were 265,816 unvested restricted stock awards with total unrecognized compensation cost related to these awards of $3.9 million with a weighted average expected amortization period of 1.9 years. Compensation expense for performance based awards is recorded based on the service period and management’s assessment of the probability of achieving the performance goals.

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Stock Repurchases

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stock Repurchases

Stock Repurchases

During the six months ended June 30, 2019, the Company purchased 2,124 shares of common stock valued at $0.1 million, through withholding, pursuant to provisions in agreements with recipients of restricted stock granted under the Company’s equity compensation plans, in which the Company withholds that number of shares having fair value equal to each recipient’s minimum tax withholding due.

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Restructuring

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

In 2017, the Company commenced a restructuring plan in the Technical Nonwovens segment which includes plant consolidations and transfer of equipment to other facilities within the segment's Europe and China operations. The consolidation of certain plants, which is expected to conclude in 2019, is expected to reduce operating costs, increase efficiency and enhance the Company’s flexibility by better aligning its manufacturing footprint with the segment's customer base. Accordingly, the Company expects to record pre-tax expenses of approximately $4.2 million, in connection with this restructuring plan, of which approximately $3.7 million is expected to result in cash expenditures over the period of consolidation. The Company also expects to incur cash expenditures of approximately $3.8 million for capital expenditures associated with this plan.

During the quarter ended June 30, 2019, the Company recorded pre-tax restructuring expenses of $0.1 million, primarily related to severance costs in selling, product development and administrative expenses. During the six months ended June 30, 2019, the Company recorded pre-tax restructuring expenses of $0.5 million, primarily related to equipment move costs in cost of sales. The Company expects to record approximately $0.8 million of restructuring expenses for the remainder of 2019.

Actual pre-tax expenses incurred and total estimated pre-tax expenses for the restructuring program by type are as follows:

In thousands	Severance and Related Expenses	Contract Termination Expenses	Facility Exit, Move and Set-up Expenses	Total
Total estimated expenses	1,250	450	2,500	4,200
Expenses incurred through December 31, 2018	787	290	1,882	2,959
Estimated remaining expense at December 31, 2018	463	160	618	1,241
Expense incurred during quarter ended:
March 31, 2019	16	—	360	376
June 30, 2019	53	—	44	97
Total pre-tax expense incurred	856	290	2,286	3,432
Estimated remaining expense at June 30, 2019	394	160	214	768

There were cash outflows of $0.2 million and $0.5 million for the restructuring program for the quarter and six months ended June 30, 2019, respectively.

Accrued restructuring costs were as follows at June 30, 2019:

In thousands	Total
Balance as of December 31, 2018	$	147
Pre-tax restructuring expenses, excluding depreciation	473
Cash paid	(534		)
Balance as of June 30, 2019	$	86

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Employer Sponsored Benefit Plans

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Employer Sponsored Benefit Plans

Employer Sponsored Benefit Plans

Prior to the quarter ended June 30, 2019, the Company maintained a defined benefit pension plan ("U.S. Lydall Pension Plan") and two domestic pension plans acquired in the Interface acquisition ("Interface Pension Plans"), (collectively the "domestic defined benefit pension plans"). During the quarter ended June 30, 2019, the Company settled the pension obligation of the U.S. Lydall Pension Plan through lump sum distributions to participants or by irrevocably transferring pension liabilities to two insurance companies through the purchase of group annuity contracts. These purchases, funded with pension assets, resulted in a pre-tax settlement loss of $25.5 million in the quarter ended June 30, 2019, related to the recognition of accumulated deferred actuarial losses. The settlement loss was included as non-operating expense in the condensed consolidated statements of operations. No contributions were made to the U.S. Lydall Pension Plan during the quarter and six months ended June 30, 2019 and contributions of $3.0 million and $4.2 million were made during the quarter and six months ended June 30, 2018, respectively.

The Interface Pension Plans cover Interface's union and non-union employees. The plans are closed to new employees and benefits are no longer accruing for the majority of participants. The Company expects to make a required contribution of approximately $1.0 million to $2.0 million to the Interface Pension Plans during 2019. Contributions of $0.3 million and $0.9 million were made during the quarter and six months ended June 30, 2019, respectively.

The following is a summary of the components of net periodic benefit cost for the domestic defined benefit pension plans for the quarters and six months ended June 30, 2019 and 2018:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Components of employer benefit cost
Service cost	$	30		$	—		$	60		$	—
Interest cost	833			470			1,827			940
Expected return on assets	(744		)	(650		)	(1,616		)	(1,300		)
Amortization of actuarial loss	186			256			464			512
Net periodic benefit cost	$	305		$	76		$	735		$	152
Settlement loss	25,515			—			25,515			—
Total employer benefit plan cost	$	25,820		$	76		$	26,250		$	152

The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in other income.

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the quarter ended June 30, 2019 the Company recorded a tax benefit of $8.2 million compared to tax expense of $1.7 million for the quarter ended June 30, 2018. The tax benefit was driven by $10.5 million of tax benefit related to the pension plan settlement and resulted in an effective tax rate for the quarter ended June 30, 2019 of 54.0%. This is compared to an effective tax rate of 13.7% for the quarter ended June 30, 2018. The pension plan settlement tax benefit included a $4.5 million benefit related to the reclassification of stranded tax effects from accumulated other comprehensive income. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the quarter ended June 30, 2019 was 22.7%. This was negatively impacted by valuation allowance activity of $0.9 million partially offset by the Company's geographical mix of earnings. The second quarter of 2018 effective tax rate was positively impacted by discretionary pension plan contributions and geographical mix of earnings.

For the six months ended June 30, 2019 the Company recorded a tax benefit of $7.1 million compared to tax expense of $3.8 million for the six months ended June 30, 2018. The tax benefit was driven by $10.5 million of tax benefit related to the pension plan settlement and resulted in an effective tax rate for the six months ended June 30, 2019 of 69.7%. This is compared to an effective tax rate of 15.0% for the six months ended June 30, 2018. Excluding the tax benefit of the pension plan settlement, the Company's effective tax rate for the six months ended June 30, 2019 was 22.5%. This was negatively impacted by valuation allowance activity of $1.2 million partially offset by the Company's geographical mix of earnings.

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, China, the United Kingdom, Canada and the Netherlands. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2015, state and local examinations for years before 2013, and non-U.S. income tax examinations for years before 2003.

The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, stock vesting, pension plan terminations, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of ongoing tax planning strategies and audits.

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Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per Share

For the quarters and six months ended June 30, 2019 and 2018, basic earnings per share were computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method as long as their effect is not antidilutive.

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

	Quarter Ended   June 30,		Six Months Ended   June 30,
In thousands	2019	2018	2019	2018
Basic average common shares outstanding	17,267	17,196	17,260	17,178
Effect of dilutive options and restricted stock awards	—	139	—	156
Diluted average common shares outstanding	17,267	17,335	17,260	17,334

Dilutive stock options totaling 54,713 and 69,730 shares of Common Stock were excluded from the diluted per share computation for the quarter and six months ended June 30, 2019, respectively, as the Company reported a net loss during those periods and, therefore, the effect of including these options would be antidilutive.

For each of the quarters ended June 30, 2019 and 2018, stock options for 520,189 shares and 162,830 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

For each of the six months ended June 30, 2019 and 2018, stock options for 521,293 shares and 149,940 shares of Common Stock were not considered in computing diluted earnings per common share because they were antidilutive.

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Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

As of June 30, 2019, the Company’s reportable segments were Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions.

Effective September 30, 2018, as a result of the Interface acquisition, the Performance Materials segment changed the disaggregation of revenue at the product level to be categorized as "Filtration" and "Sealing and Advanced Solutions". Prior period product level amounts throughout the Notes to the Condensed Consolidated Financial Statements have been recast to reflect the results of the new product level structure. The recast of historical product level information had no impact on the consolidated financial results.

