8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

______________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 22, 2012

KADANT INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-11406	52-1762325
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

One Technology Park Drive
Westford, Massachusetts	01886
(Address of Principal Executive Offices)	(Zip Code)

(978) 776-2000

Registrant's telephone number, including area code

Not Applicable

 (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

KADANT INC.

Item 2.02  Results of Operations and Financial Condition.

On February 22, 2012, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended December 31, 2011. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01  Financial Statements and Exhibits.

(c) Exhibit
The following exhibit relating to Item 2.02 shall be deemed to be furnished and not filed.
Exhibit     No.	Description of Exhibit
99	Press Release issued by the Company on February 22, 2012

SIGNATURE

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

		KADANT INC.
Date:  February 22, 2012	By	/s/ Thomas M. O’Brien
		Thomas M. O’Brien Executive Vice President and    Chief Financial Officer

EX-99

Exhibit 99

[LOGO]                                                                                                                                                         

NEWS

KADANT

AN ACCENT ON INNOVATION

One Technology Park Drive

Westford, MA 01886

Investor contact: Thomas M. O’Brien, 978-776-2000

Media contact: Wes Martz, 269-278-1715

Kadant Reports 2011 Fourth Quarter and Full-Year Results

Record Quarterly Revenues and EPS

Provides Financial Guidance for 2012

WESTFORD, Mass., February 22, 2012 – Kadant Inc. (NYSE:KAI) reported its financial results for the fourth quarter and year ended December 31, 2011.

Fourth Quarter and Full-Year 2011 Financial Highlights

·   Record GAAP diluted earnings per share (EPS) from continuing operations was $0.90 in the fourth quarter of 2011, including restructuring costs and a benefit from discrete tax items, compared to $0.41 in the fourth quarter of 2010. For the full year, GAAP diluted EPS was $2.74, compared to $1.48 in 2010.

·   Adjusted diluted EPS was $0.59 in the fourth quarter and $2.10 for the year, up 40% and 49%, respectively, over the corresponding prior periods.

·   Revenues were a record $97 million in the quarter, increasing 32% over the fourth quarter of 2010.

·   Operating income was $9 million in the fourth quarter of 2011, up 36% over the prior period, and a record $39 million for the full-year 2011, up 55% over 2010.

·   Cash flow from continuing operations was $15 million in the fourth quarter of 2011, one of the highest quarterly performances in the Company’s history.

·   Repurchases of common stock were $7 million in the fourth quarter of 2011 and $16 million for full-year 2011.

Adjusted diluted EPS is a non-GAAP measure that excludes certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures” and in the reconciliation tables below.

Management Commentary

“Our financial performance in 2011 was outstanding and ended with one of the best quarters in our Company’s history,” said Jonathan W. Painter, president and chief executive officer of Kadant. “Diluted EPS from continuing operations was a record $0.90 in the fourth quarter of 2011 compared to last year’s $0.41. Excluding restructuring costs and a benefit from discrete tax items, adjusted diluted EPS was $0.59 in the fourth quarter of 2011, increasing 40 percent over last year’s $0.42. This compares to our GAAP guidance of $0.56 to $0.58 for the quarter.

“Revenues in the fourth quarter of 2011 were a record $97 million, up 32 percent over last year, and exceeded our guidance of $92 to $94 million largely due to higher stock-preparation revenues. Encouragingly, we saw significant increases in all our major product lines with the exception of doctoring. In our stock-preparation product line, revenues were up 49 percent compared to the fourth quarter of 2010, and included particularly strong capital revenues in both North America and China. Fluid-handling revenues in the fourth quarter of 2011 were $28 million, up 31 percent over last year, the highest quarterly performance since we acquired this business in 2005.

“Adjusted EBITDA was $11.5 million in the fourth quarter of 2011, 32 percent higher than the fourth quarter of 2010. For the full year 2011, adjusted EBITDA was $45 million, or a record 13.3 percent of revenues, and increased 44 percent from $31 million in 2010.

