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)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $.01 par value
|
|
New York Stock Exchange
|
Large accelerated filer
ý
|
|
Non-accelerated filer
o
|
|
Accelerated filer
o
|
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
|
|
|
Page
Number
|
PART I
|
|
|
|
||
PART II
|
|
|
PART III
|
|
|
PART IV
|
|
|
|
•
|
Overall economic, business and political conditions and the effects on the Company’s markets;
|
•
|
Outlook for first quarter and full year 2019;
|
•
|
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 the application of Lean Six Sigma;
|
•
|
Future impact of raw material commodity costs;
|
•
|
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 and expected impacts of Lydall Pension Plan termination during 2019;
|
•
|
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, which was further revised and under which outstanding borrowings increased in the third quarter of 2018;
|
•
|
Future impact of the variability of interest rates and foreign currency exchange rates;
|
•
|
Expected future impact of recently issued accounting pronouncements upon adoption, including the new leasing standard effective January 1, 2019;
|
•
|
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.
|
Item 1.
|
BUSINESS
|
Item 1A.
|
RISK FACTORS
|
•
|
Identify and effectively complete strategic transactions;
|
•
|
Obtain adequate financing to fund strategic initiatives;
|
•
|
Successfully integrate and manage acquired businesses that involve numerous operational and financial risks, including difficulties in the integration of acquired operations, diversion of management's attention from other business concerns, managing assets in multiple geographic regions and potential loss of key employees and key customers of acquired operations;
|
•
|
Improve operating margins through its Lean Six Sigma initiatives which are intended to improve processes and work flow, improve customer service, reduce costs and leverage synergies across the Company; and
|
•
|
Successfully invest and deploy capital investments to support our business and commitments to our customers.
|
•
|
Manage working capital and the level of future profitability. The consolidated cash balance is impacted by capital equipment and inventory investments that may be made in response to changing market conditions;
|
•
|
Satisfy covenants and other obligations under its existing credit facility, which could limit or prohibit Lydall’s ability to borrow funds. Additionally, these debt covenants and other obligations could limit the Company’s ability to make acquisitions, incur additional debt, make investments, or consummate asset sales and obtain additional financing from other sources.
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Item 2.
|
PROPERTIES
|
Location
|
|
Primary Business Segment/General Description
|
|
Type of
Interest
|
Hamptonville, North Carolina
|
|
Thermal Acoustical Solutions – Product Manufacturing
|
|
Owned
|
Yadkinville, North Carolina
|
|
Thermal Acoustical Solutions – Product Manufacturing
|
|
Leased
|
Meinerzhagen, Germany
|
|
Thermal Acoustical Solutions – Product Manufacturing
|
|
Owned
|
Saint-Nazaire, France
|
|
Thermal Acoustical Solutions – Product Manufacturing
|
|
Owned
|
Taicang, China
|
|
Thermal Acoustical Solutions – Product Manufacturing
|
|
Leased
|
Green Island, New York
|
|
Performance Materials – Specialty Media Manufacturing
|
|
Owned
|
Rochester, New Hampshire
|
|
Performance Materials – Specialty Media Manufacturing
|
|
Owned
|
Saint-Rivalain, France
|
|
Performance Materials – Specialty Media Manufacturing
|
|
Owned
|
Fulton, New York
|
|
Performance Materials – Specialty Media Manufacturing
|
|
Owned
|
Marshalltown, Iowa
|
|
Performance Materials – Specialty Media Manufacturing
|
|
Owned
|
Altenkirchen, Germany
|
|
Performance Materials – Specialty Media Manufacturing
|
|
Owned
|
St. Elzear, Quebec, Canada
|
|
Technical Nonwovens - Filtration Media Manufacturing
|
|
Owned
|
St. Marie, Quebec, Canada
|
|
Technical Nonwovens - Filtration Media Manufacturing
|
|
Owned
|
Rossendale, United Kingdom
|
|
Technical Nonwovens - Filtration Media Manufacturing
|
|
Owned
|
North Augusta, South Carolina
|
|
Technical Nonwovens - Filtration Media Manufacturing
|
|
Owned
|
Wuxi, China
|
|
Technical Nonwovens - Filtration Media Manufacturing
|
|
Leased
|
Fulda, Germany
|
|
Technical Nonwovens - Filtration Media Manufacturing
|
|
Leased
|
Manchester, Connecticut
|
|
Corporate Office
|
|
Owned
|
Item 3.
|
LEGAL PROCEEDINGS
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Name
|
|
Age
|
|
Position and Date of Appointment
|
|
Other Business Experience Since 2014
|
Dale G. Barnhart
|
|
66
|
|
President, Chief Executive Officer (August 27, 2007)
|
|
Not applicable
|
Randall B. Gonzales
|
|
47
|
|
Executive Vice President and Chief Financial Officer (March 12, 2018)
|
|
Chief Financial Officer and Treasurer, Progress Rail Services Corporation, a wholly-owned subsidiary of Caterpillar Inc. (2014-2018), a diversified global supplier of railroad and transit system products and services; Chief Financial Officer, Marketing and Sales, Nissan Motor Co., Ltd (2011 - 2014), a Fortune Global 50 automotive manufacturer.
|
Joseph A. Abbruzzi
|
|
60
|
|
President, Technical Nonwovens, (February 20, 2014); formerly Sr. Vice President, General Manager, Lydall Thermal/Acoustical Fibers (March 14, 2011)
|
|
Not applicable
|
Scott M. Deakin
|
|
52
|
|
President, Lydall Thermal Acoustical Solutions (August 30, 2017); formerly Executive Vice President and Chief Financial Officer, (September 8, 2015)
|
|
Executive Vice President and Chief Financial Officer, Ensign-Bickford Industries, Inc. (2009 – 2015), a diversified global manufacturer with operating segments that serve the aerospace & defense, life science, specialty chemicals (divested in 2016) and food & flavoring industries.
|
James V. Laughlan
|
|
46
|
|
Vice President, Chief Accounting Officer and Treasurer (March 26, 2013); formerly Chief Accounting Officer, Controller and Treasurer (July 27, 2012); formerly Chief Accounting Officer and Controller (March 29, 2010)
|
|
Not applicable
|
Paul A. Marold
|
|
57
|
|
President, Performance Materials (February 15, 2016)
|
|
Chief Operating Officer, Sontara, a division of Jacob Holm & Sons (2014-2016), a global manufacturer of spunlace nonwoven fabrics and finished goods; Senior Vice President, Growth & Innovation, Clarcor, Inc. (2013-2014), a global manufacturer of filtration products.
|
Chad A. McDaniel
|
|
45
|
|
Senior Vice President, Chief Administrative Officer and General Counsel (May 13, 2015); formerly Vice President, General Counsel and Secretary (May 10, 2013)
|
|
Director, Chase Corporation (2016), NYSE: CCF, a manufacturer of protective materials for high reliability applications.
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period
|
Total Number
of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced
Plans or Programs
|
|
Maximum Number of
Shares That May Yet Be Purchased Under the
Plans or Programs
|
|||||
Activity October 1, 2018 - October 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Activity November 1, 2018 - November 30, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Activity December 1, 2018 - December 31, 2018
|
2,855
|
|
|
$
|
20.99
|
|
|
—
|
|
|
—
|
|
Total
|
2,855
|
|
|
$
|
20.99
|
|
|
—
|
|
|
—
|
|
|
|
12/13
|
|
12/14
|
|
12/15
|
|
12/16
|
|
12/17
|
|
12/18
|
||||||
Lydall, Inc.
|
|
100.00
|
|
|
186.27
|
|
|
201.36
|
|
|
351.02
|
|
|
288.03
|
|
|
115.27
|
|
S&P Smallcap 600
|
|
100.00
|
|
|
105.76
|
|
|
103.67
|
|
|
131.20
|
|
|
148.56
|
|
|
135.96
|
|
Russell 2000
|
|
100.00
|
|
|
104.89
|
|
|
100.26
|
|
|
121.63
|
|
|
139.44
|
|
|
124.09
|
|
*
|
$100 invested on 12/31/13 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
|
Item 6.
