UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q/A
Amendment Number 1
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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.
(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, 06040
(Address of principal executive offices) (zip code)
(860) 646-1233
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Common stock $.10 par value per share. |
||
| Total Shares outstanding February 28, 2003 |
16,078,730 |
INDEX
| Page Number | ||||
| Part I. |
Financial Information |
|||
| This amendment to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 is being filed to revise the consolidated condensed financial statements as set forth in Note 8 to the Notes to Consolidated Condensed Financial Statements, from those previously filed on August 13, 2002. In this amendment the disclosures have not been updated other than to reflect the adjustments specifically discussed in Note 8 to the Notes to Consolidated Condensed Financial Statements. |
||||
| Item 1. Financial Statements |
||||
| 3 | ||||
| Consolidated Condensed Statements of Income and Comprehensive Income |
4-5 | |||
| 6 | ||||
| 7-11 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12-15 | |||
| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
15 | |||
| Part II. |
Other Information |
|||
| 15 | ||||
| 15 | ||||
| 16 | ||||
| 17 | ||||
| 18-19 | ||||
| 20 | ||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LYDALL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
| June 30, 2002 |
December 31, 2001 |
|||||||
| (Restated See Note 8) |
||||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
1,041 |
|
$ |
955 |
| ||
| Accounts receivable, net |
|
46,241 |
|
|
35,458 |
| ||
| Inventories: |
||||||||
| Finished goods |
|
10,509 |
|
|
10,408 |
| ||
| Work in process |
|
11,183 |
|
|
8,135 |
| ||
| Raw materials and supplies |
|
9,358 |
|
|
9,799 |
| ||
| LIFO reserve |
|
(483 |
) |
|
(483 |
) | ||
| Total inventories |
|
30,567 |
|
|
27,859 |
| ||
| Income taxes receivable |
|
— |
|
|
611 |
| ||
| Prepaid expenses |
|
2,268 |
|
|
2,363 |
| ||
| Net investment in discontinued operations |
|
1,118 |
|
|
1,165 |
| ||
| Assets held for sale |
|
410 |
|
|
1,515 |
| ||
| Deferred tax assets |
|
2,108 |
|
|
2,014 |
| ||
| Total current assets |
|
83,753 |
|
|
71,940 |
| ||
| Property, plant and equipment, at cost |
|
148,137 |
|
|
138,976 |
| ||
| Accumulated depreciation |
|
(67,459 |
) |
|
(61,187 |
) | ||
|
|
80,678 |
|
|
77,789 |
| |||
| Other assets, net |
|
39,179 |
|
|
37,788 |
| ||
| Total assets |
$ |
203,610 |
|
$ |
187,517 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt |
$ |
10,640 |
|
$ |
9,473 |
| ||
| Accounts payable |
|
16,551 |
|
|
15,295 |
| ||
| Accrued taxes |
|
2,529 |
|
|
792 |
| ||
| Accrued payroll and other compensation |
|
5,941 |
|
|
3,144 |
| ||
| Other accrued liabilities |
|
5,437 |
|
|
6,929 |
| ||
| Total current liabilities |
|
41,098 |
|
|
35,633 |
| ||
| Long-term debt |
|
19,985 |
|
|
18,210 |
| ||
| Deferred tax liabilities |
|
6,978 |
|
|
6,818 |
| ||
| Other long-term liabilities |
|
8,283 |
|
|
8,273 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock |
|
— |
|
|
— |
| ||
| Common stock |
|
2,210 |
|
|
2,208 |
| ||
| Capital in excess of par value |
|
41,676 |
|
|
41,439 |
| ||
| Retained earnings |
|
151,505 |
|
|
144,631 |
| ||
| Accumulated other comprehensive loss |
|
(6,483 |
) |
|
(8,053 |
) | ||
|
|
188,908 |
|
|
180,225 |
| |||
| Treasury stock, at cost |
|
(61,642 |
) |
|
(61,642 |
) | ||
| Total stockholders’ equity |
|
127,266 |
|
|
118,583 |
| ||
| Total liabilities and stockholders’ equity |
$ |
203,610 |
|
$ |
187,517 |
| ||
See accompanying Notes to Consolidated Condensed Financial Statements.