“Further, we had another excellent quarter in operating cash flows. Cash flows from continuing operations were $15 million in the fourth quarter of 2011, one of the highest performances we’ve ever achieved. Moreover, for the full year 2011, cash flows were $34 million, up 22 percent over a solid performance in 2010. We ended the quarter with $48 million in cash and our net cash position, that is, cash less debt, was $35 million, up $5 million from the third quarter of 2011, despite having purchased $7 million of our common stock in the fourth quarter. For the full year 2011, we purchased $16 million in common stock, which represented approximately 748,000 shares at an average purchase price of $21.52 per share.”

Fourth Quarter 2011

Kadant reported record revenues from continuing operations of $97.0 million in the fourth quarter of 2011, an increase of $23.7 million, or 32 percent, compared with $73.3 million in the fourth quarter of 2010. Revenues for the fourth quarter of 2011 included $1.1 million from acquisitions and a $0.2 million increase from foreign currency translation compared to the fourth quarter of 2010. Operating income from continuing operations was $9.1 million in the fourth quarter of 2011, including a $0.4 million restructuring charge, compared to $6.7 million in the fourth quarter of 2010, including a $0.1 million restructuring charge.

Net income from continuing operations was a record $10.7 million in the fourth quarter of 2011, or $0.90 per diluted share, compared to $5.1 million, or $0.41 per diluted share, in the fourth quarter of 2010. Net income from continuing operations in the fourth quarter of 2011 included a $4.1 million, or $0.34 per diluted share, benefit from discrete tax items and a $0.4 million, or $0.03 per diluted share, after-tax restructuring charge. Income from the discontinued operation was $1.1 million, or $0.10 per diluted share, primarily due to tax benefits associated with the reversal of a valuation allowance. Net income from continuing operations in the fourth quarter of 2010 included a $0.1 million, or $0.01 per diluted share, after-tax restructuring charge. Adjusted net income, a non-GAAP measure, was $7.0 million, or $0.59 per diluted share, in the fourth quarter of 2011, increasing 35 percent compared to $5.2 million, or $0.42 per diluted share, in the fourth quarter of 2010.

	Three Months Ended Dec. 31, 2011						Three Months Ended Jan. 1, 2011
Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP)	($ in millions)			Diluted EPS			($ in millions)			Diluted EPS
Net Income and Diluted EPS Attributable to Kadant, as reported	$	11.8		$	1.00		$	5.2		$	0.42
Income from discontinued operation		(1.1	)		(0.10	)		(0.1	)		(0.01	)
Income and Diluted EPS from Continuing Operations, as reported		10.7			0.90			5.1			0.41
Adjustments for the following:
Restructuring costs		0.4			0.03			0.1			0.01
Benefit from discrete tax items		(4.1	)		(0.34	)		-			-
Adjusted Net Income and Adjusted Diluted EPS	$	7.0		$	0.59		$	5.2		$	0.42

Full-Year 2011

For full-year 2011, Kadant reported revenues from continuing operations of $335.5 million, an increase of $65.5 million, or 24 percent, compared with $270.0 million in 2010. Revenues for 2011 included $2.9 million from acquisitions and a $9.8 million increase from foreign currency translation. Operating income from continuing operations was a record $38.7 million in 2011, including a $1.9 million gain, net of restructuring costs, compared to $24.9 million in 2010, including a $1.0 million gain, net of restructuring costs.

Net income from continuing operations was a record $33.6 million in 2011, or $2.74 per diluted share, compared to $18.4 million, or $1.48 per diluted share, in 2010. Net income from continuing operations in 2011 included a $6.2 million, or $0.51 per diluted share, benefit from discrete tax items and a $1.7 million, or $0.13 per diluted share, after-tax gain, net of restructuring costs. Net income from continuing operations in 2010 included a $0.9 million, or $0.07 per diluted share, after-tax gain, net of restructuring costs. Adjusted net income, a non-GAAP measure, was a record $25.7 million or $2.10 per diluted share in 2011, increasing 47 percent compared to $17.5 million, or $1.41 per diluted share, in 2010.