|
SELECTED FINANCIAL DATA
|
In thousands except per share amounts and ratio data
|
2018 (1)
|
|
2017
|
|
2016 (2)
|
|
2015 (3)
|
|
2014 (4)
|
||||||||||
Financial results for the year
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
785,897
|
|
|
$
|
698,437
|
|
|
$
|
566,852
|
|
|
$
|
524,505
|
|
|
$
|
535,829
|
|
Gross margin
|
19.4
|
%
|
|
23.4
|
%
|
|
24.5
|
%
|
|
23.4
|
%
|
|
21.5
|
%
|
|||||
Operating margin
|
6.3
|
%
|
|
9.5
|
%
|
|
9.8
|
%
|
|
10.1
|
%
|
|
6.4
|
%
|
|||||
Net income
|
$
|
34,944
|
|
|
$
|
49,317
|
|
|
$
|
37,187
|
|
|
$
|
46,259
|
|
|
$
|
21,847
|
|
Depreciation and amortization
|
$
|
32,731
|
|
|
$
|
25,939
|
|
|
$
|
19,401
|
|
|
$
|
17,162
|
|
|
$
|
17,531
|
|
Capital expenditures
|
$
|
29,630
|
|
|
$
|
24,915
|
|
|
$
|
28,159
|
|
|
$
|
21,555
|
|
|
$
|
19,001
|
|
Common stock per share data
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income
|
$
|
2.03
|
|
|
$
|
2.89
|
|
|
$
|
2.20
|
|
|
$
|
2.76
|
|
|
$
|
1.31
|
|
Diluted net income
|
$
|
2.02
|
|
|
$
|
2.85
|
|
|
$
|
2.16
|
|
|
$
|
2.71
|
|
|
$
|
1.28
|
|
Financial position
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
195,732
|
|
|
$
|
171,389
|
|
|
$
|
165,162
|
|
|
$
|
158,303
|
|
|
$
|
140,229
|
|
Property, plant and equipment, net
|
$
|
213,369
|
|
|
$
|
170,332
|
|
|
$
|
160,795
|
|
|
$
|
114,433
|
|
|
$
|
115,357
|
|
Goodwill
|
$
|
196,963
|
|
|
$
|
68,969
|
|
|
$
|
63,606
|
|
|
$
|
16,841
|
|
|
$
|
21,943
|
|
Other intangible assets, net
|
$
|
136,604
|
|
|
$
|
40,543
|
|
|
$
|
41,447
|
|
|
$
|
5,399
|
|
|
$
|
7,841
|
|
Total assets
|
$
|
872,686
|
|
|
$
|
560,871
|
|
|
$
|
527,029
|
|
|
$
|
358,260
|
|
|
$
|
361,770
|
|
Long-term debt, net of current maturities
|
$
|
314,641
|
|
|
$
|
76,913
|
|
|
$
|
128,141
|
|
|
$
|
20,156
|
|
|
$
|
40,315
|
|
Total stockholders’ equity
|
$
|
369,275
|
|
|
$
|
353,396
|
|
|
$
|
273,456
|
|
|
$
|
245,225
|
|
|
$
|
212,599
|
|
Total debt to total capitalization
|
46.8
|
%
|
|
17.9
|
%
|
|
32.0
|
%
|
|
7.7
|
%
|
|
16.1
|
%
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Consolidated net sales were
$785.9 million
in
2018
, compared to
$698.4 million
in
2017
, an increase of
$87.5 million
, or
12.5%
, with the increase primarily attributable to the acquisition of Interface on August 31, 2018. The change in consolidated net sales is summarized in the following table:
|
Components
|
|
Change in Net Sales
|
|
Percent Change
|
|||
Acquisitions
|
|
$
|
48,918
|
|
|
7.0
|
%
|
Parts volume and pricing change
|
|
15,104
|
|
|
2.2
|
%
|
|
Change in tooling sales
|
|
12,860
|
|
|
1.8
|
%
|
|
Foreign currency translation
|
|
10,578
|
|
|
1.5
|
%
|
|
Total
|
|
$
|
87,460
|
|
|
12.5
|
%
|
•
|
Gross margin decreased to
19.4%
in 2018 compared to
23.4%
in 2017, primarily driven by the Thermal Acoustical Solutions segment, and to a lesser extent the Technical Nonwovens segment. The Thermal Acoustical Solutions segment negatively impacted consolidated gross margin by approximately 350 basis points due to higher labor and overhead costs, primarily associated with new product launch activity, commodity inflation and lower customer pricing. The Technical Nonwovens segment negatively impacted consolidated gross margin by approximately140 basis points, principally driven by commodity inflation and unfavorable product mix, partially offset by increased customer pricing, while the Performance Materials segment favorably impacted consolidated gross margin by approximately 90 basis points from improved segment mix, driven by higher margin sales from the acquired Interface business since August 31, 2018.
|
•
|
Operating income was
$49.2 million
, or
6.3%
of net sales in 2018, compared to
$66.2 million
, or
9.5%
of net sales in 2017; Operating margin declined due to the negative impact of lower gross margin of 400 basis points, partially offset by a 70 basis point reduction in selling, product development and administrative expenses. Operating income in 2018 was favorably impacted by decreased cash incentive and stock compensation expenses of approximately $4.9 million, or 60 basis points, compared to 2017. The following items are included in operating income for 2018 and 2017 and impact the comparability of each year:
|
|
|
2018
|
|
2017
|
||||||||||||
Components
(in thousands except per share amounts)
|
|
Operating income effect
|
|
EPS impact
|
|
Operating income effect
|
|
EPS impact
|
||||||||
Strategic initiatives expenses
|
|
$
|
3,631
|
|
|
$
|
0.18
|
|
|
$
|
778
|
|
|
$
|
0.03
|
|
TNW restructuring expenses
|
|
2,296
|
|
|
$
|
0.12
|
|
|
662
|
|
|
$
|
0.03
|
|
||
Inventory step-up purchase accounting adjustments
|
|
1,975
|
|
|
$
|
0.09
|
|
|
1,108
|
|
|
$
|
0.04
|
|
||
Intangible assets amortization expenses
|
|
9,308
|
|
|
$
|
0.40
|
|
|
4,483
|
|
|
$
|
0.19
|
|
||
Automotive segments consolidation expenses
|
|
—
|
|
|
$
|
—
|
|
|
1,693
|
|
|
$
|
0.06
|
|
||
Reduction in force severance expenses
|
|
—
|
|
|
$
|
—
|
|
|
987
|
|
|
$
|
0.04
|
|
||
Impairment charge
|
|
—
|
|
|
$
|
—
|
|
|
772
|
|
|
$
|
0.03
|
|
•
|
Net income was
$34.9 million
, or
$2.02
per diluted share in
2018
, compared to
$49.3 million
, or
$2.85
per diluted share in
2017
.
|
In thousands of dollars
|
|
2018
|
|
Percent Change
|
|
2017
|
|
Percent Change
|
|
2016
|
||||||||
Net sales
|
|
$
|
785,897
|
|
|
12.5
|
%
|
|
$
|
698,437
|
|
|
23.2
|
%
|
|
$
|
566,852
|
|
In thousands of dollars
|
|
2018
|
|
Percent Change
|
|
2017
|
|
Percent Change
|
|
2016
|
||||||||
Cost of sales
|
|
$
|
633,252
|
|
|
18.3
|
%
|
|
$
|
535,078
|
|
|
25.0
|
%
|
|
$
|
428,048
|
|
In thousands of dollars
|
2018
|
|
2017
|
|
2016
|
||||||
Gross profit
|
$
|
152,645
|
|
|
$
|
163,359
|
|
|
$
|
138,804
|
|
Gross margin
|
19.4
|
%
|
|
23.4
|
%
|
|
24.5
|
%
|
In thousands of dollars
|
2018
|
|
2017
|
|
2016
|
||||||
Selling, product development and administrative expenses
|
$
|
103,457
|
|
|
$
|
97,159
|
|
|
$
|
83,359
|
|
Percentage of net sales
|
13.2
|
%
|
|
13.9
|
%
|
|
14.7
|
%
|
In thousands of dollars
|
2018
|
|
2017
|
|
2016
|
||||||
Interest expense
|
$
|
6,212
|
|
|
$
|
2,720
|
|
|
$
|
1,068
|
|
Weighted average interest rate during the year
|
3.4
|
%
|
|
2.2
|
%
|
|
1.4
|
%
|
In thousands of dollars
|
2018
|
|
2017
|
|
2016
|
||||||
Other (income) expense, net
|
$
|
(289
|
)
|
|
$
|
2,161
|
|
|
$
|
(562
|
)
|
|
2018
|
|
2017
|
|
2016
|
|||
Effective income tax rate
|
19.5
|
%
|
|
19.5
|
%
|
|
32.4
|
%
|
Consolidated Net Sales
|
For the Years Ended December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Performance Materials Segment
(1)
:
|
|
|
|
|
|
||||||
Filtration
|
$
|
93,089
|
|
|
$
|
87,173
|
|
|
$
|
83,345
|
|
Sealing and Advanced Solutions
|
76,128
|
|
|
29,496
|
|
|
27,783
|
|
|||
Performance Materials Segment net sales
|
169,217
|
|
|
116,669
|
|
|
111,128
|
|
|||
Technical Nonwovens Segment
(2)
:
|
|
|
|
|
|
||||||
Industrial Filtration
|
157,606
|
|
|
147,087
|
|
|
90,415
|
|
|||
Advanced Materials
(3)
|
119,465
|
|
|
121,990
|
|
|
65,090
|
|
|||
Technical Nonwovens net sales
|
277,071
|
|
|
269,077
|
|
|
155,505
|
|
|||
Thermal Acoustical Solutions Segment:
|
|
|
|
|
|
||||||
Parts
|
328,057
|
|
|
318,217
|
|
|
298,016
|
|
|||
Tooling
|
37,370
|
|
|
23,888
|
|
|
23,176
|
|
|||
Thermal Acoustical Solutions Segment net sales
|
365,427
|
|
|
342,105
|
|
|
321,192
|
|
|||
Eliminations and Other
(3)
|
(25,818
|
)
|
|
(29,414
|
)
|
|
(20,973
|
)
|
|||
Consolidated Net Sales
|
$
|
785,897
|
|
|
$
|
698,437
|
|
|
$
|
566,852
|
|
Operating Income
|
For the Years Ended December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Performance Materials Segment
(1)
|
$
|
13,139
|
|
|
$
|
12,321
|
|
|
$
|
12,574
|
|
Technical Nonwovens Segment
(2)
|
21,323
|
|
|
26,047
|
|
|
15,584
|
|
|||
Thermal Acoustical Solutions Segment
|
38,085
|
|
|
53,132
|
|
|
53,072
|
|
|||
Corporate Office Expenses
|
(23,359
|
)
|
|
(25,300
|
)
|
|
(25,785
|
)
|
|||
Consolidated Operating Income
|
$
|
49,188
|
|
|
$
|
66,200
|
|
|
$
|
55,445
|
|
(1)
|
The Performance Materials segment reports the results of Interface and PCC for the periods following the dates of acquisitions of August 31, 2018 and July 12, 2018, respectively.
|
(2)
|
The Technical Nonwovens segment reports results of Texel and Gutsche for the periods following the date of acquisitions of July 7, 2016 and December 31, 2016, respectively.