3
LYDALL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In Thousands Except Per-Share Data)
| Three Months Ended June 30, |
||||||||
| 2002 |
2001 |
|||||||
| (Restated See Note 8) |
||||||||
| (Unaudited) |
||||||||
| Net sales |
$ |
66,259 |
|
$ |
58,940 |
| ||
| Cost of sales |
|
47,796 |
|
|
42,529 |
| ||
| Gross margin |
|
18,463 |
|
|
16,411 |
| ||
| Selling, product development and administrative expenses |
|
12,521 |
|
|
11,595 |
| ||
| Impairment and restructuring charges |
|
— |
|
|
2,629 |
| ||
| Operating income |
|
5,942 |
|
|
2,187 |
| ||
| Other (income) expense: |
||||||||
| Investment income |
|
(9 |
) |
|
(54 |
) | ||
| Interest expense |
|
202 |
|
|
243 |
| ||
| Foreign currency transaction (gains) losses, net |
|
(61 |
) |
|
50 |
| ||
| Other, net |
|
— |
|
|
10 |
| ||
|
|
132 |
|
|
249 |
| |||
| Income from continuing operations before income taxes |
|
5,810 |
|
|
1,938 |
| ||
| Income tax expense |
|
2,036 |
|
|
618 |
| ||
| Income from continuing operations |
|
3,774 |
|
|
1,320 |
| ||
| Discontinued operations: |
||||||||
| Loss from disposal of discontinued segments, net of tax benefit of $49 |
|
— |
|
|
(79 |
) | ||
| Loss from discontinued operations |
|
— |
|
|
(79 |
) | ||
| Net income |
$ |
3,774 |
|
$ |
1,241 |
| ||
| Basic earnings (loss) per common share: |
||||||||
| Continuing operations |
$ |
.24 |
|
$ |
.08 |
| ||
| Discontinued operations |
|
— |
|
|
(.01 |
) | ||
| Net income |
$ |
.24 |
|
$ |
.07 |
| ||
| Diluted earnings (loss) per common share: |
||||||||
| Continuing operations |
$ |
.23 |
|
$ |
.08 |
| ||
| Discontinued operations |
|
— |
|
|
(.01 |
) | ||
| Net income |
$ |
.23 |
|
$ |
.07 |
| ||
| Weighted average common shares outstanding |
|
15,995 |
|
|
15,889 |
| ||
| Weighted average common shares and equivalents outstanding |
|
16,430 |
|
|
16,117 |
| ||
| Net income |
$ |
3,774 |
|
$ |
1,241 |
| ||
| Other comprehensive income (loss), before tax: |
||||||||
| Foreign currency translation adjustments |
|
2,731 |
|
|
(325 |
) | ||
| Change in fair value of derivative instrument |
|
(42 |
) |
|
(15 |
) | ||
| Other comprehensive income (loss), before tax |
|
2,689 |
|
|
(340 |
) | ||
| Income tax (expense) benefit related to other comprehensive income (loss) |
|
(941 |
) |
|
118 |
| ||
| Other comprehensive income (loss), net of tax |
|
1,748 |
|
|
(222 |
) | ||
| Comprehensive income |
$ |
5,522 |
|
$ |
1,019 |
| ||
See accompanying Notes to Consolidated Condensed Financial Statements.
4
LYDALL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In Thousands Except Per-Share Data)
| Six Months Ended June 30, |
||||||||
| 2002 |
2001 |
|||||||
| (Restated See Note 8) |
||||||||
| (Unaudited) |
||||||||
| Net sales |
$ |
125,944 |
|
$ |
117,205 |
| ||
| Cost of sales |
|
91,107 |
|
|
84,422 |
| ||
| Gross margin |
|
34,837 |
|
|
32,783 |
| ||
| Selling, product development and administrative expenses |
|
23,969 |
|
|
25,104 |
| ||
| Impairment and restructuring charges |
|
— |
|
|
3,389 |
| ||
| Operating income |
|
10,868 |
|
|
4,290 |
| ||
| Other (income) expense: |
||||||||
| Investment income |
|
(24 |
) |
|
(91 |
) | ||
| Interest expense |
|
385 |
|
|
576 |
| ||
| Foreign currency transaction (gains) losses, net |
|
(54 |
) |
|
198 |
| ||
| Other, net |
|
(24 |
) |
|
43 |
| ||
|
|
283 |
|
|
726 |
| |||
| Income from continuing operations before income taxes |
|
10,585 |
|
|
3,564 |
| ||
| Income tax expense |
|
3,712 |
|
|
1,152 |
| ||
| Income from continuing operations |
|
6,873 |
|
|
2,412 |
| ||
| Discontinued operations: |
||||||||
| Loss from operations of discontinued segments, net of tax benefit of $181 |
|
— |
|
|
(308 |
) | ||
| Gain on disposal of discontinued segments, net of tax expense of $400 |
|
— |
|
|
684 |
| ||
| Income from discontinued operations |
|
— |
|
|
376 |
| ||
| Net income |
$ |
6,873 |
|
$ |
2,788 |
| ||
| Basic earnings per common share: |
||||||||
| Continuing operations |
$ |
.43 |
|
$ |
.15 |
| ||
| Discontinued operations |
|
— |
|
|
.02 |
| ||
| Net income |
$ |
.43 |
|
$ |
.17 |
| ||
| Diluted earnings per common share: |
||||||||
| Continuing operations |
$ |
.42 |
|
$ |
.15 |
| ||
| Discontinued operations |
|
— |
|
|
.02 |
| ||
| Net income |
$ |
.42 |
|
$ |
.17 |
| ||
| Weighted average common shares outstanding |
|
15,990 |
|
|
15,876 |
| ||
| Weighted average common shares and equivalents outstanding |
|
16,327 |
|
|
16,050 |
| ||
| Net income |
$ |
6,873 |
|
$ |
2,788 |
| ||
| Other comprehensive income (loss), before tax: |
||||||||
| Foreign currency translation adjustments |
|
2,406 |
|
|
(708 |
) | ||
| Change in fair value of derivative instrument |
|
8 |
|
|
(140 |
) | ||
| Other comprehensive income (loss), before tax |
|
2,414 |
|
|
(848 |
) | ||
| Income tax (expense) benefit related to other comprehensive income (loss) |
|
(845 |
) |
|
295 |
| ||
| Other comprehensive income (loss), net of tax |
|
1,569 |
|
|
(553 |
) | ||
| Cumulative effect of change in accounting principle, net of tax |
|
— |
|
|
201 |
| ||
| Comprehensive income |
$ |
8,442 |
|
$ |
2,436 |
| ||
See accompanying Notes to Consolidated Condensed Financial Statements.
