Net sales for the second quarter were $88.9 million compared with $87.8 million for the same period in 2007. Excluding the impact of foreign currency translation, net sales decreased by $3.3 million, or 3.7%, in the second quarter of 2008 compared with the second quarter of 2007. Net income for the current quarter was $2.9 million compared with $3.5 million for the second quarter of 2007.

Year-to-date net income was $6.1 million compared with $4.8 million for the comparable period in 2007. Gross margin as a percent of net sales for the second quarter of 2008 was 22.6% compared with 23.2% for the same quarter of 2007.

Dale Barnhart, president and CEO, commented, “Overall I am relatively pleased with our second quarter results in light of the economic conditions in the U.S. Less demand for automobiles by U.S. consumers resulted in lower production of automobiles containing our parts. In contrast to North America, production in the European automotive market that the company serves was relatively stable in the second quarter and first half of 2008.

Lydall’s Performance Materials group reported solid sales growth of 9% in the second quarter but was not immune to increases in raw material and energy costs that negatively impacted this group, as well as its automotive businesses during the quarter. During the second quarter, the company announced price increases, effective in the second half of 2008, on certain performance materials’ products. These price increases are expected to mitigate a portion of the increased raw material and energy costs during the remainder of 2008.

Mr. Barnhart described Lydall’s balance sheet as strong and said that from a cash flow perspective, the company generated more than $7 million of cash flow from operations in the second quarter of 2008 and more than $15 million year-to-date. We will continue to invest in our businesses and support growth initiatives.

“Looking forward to the second half of 2008, we expect to continue to face sales volume reductions in our North American automotive business and be challenged by higher raw material and energy costs throughout many of our businesses,” he said.