|
(3)
|
Included in the Technical Nonwovens segment and Eliminations and Other is
$22.2 million
,
$26.5 million
and
$18.2 million
in intercompany sales to the Thermal Acoustical Solutions segment for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
|
|
For the Year Ended
December 31, |
||||||||||
In thousands except ratio data
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash and cash equivalents
|
|
$
|
49,237
|
|
|
$
|
59,875
|
|
|
$
|
71,934
|
|
Cash provided by operating activities
|
|
$
|
44,739
|
|
|
$
|
62,936
|
|
|
$
|
69,727
|
|
Cash used for investing activities
|
|
$
|
(300,965
|
)
|
|
$
|
(27,329
|
)
|
|
$
|
(177,708
|
)
|
Cash provided by (used for) financing activities
|
|
$
|
247,476
|
|
|
$
|
(53,209
|
)
|
|
$
|
106,375
|
|
Depreciation and amortization
|
|
$
|
33,162
|
|
|
$
|
26,130
|
|
|
$
|
19,559
|
|
Capital expenditures
|
|
$
|
(31,291
|
)
|
|
$
|
(27,006
|
)
|
|
$
|
(25,466
|
)
|
Total debt
|
|
$
|
324,813
|
|
|
$
|
77,190
|
|
|
$
|
128,775
|
|
Total capitalization (debt plus equity)
|
|
$
|
694,088
|
|
|
$
|
430,586
|
|
|
$
|
402,231
|
|
Total debt to total capitalization
|
|
46.8
|
%
|
|
17.9
|
%
|
|
32.0
|
%
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
In thousands
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
After 5 years
|
|
Total
|
||||||||||||||
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating leases
|
$
|
6,004
|
|
|
$
|
4,871
|
|
|
$
|
3,877
|
|
|
$
|
3,226
|
|
|
$
|
2,617
|
|
|
$
|
11,111
|
|
|
$
|
31,706
|
|
Capital leases*
|
279
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
314
|
|
|||||||
Long-term debt*
|
24,117
|
|
|
23,837
|
|
|
23,209
|
|
|
22,573
|
|
|
293,017
|
|
|
—
|
|
|
386,753
|
|
|||||||
Total Contractual Obligations
|
$
|
30,400
|
|
|
$
|
28,743
|
|
|
$
|
27,086
|
|
|
$
|
25,799
|
|
|
$
|
295,634
|
|
|
$
|
11,111
|
|
|
$
|
418,773
|
|
|
*
|
Includes estimated interest payments
|
|
2018
|
|
2017
|
|
2016
|
|||
Risk-free interest rate
|
2.7
|
%
|
|
2.2
|
%
|
|
1.8
|
%
|
Expected life
|
5.5 years
|
|
|
5.5 years
|
|
|
5.5 years
|
|
Expected volatility
|
34
|
%
|
|
33
|
%
|
|
42
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
|
Weighted average exercise price of outstanding options, warrants and rights
(b)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
||||
Equity compensation plans approved by security holders
|
922,879
|
|
|
$
|
20.34
|
|
|
168,429
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
922,879
|
|
|
$
|
20.34
|
|
|
168,429
|
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|
|
|
Page
|
(a) 1. Financial Statements:
|
|
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017, and 2016
|
|
Consolidated Balance Sheets at December 31, 2018 and 2017
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017, and 2016
|
|
Consolidated Statements of Changes in Stockholders’ Equity for each of the three years in the period ended December 31, 2018
|
|
(a) 2. Financial Statement Schedule:
|
|
Schedule II — Valuation and Qualifying Accounts for the years ended December 31, 2018, 2017, and 2016
|
2.1
|
|
|
2.2
|
|
|
2.3
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
Certain long-term debt instruments, each representing indebtedness in an amount equal to or less than 10 percent of the Registrant’s total consolidated assets, have not been filed as exhibits to this Annual Report on Form 10-K. The Registrant will file these instruments with the Commission upon request.
|
10.1*
|
|
|
10.2*
|
|
|
10.3*
|
|
|
10.4*
|
|
|
10.5*
|
|
|
10.6*
|
|
|
10.7*
|
|
|
10.8*
|
|
|
10.9
|
|
|
10.10*
|
|
|
10.11*
|
|
|
10.12*
|
|
|
10.13*
|
|
|
10.14*
|
|
10.15*
|
|
|
10.16*
|
|
|
10.17*
|
|
|
10.18*
|
|
|
10.19*
|
|
|
10.20*
|
|
|
10.21*
|
|
|
10.22*
|
|
|
10.23
|
|
|
10.24
|
|
|
10.25
|
|
|
10.26
|
|
|
10.27*
|
|
|
10.28*
|
|
|
10.29*
|
|
|
10.30*
|
|
|
10.31*
|
|
10.32*
|
|
|
10.33*
|
|
|
10.34*
|
|
|
10.35
|
|
|
10.36
|
|
|
10.37
|
|
|
10.38
|
|
|
10.39
|
|
|
10.40
|
|
|
10.41*
|
|
|
10.42
|
|
|
14.1
|
|
Lydall’s Code of Ethics and Business Conduct, as amended, and the supplemental Code of Ethics for the Chief Executive Officer, Senior Financial Officers and All Accounting and Financial Personnel, as amended, each can be accessed on Lydall’s website at www.lydall.com under the Corporate Governance section.
|
21.1
|
|
|
23.1
|
|
|
24.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
*
|
Management contract or compensatory plan.
|
Item 16.
|
FORM 10-K SUMMARY
|
|
LYDALL, INC.
|
||
February 26, 2019
|
By:
|
|
/s/ Randall B. Gonzales
|
|
|
|
Randall B. Gonzales
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
/s/ Dale G. Barnhart
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 26, 2019
|
Dale G. Barnhart
|
|
|
|
|
/s/ Randall B. Gonzales
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
|
|
February 26, 2019
|
Randall B. Gonzales
|
|
|
|
|
/s/ James V. Laughlan
|
|
Vice President, Chief Accounting Officer, and Treasurer (Principal Accounting Officer)
|
|
February 26, 2019
|
James V. Laughlan
|
|
|
|
|
|
|
|
|
|
/s/ Randall B. Gonzales
|
|
|
|
February 26, 2019
|
Randall B. Gonzales
|
|
|
|
|
Attorney-in-fact for:
|
|
|
|
|
David G. Bills
|
|
Director
|
|
|
Kathleen Burdett
|
|
Director
|
|
|
James Cannon
|
|
Director
|
|
|
Matthew T. Farrell
|
|
Director
|
|
|
Marc T. Giles
|
|
Chairman of the Board of Directors
|
|
|
William D. Gurley
|
|
Director
|
|
|
Suzanne Hammett
|
|
Director
|
|
|
S. Carl Soderstrom, Jr.
|
|
Director
|
|
|
/s/ PricewaterhouseCoopers LLP
|
|
PricewaterhouseCoopers LLP
|
Hartford, Connecticut
|
February 26, 2019
|
|
For the years ended December 31,
|
||||||||||
In thousands except per share data
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Net sales
|
$
|
785,897
|
|
|
$
|
698,437
|
|
|
$
|
566,852
|
|
Cost of sales
|
633,252
|
|
|
535,078
|
|
|
428,048
|
|
|||
Gross profit
|
152,645
|
|
|
163,359
|
|
|
138,804
|
|
|||
Selling, product development and administrative expenses
|
103,457
|
|
|
97,159
|
|
|
83,359
|
|
|||
Operating income
|
49,188
|
|
|
66,200
|
|
|
55,445
|
|
|||
Interest expense
|
6,212
|
|
|
2,720
|
|
|
1,068
|
|
|||
Other (income) expense, net
|
(289
|
)
|
|
2,161
|
|
|
(562
|
)
|
|||
Income before income taxes
|
43,265
|
|
|
61,319
|
|
|
54,939
|
|
|||
Income tax expense
|
8,453
|
|
|
11,974
|
|
|
17,821
|
|
|||
(Income) loss from equity method investment
|
(132
|
)
|
|
28
|
|
|
(69
|
)
|
|||
Net income
|
$
|
34,944
|
|
|
$
|
49,317
|
|
|
$
|
37,187
|
|
Earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.03
|
|
|
$
|
2.89
|
|
|
$
|
2.20
|
|
Diluted
|
$
|
2.02
|
|
|
$
|
2.85
|
|
|
$
|
2.16
|
|
Weighted average common shares outstanding
|
17,204
|
|
|
17,045
|
|
|
16,871
|
|
|||
Weighted average common shares and equivalents outstanding
|
17,330
|
|
|
17,317
|
|
|
17,241
|
|
|
For the years ended December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
34,944
|
|
|
$
|
49,317
|
|
|
$
|
37,187
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Change in pension plans, net of income taxes of $1,285, $409, and
$1,409, respectively |
(4,204
|
)
|
|
2,016
|
|
|
(2,400
|
)
|
|||
Foreign currency translation adjustments
|
(16,237
|
)
|
|
25,664
|
|
|
(10,965
|
)
|
|||
Unrealized (loss) gain on hedging activities, net of tax
|
(2,096
|
)
|
|
122
|
|
|
—
|
|
|||
Total other comprehensive (loss) income, net of tax
|
(22,537
|
)
|
|
27,802
|
|
|
(13,365
|
)
|
|||
Comprehensive income
|
$
|
12,407
|
|
|
$
|
77,119
|
|
|
$
|
23,822
|
|
|
December 31,
|
||||||
In thousands of dollars and shares