Performance Materials Segment

The Performance Materials segment includes filtration media solutions primarily for air, fluid power, life science and industrial applications (“Filtration”), and sealing and gasket solutions, thermal insulation, energy storage, and other engineered products (“Sealing and Advanced Solutions”).

Filtration products include LydAir® MG (Micro-Glass) Air Filtration Media, LydAir® MB (Melt Blown) Air Filtration Media, LydAir® SC (Synthetic Composite) Air Filtration Media, and Arioso® Membrane Composite Media. These products constitute the critical media component of clean-air systems for applications in clean-space, commercial, industrial and residential HVAC, power generation, respiratory protection, 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 transportation 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. LyPore® media and Solupor® ultra-high molecular weight polyethylene membranes also serve critical liquid filtration/separation applications such as biopharmaceutical pre-filtration and clarification, lateral flow diagnostic and analytical testing, potable water filtration and high purity process filtration such as those found in food and beverage and medical applications.

Sealing and Advanced Solutions products include nonwoven specialty engineered materials for a multitude of applications. Interface fiber-reinforced gasket materials serve the heavy-duty diesel, automobile, small engine, transmission and compressor markets. These products handle demanding sealing challenges with a diverse range of metallic, non-metallic, rubber-coated and laminate materials that comprise the extensive Sealing materials portfolio. Interface Engineered Components are ready to use soft and hard gasket parts sold directly to OEMs and aftermarket applications. An example is Select-a-Seal® rubber-edged composite (REC) technology that provides robust sealing, compression, adhesion, and shear strength for driveline applications. Advanced Solutions’ nonwoven veils, papers and specialty composites for the building products, appliance, energy and industrial markets include Manniglas® Thermal Insulation Papers, and Lytherm® Insulation Media for high temperature technology applications. Lydall’s Cryotherm® Super-Insulating Media, CRS-Wrap® Super-Insulating Media and Cryo-Lite® 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. Additional specialty composite materials include specialty fiber calendar bowl products to service the printing and textile industries and press pad materials for industrial lamination processes.

Technical Nonwovens Segment

The Technical Nonwovens segment primarily produces needle punch nonwoven solutions for a multitude of industries and applications. Products are manufactured and sold globally under the leading brands of Lydall Industrial Filtration, Southern Felt, Gutsche, and Texel. Industrial Filtration products include nonwoven rolled-good felt media and filter bags used primarily in industrial air and liquid filtration applications. Nonwoven filter media is an effective solution to satisfy increasing emission control regulations in a wide range of industries, including power, cement, steel, asphalt, incineration, mining, food, and pharmaceutical. Advanced Materials products include nonwoven rolled-good media used in commercial applications and predominantly serves the geosynthetics, automotive, industrial, medical, and safety apparel markets. Automotive media is provided to Tier I/II suppliers as well as the Company's Thermal Acoustical Solutions segment.

Technical Nonwovens segment products include air and liquid filtration media sold under the brand names Fiberlox® high performance filtration felts, Checkstatic™ conductive filtration felts, Microfelt® high efficiency filtration felts, Pleatlox® pleatable filtration felts, Ultratech™ PTFE filtration felts, Powertech® and Powerlox® power generation filtration felts, Microcap® high efficiency liquid filtration felts, Duotech membrane composite filtration felts, along with our porotex® family of high temperature filtration felts including microvel® and optivel® products. Technical Nonwovens Advanced Materials products are sold under the brand names Thermofit® thermo-formable products, Ecoduo® recycled content materials, Duotex® floor protection products, and Versaflex® composite molding materials. Technical Nonwovens also offers extensive finishing and coating capabilities which provide custom engineered properties tailored to meet the most demanding applications. The business leverages a wide range of fiber types and extensive technical capabilities to provide products that meet our customers’ needs across a variety of applications providing both high performance and durability.

Thermal Acoustical Solutions Segment 

The Thermal Acoustical Solutions segment offers a full range of innovative engineered products tailored for the transportation and industrial sectors to thermally shield sensitive components from high heat, improve exhaust gas treatment and lower harmful emissions as well as assist in the reduction of noise, vibration and harshness (NVH). Within the transportation sector, Lydall’s products are found in the interior (dash insulators, cabin flooring), underbody (wheel well, aerodynamic belly pan, fuel tank, exhaust, tunnel, spare tire) and under hood (engine compartment, outer dash, powertrain, catalytic converter, turbo charger, manifolds) of cars, trucks, SUVs, heavy duty trucks and recreational vehicles.

Thermal Acoustical Solutions segment products offer thermal and acoustical insulating solutions comprised of organic and inorganic fiber composites that provide weight reduction, superior noise suppression and increased durability over conventional designs, as well as products that efficiently combine multiple layers of metal and thermal - acoustical insulation media to provide an engineered shielding solution for an array of application areas. 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 used to protect vehicle components from excessive heat. Lydall’s flux® product family includes several patented or IP-rich products that address applications which include: Direct Exhaust Mount heat shields, which are assembled to high temperature components like catalytic converters, turbochargers or exhaust manifolds using aluminized and stainless steel and high performance and high temperature heat insulating materials; Powertrain heat shields that absorb noise at the source and do not contribute to the engine's noise budget; and durable, thermally robust solutions for temperature sensitive plastic components such as fuel tanks that are in proximity to high temperature heat sources.

The tables below present net sales and operating income by segment for the quarters and six months ended June 30, 2019 and 2018, and also a reconciliation of total segment net sales and operating income to total consolidated net sales and operating income.

Consolidated net sales by segment:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Performance Materials Segment (1):
Filtration	$	24,732		$	23,061		$	48,666		$	46,203
Sealing and Advanced Solutions	40,370			8,173			81,016			15,724
Performance Materials Segment net sales	65,102			31,234			129,682			61,927
Technical Nonwovens Segment:
Industrial Filtration	38,706			39,170			81,070			79,401
Advanced Materials (2)	30,372			32,542			53,614			59,852
Technical Nonwovens Segment net sales	69,078			71,712			134,684			139,253
Thermal Acoustical Solutions Segment:
Parts	85,705			82,920			170,281			171,041
Tooling	7,567			7,249			17,304			20,565
Thermal Acoustical Solutions Segment net sales	93,272			90,169			187,585			191,606
Eliminations and Other (2)	(6,641		)	(6,702		)	(13,115		)	(14,713		)
Consolidated Net Sales	$	220,811		$	186,413		$	438,836		$	378,073

 Operating income by segment:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Performance Materials (1)	$	3,303		$	3,649		$	4,762		$	6,290
Technical Nonwovens	7,844			6,118			12,578			11,124
Thermal Acoustical Solutions	7,357			8,820			16,848			21,434
Corporate Office Expenses	(5,325		)	(6,338		)	(11,959		)	(12,563		)
Consolidated Operating Income	$	13,179		$	12,249		$	22,229		$	26,285

(1) The Performance Materials segment reports the results of Interface and PCC for the period following the date of acquisitions of August 31, 2018 and July 12, 2018, respectively, and included $4.0 million and $8.0 million of incremental intangible assets amortization for the quarter and six months ended June 30, 2019, respectively.

(2) Included in the Technical Nonwovens segment and Eliminations and Other is $4.6 million and $5.8 million in intercompany sales to the Thermal Acoustical Solutions segment for the quarters ended June 30, 2019 and 2018, respectively, and $9.3 million and $12.9 million for the six months ended June 30, 2019 and 2018, respectively.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental Remediation

In the fourth quarter of 2016, as part of a groundwater discharging permitting process, water samples collected from wells and process water basins at the Company’s Rochester New Hampshire manufacturing facility, within the Performance Materials segment, showed concentrations of Per and Polyfluorinated Substances (“PFAS”) in excess of state ambient groundwater quality standards. In January 2017, the Company received a notification from the State of New Hampshire Department of Environmental Services (“NHDES”) naming Lydall Performance Materials, Inc. a responsible party with respect to the discharge of regulated contaminants and, as such, is required to take action to investigate and remediate the impacts in accordance with standards established by the NHDES. The Company conducted a site investigation, the scope of which was reviewed by the NHDES, in order to assess the extent of potential soil and groundwater contamination and develop a remedial action. Based on input received from NHDES in March 2017 with regard to the scope of the site investigation, the Company recorded $0.2 million of expense. In 2018, the Company received a response from the NHDES to the site investigation report outlining proposed remedial actions.