	Twelve Months Ended Dec. 31, 2011						Twelve Months Ended Jan. 1, 2011
Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP)	($ in millions)			Diluted EPS			($ in millions)			Diluted EPS
Net Income and Diluted EPS Attributable to Kadant, as reported	$	33.6		$	2.74		$	18.5		$	1.48
Loss (income) from discontinued operation		-			-			(0.1	)		-
Income and Diluted EPS from Continuing Operations, as reported		33.6			2.74			18.4			1.48
Adjustments for the following:
Restructuring costs and other income, net		(1.7	)		(0.13	)		(0.9	)		(0.07	)
Benefit from discrete tax items		(6.2	)		(0.51	)		-			-
Adjusted Net Income and Adjusted Diluted EPS	$	25.7		$	2.10		$	17.5		$	1.41

Guidance

“We ended the quarter with a healthy backlog position of $108 million, 14 percent higher than the backlog at the end of 2010,” Jonathan W. Painter continued. “However, our bookings of $79 million in the fourth quarter of 2011 were at the lowest quarterly level of the year. Although we see good project activity to start 2012 in some of our markets, we are concerned about the macroeconomic environment, particularly in Europe and China, where we have seen softening of demand in some product lines. As a result, we expect to achieve GAAP diluted EPS from continuing operations of $1.95 to $2.05 in 2012 on revenues of $330 to $340 million. Our full-year diluted EPS guidance includes an unfavorable effect of $0.06 from the stronger U.S. dollar and $0.06 from a higher effective tax rate compared to 2011. For the first quarter of 2012, we expect to achieve diluted EPS from continuing operations of $0.41 to $0.43 on revenues of $82 to $84 million.”

Conference Call

Kadant will hold a webcast with a slide presentation for investors on Thursday, February 23, 2012, at 11 a.m. eastern time to discuss its fourth quarter and full-year performance, as well as future expectations. To view the webcast, go to www.kadant.com and click on the “Investors” tab. To listen to the webcast via teleconference, call 866-804-6926 within the U.S., or +1-857-350-1672 outside the U.S. and reference participant passcode 83375884. Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at www.sec.gov. An archive of the webcast presentation will be available on our Web site until March 23, 2012.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the fourth quarter and full-year results on its Web site at www.kadant.com under the “Investors” tab.

Use of Non-GAAP Financial Measures

     In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenues excluding the effect of foreign currency translation, adjusted operating income, adjusted net income, adjusted diluted EPS, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

We present increases or decreases in revenues excluding the effect of foreign currency translation to provide investors insight into underlying revenue trends. In addition, we exclude from certain financial measures restructuring costs and certain gains and losses to give investors additional insight into our quarterly and annual operating performance, especially when compared to quarters in which such items had greater or lesser effect, or no effect. In addition, these items are excluded as they are either isolated or cannot be expected to occur again with any regularity or predictability and we believe are not indicative of our normal operating results.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors to gain a better understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them an additional measure of our performance.

The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for the results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies.

Adjusted diluted EPS in the three-month and twelve-month periods ended December 31, 2011 and January 1, 2011 was calculated using the reported weighted average diluted shares for each period.

Adjusted net income and adjusted diluted EPS exclude:

·   Restructuring costs of $0.4 million and $0.1 million in the fourth quarter of 2011 and 2010, respectively, and other income, net, of $1.7 million and $0.9 million in the twelve-month periods ended December 31, 2011 and January 1, 2011, respectively. Other income, net, includes gains on the sale of assets of $2.0 million, net of tax of $0.3 million, and restructuring costs of $0.3 million, net of tax of $0.1 million, in the twelve-month period ended December 31, 2011. Other income, net, includes gains on the sale of assets and pension curtailment of $1.1 million, net of tax of $0.2 million, and restructuring costs of $0.2 million, net of tax of $0.1 million, in the twelve-month period ended January 1, 2011. We believe that the restructuring costs and other income are not indicative of our core operating results and not comparable to other periods, which have differing levels of incremental costs and other income or none at all.

·   A benefit from discrete tax items of $4.1 million and $6.2 million, in the three-month and twelve-month periods ended December 31, 2011, respectively. These tax benefits were primarily due to the reversal of valuation allowances on certain deferred tax assets in the U.S. and China. We believe that these tax benefits are not comparable to other periods, which may have differing levels of discrete tax items or none at all.

Adjusted EBITDA and adjusted operating income exclude pre-tax restructuring costs of $0.4 million and $0.1 million in the three-month periods ended December 31, 2011 and January 1, 2011, respectively. Adjusted EBITDA and adjusted operating income exclude pre-tax gains of $2.3 million and $1.3 million, net of restructuring costs of $0.4 million and $0.3 million, in the twelve-month periods ended December 31, 2011 and January 1, 2011, respectively. These items are excluded as they are not indicative of our core operating results and not comparable to other periods, which have differing levels of incremental costs or other income or none at all.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.