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
49,237
|
|
|
$
|
59,875
|
|
Accounts receivable, (net of allowance for doubtful receivables of $1,440 and
$1,507, respectively) |
144,938
|
|
|
116,712
|
|
||
Contract assets
|
23,040
|
|
|
—
|
|
||
Inventories
|
84,465
|
|
|
80,339
|
|
||
Taxes receivable
|
2,912
|
|
|
5,525
|
|
||
Prepaid expenses and other current assets
|
12,486
|
|
|
11,044
|
|
||
Total current assets
|
317,078
|
|
|
273,495
|
|
||
Property, plant and equipment, net
|
213,369
|
|
|
170,332
|
|
||
Goodwill
|
196,963
|
|
|
68,969
|
|
||
Other intangible assets, net
|
136,604
|
|
|
40,543
|
|
||
Deferred tax assets
|
2,055
|
|
|
1,146
|
|
||
Other assets, net
|
6,617
|
|
|
6,386
|
|
||
Total assets
|
$
|
872,686
|
|
|
$
|
560,871
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
10,172
|
|
|
$
|
277
|
|
Accounts payable
|
73,265
|
|
|
71,931
|
|
||
Accrued payroll and other compensation
|
16,621
|
|
|
15,978
|
|
||
Accrued taxes
|
3,095
|
|
|
2,230
|
|
||
Deferred revenue
|
6,990
|
|
|
3,412
|
|
||
Other accrued liabilities
|
11,203
|
|
|
8,278
|
|
||
Total current liabilities
|
121,346
|
|
|
102,106
|
|
||
Long-term debt
|
314,641
|
|
|
76,913
|
|
||
Deferred tax liabilities
|
39,265
|
|
|
14,714
|
|
||
Benefit plan liabilities
|
22,795
|
|
|
9,743
|
|
||
Other long-term liabilities
|
5,364
|
|
|
3,999
|
|
||
Commitments and Contingencies (Note 15)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock (par value $0.01 per share; authorized 500 shares; none issued
or outstanding) (Note 9) |
—
|
|
|
—
|
|
||
Common stock (par value $0.01 per share; authorized 30,000 shares; issued
25,254 and 25,018 shares, respectively) (Note 9) |
253
|
|
|
250
|
|
||
Capital in excess of par value
|
90,851
|
|
|
88,006
|
|
||
Retained earnings
|
411,325
|
|
|
374,783
|
|
||
Accumulated other comprehensive loss
|
(42,685
|
)
|
|
(20,148
|
)
|
||
Treasury stock, 7,698 and 7,675 shares of common stock, respectively, at cost
|
(90,469
|
)
|
|
(89,495
|
)
|
||
Total stockholders’ equity
|
369,275
|
|
|
353,396
|
|
||
Total liabilities and stockholders’ equity
|
$
|
872,686
|
|
|
$
|
560,871
|
|
|
For the years ended December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
34,944
|
|
|
$
|
49,317
|
|
|
$
|
37,187
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
33,162
|
|
|
26,130
|
|
|
19,559
|
|
|||
Inventory step-up amortization
|
1,975
|
|
|
1,108
|
|
|
1,954
|
|
|||
Long-lived asset impairment charge
|
—
|
|
|
772
|
|
|
—
|
|
|||
Deferred income taxes
|
636
|
|
|
(2,933
|
)
|
|
(1,172
|
)
|
|||
Stock-based compensation
|
2,081
|
|
|
4,269
|
|
|
4,359
|
|
|||
(Income) loss from equity method investment
|
(132
|
)
|
|
28
|
|
|
(69
|
)
|
|||
Loss on disposition of property, plant and equipment
|
230
|
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(7,127
|
)
|
|
(8,046
|
)
|
|
379
|
|
|||
Contract assets
|
(3,828
|
)
|
|
—
|
|
|
—
|
|
|||
Inventories
|
(6,001
|
)
|
|
(11,116
|
)
|
|
500
|
|
|||
Taxes receivable
|
3,151
|
|
|
(1,216
|
)
|
|
1,169
|
|
|||
Prepaid expenses and other assets
|
(542
|
)
|
|
(784
|
)
|
|
(3,355
|
)
|
|||
Accounts payable
|
(5,055
|
)
|
|
14,315
|
|
|
3,505
|
|
|||
Accrued taxes
|
535
|
|
|
(4,708
|
)
|
|
1,244
|
|
|||
Accrued payroll and other compensation
|
(2,352
|
)
|
|
1,103
|
|
|
1,770
|
|
|||
Deferred revenue
|
3,801
|
|
|
934
|
|
|
1,072
|
|
|||
Benefit plan liabilities
|
(7,658
|
)
|
|
(5,245
|
)
|
|
487
|
|
|||
Other, net
|
(3,081
|
)
|
|
(992
|
)
|
|
1,138
|
|
|||
Net cash provided by operating activities
|
44,739
|
|
|
62,936
|
|
|
69,727
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Business acquisitions, net of cash acquired
|
(269,972
|
)
|
|
(323
|
)
|
|
(152,242
|
)
|
|||
Capital expenditures
|
(31,291
|
)
|
|
(27,006
|
)
|
|
(25,466
|
)
|
|||
Proceeds from the sale of property, plant and equipment
|
298
|
|
|
—
|
|
|
—
|
|
|||
Net cash used for investing activities
|
(300,965
|
)
|
|
(27,329
|
)
|
|
(177,708
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings
|
338,000
|
|
|
—
|
|
|
116,600
|
|
|||
Debt repayments
|
(89,862
|
)
|
|
(51,762
|
)
|
|
(10,328
|
)
|
|||
Debt issuance costs payments
|
(538
|
)
|
|
—
|
|
|
—
|
|
|||
Common stock issued
|
850
|
|
|
1,323
|
|
|
1,194
|
|
|||
Common stock repurchased
|
(974
|
)
|
|
(2,770
|
)
|
|
(1,091
|
)
|
|||
Net cash provided by (used for) financing activities
|
247,476
|
|
|
(53,209
|
)
|
|
106,375
|
|
|||
Effect of exchange rate changes on cash
|
(1,888
|
)
|
|
5,543
|
|
|
(2,369
|
)
|
|||
Decrease in cash and cash equivalents
|
(10,638
|
)
|
|
(12,059
|
)
|
|
(3,975
|
)
|
|||
Cash and cash equivalents at beginning of period
|
59,875
|
|
|
71,934
|
|
|
75,909
|
|
|||
Cash and cash equivalents at end of period
|
$
|
49,237
|
|
|
$
|
59,875
|
|
|
$
|
71,934
|
|
Supplemental Schedule for Cash Flow Information
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
5,960
|
|
|
$
|
2,747
|
|
|
$
|
787
|
|
Income taxes, net
|
$
|
4,606
|
|
|
$
|
16,158
|
|
|
$
|
15,739
|
|
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, 2015
|
24,732
|
|
|
$
|
247
|
|
|
$
|
76,746
|
|
|
$
|
288,358
|
|
|
$
|
(34,585
|
)
|
|
$
|
(85,541
|
)
|
|
$
|
245,225
|
|
Net income
|
|
|
|
|
|
|
37,187
|
|
|
|
|
|
|
37,187
|
|
|||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
(13,365
|
)
|
|
|
|
(13,365
|
)
|
|||||||||||
Stock repurchased
|
|
|
|
|
|
|
|
|
|
|
(1,155
|
)
|
|
(1,155
|
)
|
|||||||||||
Stock issued under employee plans
|
119
|
|
|
2
|
|
|
1,156
|
|
|
|
|
|
|
|
|
1,158
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
4,009
|
|
|
|
|
|
|
|
|
4,009
|
|
|||||||||||
Stock issued to directors
|
7
|
|
|
|
|
350
|
|
|
|
|
|
|
|
|
350
|
|
||||||||||
Recently adopted accounting standards
|
|
|
|
|
126
|
|
|
(79
|
)
|
|
|
|
|
|
47
|
|
||||||||||
Balance at December 31, 2016
|
24,858
|
|
|
249
|
|
|
82,387
|
|
|
325,466
|
|
|
(47,950
|
)
|
|
(86,696
|
)
|
|
273,456
|
|
||||||
Net income
|
|
|
|
|
|
|
49,317
|
|
|
|
|
|
|
49,317
|
|
|||||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
27,802
|
|
|
|
|
27,802
|
|
|||||||||||
Stock repurchased
|
|
|
|
|
|
|
|
|
|
|
(2,799
|
)
|
|
(2,799
|
)
|
|||||||||||
Stock issued under employee plans
|
152
|
|
|
1
|
|
|
1,350
|
|
|
|
|
|
|
|
|
1,351
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
3,868
|
|
|
|
|
|
|
|
|
3,868
|
|
|||||||||||
Stock issued to directors
|
8
|
|
|
|
|
401
|
|
|
|
|
|
|
|
|
401
|
|
||||||||||
Balance at December 31, 2017
|
25,018
|
|
|
250
|
|
|
88,006
|
|
|
374,783
|
|
|
(20,148
|
)
|
|
(89,495
|
)
|
|
353,396
|
|
||||||
Net Income
|
|
|
|
|
|
|
34,944
|
|
|
|
|
|
|
34,944
|
|
|||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
(22,537
|
)
|
|
|
|
(22,537
|
)
|
|||||||||||
Stock repurchased
|
|
|
|
|
|
|
|
|
|
|
(974
|
)
|
|
(974
|
)
|
|||||||||||
Stock issued under employee plans
|
225
|
|
|
3
|
|
|
852
|
|
|
|
|
|
|
|
|
855
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
1,619
|
|
|
|
|
|
|
|
|
1,619
|
|
|||||||||||
Stock issued to directors
|
11
|
|
|
|
|
374
|
|
|
|
|
|
|
|
|
374
|
|
||||||||||
Adoption of ASC 606
|
|
|
|
|
|
|
1,598
|
|
|
|
|
|
|
1,598
|
|
|||||||||||
Balance at December 31, 2018
|
25,254
|
|
|
$
|
253
|
|
|
$
|
90,851
|
|
|
$
|
411,325
|
|
|
$
|
(42,685
|
)
|
|
$
|
(90,469
|
)
|
|
$
|
369,275
|
|
|
December, 31
|
||||||
In thousands
|
2018
|
|
2017
|
||||
Inventories, net of progress billings and reserves
|
$
|
4,262
|
|
|
$
|
18,540
|
|
Prepaid expenses and other current assets
|
469
|
|
|
281
|
|
||
Other assets, net
|
987
|
|
|
476