The Company recorded an additional $0.1 million of expense in 2018 associated with the expected costs to remediate the impacts of the discharge of regulated contaminants in accordance with standards established by the NHDES. During 2018 the environmental liability was fully reduced reflecting payments made to vendors, resulting in no balance at December 31, 2018. Additionally, the Company incurred $0.2 million of capital expenditures in 2018, in relation to the lining of the Company's fresh water lagoons. The site investigation is ongoing. The Company cannot be sure that costs will not exceed the current estimates until this matter is closed with the NHDES, nor that any future corrective action at this location would not have a material effect on the Company’s financial condition, results of operations or liquidity.

Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly impact any estimates of environmental remediation costs.

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Changes in Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2019

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

Changes in Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated Other Comprehensive Income (Loss)

The following table discloses the changes by classification within accumulated other comprehensive income (loss) for the six months ended June 30, 2019 and 2018:

In thousands	Foreign Currency Translation Adjustment			Defined Benefit Pension Adjustment				Gains and Losses on Cash Flow Hedges				Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(2,221	)	$	(18,049	)		$	122			$	(20,148	)
Other comprehensive income	(8,604		)	—				75			(c)	(8,529		)
Amounts reclassified from accumulated other comprehensive loss	—			397			(a)	—				397
Balance at June 30, 2018	(10,825		)	(17,652		)		197				(28,280		)
Balance at December 31, 2018	(18,458		)	(22,253		)		(1,974		)		(42,685		)
Other comprehensive loss	2,330			—				(2,026		)	(c)	304
Amounts reclassified from accumulated other comprehensive loss	—			19,374			(b)	—				19,374
Balance at June 30, 2019	$	(16,128	)	$	(2,879	)		$	(4,000	)		$	(23,007	)

(a) Amount represents amortization of actuarial losses, a component of net periodic benefit cost. This amount was $0.4 million, net of $0.1 million tax benefit, for the six months ended June 30, 2018.

(b) Amount represents the settlement of the Lydall Pension Plan in the second quarter of 2019. This amount was $19.0 million, net of $11.5 million tax benefit, for the six months ended June 30, 2019. Amount also represents amortization of actuarial losses, a component of net periodic benefit cost during the first five months of fiscal year 2019 prior to the plan termination. This amount was $0.4 million, net of $0.1 million tax benefit.

(c)

Amount represents unrealized gains (losses) on the fair value of hedging activities, net of taxes, for the six months ended June 30, 2019 and 2018.

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Basis of Financial Statement Presentation (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of Lydall, Inc. and its subsidiaries. All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The operating results of Interface have been included in the Consolidated Statements of Operations beginning on the date of acquisition. The year-end Condensed Consolidated Balance Sheet was derived from the audited financial statements for the year ended December 31, 2018, but does not include all disclosures required by U.S. GAAP. Management believes that all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows for the periods reported, have been included. For further information, refer to the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)", along with several additional clarification ASU's issued during 2018, collectively, "New Lease Standard". The New Lease Standard requires entities that lease assets with lease terms of more than 12 months to recognize right-of-use assets and lease liabilities created by those leases on their balance sheets. This New Lease Standard also requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The Company's adoption of the New Lease Standard was on a modified retrospective basis and did not have any impact on the Company's 2018 financial statements and disclosures. As part of the adoption of the New Lease Standard, the Company elected the package of practical expedients which allowed the Company to not re-assess 1) if any existing arrangements contained a lease, 2) the lease classification of any existing leases and 3) initial direct costs for any existing lease. The Company also elected the practical expedient which allows use of hindsight in determining the lease term for leases in existence at the date of adoption. Effective January 1, 2019, the Company reported lease right-of-use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets. Adoption of the New Lease Standard did not change the balances reported in the Company's 2019 Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows, or Condensed Statements of Comprehensive Income. Please refer to Footnote 8 "Leases" for additional information required as part of the adoption of the New Lease Standard.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Account for Hedging Activities". This ASU provides various improvements revolving around the financial reporting of hedging relationships that requires an entity to amend the presentation and disclosure of hedging activities to better portray the economic results of an entity's risk management activities in its financial statements. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for reclassification of stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings, but does not require the reclassification. The Company elected not to reclassify the income tax effects of the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

Effective January 1, 2019, the Company adopted the FASB issued ASU No. 2018-07, "Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting". This ASU expands the guidance for stock-based compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)". The new standard amends guidance on reporting credit losses for assets held at amortized cost basis. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement", which adds, amends and removes certain disclosure requirements related to fair value measurements.  Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.  This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Certain amended or eliminated disclosures in this standard may be adopted early, while certain additional disclosure requirements in this standard can be adopted on its effective date.  In addition, certain changes in the standard require retrospective adoption, while other changes must be adopted prospectively.  The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU requires entities to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. This ASU also requires entities to disclose an explanation for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years beginning after December 15, 2020 with early adoption permitted.  The Company is currently evaluating the method and impact the adoption of this ASU will have on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.  The Company is required to adopt this new guidance in the first quarter of 2020.  Early adoption is permitted.  The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

Derivatives

Derivatives

The Company selectively uses financial instruments to manage market risk associated with exposure to fluctuations in interest rates. These financial exposures are monitored and managed by the Company as an integral part of its risk management program. 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. The Company has debt with variable rates of interest based generally on LIBOR. From time to time, the Company enters into interest rate swap agreements to manage interest rate risk. These instruments are designated as cash flow hedges and are recorded at fair value using Level 2 observable market inputs.

Derivative instruments are recognized as either assets or liabilities on the 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 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. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings. The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. The Company does not use derivatives for speculative or trading purposes.

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Contract Assets and Liabilities

Contract assets and liabilities consisted of the following:

In thousands	June 30, 2019		December 31, 2018		Dollar Change
Contract assets	$	21,566	$	23,040	$	(1,474	)
Contract liabilities	$	2,707	$	4,537	$	(1,830	)

Schedule of Disaggregation of Revenue by Geographical Region

Disaggregated revenue by geographical region for the quarters and six months ended June 30, 2019 and 2018 were as follows:

	Quarter Ended June 30, 2019
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	47,822	$	42,667	$	64,235	$	(6,466	)	$	148,258
Europe	15,729		17,791		25,203		(175		)	58,548
Asia	1,551		8,620		3,834		—			14,005
Total Net Sales	$	65,102	$	69,078	$	93,272	$	(6,641	)	$	220,811

	Quarter Ended June 30, 2018
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	20,879	$	45,564	$	61,922	$	(6,533	)	$	121,832
Europe	10,355		18,053		24,515		(169		)	52,754
Asia	—		8,095		3,732		—			11,827
Total Net Sales	$	31,234	$	71,712	$	90,169	$	(6,702	)	$	186,413

	Six Months Ended June 30, 2019
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	94,199	$	79,856	$	127,837	$	(12,734	)	$	289,158
Europe	32,386		36,840		51,645		(381		)	120,490
Asia	3,097		17,988		8,103		—			29,188
Total Net Sales	$	129,682	$	134,684	$	187,585	$	(13,115	)	$	438,836

	Six Months Ended June 30, 2018
In thousands	Performance Materials		Technical Nonwovens		Thermal Acoustical Solutions		Eliminations and Other			Consolidated Net Sales
North America	$	40,040	$	84,697	$	131,901	$	(14,359	)	$	242,279
Europe	21,887		37,439		52,570		(354		)	111,542
Asia	—		17,117		7,135		—			24,252
Total Net Sales	$	61,927	$	139,253	$	191,606	$	(14,713	)	$	378,073

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Acquisitions and Divestiture (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table presents the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Company's acquisition of Interface. The final determination of the fair value of certain assets and liabilities will be completed within the one year measurement period as required by the FASB ASC Topic 805, “Business Combinations.” As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period within one year of the acquisition date. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations. The finalization of the purchase accounting assessment may result in a change in the

valuation of assets acquired and liabilities assumed and may have a material impact on the Company's results of operations and financial position.