5
LYDALL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
| Six Months Ended June 30, |
||||||||
| 2002 |
2001 |
|||||||
| (Restated See Note 8) |
||||||||
| (Unaudited) |
||||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ |
6,873 |
|
$ |
2,788 |
| ||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
|
5,111 |
|
|
4,918 |
| ||
| Amortization |
|
191 |
|
|
776 |
| ||
| Gain on disposal of discontinued segments |
|
— |
|
|
(1,289 |
) | ||
| Impairment and restructuring charges |
|
— |
|
|
3,389 |
| ||
| Foreign currency transaction (gains) losses |
|
(54 |
) |
|
198 |
| ||
| Changes in operating assets and liabilities, excluding effects from acquisitions: |
||||||||
| Accounts receivable |
|
(11,624 |
) |
|
657 |
| ||
| Income taxes receivable |
|
611 |
|
|
2,583 |
| ||
| Inventories |
|
(1,809 |
) |
|
(3,834 |
) | ||
| Prepaid expenses and other assets |
|
(119 |
) |
|
(812 |
) | ||
| Accounts payable |
|
2,722 |
|
|
47 |
| ||
| Accrued taxes |
|
1,595 |
|
|
64 |
| ||
| Accrued payroll and other compensation |
|
2,714 |
|
|
(4,422 |
) | ||
| Deferred income taxes |
|
(78 |
) |
|
(950 |
) | ||
| Other long-term liabilities |
|
(124 |
) |
|
217 |
| ||
| Other accrued liabilities |
|
(1,389 |
) |
|
(1,998 |
) | ||
| Total adjustments |
|
(2,253 |
) |
|
(456 |
) | ||
| Net cash provided by operating activities |
|
4,620 |
|
|
2,332 |
| ||
| Cash flows from investing activities: |
||||||||
| Acquisitions, net |
|
(1,035 |
) |
|
— |
| ||
| Proceeds from post-closing net equity adjustment |
|
— |
|
|
1,357 |
| ||
| Proceeds from disposal of discontinued segments |
|
47 |
|
|
14,163 |
| ||
| Proceeds from assets held for sale |
|
920 |
|
|
872 |
| ||
| Additions of property, plant and equipment |
|
(6,157 |
) |
|
(4,194 |
) | ||
| Net cash (used for) provided by investing activities |
|
(6,225 |
) |
|
12,198 |
| ||
| Cash flows from financing activities: |
||||||||
| Long-term debt proceeds |
|
64,830 |
|
|
15,756 |
| ||
| Long-term debt payments |
|
(63,438 |
) |
|
(30,070 |
) | ||
| Issuance of common stock |
|
239 |
|
|
475 |
| ||
| Net cash provided by (used for) financing activities |
|
1,631 |
|
|
(13,839 |
) | ||
| Effect of exchange rate changes on cash |
|
60 |
|
|
(100 |
) | ||
| Increase in cash and cash equivalents |
|
86 |
|
|
591 |
| ||
| Cash and cash equivalents at beginning of period |
|
955 |
|
|
2,220 |
| ||
| Cash and cash equivalents at end of period |
$ |
1,041 |
|
$ |
2,811 |
| ||
| Supplemental Schedule of Cash Flow Information |
||||||||
| Cash paid during the period for: |
||||||||
| Interest |
$ |
432 |
|
$ |
581 |
| ||
| Income taxes |
|
1,691 |
|
|
959 |
| ||
See accompanying Notes to Consolidated Condensed Financial Statements.
6
LYDALL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying consolidated condensed financial statements include the accounts of Lydall, Inc. and its wholly owned subsidiaries (collectively, the “Company” or the “Registrant”). All financial information is unaudited for the interim periods reported. All significant intercompany transactions have been eliminated in the consolidated condensed financial statements. Management believes that all adjustments, which include only normal recurring adjustments necessary to fairly present the consolidated financial position, results of operations and cash flows for the periods reported, have been included. The year-end consolidated condensed balance sheet was derived from the December 31, 2001 audited financial statements, as restated, but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001.
2. Basic earnings per common share are based on income from continuing operations and net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are based on income from continuing operations and net income divided by the weighted average number of common shares outstanding during the period, including the effect of stock options, where such effect is dilutive.
| Quarter Ended June 30, 2002 |
Quarter Ended June 30, 2001 | ||||||||||||||||
| (Unaudited) (Restated See Note 8) |
(Unaudited) | ||||||||||||||||
| Income from Continuing Operations ($000’s) |
Average Shares (000’s) |
Per-Share Amount |
Income from Continuing Operations ($000’s) |
Average Shares (000’s) |
Per-Share Amount | ||||||||||||
| Basic earnings per share |
$ |
3,774 |
15,995 |
$ |
.24 |
|
$ |
1,320 |
15,889 |
$ |
.08 | ||||||
| Effect of dilutive stock options |
|
— |
435 |
|
(.01 |
) |
|
— |
228 |
|
— | ||||||
| Diluted earnings per share |
$ |
3,774 |
16,430 |
$ |
.23 |
|
$ |
1,320 |
16,117 |
$ |
.08 | ||||||
| Net Income ($000’s) |
Average Shares (000’s) |
Per-Share Amount |
Net Income ($000’s) |
Average Shares (000’s) |
Per-Share Amount | ||||||||||||
| Basic earnings per share |
$ |
3,774 |
15,995 |
$ |
.24 |
|
$ |
1,241 |
15,889 |
$ |
.07 | ||||||
| Effect of dilutive stock options |
|
— |
435 |
|
(.01 |
) |
|
— |
228 |
|
— | ||||||
| Diluted earnings per share |
$ |
3,774 |
16,430 |
$ |
.23 |
|
$ |
1,241 |
16,117 |
$ |
.07 | ||||||
| Six Months Ended June 30, 2002 |
Six Months Ended June 30, 2001 | ||||||||||||||||
| (Unaudited) (Restated See Note 8) |
(Unaudited) | ||||||||||||||||
| Income from Continuing Operations ($000’s) |
Average Shares (000’s) |
Per-Share Amount |
Income from Continuing Operations ($000’s) |
Average Shares (000’s) |
Per-Share Amount | ||||||||||||
| Basic earnings per share |
$ |
6,873 |
15,990 |
$ |
.43 |
|
$ |
2,412 |
15,876 |
$ |
.15 | ||||||
| Effect of dilutive stock options |
|
— |
337 |
|
(.01 |
) |
|
— |
174 |
|
— | ||||||
| Diluted earnings per share |
$ |
6,873 |
16,327 |
$ |
.42 |
|
$ |
2,412 |
16,050 |
$ |
.15 | ||||||
| Net Income ($000’s) |
Average Shares (000’s) |
Per-Share Amount |
Net Income ($000’s) |
Average Shares (000’s) |
Per-Share Amount | ||||||||||||
| Basic earnings per share |
$ |
6,873 |
15,990 |
$ |
.43 |
|
$ |
2,788 |
15,876 |
$ |
.17 | ||||||
| Effect of dilutive stock options |
|
— |
337 |
|
(.01 |
) |
|
— |
174 |
|
— | ||||||
| Diluted earnings per share |
$ |
6,873 |
16,327 |
$ |
.42 |
|
$ |
2,788 |
16,050 |
$ |
.17 | ||||||
7
LYDALL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
3. In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (FAS 142), effective for fiscal years beginning after December 15, 2001. FAS 142 requires that goodwill recorded from business combinations completed on or before June 30, 2001, and certain other intangible assets deemed to have indefinite lives, no longer be amortized after the effective date. In addition, FAS 142 requires that goodwill and other intangible assets with indefinite lives recorded as a result of business combinations completed after June 30, 2001 not be amortized. Goodwill and other intangible assets with indefinite lives are subject to annual impairment tests. The Company completed its initial impairment tests for such assets recorded as of January 1, 2002 and determined that no impairment exists. The Company will perform its annual impairment tests for such assets as required by FAS 142 in the fourth quarter of each fiscal year.