|
|
||
Total tooling related assets
|
$
|
5,718
|
|
|
$
|
19,297
|
|
In thousands
|
|
December 31, 2018
|
|
January 1, 2018
|
|
Dollar Change
|
||||||
Contract assets
|
|
$
|
23,040
|
|
|
$
|
19,125
|
|
|
$
|
3,915
|
|
Contract liabilities
|
|
$
|
4,537
|
|
|
$
|
2,820
|
|
|
$
|
1,717
|
|
In thousands
|
|
December 31, 2017
|
|
Adjustments for Adoption of ASC606
|
|
January 1, 2018
|
||||||
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
||||||
Contract assets
|
|
$
|
—
|
|
|
$
|
19,125
|
|
|
$
|
19,125
|
|
Inventories
|
|
$
|
80,339
|
|
|
$
|
(15,184
|
)
|
|
$
|
65,155
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
71,931
|
|
|
$
|
663
|
|
|
$
|
72,594
|
|
Deferred revenue
|
|
$
|
3,412
|
|
|
$
|
1,209
|
|
|
$
|
4,621
|
|
Deferred tax liabilities
|
|
$
|
14,714
|
|
|
$
|
471
|
|
|
$
|
15,185
|
|
|
|
|
|
|
|
|
||||||
Stockholders' equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
374,783
|
|
|
$
|
1,598
|
|
|
$
|
376,381
|
|
|
|
December 31, 2018
|
||||||||||
In thousands
|
|
Balances Without Adoption of ASC 606
|
|
ASC 606 Adjustments
|
|
As Reported
|
||||||
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
||||||
Contract assets
|
|
$
|
—
|
|
|
$
|
23,040
|
|
|
$
|
23,040
|
|
Inventories
|
|
$
|
103,767
|
|
|
$
|
(19,302
|
)
|
|
$
|
84,465
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
71,937
|
|
|
$
|
1,328
|
|
|
$
|
73,265
|
|
Deferred revenue
|
|
$
|
7,952
|
|
|
$
|
(962
|
)
|
|
$
|
6,990
|
|
Deferred tax liabilities
|
|
$
|
38,422
|
|
|
$
|
843
|
|
|
$
|
39,265
|
|
|
|
|
|
|
|
|
||||||
Stockholders' equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
408,846
|
|
|
$
|
2,479
|
|
|
$
|
411,325
|
|
Accumulated other comprehensive loss
|
|
$
|
(42,735
|
)
|
|
$
|
50
|
|
|
$
|
(42,685
|
)
|
|
|
December 31, 2018
|
||||||||||
In thousands
|
|
Results Without Adoption of ASC 606
|
|
Effect of Change
Higher (Lower) |
|
As Reported
|
||||||
|
|
|
|
|
||||||||
Net sales
|
|
$
|
781,612
|
|
|
$
|
4,285
|
|
|
$
|
785,897
|
|
Cost of sales
|
|
630,220
|
|
|
3,032
|
|
|
633,252
|
|
|||
Gross profit
|
|
151,392
|
|
|
1,253
|
|
|
152,645
|
|
|||
Selling, product development and administrative expenses
|
|
103,457
|
|
|
—
|
|
|
103,457
|
|
|||
Operating income
|
|
47,935
|
|
|
1,253
|
|
|
49,188
|
|
|||
Interest expense
|
|
6,212
|
|
|
—
|
|
|
6,212
|
|
|||
Other income, net
|
|
(289
|
)
|
|
—
|
|
|
(289
|
)
|
|||
Income before income taxes
|
|
42,012
|
|
|
1,253
|
|
|
43,265
|
|
|||
Income tax expense
|
|
8,081
|
|
|
372
|
|
|
8,453
|
|
|||
Income from equity method investment
|
|
(132
|
)
|
|
—
|
|
|
(132
|
)
|
|||
Net income
|
|
$
|
34,063
|
|
|
$
|
881
|
|
|
$
|
34,944
|
|
Earnings per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.98
|
|
|
$
|
0.05
|
|
|
$
|
2.03
|
|
Diluted
|
|
$
|
1.97
|
|
|
$
|
0.05
|
|
|
$
|
2.02
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
17,204
|
|
|
—
|
|
|
17,204
|
|
|||
Diluted
|
|
17,330
|
|
|
—
|
|
|
17,330
|
|
|
|
December 31, 2018
|
||||||||||||||||||
In thousands
|
|
Performance Materials
|
|
Technical Nonwovens
|
|
Thermal Acoustical Solutions
|
|
Eliminations and Other
|
|
Consolidated Net Sales
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
|
$
|
117,313
|
|
|
$
|
167,519
|
|
|
$
|
250,133
|
|
|
$
|
(25,121
|
)
|
|
$
|
509,844
|
|
Europe
|
|
49,055
|
|
|
73,912
|
|
|
99,529
|
|
|
(697
|
)
|
|
221,799
|
|
|||||
Asia
|
|
2,849
|
|
|
35,640
|
|
|
15,765
|
|
|
—
|
|
|
54,254
|
|
|||||
Total Net Sales
|
|
$
|
169,217
|
|
|
$
|
277,071
|
|
|
$
|
365,427
|
|
|
$
|
(25,818
|
)
|
|
$
|
785,897
|
|
In thousands
|
|
|
||
Accounts receivable
|
|
$
|
25,182
|
|
Inventories
|
|
17,313
|
|
|
Prepaid expenses and other current assets
|
|
2,382
|
|
|
Property, plant and equipment
|
|
40,902
|
|
|
Goodwill (Note 6)
|
|
130,991
|
|
|
Other intangible assets (Note 6)
|
|
106,900
|
|
|
Other assets
|
|
308
|
|
|
Total assets acquired, net of cash acquired
|
|
$
|
323,978
|
|
|
|
|
||
Current liabilities
|
|
(11,319
|
)
|
|
Deferred tax liabilities (Note 14)
|
|
(24,904
|
)
|
|
Benefit plan liabilities (Note 10)
|
|
(18,352
|
)
|
|
Other long-term liabilities
|
|
(1,031
|
)
|
|
Total liabilities assumed
|
|
(55,606
|
)
|
|
Total purchase price, net of cash acquired
|
|
$
|
268,372
|
|
|
|
For The Years Ended
December 31, |
||||||
|
|
(Unaudited Pro Forma)
|
|
(Unaudited
Pro Forma) |
||||
In thousands
|
|
2018
|
|
2017
|
||||
Net Sales
|
|
$
|
888,355
|
|
|
$
|
840,040
|
|
Net Income
|
|
$
|
34,896
|
|
|
$
|
36,619
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
||||
Basic
|
|
$
|
2.03
|
|
|
$
|
2.15
|
|
Diluted
|
|
$
|
2.01
|
|
|
$
|
2.11
|
|
|
December 31,
|
||||||
In thousands
|
2018
|
|
2017
|
||||
Raw materials
|
$
|
37,731
|
|
|
$
|
28,672
|
|
Work in process
|
18,296
|
|
|
29,427
|
|
||
Finished goods
|
28,438
|
|
|
23,901
|
|
||
|
84,465
|
|
|
82,000
|
|
||
Less: Progress billings
|
—
|
|
|
(1,661
|
)
|
||
Total inventories
|
$
|
84,465
|
|
|
$
|
80,339
|
|
|
Estimated
Useful Lives
|
|
December 31,
|
||||||
In thousands
|
2018
|
|
2017
|
||||||
Land
|
–
|
|
$
|
6,280
|
|
|
$
|
4,289
|
|
Buildings and improvements
|
10-35 years
|
|
104,036
|
|
|
84,337
|
|
||
Machinery and equipment
|
5-25 years
|
|
289,059
|
|
|
254,881
|
|
||
Office equipment
|
2-8 years
|
|
36,110
|
|
|
33,880
|
|
||
Vehicles
|
3-6 years
|
|
1,640
|
|
|
1,706
|
|
||
Assets under capital leases:
|
|
|
|
|
|
||||
Land
|
–
|
|
228
|
|
|
241
|
|
||
Buildings and improvements
|
10-35 years
|
|
229
|
|
|
221
|
|
||
Machinery and equipment
|
5-25 years
|
|
1,005
|
|
|
1,051
|
|
||
Office equipment
|
2-8 years
|
|
32
|
|
|
34
|
|
||
|
|
|
438,619
|
|
|
380,640
|
|
||
Accumulated depreciation
|
|
|
(244,098
|
)
|
|
(226,581
|
)
|
||
Accumulated depreciation of capital leases
|
|
|
(608
|
)
|
|
(239
|
)
|
||
|
|
|
193,913
|
|
|
153,820
|
|
||
Construction in progress
|
|
|
19,456
|
|
|
16,512
|
|
||
Total property, plant and equipment, net
|
|
|
$
|
213,369
|
|
|
$
|
170,332
|
|
In thousands
|
Performance Materials
|
|
Technical Nonwovens
|
|
Thermal Acoustical Solutions
|
|
Totals
|
||||||||
Goodwill
|
$
|
13,307
|
|
|
$
|
55,662
|
|
|
$
|
12,160
|
|
|
$
|
81,129
|
|
Accumulated amortization/impairment
|
—
|
|
|
—
|
|
|
(12,160
|
)
|
|
(12,160
|
)
|
||||
Balance at December 31, 2017
|
13,307
|
|
|
55,662
|
|
|
—
|
|
|
68,969
|
|
||||
Goodwill
|
144,626
|
|
|
52,337
|
|
|
12,160
|
|
|
209,123
|
|
||||
Accumulated amortization/impairment
|
—
|
|
|
—
|
|
|
(12,160
|
)
|
|
(12,160
|
)
|
||||
Balance at December 31, 2018
|
$
|
144,626
|
|
|
$
|
52,337
|
|
|
$
|
—
|
|
|
$
|
196,963
|
|
In thousands
|
Performance Materials
|
|
Technical Nonwovens
|
|
Totals
|
||||||
Balance at January 1, 2017
|
$
|
12,777
|
|
|
$
|
50,829
|
|
|
$
|
63,606
|
|
Goodwill addition
|
—
|
|
|
323
|
|
|
323
|
|
|||
Currency translation adjustment
|
530
|
|
|
4,510
|
|
|
5,040
|
|
|||
Balance at December 31, 2017
|
13,307
|
|
|
55,662
|
|
|
68,969
|
|
|||
Goodwill addition
|
131,509
|
|
|
—
|
|
|
131,509
|
|
|||
Currency translation adjustment
|
(190
|
)
|
|
(3,325
|
)
|
|
(3,515
|
)
|
|||
Balance at December 31, 2018
|
$
|
144,626
|
|
|
$
|
52,337
|
|
|
$
|
196,963
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
In thousands
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Amortized intangible assets
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
|
$
|
141,455
|
|
|
$
|
(11,453
|
)
|
|
$
|
39,474
|
|
|
$
|
(4,460
|
)
|
Patents
|
|
4,333
|
|
|
(3,816
|
)
|
|
4,504
|
|
|
(3,821
|
)
|
||||
Technology
|
|
2,500
|
|
|
(810
|
)
|
|