In thousands
Accounts receivable	$	25,182
Inventories	17,013
Prepaid expenses and other current assets	2,382
Property, plant and equipment	40,902
Goodwill (Note 5)	130,346
Other intangible assets (Note 5)	106,900
Other assets	308
Total assets acquired, net of cash acquired	$	323,033
Current liabilities	$	(11,319	)
Deferred tax liabilities	(24,678		)
Benefit plan liabilities (Note 12)	(19,002		)
Other long-term liabilities	(1,031		)
Total liabilities assumed	(56,030		)
Total purchase price, net of cash acquired	$	267,003

Schedule of Unaudited Pro Forma Operating Results

The following table reflects the unaudited actual results of the Company for the quarter and six months ended June 30, 2019 and the pro forma operating results of the Company for the quarter and six months ended June 30, 2018, which gives effect to the acquisition of Interface as if it had occurred on January 1, 2017. The pro forma information includes the historical financial results of the Company and Interface. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2017, nor are they intended to be indicative of results that may occur in the future. The pro forma information does not include the effects of any synergies related to the acquisition.

	Quarter Ended   June 30,					Six Months Ended   June 30,
	(Actual)			(Pro Forma)		(Actual)			(Pro Forma)
In thousands	2019			2018		2019			2018
Net sales	$	220,811		$	226,404	$	438,836		$	457,481
Net (loss) income	$	(6,946	)	$	11,589	$	(3,056	)	$	22,518
Earnings per share:
Basic	$	(0.40	)	$	0.67	$	(0.18	)	$	1.31
Diluted	$	(0.40	)	$	0.67	$	(0.18	)	$	1.30
Basic	17,267			17,196		17,260			17,178
Diluted	17,267			17,335		17,260			17,334

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Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories as of June 30, 2019 and December 31, 2018 were as follows:

In thousands	June 30, 2019		December 31, 2018
Raw materials	$	41,108	$	37,731
Work in process	16,527		18,296
Finished goods	30,597		28,438
Total inventories	$	88,232	$	84,465

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill by Segment

The changes in the carrying amount of goodwill by segment as of and for the six months ended June 30, 2019 were as follows:

In thousands	December 31, 2018		Currency translation adjustments			Reductions			June 30, 2019
Performance Materials	$	144,626	$	(84	)	$	(65	)	$	144,477
Technical Nonwovens	52,337		982			—			53,319
Total goodwill	$	196,963	$	898		$	(65	)	$	197,796

Schedule of Impaired 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 Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018:

	June 30, 2019					December 31, 2018
In thousands	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer Relationships	$	142,418	$	(21,134	)	$	141,455	$	(11,453	)
Patents	4,366		(3,841		)	4,333		(3,816		)
Technology	2,500		(898		)	2,500		(810		)
Trade Names	7,302		(4,017		)	7,235		(2,840		)
License Agreements	616		(616		)	619		(619		)
Other	559		(559		)	561		(561		)
Total amortized intangible assets	$	157,761	$	(31,065	)	$	156,703	$	(20,099	)

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Long-term Debt and Financing Arrangements (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

Total outstanding debt consists of:

In thousands	Effective Rate		Maturity	June 30, 2019			December 31, 2018
Revolver loan	4.40	%	8/31/2023	$	138,000		$	138,000
Term loan, net of debt issuance costs	4.40	%	8/31/2023	161,552			186,498
Finance leases	0.00% - 2.09%		2019 - 2020	122			315
				299,674			324,813
Less portion due within one year				(10,001		)	(10,172		)
Total long-term debt, net of debt issuance costs				$	289,673		$	314,641

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Derivatives (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Assets at Fair Value

The following table sets forth the fair value amounts of derivative instruments held by the Company:

	June 30, 2019				December 31, 2018
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts	$	34	$	5,263	$	179	$	2,738
Total derivatives	$	34	$	5,263	$	179	$	2,738

Schedule of Derivative Liabilities at Fair Value

The following table sets forth the fair value amounts of derivative instruments held by the Company:

	June 30, 2019				December 31, 2018
In thousands	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts	$	34	$	5,263	$	179	$	2,738
Total derivatives	$	34	$	5,263	$	179	$	2,738

Schedule of Cash Flow Hedges included in Accumulated Other Comprehensive Income (Loss)

The following table sets forth the income recorded in accumulated other comprehensive (loss) income, net of tax, for the quarters and six months ended June 30, 2019 and 2018 for derivatives held by the Company and designated as hedging instruments:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Cash flow hedges:
Interest rate contracts	$	(1,351	)	$	(27	)	$	(2,026	)	$	75
	$	(1,351	)	(27		)	$	(2,026	)	$	75

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of Components of Lease Expense

The components of lease expense are as follows:

In thousands	Quarter Ended   June 30, 2019		Six Months Ended   June 30, 2019
Finance lease expense:
Amortization of right-of-use assets	$	16	$	49
Interest on lease liabilities	—		1
Operating lease expense	1,605		3,249
Short-term lease expense	244		468
Variable lease expense	18		54
Total lease expense	$	1,883	$	3,821

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases are as follows:

In thousands, except lease term	June 30, 2019
Operating leases:
Operating lease right-of-use assets	$	27,070
Short-term lease liabilities, included in "Other accrued liabilities"	$	5,176
Long-term lease liabilities	22,006
Total operating lease liabilities	$	27,182
Finance leases:
Property, plant and equipment	$	740
Accumulated depreciation	(195		)
Property, plant and equipment, net	$	545
Short-term lease liabilities, included in debt	$	109
Long-term lease liabilities, included in debt	13
Total finance lease liabilities	$	122
Weighted average remaining lease term:
Operating leases	7.5 years
Finance leases	12.0 years

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases are as follows:

	Six Months Ended June 30,
In thousands	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,162
Operating cash flows from finance leases	1
Financing cash flows from finance leases	188
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,676
Finance leases	—

Schedule of Maturities of Operating Lease Liabilities

As of June 30, 2019, future lease payments maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	3,223		$	89
2020	5,723			34
2021	4,408			—
2022	3,643			—
2023	2,753			—
Thereafter	12,822			—
Total lease payments	32,572			123
Less imputed interest	(5,390		)	(1		)
Total discounted future lease payments	$	27,182		$	122

As of December 31, 2018, future lease payment maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314

Schedule of Maturities of Finance Lease Liabilities

As of June 30, 2019, future lease payments maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	3,223		$	89
2020	5,723			34
2021	4,408			—
2022	3,643			—
2023	2,753			—
Thereafter	12,822			—
Total lease payments	32,572			123
Less imputed interest	(5,390		)	(1		)
Total discounted future lease payments	$	27,182		$	122

As of December 31, 2018, future lease payment maturities were as follows:

In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314

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Equity Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Outstanding and Exercisable Options

The following table is a summary of outstanding and exercisable options as of June 30, 2019:

In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Aggregate Intrinsic Value
Outstanding at June 30, 2019	599	$	30.32	$	644
Exercisable at June 30, 2019	256	$	29.89	$	635
Unvested at June 30, 2019	343	$	30.64	$	9

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

Actual pre-tax expenses incurred and total estimated pre-tax expenses for the restructuring program by type are as follows:

In thousands	Severance and Related Expenses	Contract Termination Expenses	Facility Exit, Move and Set-up Expenses	Total
Total estimated expenses	1,250	450	2,500	4,200
Expenses incurred through December 31, 2018	787	290	1,882	2,959
Estimated remaining expense at December 31, 2018	463	160	618	1,241
Expense incurred during quarter ended:
March 31, 2019	16	—	360	376
June 30, 2019	53	—	44	97
Total pre-tax expense incurred	856	290	2,286	3,432
Estimated remaining expense at June 30, 2019	394	160	214	768