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Financial Highlights (unaudited)
(In thousands, except per share amounts and percentages)
	Three Months Ended						Twelve Months Ended
Consolidated Statement of Income	Dec. 31, 2011			Jan. 1, 2011			Dec. 31, 2011			Jan. 1, 2011
Revenues	$	96,965		$	73,256		$	335,460		$	270,029
Costs and Operating Expenses:
Cost of revenues		59,562			42,176			190,247			151,604
Selling, general, and administrative expenses		26,286			22,942			102,660			89,212
Research and development expenses		1,594			1,365			5,717			5,269
Restructuring costs and other income, net (a)		408			66			(1,874	)		(1,005	)
		87,850			66,549			296,750			245,080
Operating Income		9,115			6,707			38,710			24,949
Interest Income		156			90			499			214
Interest Expense		(256	)		(307	)		(1,066	)		(1,315	)
Income from Continuing Operations before Income Taxes		9,015			6,490			38,143			23,848
Income Tax (Benefit) Provision		(1,689	)		1,334			4,285			5,198
Income from Continuing Operations		10,704			5,156			33,858			18,650
Income (Loss) from Discontinued Operation, Net of Tax (b)		1,156			112			(9	)		98
Net Income		11,860			5,268			33,849			18,748
Net Income Attributable to Noncontrolling Interest		(28	)		(89	)		(274	)		(241	)
Net Income Attributable to Kadant	$	11,832		$	5,179		$	33,575		$	18,507
Amounts Attributable to Kadant:
Income from Continuing Operations	$	10,676		$	5,067		$	33,584		$	18,409
Income (Loss) from Discontinued Operation, Net of Tax (b)		1,156			112			(9	)		98
Net Income Attributable to Kadant	$	11,832		$	5,179		$	33,575		$	18,507
Earnings per Share from Continuing Operations
Attributable to Kadant:
Basic	$	0.91		$	0.42		$	2.77		$	1.49
Diluted	$	0.90		$	0.41		$	2.74		$	1.48
Earnings per Share Attributable to Kadant:
Basic	$	1.01		$	0.42		$	2.77		$	1.50
Diluted	$	1.00		$	0.42		$	2.74		$	1.48
Weighted Average Shares:
Basic		11,751			12,186			12,124			12,339
Diluted		11,884			12,335			12,261			12,466
										Increase
										(Decrease)
										Excluding Effect
	Three Months Ended						Increase			of Currency
Revenues by Product Line	Dec. 31, 2011			Jan. 1, 2011			(Decrease)			Translation (c,d)
Stock-Preparation	$	43,240		$	28,928		$	14,312		$	13,728
Fluid-Handling		28,204			21,570			6,634			6,710
Doctoring		13,504			13,812			(308	)		(165	)
Water-Management		9,202			6,584			2,618			2,721
Other		677			603			74			142
Papermaking Systems Segment		94,827			71,497			23,330			23,136
Fiber-based Products		2,138			1,759			379			379
	$	96,965		$	73,256		$	23,709		$	23,515