2,500
|
|
|
(644
|
)
|
||||
Trade names
|
|
7,235
|
|
|
(2,840
|
)
|
|
4,288
|
|
|
(1,461
|
)
|
||||
License agreements
|
|
619
|
|
|
(619
|
)
|
|
640
|
|
|
(640
|
)
|
||||
Other
|
|
561
|
|
|
(561
|
)
|
|
586
|
|
|
(423
|
)
|
||||
Total amortized intangible assets
|
|
$
|
156,703
|
|
|
$
|
(20,099
|
)
|
|
$
|
51,992
|
|
|
$
|
(11,449
|
)
|
|
|
|
|
|
December 31,
|
||||||
In thousands
|
Effective Rate
|
|
Maturity
|
|
2018
|
|
2017
|
||||
Revolver Loan
|
4.15%
|
|
8/31/2023
|
|
$
|
138,000
|
|
|
$
|
76,600
|
|
Term Loan, net of debt issuance costs
|
4.15%
|
|
8/31/2023
|
|
186,498
|
|
|
—
|
|
||
Capital Leases
|
1.65% - 2.09%
|
|
2019 - 2020
|
|
315
|
|
|
590
|
|
||
|
|
|
|
|
324,813
|
|
|
77,190
|
|
||
Less portion due within one year
|
|
|
|
|
(10,172
|
)
|
|
(277
|
)
|
||
Total long-term debt
|
|
|
|
|
$
|
314,641
|
|
|
$
|
76,913
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
In thousands
|
Asset Derivatives
|
|
Liability Derivatives
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
$
|
179
|
|
|
$
|
2,738
|
|
|
$
|
157
|
|
|
$
|
—
|
|
Total derivatives
|
$
|
179
|
|
|
$
|
2,738
|
|
|
$
|
157
|
|
|
$
|
—
|
|
|
Quarters Ended December 31,
|
|
Years Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
$
|
(2,185
|
)
|
|
$
|
129
|
|
|
$
|
(2,096
|
)
|
|
$
|
122
|
|
|
$
|
(2,185
|
)
|
|
$
|
129
|
|
|
$
|
(2,096
|
)
|
|
$
|
122
|
|
|
December 31,
|
||||||
In thousands
|
2018
|
|
2017
|
||||
Change in benefit obligation:
|
|
|
|
||||
Net benefit obligation at beginning of year
|
$
|
51,882
|
|
|
$
|
50,086
|
|
Benefit obligation assumed through acquisition
|
52,392
|
|
|
—
|
|
||
Service Cost
|
46
|
|
|
—
|
|
||
Interest cost
|
2,595
|
|
|
2,058
|
|
||
Actuarial (gain)/loss
|
(876
|
)
|
|
2,126
|
|
||
Gross benefits paid
|
(3,360
|
)
|
|
(2,388
|
)
|
||
Net benefit obligation at end of year
|
$
|
102,679
|
|
|
$
|
51,882
|
|
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
44,174
|
|
|
$
|
37,038
|
|
Fair value of plan assets through acquisition
|
43,230
|
|
|
—
|
|
||
Actual (loss)/return on plan assets
|
(4,092
|
)
|
|
5,924
|
|
||
Contributions
|
7,500
|
|
|
3,600
|
|
||
Gross benefits paid
|
(3,360
|
)
|
|
(2,388
|
)
|
||
Fair value of plan assets at end of year
|
$
|
87,452
|
|
|
$
|
44,174
|
|
Net benefit obligation in excess of plan assets
|
$
|
(15,227
|
)
|
|
$
|
(7,708
|
)
|
Balance sheet amounts:
|
|
|
|
||||
Current liabilities
|
$
|
(3,078
|
)
|
|
$
|
—
|
|
Noncurrent liabilities
|
$
|
(12,149
|
)
|
|
$
|
(7,708
|
)
|
Total liabilities
|
$
|
(15,227
|
)
|
|
$
|
(7,708
|
)
|
Amounts recognized in accumulated other comprehensive income, net of tax consist of:
|
|
|
|
||||
Net actuarial loss
|
$
|
21,850
|
|
|
$
|
17,632
|
|
Net amount recognized
|
$
|
21,850
|
|
|
$
|
17,632
|
|
|
December 31,
|
||||||
In thousands
|
2018
|
|
2017
|
||||
Projected benefit obligation
|
$
|
102,679
|
|
|
$
|
51,882
|
|
Accumulated benefit obligation
|
$
|
104,188
|
|
|
$
|
51,882
|
|
Fair value of plan assets
|
$
|
87,452
|
|
|
$
|
44,174
|
|
|
December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Service cost
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
2,595
|
|
|
2,058
|
|
|
2,139
|
|
|||
Expected return on plan assets
|
(3,339
|
)
|
|
(2,376
|
)
|
|
(2,419
|
)
|
|||
Amortization of actuarial net loss
|
1,024
|
|
|
1,092
|
|
|
933
|
|
|||
Total net periodic benefit cost
|
$
|
326
|
|
|
$
|
774
|
|
|
$
|
653
|
|
|
Benefit Obligation
|
|
Net Cost
|
|||||||||||
For the years ended December 31,
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2016
|
|||||
Discount rate
|
3.99
|
%
|
|
3.71
|
%
|
|
3.75
|
%
|
|
4.21
|
%
|
|
4.56
|
%
|
Expected return on plan assets
|
4.08
|
%
|
|
5.80
|
%
|
|
5.79
|
%
|
|
6.30
|
%
|
|
7.00
|
%
|
|
|||||||
|
Target Allocation
|
|
Actual Allocation of Plan Assets
December 31, |
||||
Asset Category
|
2019
|
|
2018
|
|
2017
|
||
Domestic equities
|
11% - 32%
|
|
16
|
%
|
|
26
|
%
|
International equities
|
5% - 24%
|
|
11
|
%
|
|
26
|
%
|
Fixed income
|
30% - 69%
|
|
44
|
%
|
|
40
|
%
|
U.S. government securities
|
2% - 13%
|
|
3
|
%
|
|
—
|
%
|
Corporate and foreign bonds
|
2% - 13%
|
|
2
|
%
|
|
—
|
%
|
Inflation hedge mutual funds
|
2% - 13%
|
|
3
|
%
|
|
—
|
%
|
Hedge fund of funds
|
2% - 9%
|
|
5
|
%
|
|
7
|
%
|
Cash and cash equivalents
|
0% - 32%
|
|
16
|
%
|
|
1
|
%
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
In thousands
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Measured at NAV
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic equity
|
$
|
13,941
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,941
|
|
International equity
|
9,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,547
|
|
|||||
Fixed income
|
10,977
|
|
|
—
|
|
|
—
|
|
|
27,727
|
|
|
38,704
|
|
|||||
U.S. government securities
|
—
|
|
|
2,466
|
|
|
—
|
|
|
—
|
|
|
2,466
|
|
|||||
Corporate and foreign bonds
|
—
|
|
|
1,448
|
|
|
—
|
|
|
—
|
|
|
1,448
|
|
|||||
Inflation hedge mutual funds
|
2,808
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,808
|
|
|||||
Hedge fund of funds
|
4,129
|
|
|
—
|
|
|
—
|
|
|
312
|
|
|
4,441
|
|
|||||
Cash and cash equivalents
|
12,027
|
|
|
2,070
|
|
|
—
|
|
|
—
|
|
|
14,097
|
|
|||||
Total Assets at Fair Value
|
$
|
53,429
|
|
|
$
|
5,984
|
|
|
$
|
—
|
|
|
$
|
28,039
|
|
|
$
|
87,452
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
In thousands
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Measured at NAV
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic equity
|
$
|
11,577
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,577
|
|
International equity
|
11,626
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,626
|
|
|||||
Fixed income
|
—
|
|
|
—
|
|
|
—
|
|
|
17,360
|
|
|
17,360
|
|
|||||
Hedge fund of funds
|
—
|
|
|
—
|
|
|
—
|
|
|
3,054
|
|
|
3,054
|
|
|||||
Cash and cash equivalents
|
557
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
557
|
|
|||||
Total Assets at Fair Value
|
$
|
23,760
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,414
|
|
|
$
|
44,174
|
|
In thousands
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024-2028
|
||||||||||||
Benefit payments
|
$
|
4,023
|
|
|
$
|
3,099
|
|
|
$
|
3,186
|
|
|
$
|
3,241
|
|
|
$
|
3,264
|
|
|
$
|
16,995
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Risk-free interest rate
|
2.7
|
%
|
|
2.2
|
%
|
|
1.8
|
%
|
Expected life
|
5.5 years
|
|
|
5.5 years
|
|
|
5.5 years
|
|
Expected volatility
|
34
|
%
|
|
33
|
%
|
|
42
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
In thousands except per share amounts and years
|
|
|
|
|
|
|
|
||||
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted- Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value
|
||||
Outstanding at December 31, 2017
|
433
|
|
$
|
33.37
|
|
|
|
|
|
||
Granted
|
246
|
|
$
|
21.49
|
|
|
|
|
|
||
Exercised
|
(54)
|
|
$
|
16.48
|
|
|
|
|
|
||
Forfeited/Cancelled
|
(2)
|
|
$
|
36.08
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
623
|
|
$
|
30.14
|
|
|
7.7
|
|
$
|
734
|
|
Options exercisable at December 31, 2018
|
254
|
|
$
|
29.36
|
|
|
5.8
|
|
$
|
699
|
|
Unvested at December 31, 2018
|
369
|
|
$
|
30.68
|
|
|
3.1
|
|
$
|
35
|
|
In thousands except per share amounts
|
|
|
|
||
Outstanding Restricted Shares
|
Shares
|
|
Weighted-Average Grant-Date Fair Value
|
||
Nonvested at December 31, 2017
|
219
|
|
$
|
44.77
|
|
Granted
|
172
|
|
$
|
25.19
|
|
Vested
|
(79)
|
|
$
|
31.26
|
|
Forfeited/Cancelled
|
(8)
|
|
$
|
50.56
|
|
Nonvested December 31, 2018
|
304
|
|
$
|
37.02
|
|