Schedule of Restructuring Reserve by Type of Cost

Accrued restructuring costs were as follows at June 30, 2019:

In thousands	Total
Balance as of December 31, 2018	$	147
Pre-tax restructuring expenses, excluding depreciation	473
Cash paid	(534		)
Balance as of June 30, 2019	$	86

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Employer Sponsored Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit Cost

The following is a summary of the components of net periodic benefit cost for the domestic defined benefit pension plans for the quarters and six months ended June 30, 2019 and 2018:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Components of employer benefit cost
Service cost	$	30		$	—		$	60		$	—
Interest cost	833			470			1,827			940
Expected return on assets	(744		)	(650		)	(1,616		)	(1,300		)
Amortization of actuarial loss	186			256			464			512
Net periodic benefit cost	$	305		$	76		$	735		$	152
Settlement loss	25,515			—			25,515			—
Total employer benefit plan cost	$	25,820		$	76		$	26,250		$	152

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Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of 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:

	Quarter Ended   June 30,		Six Months Ended   June 30,
In thousands	2019	2018	2019	2018
Basic average common shares outstanding	17,267	17,196	17,260	17,178
Effect of dilutive options and restricted stock awards	—	139	—	156
Diluted average common shares outstanding	17,267	17,335	17,260	17,334

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Consolidated Net Sales and Operating Income by Segment

Consolidated net sales by segment:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Performance Materials Segment (1):
Filtration	$	24,732		$	23,061		$	48,666		$	46,203
Sealing and Advanced Solutions	40,370			8,173			81,016			15,724
Performance Materials Segment net sales	65,102			31,234			129,682			61,927
Technical Nonwovens Segment:
Industrial Filtration	38,706			39,170			81,070			79,401
Advanced Materials (2)	30,372			32,542			53,614			59,852
Technical Nonwovens Segment net sales	69,078			71,712			134,684			139,253
Thermal Acoustical Solutions Segment:
Parts	85,705			82,920			170,281			171,041
Tooling	7,567			7,249			17,304			20,565
Thermal Acoustical Solutions Segment net sales	93,272			90,169			187,585			191,606
Eliminations and Other (2)	(6,641		)	(6,702		)	(13,115		)	(14,713		)
Consolidated Net Sales	$	220,811		$	186,413		$	438,836		$	378,073

 Operating income by segment:

	Quarters Ended June 30,						Six Months Ended June 30,
In thousands	2019			2018			2019			2018
Performance Materials (1)	$	3,303		$	3,649		$	4,762		$	6,290
Technical Nonwovens	7,844			6,118			12,578			11,124
Thermal Acoustical Solutions	7,357			8,820			16,848			21,434
Corporate Office Expenses	(5,325		)	(6,338		)	(11,959		)	(12,563		)
Consolidated Operating Income	$	13,179		$	12,249		$	22,229		$	26,285

(1) The Performance Materials segment reports the results of Interface and PCC for the period following the date of acquisitions of August 31, 2018 and July 12, 2018, respectively, and included $4.0 million and $8.0 million of incremental intangible assets amortization for the quarter and six months ended June 30, 2019, respectively.

(2) Included in the Technical Nonwovens segment and Eliminations and Other is $4.6 million and $5.8 million in intercompany sales to the Thermal Acoustical Solutions segment for the quarters ended June 30, 2019 and 2018, respectively, and $9.3 million and $12.9 million for the six months ended June 30, 2019 and 2018, respectively.

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Changes in Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2019

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

Schedule of 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 six months ended June 30, 2019 and 2018:

In thousands	Foreign Currency Translation Adjustment			Defined Benefit Pension Adjustment				Gains and Losses on Cash Flow Hedges				Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(2,221	)	$	(18,049	)		$	122			$	(20,148	)
Other comprehensive income	(8,604		)	—				75			(c)	(8,529		)
Amounts reclassified from accumulated other comprehensive loss	—			397			(a)	—				397
Balance at June 30, 2018	(10,825		)	(17,652		)		197				(28,280		)
Balance at December 31, 2018	(18,458		)	(22,253		)		(1,974		)		(42,685		)
Other comprehensive loss	2,330			—				(2,026		)	(c)	304
Amounts reclassified from accumulated other comprehensive loss	—			19,374			(b)	—				19,374
Balance at June 30, 2019	$	(16,128	)	$	(2,879	)		$	(4,000	)		$	(23,007	)

(a) Amount represents amortization of actuarial losses, a component of net periodic benefit cost. This amount was $0.4 million, net of $0.1 million tax benefit, for the six months ended June 30, 2018.

(b) Amount represents the settlement of the Lydall Pension Plan in the second quarter of 2019. This amount was $19.0 million, net of $11.5 million tax benefit, for the six months ended June 30, 2019. Amount also represents amortization of actuarial losses, a component of net periodic benefit cost during the first five months of fiscal year 2019 prior to the plan termination. This amount was $0.4 million, net of $0.1 million tax benefit.

(c)

Amount represents unrealized gains (losses) on the fair value of hedging activities, net of taxes, for the six months ended June 30, 2019 and 2018.

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Basis of Financial Statement Presentation - Narrative (Details) - Interface - USD ($) $ in Millions		3 Months Ended
	Aug. 31, 2018	Jun. 30, 2019
New Accounting Pronouncement, Early Adoption [Line Items]
Business acquisitions, net of cash acquired		$ 267.0
Cash acquired from acquisition	$ 5.2

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Revenue from Contracts with Customers - Narrative (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Increase (decrease) in contract assets	$ (1,474)
Increase (decrease) in contract liabilities	(1,830)
Revenue recognized from contracts with customers	$ 3,400

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Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Contract assets	$ 21,566	$ 23,040
Dollar change in contract assets	(1,474)
Contract liabilities	2,707	$ 4,537
Dollar change in contract liabilities	$ (1,830)

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Revenue from Contracts with Customers - Disaggregation of Revenue by Geographical Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Net sales	$ 220,811	$ 186,413	$ 438,836	$ 378,073
North America
Disaggregation of Revenue [Line Items]
Net sales	148,258	121,832	289,158	242,279
Europe
Disaggregation of Revenue [Line Items]
Net sales	58,548	52,754	120,490	111,542
Asia
Disaggregation of Revenue [Line Items]
Net sales	14,005	11,827	29,188	24,252
Operating Segments | Performance Materials
Disaggregation of Revenue [Line Items]
Net sales	65,102	31,234	129,682	61,927
Operating Segments | Performance Materials | North America
Disaggregation of Revenue [Line Items]
Net sales	47,822	20,879	94,199	40,040
Operating Segments | Performance Materials | Europe
Disaggregation of Revenue [Line Items]
Net sales	15,729	10,355	32,386	21,887
Operating Segments | Performance Materials | Asia
Disaggregation of Revenue [Line Items]
Net sales	1,551	0	3,097	0
Operating Segments | Technical Nonwovens
Disaggregation of Revenue [Line Items]
Net sales	69,078	71,712	134,684	139,253
Operating Segments | Technical Nonwovens | North America
Disaggregation of Revenue [Line Items]
Net sales	42,667	45,564	79,856	84,697
Operating Segments | Technical Nonwovens | Europe
Disaggregation of Revenue [Line Items]
Net sales	17,791	18,053	36,840	37,439
Operating Segments | Technical Nonwovens | Asia
Disaggregation of Revenue [Line Items]
Net sales	8,620	8,095	17,988	17,117
Operating Segments | Thermal Acoustical Solutions
Disaggregation of Revenue [Line Items]
Net sales	93,272	90,169	187,585	191,606
Operating Segments | Thermal Acoustical Solutions | North America
Disaggregation of Revenue [Line Items]
Net sales	64,235	61,922	127,837	131,901
Operating Segments | Thermal Acoustical Solutions | Europe
Disaggregation of Revenue [Line Items]
Net sales	25,203	24,515	51,645	52,570
Operating Segments | Thermal Acoustical Solutions | Asia
Disaggregation of Revenue [Line Items]
Net sales	3,834	3,732	8,103	7,135
Eliminations and Other
Disaggregation of Revenue [Line Items]
Net sales	(6,641)	(6,702)	(13,115)	(14,713)
Eliminations and Other | North America
Disaggregation of Revenue [Line Items]
Net sales	(6,466)	(6,533)	(12,734)	(14,359)
Eliminations and Other | Europe
Disaggregation of Revenue [Line Items]
Net sales	(175)	(169)	(381)	(354)
Eliminations and Other | Asia
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0	$ 0	$ 0