The following table reconciles the reported results for the second quarter and six months ended June 30, 2001 to the adjusted results for the same period had FAS 142 been adopted on January 1, 2001:
| Quarter Ended June 30, 2001 |
Six Months Ended June 30, 2001 |
|||||||
| In thousands except per-share data |
(Unaudited) |
|||||||
| Reported net income |
$ |
1,241 |
|
$ |
2,788 |
| ||
| Goodwill amortization |
|
313 |
|
|
626 |
| ||
| Tax effect of deductible goodwill |
|
(96 |
) |
|
(203 |
) | ||
| Adjusted net income |
$ |
1,458 |
|
$ |
3,211 |
| ||
| Basic earnings per share: |
||||||||
| Reported net income |
$ |
.07 |
|
$ |
.17 |
| ||
| Goodwill amortization, net of tax |
|
.02 |
|
|
.03 |
| ||
| Adjusted net income |
$ |
.09 |
|
$ |
.20 |
| ||
| Diluted earnings per share: |
||||||||
| Reported net income |
$ |
.07 |
|
$ |
.17 |
| ||
| Goodwill amortization, net of tax |
|
.02 |
|
|
.03 |
| ||
| Adjusted net income |
$ |
.09 |
|
$ |
.20 |
| ||
4. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets” (FAS 144). FAS 144 establishes the accounting and reporting for the impairment or disposal of long-lived assets. The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (FAS 146). This statement provides guidance on significant issues associated with the recognition, measurement and reporting of costs associated with exit and disposal activities and is effective for the Company on January 1, 2003. The Company is currently reviewing and assessing the provisions of FAS 146 to determine the statement’s impact upon adoption, if any.
5. During the second quarter of 2002, the Company signed a settlement agreement regarding the environmental claims against it relating to the Rogers Fibre Mill site, a matter previously disclosed in Note 12 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001. The Company and subsequent owners/operators of the site paid a total of $300 thousand, which is currently held in escrow pending final approval of the settlement. The Company’s share of the settlement was $150 thousand, an amount previously accrued. The settlement did not have any impact on the results of operations for the quarter or six months ended June 30, 2002.
During the second quarter of 2002, the Company entered into a consent order with the Connecticut Department of Environmental Protection relating to a matter previously disclosed in Item 1 of “Other Information” in the Company’s Quarterly Report on Form 10-Q/A for the period ended June 30, 2001. The Company paid $120 thousand in connection with this consent order. This amount had previously been accrued and therefore the settlement did not have any impact on the results of operations for the quarter or six months ended June 30, 2002.
8
LYDALL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
6. Lydall, Inc. and certain subsidiaries amended and restated its $50 million domestic revolving credit facility with a group of five banking institutions on May 13, 2002. This facility, which has a maturity date of September 30, 2005, was renewed under similar terms and conditions to those in place under the prior agreement. Under the new arrangement, the Company may borrow up to $50 million, or the equivalent in certain other foreign currencies. Amounts borrowed under this agreement are required to be paid in full by September 30, 2005, unless the agreement is extended through amendment or renegotiation. The rate of interest charged on outstanding loans may, at the Company’s option and subject to certain restrictions, be based on the prime rate or at rates from 100 to 175 basis points over a Eurocurrency loan rate. The basis point spread over the Eurocurrency rate is based on the Company’s leverage ratio. Under the arrangement, the ongoing commitment fee varies from 25.0 to 37.5 basis points of the maximum amount that can be borrowed, net of any outstanding borrowings and net of amounts beneficiaries may draw under outstanding letters of credit. The loan agreement contains restrictions that limit the amount of dividends (whether in cash, securities or other property, unless payable solely in additional shares of the Company’s capital stock) that can be paid to external shareholders of its capital stock each fiscal year. The loan agreement also contains restrictive financial covenants primarily related to indebtedness, leverage ratio, fixed charge coverage ratio, capital expenditures, EBITDA (adjusted for certain non-recurring transactions) and net worth. At June 30, 2002, the Company was in compliance with these financial covenants, as well as, all non-financial covenants contained in the loan agreement.