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 during year ended:
|
|
|
|
|
||||||||
December 31, 2017
|
181
|
|
154
|
|
327
|
|
662
|
|
||||
December 31, 2018
|
606
|
|
136
|
|
1,555
|
|
2,297
|
|
||||
Estimated remaining expense at December 31, 2018
|
$
|
463
|
|
$
|
160
|
|
$
|
618
|
|
$
|
1,241
|
|
In thousands
|
Total
|
||
Pre-tax restructuring expenses, excluding depreciation
|
$
|
510
|
|
Cash paid
|
(177
|
)
|
|
Balance as of December 31, 2017
|
$
|
333
|
|
Pre-tax restructuring expenses, excluding depreciation
|
$
|
2,012
|
|
Cash paid
|
(2,198
|
)
|
|
Balance as of December 31, 2018
|
$
|
147
|
|
Consolidated Net Sales
|
For the Years Ended December 31,
|
||||||||||
|
|
|
|
|
|
||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Performance Materials Segment
(1)
:
|
|
|
|
|
|
||||||
Filtration
|
$
|
93,089
|
|
|
$
|
87,173
|
|
|
$
|
83,345
|
|
Sealing and Advanced Solutions
|
76,128
|
|
|
29,496
|
|
|
27,783
|
|
|||
Performance Materials Segment net sales
|
169,217
|
|
|
116,669
|
|
|
111,128
|
|
|||
Technical Nonwovens Segment
(2),(3)
:
|
|
|
|
|
|
||||||
Industrial Filtration
|
157,606
|
|
|
147,087
|
|
|
90,415
|
|
|||
Advanced Materials
(4)
|
119,465
|
|
|
121,990
|
|
|
65,090
|
|
|||
Technical Nonwovens net sales
|
277,071
|
|
|
269,077
|
|
|
155,505
|
|
|||
Thermal Acoustical Solutions Segment:
|
|
|
|
|
|
||||||
Parts
|
328,057
|
|
|
318,217
|
|
|
298,016
|
|
|||
Tooling
|
37,370
|
|
|
23,888
|
|
|
23,176
|
|
|||
Thermal Acoustical Solutions Segment net sales
|
365,427
|
|
|
342,105
|
|
|
321,192
|
|
|||
Eliminations and Other
(4)
|
(25,818
|
)
|
|
(29,414
|
)
|
|
(20,973
|
)
|
|||
Consolidated Net Sales
|
$
|
785,897
|
|
|
$
|
698,437
|
|
|
$
|
566,852
|
|
Operating Income
|
For the Years Ended December 31,
|
||||||||||
|
|
|
|
|
|
||||||
In thousands
|
2018
|
|
2017
(5)
|
|
2016
(5)
|
||||||
Performance Materials Segment
(1)
|
$
|
13,139
|
|
|
$
|
12,321
|
|
|
$
|
12,574
|
|
Technical Nonwovens Segment
(2),(3)
|
21,323
|
|
|
26,047
|
|
|
15,584
|
|
|||
Thermal Acoustical Solutions Segment
|
38,085
|
|
|
53,132
|
|
|
53,072
|
|
|||
Corporate Office Expenses
|
(23,359
|
)
|
|
(25,300
|
)
|
|
(25,785
|
)
|
|||
Consolidated Operating Income
|
$
|
49,188
|
|
|
$
|
66,200
|
|
|
$
|
55,445
|
|
Total Assets
|
December 31,
|
||||||||||
|
|
|
|
|
|
||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Performance Materials Segment
(1)
|
$
|
414,211
|
|
|
$
|
72,837
|
|
|
$
|
66,965
|
|
Technical Nonwovens Segment
(2),(3)
|
242,007
|
|
|
271,713
|
|
|
268,104
|
|
|||
Thermal Acoustical Solutions Segment
|
201,509
|
|
|
189,301
|
|
|
166,591
|
|
|||
Corporate Office
|
14,959
|
|
|
27,020
|
|
|
25,369
|
|
|||
Total Assets
|
$
|
872,686
|
|
|
$
|
560,871
|
|
|
$
|
527,029
|
|
|
Capital Expenditures
|
|
Depreciation and Amortization
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Performance Materials Segment
(1)
|
$
|
11,288
|
|
|
$
|
3,610
|
|
|
$
|
4,098
|
|
|
$
|
9,006
|
|
|
$
|
3,996
|
|
|
$
|
4,028
|
|
Technical Nonwovens Segment
(2),(3)
|
5,864
|
|
|
2,903
|
|
|
1,248
|
|
|
13,877
|
|
|
12,625
|
|
|
6,791
|
|
||||||
Thermal Acoustical Solutions Segment
|
11,934
|
|
|
17,462
|
|
|
22,324
|
|
|
9,190
|
|
|
8,619
|
|
|
7,605
|
|
||||||
Corporate Office
|
544
|
|
|
940
|
|
|
489
|
|
|
658
|
|
|
699
|
|
|
977
|
|
||||||
Total
|
$
|
29,630
|
|
|
$
|
24,915
|
|
|
$
|
28,159
|
|
|
$
|
32,731
|
|
|
$
|
25,939
|
|
|
$
|
19,401
|
|
|
Net Sales
|
|
Long-Lived Assets
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
United States
(1)
|
$
|
422,222
|
|
|
$
|
376,086
|
|
|
$
|
354,371
|
|
|
$
|
136,448
|
|
|
$
|
93,583
|
|
|
$
|
88,918
|
|
France
(1)
|
66,579
|
|
|
56,214
|
|
|
52,042
|
|
|
13,219
|
|
|
14,268
|
|
|
12,692
|
|
||||||
Germany
(1),(3)
|
125,796
|
|
|
105,828
|
|
|
63,301
|
|
|
25,873
|
|
|
20,872
|
|
|
15,649
|
|
||||||
United Kingdom
|
27,156
|
|
|
24,921
|
|
|
23,871
|
|
|
4,844
|
|
|
4,916
|
|
|
4,903
|
|
||||||
Canada
(2)
|
87,622
|
|
|
84,701
|
|
|
40,871
|
|
|
25,614
|
|
|
30,739
|
|
|
30,911
|
|
||||||
China
(1),(3)
|
54,198
|
|
|
47,856
|
|
|
30,361
|
|
|
11,958
|
|
|
11,896
|
|
|
11,996
|
|
||||||
Other
(1)
|
2,324
|
|
|
2,831
|
|
|
2,035
|
|
|
4,085
|
|
|
1,590
|
|
|
1,301
|
|
||||||
Total
|
$
|
785,897
|
|
|
$
|
698,437
|
|
|
$
|
566,852
|
|
|
$
|
222,041
|
|
|
$
|
177,864
|
|
|
$
|
166,370
|
|
(1)
|
The Performance Materials segment includes the results of Interface and PCC for the periods following the dates of acquisitions of August 31, 2018 and July 12, 2018, respectively.
|
(2)
|
Technical Nonwovens segment includes results of Texel for the period following the date of acquisition of July 7, 2016.
|
(3)
|
Technical Nonwovens segment includes results of Gutsche as of the acquisition date of December 31, 2016.
|
(4)
|
Included in the Technical Nonwovens segment and Eliminations and Other is
$22.2 million
,
$26.5 million
and
$18.2 million
of intercompany sales to the Thermal Acoustical Solutions segment for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
(5)
|
For the years ended
December 31, 2017
and
2016
$0.8 million
and
$0.7 million
, respectively, have been reclassified from operating income to other expense (income), net, to give effect to the adoption of ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost".
|
|
For the years ended December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
3,739
|
|
|
$
|
11,526
|
|
|
$
|
15,376
|
|
State
|
498
|
|
|
956
|
|
|
1,513
|
|
|||
Foreign
|
3,788
|
|
|
2,425
|
|
|
2,104
|
|
|||
Total Current
|
$
|
8,025
|
|
|
$
|
14,907
|
|
|
$
|
18,993
|
|
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
2,646
|
|
|
$
|
(2,472
|
)
|
|
$
|
(594
|
)
|
State
|
380
|
|
|
256
|
|
|
601
|
|
|||
Foreign
|
(2,598
|
)
|
|
(717
|
)
|
|
(1,179
|
)
|
|||
Total Deferred
|
428
|
|
|
(2,933
|
)
|
|
(1,172
|
)
|
|||
Provision for income taxes
|
$
|
8,453
|
|
|
$
|
11,974
|
|
|
$
|
17,821
|
|
|
For the years ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Statutory federal income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes
|
1.6
|
|
|
1.6
|
|
|
2.1
|
|
Valuation allowances for deferred tax assets, including state
|
(1.3
|
)
|
|
0.1
|
|
|
1.3
|
|
Research and development credits
|
(1.3
|
)
|
|
(1.0
|
)
|
|
(1.2
|
)
|
Capitalized transaction costs
|
0.6
|
|
|
—
|
|
|
0.7
|
|
Domestic production activities deduction
|
—
|
|
|
(1.8
|
)
|
|
(2.7
|
)
|
Stock based compensation
|
(0.7
|
)
|
|
(4.4
|
)
|
|
(2.1
|
)
|
German Cartel settlement
|
—
|
|
|
—
|
|
|
2.2
|
|
Foreign income taxed at lower rates
|
(1.6
|
)
|
|
(2.8
|
)
|
|
(3.5
|
)
|
Reserves for uncertain tax positions
|
—
|
|
|
(1.7
|
)
|
|
(0.1
|
)
|
Repatriation of foreign undistributed earnings
|
1.6
|
|
|
1.3
|
|
|
—
|
|
Revaluation of deferred tax liabilities due to federal rate change
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
Other
|
(0.4
|
)
|
|
0.5
|
|
|
0.7
|
|
Effective income tax rate
|
19.5
|
%
|
|
19.5
|
%
|
|
32.4
|
%
|
|
2018
|
|
2017
|
||||||||||||
|
Deferred Tax Assets
|
|
Deferred Tax Assets
|
||||||||||||
In thousands
|
Current
|
|
Long-term
|
|
Current
|
|
Long-term
|
||||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign
|
—
|
|
|
2,055
|
|
|
—
|
|
|
1,146
|
|
||||
Totals
|
$
|
—
|
|
|
$
|
2,055
|
|
|
$
|
—
|
|
|
$
|
1,146
|
|
|
2018
|
|
2017
|
||||||||||||
|
Deferred Tax Liabilities
|
|
Deferred Tax Liabilities
|
||||||||||||
In thousands
|
Current
|
|
Long-term
|
|
Current
|
|
Long-term
|
||||||||
Federal
|
$
|
—
|
|
|
$
|
30,193
|
|
|
$
|
—
|
|
|
$
|
7,288
|
|
State
|
—
|
|