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Acquisitions and Divestiture - Narrative (Details)				3 Months Ended		6 Months Ended
	May 09, 2019 USD ($) annual_payment	Aug. 31, 2018 USD ($)	Jul. 12, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Aug. 30, 2018 USD ($)	Jul. 06, 2016 USD ($)
Business Acquisition [Line Items]
Business acquisitions, net of cash acquired						$ (869,000)	$ 0
Interest expense				$ 3,731,000	$ 572,000	7,359,000	1,112,000
Gain on sale of business, net of income taxes						1,459,000	0
Revolving Credit Facility | Amended Credit Facility
Business Acquisition [Line Items]
Maximum borrowing capacity		$ 450,000,000						$ 175,000,000	$ 450,000,000
Interface
Business Acquisition [Line Items]
Voting interest acquired (as a percent)		100.00%
Business acquisitions, net of cash acquired		$ 268,400,000
Cash acquired from acquisition		5,200,000
Working capital adjustment				1,400,000
Final purchase price				267,000,000.0
Purchase price borrowings		$ 261,400,000
Net sales of acquiree since acquisition date				32,700,000	0	65,600,000	0
Operating income (loss) of acquiree since acquisition date				(100,000)	0	(700,000)	0
Amortization of intangible assets				3,100,000	3,000,000.0	6,100,000	6,100,000
Interest expense				2,600,000	2,100,000	5,200,000	4,200,000
Additional pro-forma net income (loss)					$ (600,000)		$ (2,100,000)
Precision Filtration Division of Precision Custom Coatings
Business Acquisition [Line Items]
Payments to acquire business			$ 1,600,000
Post-closing adjustment			$ 2,000,000.0
Selling, Product Development and Administrative Expenses | Interface
Business Acquisition [Line Items]
Amortization of intangible assets				$ 4,000,000.0		$ 8,000,000.0
Geosol | Disposed of by Sale, Not Discontinued Operations
Business Acquisition [Line Items]
Cash purchase price of divestiture	$ 3,000,000.0
Consideration withheld	$ 400,000
Business Combination, Consideration Withheld, Number of Annual Payments | annual_payment	3
Annual payment of consideration withheld	$ 100,000
Pre-tax gain on sale of business	1,500,000
Gain on sale of business, net of income taxes	$ 1,300,000

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Acquisitions and Divestiture - Identifiable Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Aug. 31, 2018
Business Acquisition [Line Items]
Goodwill (Note 5)	$ 197,796	$ 196,963
Interface
Business Acquisition [Line Items]
Accounts receivable			$ 25,182
Inventories			17,013
Prepaid expenses and other current assets			2,382
Property, plant and equipment			40,902
Goodwill (Note 5)			130,346
Other intangible assets (Note 5)			106,900
Other assets			308
Total assets acquired, net of cash acquired			323,033
Current liabilities			(11,319)
Deferred tax liabilities			(24,678)
Benefit plan liabilities (Note 12)			(19,002)
Other long-term liabilities			(1,031)
Total liabilities assumed			(56,030)
Total purchase price, net of cash acquired			$ 267,003

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Acquisitions and Divestiture - Unaudited Pro Forma Operating Results (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
(Actual)
Net sales	$ 220,811		$ 186,413		$ 438,836	$ 378,073
Net (loss) income	$ (6,946)	$ 3,890	$ 10,450	$ 11,054	$ (3,056)	$ 21,504
Earnings per share:
Basic (USD per share)	$ (0.40)		$ 0.61		$ (0.18)	$ 1.25
Diluted (USD per share)	$ (0.40)		$ 0.60		$ (0.18)	$ 1.24
Basic (shares)	17,267		17,196		17,260	17,178
Diluted (shares)	17,267		17,335		17,260	17,334
Interface
(Actual)
Net sales	$ 220,811				$ 438,836
Net (loss) income	$ (6,946)				$ (3,056)
(Pro Forma)
Net sales			$ 226,404			$ 457,481
Net (loss) income			$ 11,589			$ 22,518
Earnings per share:
Basic (USD per share)			$ 0.67			$ 1.31
Diluted (USD per share)			$ 0.67			$ 1.30
Basic (shares)			17,196			17,178
Diluted (shares)			17,335			17,334

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Inventories - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Gross tooling inventory	$ 2.5	$ 4.3

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Inventories - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Inventory, Net [Abstract]
Raw materials	$ 41,108	$ 37,731
Work in process	16,527	18,296
Finished goods	30,597	28,438
Total inventories	$ 88,232	$ 84,465

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Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Goodwill [Line Items]
Additions (reductions) in goodwill		$ (65)
Performance Materials
Goodwill [Line Items]
Additions (reductions) in goodwill		(65)
Interface Performance Materials
Goodwill [Line Items]
Additions (reductions) in goodwill		$ (700)
Hollingsworth & Vose Company
Goodwill [Line Items]
Additions (reductions) in goodwill	$ 600

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Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill by Segment (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Goodwill [Roll Forward]
Balance at beginning of period	$ 196,963
Currency translation adjustments	898
Reductions	(65)
Balance at end of period	197,796
Performance Materials
Goodwill [Roll Forward]
Balance at beginning of period	144,626
Currency translation adjustments	(84)
Reductions	(65)
Balance at end of period	144,477
Technical Nonwovens
Goodwill [Roll Forward]
Balance at beginning of period	52,337
Currency translation adjustments	982
Reductions	0
Balance at end of period	$ 53,319

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Goodwill and Other Intangible Assets - Amortization of the Acquired Intangible Assets Other than Goodwill (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized intangible assets
Gross Carrying Amount	$ 157,761	$ 156,703
Accumulated Amortization	(31,065)	(20,099)
Customer Relationships
Amortized intangible assets
Gross Carrying Amount	142,418	141,455
Accumulated Amortization	(21,134)	(11,453)
Patents
Amortized intangible assets
Gross Carrying Amount	4,366	4,333
Accumulated Amortization	(3,841)	(3,816)
Technology
Amortized intangible assets
Gross Carrying Amount	2,500	2,500
Accumulated Amortization	(898)	(810)
Trade Names
Amortized intangible assets
Gross Carrying Amount	7,302	7,235
Accumulated Amortization	(4,017)	(2,840)
License Agreements
Amortized intangible assets
Gross Carrying Amount	616	619
Accumulated Amortization	(616)	(619)
Other
Amortized intangible assets
Gross Carrying Amount	559	561
Accumulated Amortization	$ (559)	$ (561)