7. Lydall’s reportable segments are: Thermal/Acoustical and Filtration/Separation. All other products are aggregated in Other Products and Services. Reconciling Items include Corporate Office operating expenses and intercompany eliminations. For a full description of each segment, refer to the “Notes to Consolidated Financial Statements” reported in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001. The table below presents net sales and operating income (loss) by segment for the quarter and six months ended June 30, 2002 and 2001:
| In thousands Quarter Ended |
Thermal/ Acoustical |
Filtration/ Separation |
Other Products and Services |
Reconciling Items |
Consolidated Totals | ||||||||||||
| June 30, 2002 (Restated See Note 8) |
|||||||||||||||||
| Net sales |
$ |
39,023 |
$ |
19,584 |
$ |
8,112 |
|
$ |
(460 |
) |
$ |
66,259 | |||||
| Operating income |
$ |
6,585 |
$ |
2,847 |
$ |
738 |
|
$ |
(4,228 |
) |
$ |
5,942 | |||||
| June 30, 2001 |
|||||||||||||||||
| Net sales |
$ |
33,349 |
$ |
17,640 |
$ |
8,483 |
|
$ |
(532 |
) |
$ |
58,940 | |||||
| Operating income (loss) |
$ |
5,572 |
$ |
1,444 |
$ |
(1,575 |
) |
$ |
(3,254 |
) |
$ |
2,187 | |||||
| In thousands Six Months Ended |
Thermal/ Acoustical |
Filtration/ Separation |
Other Products and Services |
Reconciling Items |
Consolidated Totals | ||||||||||||
| June 30, 2002 (Restated See Note 8) |
|||||||||||||||||
| Net sales |
$ |
73,716 |
$ |
36,591 |
$ |
16,535 |
|
$ |
(898 |
) |
$ |
125,944 | |||||
| Operating income |
$ |
11,771 |
$ |
5,638 |
$ |
1,424 |
|
$ |
(7,965 |
) |
$ |
10,868 | |||||
| June 30, 2001 |
|||||||||||||||||
| Net sales |
$ |
65,450 |
$ |
35,206 |
$ |
17,799 |
|
$ |
(1,250 |
) |
$ |
117,205 | |||||
| Operating income (loss) |
$ |
9,969 |
$ |
3,228 |
$ |
(1,658 |
) |
$ |
(7,249 |
) |
$ |
4,290 | |||||
The operating losses for Other Products and Services for the quarter and six months ended June 30, 2001 include pre-tax impairment and restructuring charges of $2.6 million and $3.4 million, respectively, related to the closing of the fiberboard operation.
8. On November 6, 2002, Lydall executives became aware of a possible accounting irregularity at the Company’s Columbus, Ohio automotive operation. An investigation was initiated immediately and identified that certain Columbus employees, acting in collusion, had circumvented the local internal control system by delaying accounting recognition of expenses and, accordingly, caused inaccuracies in previously reported financial results. Consequently, in November 2002 the Company restated its financial statements and filed amended Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2001, June 30, 2001 and September 30, 2001, as well as, its Annual Report on Form 10-K for the year ended December 31, 2001.
In connection with the completion and audit of the 2002 year-end financial statements, the Company and PricewaterhouseCoopers LLP, its independent auditor, conducted additional audit and forensic procedures at the Columbus Operation. These procedures identified inaccuracies in previously reported results for the quarter ended June 30, 2002, the correction of which are reflected in this restatement. The impact of correcting these inaccuracies was to increase cost of sales by approximately $255 thousand and to decrease selling, product
9
LYDALL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
development and administrative expenses by $24 thousand for the quarter and six months ended June 30, 2002. The total impact of the adjustments was to reduce income from continuing operations and net income by approximately $146 thousand after tax.
The effect on the operating results for the quarter and six months ended June 30, 2002, previously reported in the Company’s Quarterly Report on Form 10-Q filed on August 13, 2002, was as follows:
| Quarter Ended June 30, 2002 |
Six Months Ended June 30 ,2002 | |||||||||||
| As Previously Reported |
Restated |
As Previously Reported |
Restated | |||||||||
| In thousands except per-share data |
(Unaudited) |
(Unaudited) | ||||||||||
| Net sales |
$ |
66,259 |
$ |
66,259 |
$ |
125,944 |
$ |
125,944 | ||||
| Cost of sales |
|
47,541 |
|
47,796 |
|
90,852 |
|
91,107 | ||||
| Gross margin |
|
18,718 |
|
18,463 |
|
35,092 |
|
34,837 | ||||
| Selling, product development and administrative expenses |
|
12,545 |
|
12,521 |
|
23,993 |
|
23,969 | ||||
| Operating income |
|
6,173 |
|
5,942 |
|
11,099 |
|
10,868 | ||||
| Income from continuing operations before income taxes |
|
6,041 |
|
5,810 |
|
10,816 |
|
10,585 | ||||
| Income tax expense |
|
2,121 |
|
2,036 |
|
3,797 |
|
3,712 | ||||
| Income from continuing operations |
|
3,920 |
|
3,774 |
|
7,019 |
|
6,873 | ||||
| Net income |
|
3,920 |
|
3,774 |
|
7,019 |
|
6,873 | ||||
| Basic earnings per share: |
||||||||||||
| Continuing operations |
$ |
0.25 |
$ |
0.24 |
$ |
0.44 |
$ |
0.43 | ||||
| Discontinued operations |
|
— |
|
— |
|
— |
|
— | ||||
| Net income |
|
0.25 |
|
0.24 |
|
0.44 |
|
0.43 | ||||
| Diluted earnings per share: |
||||||||||||
| Continuing operations |
$ |
0.24 |
$ |
0.23 |
$ |
0.43 |
$ |
0.42 | ||||
| Discontinued operations |
|
— |
|
— |
|
— |
|
— | ||||
| Net income |
|
0.24 |
|
0.23 |
|
0.43 |
|
0.42 | ||||
10
LYDALL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
The effect on the balance sheet as of June 30, 2002, previously reported in the Company’s Quarterly Report on Form 10-Q filed on August 13, 2002, was as follows:
| June 30, 2002 | ||||||
| In thousands |
As Previously Reported |
Restated(1) | ||||
| (Unaudited) | ||||||
| Total inventories |
$ |
30,812 |
$ |
30,567 | ||
| Deferred tax assets |
$ |
1,779 |
$ |
2,108 | ||
| Total current assets |
$ |
83,669 |
$ |
83,753 | ||
| Total assets |
$ |
203,526 |
$ |
203,610 | ||
| Accounts payable |
$ |
15,827 |
$ |
16,551 | ||
| Accrued payroll and other compensation |
$ |
5,983 |
$ |
5,941 | ||
| Total current liabilities |
$ |
40,416 |
$ |
41,098 | ||
| Retained earnings |
$ |
152,103 |
$ |
151,505 | ||
| Stockholders’ equity |
$ |
127,864 |
$ |
127,266 | ||
| (1) | The restated balance sheet amounts include the effects of the previously restated periods discussed above, as well as the impact of the current restatement. |
There was no impact on net cash provided by operating activities for the six months ended June 30, 2002 previously reported in the Company’s Quarterly Report on Form 10-Q filed on August 13, 2002.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects the Company’s restatement of certain 2002 amounts (See Note 8).