|
3,728
|
|
|
—
|
|
|
424
|
|
||||
Foreign
|
—
|
|
|
5,344
|
|
|
—
|
|
|
7,002
|
|
||||
Totals
|
$
|
—
|
|
|
$
|
39,265
|
|
|
$
|
—
|
|
|
$
|
14,714
|
|
|
December 31,
|
||||||
In thousands
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Accounts receivable
|
$
|
172
|
|
|
$
|
132
|
|
Inventories
|
520
|
|
|
164
|
|
||
Net operating loss carryforwards
|
6,095
|
|
|
5,339
|
|
||
Other accrued liabilities
|
3,426
|
|
|
1,053
|
|
||
Pension
|
5,181
|
|
|
1,482
|
|
||
Tax Credits
|
1,846
|
|
|
1,735
|
|
||
Total deferred tax assets
|
17,240
|
|
|
9,905
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
25,133
|
|
|
2,073
|
|
||
Property, plant and equipment
|
23,353
|
|
|
15,691
|
|
||
Total deferred tax liabilities
|
48,486
|
|
|
17,764
|
|
||
Valuation allowance
|
5,964
|
|
|
5,709
|
|
||
Net deferred tax liabilities
|
$
|
(37,210
|
)
|
|
$
|
(13,568
|
)
|
|
For the years ended December 31,
|
||||||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
$
|
33,928
|
|
|
$
|
54,212
|
|
|
$
|
53,356
|
|
Foreign
|
9,337
|
|
|
7,107
|
|
|
1,583
|
|
|||
Total income before income taxes
|
$
|
43,265
|
|
|
$
|
61,319
|
|
|
$
|
54,939
|
|
In thousands
|
2018
|
|
2017
|
||||
Unrecognized tax benefits at beginning of year
|
$
|
2,526
|
|
|
$
|
3,219
|
|
Decreases relating to positions taken in prior periods
|
(298
|
)
|
|
—
|
|
||
Increases relating to positions taken in prior periods
|
—
|
|
|
221
|
|
||
Increases relating to current period
|
1,584
|
|
|
475
|
|
||
Decreases due to settlements with tax authorities
|
(233
|
)
|
|
(1,372
|
)
|
||
Decreases due to lapse of statute of limitations
|
(16
|
)
|
|
(17
|
)
|
||
Unrecognized tax benefits at end of year
|
$
|
3,563
|
|
|
$
|
2,526
|
|
|
Payments due by period
|
||||||||||
In thousands
|
Operating Lease Payments
|
|
Capital Lease Payments
|
|
Total
|
||||||
2019
|
$
|
6,004
|
|
|
$
|
279
|
|
|
$
|
6,283
|
|
2020
|
4,871
|
|
|
35
|
|
|
4,906
|
|
|||
2021
|
3,877
|
|
|
—
|
|
|
3,877
|
|
|||
2022
|
3,226
|
|
|
—
|
|
|
3,226
|
|
|||
2023
|
2,617
|
|
|
—
|
|
|
2,617
|
|
|||
Thereafter
|
11,111
|
|
|
—
|
|
|
11,111
|
|
|||
Total
|
31,706
|
|
|
314
|
|
|
32,020
|
|
|||
Interest on capital leases
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Total
|
$
|
31,706
|
|
|
$
|
312
|
|
|
$
|
32,018
|
|
|
For the years ended
December 31, |
|||||||
In thousands
|
2018
|
|
2017
|
|
2016
|
|||
Basic average common shares outstanding
|
17,204
|
|
|
17,045
|
|
|
16,871
|
|
Effect of dilutive options and restricted stock awards
|
126
|
|
|
272
|
|
|
370
|
|
Diluted average common shares outstanding
|
17,330
|
|
|
17,317
|
|
|
17,241
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||||||||||||||||||
In thousands except per share data
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Net sales
|
$
|
191,660
|
|
|
$
|
165,487
|
|
|
$
|
186,413
|
|
|
$
|
174,879
|
|
|
$
|
197,886
|
|
|
$
|
180,041
|
|
|
$
|
209,938
|
|
|
$
|
178,030
|
|
Gross profit
|
$
|
39,507
|
|
|
$
|
40,498
|
|
|
$
|
36,127
|
|
|
$
|
43,327
|
|
|
$
|
35,139
|
|
|
$
|
40,054
|
|
|
$
|
41,872
|
|
|
$
|
39,480
|
|
Net income
|
$
|
11,054
|
|
|
$
|
11,669
|
|
|
$
|
10,450
|
|
|
$
|
13,125
|
|
|
$
|
6,256
|
|
|
$
|
10,675
|
|
|
$
|
7,184
|
|
|
$
|
13,848
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.64
|
|
|
$
|
0.69
|
|
|
$
|
0.61
|
|
|
$
|
0.77
|
|
|
$
|
0.36
|
|
|
$
|
0.63
|
|
|
$
|
0.42
|
|
|
$
|
0.81
|
|
Diluted
|
$
|
0.64
|
|
|
$
|
0.68
|
|
|
$
|
0.60
|
|
|
$
|
0.76
|
|
|
$
|
0.36
|
|
|
$
|
0.62
|
|
|
$
|
0.42
|
|
|
$
|
0.80
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||||||||||||||||||
In thousands except per share data
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Gross profit impact:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Inventory step-up purchase accounting adjustments
|
$
|
—
|
|
|
$
|
481
|
|
|
$
|
—
|
|
|
$
|
543
|
|
|
$
|
1,390
|
|
|
$
|
83
|
|
|
$
|
585
|
|
|
$
|
—
|
|
Restructuring, severance and segment consolidation expenses
|
449
|
|
|
441
|
|
|
876
|
|
|
92
|
|
|
400
|
|
|
287
|
|
|
169
|
|
|
155
|
|
||||||||
Net income impact:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Inventory step-up purchase accounting adjustments
|
$
|
—
|
|
|
$
|
350
|
|
|
$
|
—
|
|
|
$
|
394
|
|
|
$
|
1,077
|
|
|
$
|
59
|
|
|
$
|
438
|
|
|
$
|
—
|
|
Restructuring, severance and segment consolidation expenses
|
494
|
|
|
702
|
|
|
711
|
|
|
216
|
|
|
409
|
|
|
910
|
|
|
527
|
|
|
488
|
|
||||||||
Long-lived asset impairment charge
|
—
|
|
|
490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Strategic initiatives expenses
|
87
|
|
|
125
|
|
|
923
|
|
|
—
|
|
|
1,730
|
|
|
219
|
|
|
493
|
|
|
205
|
|
||||||||
Discrete tax items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,380
|
)
|
|
320
|
|
|
(2,867
|
)
|
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, 2015
|
$
|
(16,920
|
)
|
|
$
|
(17,665
|
)
|
|
$
|
—
|
|
|
$
|
(34,585
|
)
|
Other Comprehensive loss
|
(10,965
|
)
|
|
(2,969
|
)
|
(a)
|
—
|
|
|
(13,934
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
|
569
|
|
(b)
|
—
|
|
|
569
|
|
|||||
Balance at December 31, 2016
|
$
|
(27,885
|
)
|
|
$
|
(20,065
|
)
|
|
$
|
—
|
|
|
$
|
(47,950
|
)
|
Other Comprehensive income
|
25,664
|
|
|
1,299
|
|
(a)
|
122
|
|
(c)
|
27,085
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
|
717
|
|
(b)
|
—
|
|
|
717
|
|
|||||
Balance at December 31, 2017
|
$
|
(2,221
|
)
|
|
$
|
(18,049
|
)
|
|
$
|
122
|
|
|
$
|
(20,148
|
)
|
Other Comprehensive loss
|
(16,237
|
)
|
|
(4,998
|
)
|
(a)
|
(2,096
|
)
|
(c)
|
(23,331
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
794
|
|
(b)
|
—
|
|
|
794
|
|
||||
Balance at December 31, 2018
|
$
|
(18,458
|
)
|
|
$
|
(22,253
|
)
|
|
$
|
(1,974
|
)
|
|
$
|
(42,685
|
)
|
In thousands
|
|
Balance at January 1,
|
|
Charges to Costs and Expenses
|
|
Charges (Deductions) to Other Accounts
|
|
Deductions
|
|
Balance at December 31,
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful receivables
|
|
$
|
1,507
|
|
|
$
|
785
|
|
|
$
|
(58
|
)
|
2
|
$
|
(794
|
)
|
1
|
$
|
1,440
|
|
Tax valuation allowances
|
|
5,709
|
|
|
3,859
|
|
|
(192
|
)
|
2
|
(3,412
|
)
|
3
|
5,964
|
|
|||||
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful receivables
|
|
$
|
1,429
|
|
|
$
|
541
|
|
|
$
|
103
|
|
2
|
$
|
(566
|
)
|
1
|
$
|
1,507
|
|
Tax valuation allowances
|
|
4,903
|
|
|
886
|
|
|
394
|
|
2
|
(474
|
)
|
3
|
5,709
|
|
|||||
2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful receivables
|
|
$
|
1,251
|
|
|
$
|
941
|
|
|
$
|
(123
|
)
|
2
|
$
|
(640
|
)
|
1
|
$
|
1,429
|
|
Tax valuation allowances
|
|
4,307
|
|
|
762
|
|
|
(140
|
)
|
2
|
(26
|
)
|
3
|
4,903
|
|
1.
|
Uncollected receivables written off and recoveries.
|
2.
|
Foreign currency translation and other adjustments.
|
3.
|
Reduction to income tax expense.
|
1.
|
I have reviewed this annual report on Form 10-K of Lydall, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
February 26, 2019
|
|
/s/ Dale G. Barnhart
|
|
|
Dale G. Barnhart
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Lydall, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
February 26, 2019
|
|
/s/ Randall B. Gonzales
|
|
|
Randall B. Gonzales
Executive Vice President and Chief Financial Officer
|
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.
|
February 26, 2019
|
|
/s/ Dale G. Barnhart
|
|
|
Dale G. Barnhart
President and Chief Executive Officer
|
|
|
|
February 26, 2019
|
|
/s/ Randall B. Gonzales
|
|
|
Randall B. Gonzales
Executive Vice President and Chief Financial Officer
|