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Long-term Debt and Financing Arrangements - Narrative (Details)		6 Months Ended
	Aug. 31, 2018 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018	Aug. 30, 2018 USD ($)	Jul. 06, 2016 USD ($)
Debt Instrument [Line Items]
Weighted-average interest rate (as a percent)		4.30%	3.40%
Amended Credit Facility
Debt Instrument [Line Items]
Borrowings outstanding under term loan	$ 250,000,000
Outstanding standby letters of credit		$ 3,800,000
Term Loan Due August 31, 2023
Debt Instrument [Line Items]
Borrowings outstanding under term loan	200,000,000	162,000,000.0
Amount of quarterly repayments of term commitment	2,500,000
Debt issuance costs		$ 500,000
Revolving Credit Facility | Amended Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	450,000,000			$ 175,000,000	$ 450,000,000
Maximum borrowing capacity possible value of increase (not to exceed)	$ 150,000,000
Credit facility fixed charge coverage ratio (not less than)		1.25
Required consolidated leverage ratio as of end of each fiscal quarter (no greater than)		3.5
Remaining borrowing capacity		$ 108,200,000
Outstanding borrowings		$ 300,000,000.0
Revolving Credit Facility | Amended Credit Facility | Minimum
Debt Instrument [Line Items]
Quarterly unused line commitment fee (as a percent)		0.15%
Revolving Credit Facility | Amended Credit Facility | Maximum
Debt Instrument [Line Items]
Quarterly unused line commitment fee (as a percent)		0.275%
Revolving Credit Facility | Amended Credit Facility | Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		0.00%
Revolving Credit Facility | Amended Credit Facility | Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		1.25%
Revolving Credit Facility | Amended Credit Facility | Federal Funds Effective Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		0.50%
Revolving Credit Facility | Amended Credit Facility | Eurocurrency Rate
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		1.00%
Revolving Credit Facility | Amended Credit Facility | Eurocurrency Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		0.75%
Revolving Credit Facility | Amended Credit Facility | Eurocurrency Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		2.00%
Foreign Credit Facility
Debt Instrument [Line Items]
Remaining borrowing capacity		$ 8,200,000
Outstanding borrowings		100,000
Outstanding standby letters of credit		$ 1,800,000

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Long-term Debt and Financing Arrangements - Maturities of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Long-term debt	$ 299,674	$ 324,813
Less portion due within one year	(10,001)	(10,172)
Total long-term debt, net of debt issuance costs	$ 289,673	314,641
Term loan, net of debt issuance costs
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	4.40%
Long-term debt	$ 161,552	186,498
Finance leases
Debt Instrument [Line Items]
Long-term debt	$ 122	315
Revolving Credit Facility | Revolver loan
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	4.40%
Long-term debt	$ 138,000	$ 138,000
Minimum | Finance leases
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	0.00%
Maximum | Finance leases
Debt Instrument [Line Items]
Debt instrument, effective interest rate (as a percent)	2.09%

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Derivatives - Narrative (Details) - Interest Rate Swap - USD ($)	1 Months Ended		3 Months Ended
	Nov. 30, 2018	Apr. 30, 2017	Jun. 30, 2019
Derivative [Line Items]
Derivative agreement term	5 years	3 years
Derivative notional amount	$ 139,000,000.0	$ 60,000,000.0
Fixed rate of derivatives (as a percent)	3.09%	1.58%
Quarterly reduction to notional amount			$ 5,000,000.0

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Derivatives - Fair Value Amounts of Derivative Instruments (Details) - Derivatives designated as hedging instruments - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 34	$ 179
Liability Derivatives	5,263	2,738
Interest rate contracts
Derivatives, Fair Value [Line Items]
Asset Derivatives	34	179
Liability Derivatives	$ 5,263	$ 2,738

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Derivatives - Loss Recorded in Accumulated Other Comprehensive Income (Loss) (Details) - Derivatives designated as hedging instruments - Cash flow hedges - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income	$ (1,351)	$ (27)	$ (2,026)	$ 75
Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income	$ (1,351)	$ (27)	$ (2,026)	$ 75

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Leases - Narrative (Details)	6 Months Ended
	Jun. 30, 2019
Lessee, Lease, Description [Line Items]
Termination period of leases	1 year
Weighted-average discount rate used for operating leases (as a percent)	4.39%
Weighted-average discount rate used for finance leases (as a percent)	1.78%
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	14 years
Renewal term of operating leases	7 years
Renewal term of finance leases	7 years

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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Finance lease expense:
Amortization of right-of-use assets	$ 16	$ 49
Interest on lease liabilities	0	1
Operating lease expense	1,605	3,249
Short-term lease expense	244	468
Variable lease expense	18	54
Total lease expense	$ 1,883	$ 3,821

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Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Operating leases:
Operating lease right-of-use assets	$ 27,070	$ 0
Short-term lease liabilities, included in Other accrued liabilities	5,176
Long-term lease liabilities	22,006	$ 0
Total operating lease liabilities	27,182
Finance leases:
Property, plant and equipment	740
Accumulated depreciation	(195)
Property, plant and equipment, net	545
Short-term lease liabilities, included in debt	109
Long-term lease liabilities, included in debt	13
Total finance lease liabilities	$ 122
Weighted average remaining lease term:
Operating leases	7 years 6 months
Finance leases	12 years

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Leases - Supplemental Cash Flow Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 3,162
Operating cash flows from finance leases	1
Financing cash flows from finance leases	188
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,676
Finance leases	$ 0

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Leases - Undiscounted Future Lease Payments Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Operating Leases after Adoption of ASC Topic 842
2019 (excluding the six months ended June 30, 2019)	$ 3,223
2020	5,723
2021	4,408
2022	3,643
2023	2,753
Thereafter	12,822
Total lease payments	32,572
Less imputed interest	(5,390)
Total discounted future lease payments	27,182
Finance Leases after Adoption of ASC Topic 842
2019 (excluding the six months ended June 30, 2019)	89
2020	34
2021	0
2022	0
2023	0
Thereafter	0
Total lease payments	123
Less imputed interest	(1)
Total discounted future lease payments	$ 122
Operating Leases before Adoption of ASC Topic 842
2019		$ 6,004
2020		4,871
2021		3,877
2022		3,226
2023		2,617
Thereafter		11,111
Total lease payments		31,706
Capital Leases before Adoption of ASC Topic 842
2019		279
2020		35
2021		0
2022		0
2023		0
Thereafter		0
Total lease payments		$ 314

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Equity Compensation Plans - Narrative (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Apr. 27, 2012	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense		$ 0.5	$ 1.4	$ 1.5	$ 2.6
Stock options granted (shares)			0	0	11,180
Stock options exercised (shares)			0	3,325	27,041
Cash received from exercise of stock option				$ 0.0	$ 0.7
Intrinsic value of options exercised				0.1	0.7
Intrinsic value of stock options exercised, tax benefit				$ 0.1	$ 0.1
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award, term				10 years
Total unrecognized compensation cost		3.0		$ 3.0
Weighted average expected amortization period				2 years 8 months 12 days
Employee Stock Option | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award, vesting period				3 years
Employee Stock Option | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award, vesting period				4 years
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost		$ 3.9		$ 3.9
Weighted average expected amortization period				1 year 10 months 24 days
Unvested restricted stock awards (shares)		265,816		265,816
Time Based Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares granted (shares)		0	0	33,932	8,106
Restricted shares vested (shares)		0	0	5,468	5,164
Time Based Restricted Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award, vesting period				2 years
Time Based Restricted Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award, vesting period				4 years
Performance Based Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares granted (shares)		0	0	0	15,190
Restricted shares vested (shares)		0	0		48,035
Stock Option Plan 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share options and restricted shares authorized (shares)	1,750,000
Additional shares authorized under the plan (shares)	1,200,000

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Equity Compensation Plans - Outstanding and Exercisable Options (Details) $ / shares in Units, shares in Thousands, $ in Thousands	Jun. 30, 2019 USD ($) $ / shares shares
Shares
Outstanding (shares) | shares	599
Exercisable (shares) | shares	256
Unvested (shares) | shares	343
Weighted- Average Exercise Price
Outstanding (USD per share) | $ / shares	$ 30.32
Exercisable (USD per share) | $ / shares	29.89
Unvested (USD per share) | $ / shares	$ 30.64
Aggregate Intrinsic Value
Outstanding | $	$ 644
Exercisable | $	635
Unvested | $	$ 9

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Stock Repurchases - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($) shares
Equity [Abstract]
Stock repurchased during period (shares) | shares	2,124
Aggregate purchase price of shares repurchased (less than) | $	$ 0.1