Results of Operations
Net Sales
Lydall, Inc. recorded net sales of $66.3 million in the second quarter of 2002 compared with $58.9 million for the same quarter of 2001, an increase of $7.3 million or 12.4 percent. This increase was the result of increased sales in the automotive business driven by the start-up of new platforms, primarily at the Company’s operation in Germany, improvement in thermal/acoustical building materials sales, increased air filtration sales in Europe and the addition of the Ossipee operation. These increases were partially offset by a decrease in specialty products sales.
For the six months ended June 30, 2002, net sales were $125.9 million, an increase of $8.7 million, or 7.5 percent, from $117.2 million for the comparable period of the prior year. This increase was primarily attributable to the overall strong performance of the automotive business, increased air filtration sales in Europe and the incremental net sales added by the Ossipee operation. These increases were partially offset by the reduction in net sales related to the fiberboard operation that was sold at the beginning of the second quarter of 2001.
Gross Margin
Gross margin for the second quarter of 2002 was 27.9 percent compared to 27.8 percent for the same quarter of 2001 and 27.7 percent and 28.0 percent for the six months ended June 30, 2002 and 2001, respectively. Increased sales volume for the Company’s automotive thermal/acoustical products and building materials products, as well as improved margins in the vital fluids business, positively impacted gross margin for the quarter and six months ended June 30, 2002. However, start-up activities at the Lydall Newport News Distribution Center and sales mix changes in the Thermal/Acoustical Segment partially offset the improvement in the quarter and more than offset these improvements year-to-date.
Selling, Product Development and Administrative Expenses
For the quarter and six months ended June 30, 2002, selling, product development and administrative expenses were $12.5 million and $24.0 million compared with $11.6 million and $25.1 million for the same periods of 2001, respectively. Selling, product development and administrative expenses were 18.9 percent of net sales for the quarter ended June 30, 2002, compared to 19.7 percent in the second quarter of 2001; and 19.0 percent of net sales for the first six months of 2002, compared to 21.4 percent for the first six months of 2001. The increased expense in the second quarter of 2002, as compared to the second quarter of 2001, was primarily related to increased bonuses accrued for in accordance with the Company’s Economic Value Added (EVA) program, which resulted from the Company’s improved performance. The decrease in costs for the six months ended June 30, 2002, as compared to the first six months of 2001, was primarily attributable to management’s continued focus on controlling and reducing discretionary administrative expenses, targeted reductions in headcount and minimized usage of external consulting, which more than offset the increased EVA bonus expense. In addition, the quarter and six months ended June 30, 2001 amounts include approximately $.3 million and $.6 million, respectively, of goodwill amortization expense. In accordance with FAS 142, goodwill is no longer amortized.
Impairment and Restructuring Charges
There were no impairment or restructuring charges recorded during the quarter or six months ended June 30, 2002.
In the quarter ended June 30, 2001, the Company recorded a pre-tax charge of $2.6 million, or $.10 per share after-tax, for closing costs, severance benefits and additional impairment on assets held for sale related to its fiberboard operation. In April 2001, the Company sold certain assets of this operation for approximately $1.9 million and announced that the operation would be closed. Additionally, during the quarter ended March 31, 2001, the Company recorded a pre-tax impairment charge of $.8 million, or $.03 per share after-tax, related to assets held for sale of the fiberboard operation.
Other Income/Expense
For the quarter ended June 30, 2002, other expense of $.1 million was primarily comprised of interest expense of $.2 million, offset by foreign exchange transaction gains of $.1 million. For the quarter ended June 30, 2001, other expense of $.3 million was primarily interest expense.
For the six months ended June 30, 2002, other expense of $.3 million consisted of interest expense of $.4 million, offset by $.1 million of foreign currency transaction gains. For the six months ended June 30, 2001 other expense of $.7 million consisted of interest expense of $.6 million and foreign currency transaction losses of $.2 million, offset by $.1 million of investment income.
12
Segment Results
Thermal/Acoustical
Thermal/Acoustical net sales increased $5.7 million, or 17.0 percent and $8.3 million, or 12.6 percent for the quarter and six months ended June 30, 2002, respectively, compared to the same periods of 2001. The increases were primarily attributable to strong automotive performance associated with new platforms and products, notably the BMW 7-Series, underbody shields for DaimlerChrysler and the continued adoption of ZeroClearance® products, improvement in building materials sales and the addition of net sales from the Ossipee operation.
