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Lydall Consolidates Automotives Operations

September 25, 2008

St. Johnsbury site to close next year.

Lydall, Inc. will close its St. Johnsbury, VT manufacturing facility and consolidating its North American automotive production into its Hamptonville, NC operation. The company plans to begin the transfer of equipment and production in the fourth quarter of 2008 and to complete the consolidation by the end of 2009.

Dale G. Barnhart, president and chief executive officer of Lydall, said, "Due to the current downturn in the U.S. automotive market, our two North American automotive plants are running at less than 50% capacity. Consequently, we looked at all possible options to rationalize our North American automotive production in the face of this increasingly difficult automotive market. Both our North American operations are profitable, viable businesses; however, the cost of running two plants at less than 50% capacity is not practical, especially in this difficult economy and under current market conditions. Consolidating operations in North Carolina will reduce operating costs significantly, increase efficiency, and enhance our flexibility and competitive position.”

Lydall anticipates that the costs associated with this consolidation will primarily be comprised of severance related costs, facility exit and move costs, the acceleration of depreciation on assets to be disposed of, certain lease obligation costs and certain income tax charges. The company expects to record pre-tax charges in the range of approximately $7.5 million to $8.5 million, or approximately $.32 to $.36 per diluted share over the period of consolidation. A portion of these costs will be recorded in the third and fourth quarters of 2008 with the remainder primarily recorded throughout 2009. Cash expenditures are expected to be in the range of $6.5 million to $7.5 million related to this action. Beginning in the latter part of 2009, the Company expects to benefit from significantly reduced fixed overhead and selling, product development and administrative expenses as a result of the consolidation.

Approximately 190 employees will be affected by the closing of the St. Johnsbury operation, and more than 100 new jobs will be created at the Hamptonville facility. St. Johnsbury employees interested in relocating to North Carolina will be given the opportunity to apply for comparable positions.