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Restructuring - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		9 Months Ended
	Jun. 30, 2019	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2017	Apr. 30, 2017
Restructuring Cost and Reserve [Line Items]
Cash paid	$ 200		$ 500
Technical Nonwovens
Restructuring Cost and Reserve [Line Items]
Estimated pre-tax restructuring expense	4,200		4,200
Restructuring, expected costs resulting in future cash expenditures					$ 3,700
Cash paid			534	$ 3,800
Technical Nonwovens | Selling, Product Development and Administrative Expenses
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring expenses, excluding depreciation	$ 100		$ 500
Forecast | Technical Nonwovens
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring expenses, excluding depreciation		$ 800

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Restructuring - Actual and Estimated Pre-Tax Expenses (Details) - Technical Nonwovens - USD ($) $ in Thousands	3 Months Ended		12 Months Ended	18 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2019	Dec. 31, 2017
Restructuring Cost and Reserve [Line Items]
Total estimated expenses					$ 4,200
Total pre-tax expense incurred	$ 97	$ 376	$ 2,959	$ 3,432
Estimated remaining expense	768		1,241	768
Severance and Related Expenses
Restructuring Cost and Reserve [Line Items]
Total estimated expenses					1,250
Total pre-tax expense incurred	53	16	787	856
Estimated remaining expense	394		463	394
Contract Termination Expenses
Restructuring Cost and Reserve [Line Items]
Total estimated expenses					450
Total pre-tax expense incurred	0	0	290	290
Estimated remaining expense	160		160	160
Facility Exit, Move and Set-up Expenses
Restructuring Cost and Reserve [Line Items]
Total estimated expenses					$ 2,500
Total pre-tax expense incurred	44	$ 360	1,882	2,286
Estimated remaining expense	$ 214		$ 618	$ 214

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Restructuring - Accrued Restructuring Costs (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2017
Restructuring Reserve [Roll Forward]
Cash paid	$ (200)	$ (500)
Technical Nonwovens
Restructuring Reserve [Roll Forward]
Balance		147
Pre-tax restructuring expenses, excluding depreciation		473
Cash paid		(534)	$ (3,800)
Balance	$ 86	$ 86

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Employer Sponsored Benefit Plans - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Interface
Defined Benefit Plan Disclosure [Line Items]
Contributions made by company to domestic pension plan	$ 300,000		$ 900,000
Interface | Minimum
Defined Benefit Plan Disclosure [Line Items]
Expected employer contributions during remainder of fiscal year	1,000,000.0		1,000,000.0
Interface | Maximum
Defined Benefit Plan Disclosure [Line Items]
Expected employer contributions during remainder of fiscal year	2,000,000.0		2,000,000.0
United States | Pension plan
Defined Benefit Plan Disclosure [Line Items]
Pre-tax settlement loss	25,500,000
Contributions made by company to domestic pension plan	$ 0	$ 3,000,000.0	$ 0	$ 4,200,000

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Employer Sponsored Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Components of employer benefit cost
Service cost	$ 30	$ 0	$ 60	$ 0
Interest cost	833	470	1,827	940
Expected return on assets	(744)	(650)	(1,616)	(1,300)
Amortization of actuarial loss	186	256	464	512
Total employer benefit plan cost	305	76	735	152
Settlement loss	25,515	0	25,515	0
Total employer benefit plan cost	$ 25,820	$ 76	$ 26,250	$ 152

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ (8,199)		$ 1,655	$ (7,093)	$ 3,778
Tax benefit related to the pension plan settlement				$ 10,500
Effective tax rate (as a percent)	54.00%		13.70%	69.70%	15.00%
Income tax effects of the Tax Cuts and Jobs Act			$ 4,500
Effective tax rate excluding pension plan settlement tax benefit (as a percent)	22.70%			22.50%
Tax benefit related to stock vesting and geographical mix of earnings	$ 900
Valuation allowance activity				$ 1,200
Release of uncertain tax position due to statutory expiration		$ 10,500

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Earnings (Loss) Per Share - Narrative (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Dilutive stock options excluded from computation of diluted earnings per share (shares)	54,713		69,730
Stock excluded from computation of diluted earnings per share (shares)	520,189	162,830	521,293	149,940

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Earnings (Loss) Per Share - Reconciliation for Basic and Diluted Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Basic average common shares outstanding (shares)	17,267	17,196	17,260	17,178
Effect of dilutive options and restricted stock awards (shares)	0	139	0	156
Diluted average common shares outstanding (shares)	17,267	17,335	17,260	17,334

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Segment Information - Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	$ 220,811	$ 186,413	$ 438,836	$ 378,073
Operating income	13,179	12,249	22,229	26,285
Operating Segments | Performance Materials
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	65,102	31,234	129,682	61,927
Operating income	3,303	3,649	4,762	6,290
Amortization of intangible assets	4,000		8,000
Operating Segments | Performance Materials | Filtration
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	24,732	23,061	48,666	46,203
Operating Segments | Performance Materials | Sealing and Advanced Solutions
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	40,370	8,173	81,016	15,724
Operating Segments | Technical Nonwovens
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	69,078	71,712	134,684	139,253
Operating income	7,844	6,118	12,578	11,124
Operating Segments | Technical Nonwovens | Industrial Filtration
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	38,706	39,170	81,070	79,401
Operating Segments | Technical Nonwovens | Advanced Materials
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	30,372	32,542	53,614	59,852
Intercompany sales	4,600	5,800	9,300	12,900
Operating Segments | Thermal Acoustical Solutions
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	93,272	90,169	187,585	191,606
Operating income	7,357	8,820	16,848	21,434
Operating Segments | Thermal Acoustical Solutions | Parts
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	85,705	82,920	170,281	171,041
Operating Segments | Thermal Acoustical Solutions | Tooling
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	7,567	7,249	17,304	20,565
Eliminations and Other
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	(6,641)	(6,702)	(13,115)	(14,713)
Intercompany sales	4,700	7,100	4,700	7,100
Corporate Office Expenses
Segment Reporting, Revenue Reconciling Item [Line Items]
Operating income	$ (5,325)	$ (6,338)	$ (11,959)	$ (12,563)

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Commitments and Contingencies - Narrative (Details) - Rochester, New Hampshire - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2018
Loss Contingencies [Line Items]
Expense associated with expected costs of site investigation	$ 200,000	$ 100,000
Capital expenditures		200,000
Environmental Contamination
Loss Contingencies [Line Items]
Accrual for environmental liability, including revision (fully offset)		$ 0

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Changes in Accumulated Other Comprehensive Income (Loss) - Summary (Details) - USD ($) $ in Thousands	5 Months Ended	6 Months Ended
	May 31, 2019	Jun. 30, 2019	Jun. 30, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	$ 369,275	$ 369,275	$ 353,396
Other comprehensive income (loss)		304	(8,529)
Amounts reclassified from accumulated other comprehensive loss		19,374	397
Balance at end of period		387,105	370,715
Loss reclassified from AOCI for defined benefit pension plans	400	19,000	400
Tax benefit reclassified from AOCI for defined benefit pension plans	100	11,500	100
Total Accumulated Other Comprehensive (Loss) Income
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(42,685)	(42,685)	(20,148)
Balance at end of period		(23,007)	(28,280)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(18,458)	(18,458)	(2,221)
Other comprehensive income (loss)		2,330	(8,604)
Amounts reclassified from accumulated other comprehensive loss		0	0
Balance at end of period		(16,128)	(10,825)
Defined Benefit Pension Adjustment
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(22,253)	(22,253)	(18,049)
Other comprehensive income (loss)		0	0
Amounts reclassified from accumulated other comprehensive loss		19,374	397
Balance at end of period		(2,879)	(17,652)
Gains and Losses on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	$ (1,974)	(1,974)	122
Other comprehensive income (loss)		(2,026)	75
Amounts reclassified from accumulated other comprehensive loss		0	0
Balance at end of period		$ (4,000)	$ 197

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Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 1,598,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(183,000)	[1]
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(183,000)	[1]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 1,598,000

[1] During the quarter ended March 31, 2019, the Company recorded an adjustment reducing retained earnings and contract assets by $0.2 million to correct an error in the adoption of ASC 606.