Thermal/Acoustical operating income for the second quarter and first six months of 2002 increased $1.0 million, or 18.2 percent and $1.8 million, or 18.1 percent, respectively, over the same periods of 2001. Operating margin for the quarter and six months ended June 30, 2002 was 16.9 percent and 16.0 percent, respectively, compared to 16.7 percent and 15.2 percent for the quarter and six months ended June 30, 2001. The overall increase in operating income primarily relates to increased gross margin from the automotive and building materials businesses and the Ossipee operation.
Filtration/Separation
Filtration/Separation net sales for the second quarter of 2002 increased $1.9 million, or 11.0 percent over the same period of 2001. Net sales for the first six months of 2002, increased $1.4 million, or 3.9 percent compared to the first six months of 2001. The majority of the increase in second quarter and six-month net sales was the result of solid sales performance in the air filtration business in Europe and liquid filtration market share gains. These gains were partially offset by domestic air filtration sales, which recovered during the second quarter, but are still lower year-to-date when compared to the first six months of 2001.
Filtration/Separation operating income increased $1.4 million, or 97.2 percent for the second quarter of 2002 and $2.4 million, or 74.7 percent for the six months ended June 30, 2002, compared to the same periods of 2001. Operating margin also showed solid improvement during the quarter and six months ended June 30, 2002, increasing to 14.5 percent and 15.4 percent, respectively; from 8.2 percent and 9.2 percent for the comparable periods of 2001. These increases were primarily related to improved margins in the vital fluids business where inventory write-offs and manufacturing cost overruns in 2001 negatively impacted operating performance. Additionally, increased manufacturing efficiencies and administrative cost reductions across all operations within the segment continued to create solid benefits in selling, product development and administrative costs.
Other Products and Services
Other Products and Services net sales decreased $.4 million, or 4.4 percent and $1.3 million, or 7.1 percent for the quarter and six months ended June 30, 2002, respectively, compared to the same periods of 2001. The decrease in second quarter net sales primarily relates to lower specialty products and battery separator sales when compared to the second quarter of 2001. The now closed fiberboard operation contributed $1.2 million of net sales during the six months ended June 30, 2001, accounting for the majority of the decrease year-to-date.
Other Products and Services operating income decreased $.3 million, or 30.0 percent for the quarter ended June 30, 2002 and $.3 million, or 17.7 percent for the six months ended June 30, 2002 compared to the same periods of 2001, after adjusting for the pre-tax impairment and restructuring charges of $2.6 million and $3.4 million, respectively, related to the closing of the fiberboard operation. The decrease for the quarter ended June 30, 2002 was primarily due to start-up activities at the Lydall Newport News Distribution Center and declines in specialty product sales. For the six months ended June 30, 2002, the decrease in operating income primarily related to Lydall Newport News Distribution Center start-up costs.
Outlook
We believe Lydall’s thermal/acoustical and filtration/separation businesses are healthy and are expected to grow, primarily through the introduction of new products and the penetration of new markets. Lydall has continued to garner new automotive thermal/acoustical business in 2002 and continues to work to identify new opportunities in this market. Demand for the Company’s bioprocessing products is expected to increase. Lydall continues to leverage its market position in the air and liquid filtration markets by expanding the Company’s technology base and range of products.
Liquidity and Capital Resources
Cash and cash equivalents were approximately $1.0 million at June 30, 2002 and December 31, 2001. Working capital at June 30, 2002 was $42.7 million compared with $36.3 million at December 31, 2001. The increase in working capital was primarily due to higher receivables and inventory related to the strong financial and operational performance of the Thermal/Acoustical Segment.
13
Capital expenditures were $6.2 million for the first six months of 2002 compared with $4.2 million for the same period of 2001 as the Company continues to invest in its core operations in line with expected demand for the Company’s products.
Lydall, Inc. and certain subsidiaries amended and restated its $50 million domestic revolving credit facility with a group of five banking institutions on May 13, 2002. This facility, which has a maturity date of September 30, 2005, was renewed under similar terms and conditions to those in place under the prior agreement. Under the new arrangement, the Company may borrow up to $50 million, or the equivalent in certain other foreign currencies. Amounts borrowed under this agreement are required to be paid in full by September 30, 2005, unless the agreement is extended through amendment or renegotiation. The rate of interest charged on outstanding loans may, at the Company’s option and subject to certain restrictions, be based on the prime rate or at rates from 100 to 175 basis points over a Eurocurrency loan rate. The basis point spread over the Eurocurrency rate is based on the Company’s leverage ratio. Under the arrangement, the ongoing commitment fee varies from 25.0 to 37.5 basis points of the maximum amount that can be borrowed, net of any outstanding borrowings and net of amounts beneficiaries may draw under outstanding letters of credit. The loan agreement contains restrictions that limit the amount of dividends (whether in cash, securities or other property, unless payable solely in additional shares of the Company’s capital stock) that can be paid to external shareholders of its capital stock each fiscal year. The loan agreement also contains restrictive financial covenants primarily related to indebtedness, leverage ratio, fixed charge coverage ratio, capital expenditures, EBITDA (adjusted for certain non-recurring transactions) and net worth. At June 30, 2002, the Company was in compliance with these financial covenants, as well as, all non-financial covenants contained in the loan agreement.
The funded status of the Company’s defined benefit pension plans is dependent upon many factors, including returns on invested assets. Recent declines in the value of equity securities have negatively impacted the value of the plans’ assets, as a result, the Company may be required to make contributions to the plans in excess of current funding levels.
As of June 30, 2002, the Company had unused borrowing capacity of approximately $37.8 million under various credit facilities. Management believes that the Company’s cash and cash equivalents, operating cash flow and unused borrowing capacity at June 30, 2002 are sufficient to meet current and anticipated requirements for the foreseeable future.
Critical Accounting Policies
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, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 of the “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001 describes the significant accounting policies used, as well as the more significant estimates included, in the preparation of the consolidated financial statements. Actual results could differ from those estimates, assumptions and judgments.
Accounting Standards
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (FAS 144). FAS 144 establishes the reporting and accounting for the impairment or disposal of long-lived assets. The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (FAS 146). This statement provides guidance on significant issues associated with the recognition, measurement and reporting of costs associated with exit and disposal activities and is effective for the Company on January 1, 2003. The Company is currently reviewing and assessing the provisions of FAS 146 to determine the statement’s impact upon adoption, if any.
Forward-Looking Information
In the interest of more meaningful disclosure, Lydall and its management make statements regarding the future outlook of the Company, which constitute “forward-looking statements” under the securities laws. These forward-looking statements are intended to provide management’s current expectations for the future operating and financial performance of the company, based on assumptions and estimates currently believed to be valid. Forward-looking statements are included under the “Outlook” section of this Item and elsewhere within this report and are generally identified through the use of language such as “believe,” “expect,” “estimate,” “anticipate” and other words of similar meaning in connection with discussion of future operating or financial performance.
All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Some of the factors that might cause such a difference include risks
14
and uncertainties which are detailed in Note 12 and in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes in market risks from those disclosed in Item 7A of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001.
PART II. OTHER INFORMATION
During the second quarter of 2002, the Company signed a settlement agreement regarding the environmental claims against it relating to the Rogers Fibre Mill site, a matter previously disclosed in Note 12 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2001. The Company and subsequent owners/operators of the site paid a total of $300 thousand, which is currently held in escrow pending final approval of the settlement. The Company’s share of the settlement was $150 thousand, an amount previously accrued. The settlement did not have any impact on the results of operations for the quarter or six months ended June 30, 2002.
During the second quarter of 2002, the Company entered into a consent order with the Connecticut Department of Environmental Protection relating to a matter previously disclosed in Item 1 of “Other Information” in the Company’s Quarterly Report on Form 10-Q/A for the period ended June 30, 2001. The Company paid $120 thousand in connection with this consent order. This amount had previously been accrued and therefore the settlement did not have any impact on the results of operations for the quarter or six months ended June 30, 2002
Item 4. Submission of Matters to a Vote of Security Holders
The Company’s Annual Meeting of Stockholders was held on May 8, 2002. Stockholders voted on two proposals presented to them for consideration. The proposed matters and results of the voting are as follows:
1.) Election of Nominees to the Board of Directors
Stockholders elected ten Directors to serve for one-year terms, until the next Annual Meeting to be held in 2003. The results of the voting were as follows:
| For |
Withheld | |||
| Lee A. Asseo |
12,694,145 |
1,399,452 | ||
| Samuel P. Cooley |
12,701,301 |
1,392,287 | ||
| W. Leslie Duffy |
12,661,692 |
1,431,905 | ||
| David Freeman |
12,703,066 |
1,390,531 | ||
| Suzanne Hammett |
12,674,782 |
1,418,815 | ||
| Robert E. McGill, III |
12,701,572 |
1,392,025 | ||
| Christopher R. Skomorowski |
11,302,530 |
2,791,067 | ||
| Elliott F. Whitely |
12,681,799 |
1,411,798 | ||
| Roger M. Widmann |
12,693,228 |
1,400,369 | ||
| Albert E. Wolf |
10,353,423 |
3,740,174 |
2.) Lydall 2002 Stock Incentive Compensation Plan
Stockholders did not approve the Lydall 2002 Stock Incentive Compensation Plan as proposed. The results of the voting were as follows:
| For |
5,477,516 | |
| Against |
6,728,743 | |
| Abstained |
58,551 |
15
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
| 3.1 |
Certificate of Incorporation of the Registrant, filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K dated March 21, 2001 and incorporated herein by this reference. | |
| 3.2 |
Bylaws of the Registrant, filed as Exhibit 3(ii) to the Registrant’s Quarterly Report on Form 10-Q dated November 12, 1999 and incorporated herein by this reference. | |
| 10.28 |
Credit Agreement dated as of July 14, 1999 and amended and restated as of May 13, 2002, filed as Exhibit 10.28 to the Registrant’s Quarterly Report on Form 10-Q dated August 13, 2002 and incorporated herein by this reference. | |
| 99.13 |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. | |
| 99.14 |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
b. Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter or six months ended June 30, 2002.
16
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. | ||||
| March 6, 2003 |
By: |
/s/ THOMAS P. SMITH | ||
| Thomas P. Smith Vice President—Controller (On behalf of the Registrant and as Principal Accounting Officer) | ||||
17
I, Christopher R. Skomorowski, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of Lydall, Inc.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;
| March 6, 2003 |
/s/ CHRISTOPHER R. SKOMOROWSKI | |
| Christopher R. Skomorowski President and Chief Executive Officer |
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CERTIFICATIONS
I, Walter A. Ruschmeyer, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of Lydall, Inc.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;
| March 6, 2003 |
/s/ WALTER A. RUSCHMEYER | |
| Walter A. Ruschmeyer Executive Vice President—Finance and Administration, Chief Financial Officer |
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LYDALL, INC.
| Exhibit Number |
||
| 3.1 |
Certificate of Incorporation of the Registrant, filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K dated March 21, 2001 and incorporated herein by reference. | |
| 3.2 |
Bylaws of the Registrant, filed as Exhibit 3(ii) to the Registrant’s Quarterly Report on Form 10-Q dated November 12, 1999 and incorporated herein by reference. | |
| 10.28 |
Credit Agreement dated as of July 14, 1999 and amended and restated as of May 13, 2002, filed as Exhibit 10.28 to the Registrant’s Quarterly Report on Form 10-Q dated August 13, 2002 and incorporated herein by this reference. | |
| 99.13 |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. | |
| 99.14 |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
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