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								Increase
								Excluding Effect
	Twelve Months Ended							of Currency
	Dec. 31, 2011		Jan. 1, 2011		Increase			Translation (c,d)
Stock-Preparation	$	131,914	$	95,542	$	36,372		$	32,349
Fluid-Handling		100,618		83,302		17,316			13,530
Doctoring		55,278		51,290		3,988			2,722
Water-Management		34,465		28,570		5,895			5,258
Other		2,590		2,484		106			67
Papermaking Systems Segment		324,865		261,188		63,677			53,926
Fiber-based Products		10,595		8,841		1,754			1,754
	$	335,460	$	270,029	$	65,431		$	55,680
								Increase
								(Decrease)
								Excluding Effect
	Three Months Ended				Increase			of Currency
Sequential Revenues by Product Line	Dec. 31, 2011		Oct. 1, 2011		(Decrease)			Translation (c,d)
Stock-Preparation	$	43,240	$	33,031	$	10,209		$	10,302
Fluid-Handling		28,204		25,310		2,894			3,136
Doctoring		13,504		14,017		(513	)		(154	)
Water-Management		9,202		9,933		(731	)		(510	)
Other		677		592		85			163
Papermaking Systems Segment		94,827		82,883		11,944			12,937
Fiber-based Products		2,138		1,475		663			663
	$	96,965	$	84,358	$	12,607		$	13,600
								Increase
								Excluding Effect
	Three Months Ended							of Currency
Revenues by Geography (e)	Dec. 31, 2011		Jan. 1, 2011		Increase			Translation (c,d)
North America	$	45,458	$	35,151	$	10,307		$	10,722
Europe		29,879		22,998		6,881			7,046
China		18,747		12,339		6,408			5,499
South America		2,396		2,317		79			226
Australia		485		451		34			22
	$	96,965	$	73,256	$	23,709		$	23,515
								Increase
								Excluding Effect
	Twelve Months Ended							of Currency
	Dec. 31, 2011		Jan. 1, 2011		Increase			Translation (c,d)
North America	$	157,747	$	138,339	$	19,408		$	18,766
Europe		104,927		85,474		19,453			14,138
China		61,929		37,087		24,842			21,663
South America		8,401		7,152		1,249			918
Australia		2,456		1,977		479			195
	$	335,460	$	270,029	$	65,431		$	55,680
								Increase
								(Decrease)
								Excluding Effect
	Three Months Ended				Increase			of Currency
Sequential Revenues by Geography (e)	Dec. 31, 2011		Oct. 1, 2011		(Decrease)			Translation (c,d)
North America	$	45,458	$	34,875	$	10,583		$	11,188
Europe		29,879		28,497		1,382			1,909
China		18,747		18,716		31			(161	)
South America		2,396		1,741		655			688
Australia		485		529		(44	)		(24	)
	$	96,965	$	84,358	$	12,607		$	13,600

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	Three Months Ended						Twelve Months Ended
Business Segment Information	Dec. 31, 2011			Jan. 1, 2011			Dec. 31, 2011			Jan. 1, 2011
Gross Profit Margin:
Papermaking Systems		38.3	%		42.4	%		43.1	%		43.8	%
Fiber-based Products		49.9	%		41.8	%		50.2	%		45.8	%
		38.6	%		42.4	%		43.3	%		43.9	%
Operating Income:
Papermaking Systems	$	12,526		$	9,981		$	50,869		$	37,281
Corporate and Fiber-based Products		(3,411	)		(3,274	)		(12,159	)		(12,332	)
	$	9,115		$	6,707		$	38,710		$	24,949
Adjusted Operating Income (d,f):
Papermaking Systems	$	12,934		$	10,047		$	48,995		$	36,276
Corporate and Fiber-based Products		(3,411	)		(3,274	)		(12,159	)		(12,332	)
	$	9,523		$	6,773		$	36,836		$	23,944
Bookings from Continuing Operations:
Papermaking Systems	$	75,181		$	97,037		$	334,978		$	293,749
Fiber-based Products		3,487			2,799			10,599			8,932
	$	78,668		$	99,836		$	345,577		$	302,681
Capital Expenditures from Continuing Operations:
Papermaking Systems	$	2,470		$	1,312		$	7,751		$	3,022
Corporate and Fiber-based Products		87			61			279			386
	$	2,557		$	1,373		$	8,030		$	3,408
	Three Months Ended						Twelve Months Ended
Cash Flow and Other Data from Continuing Operations	Dec. 31, 2011			Jan. 1, 2011			Dec. 31, 2011			Jan. 1, 2011
Cash Provided by Operations	$	14,863		$	13,843		$	34,362		$	28,263
Depreciation and Amortization Expense		1,989			1,947			7,936			7,228
Balance Sheet Data							Dec. 31, 2011			Jan. 1, 2011
Assets
Cash and Cash Equivalents							$	46,950		$	61,805
Restricted Cash								700			-
Accounts Receivable, net								59,492			49,897
Inventories								50,527			41,628
Unbilled Contract Costs and Fees								3,244			875
Other Current Assets								13,378			9,402
Property, Plant and Equipment, net								40,095			36,911
Intangible Assets								29,053			26,793
Goodwill								105,959			97,988
Other Assets								9,000			11,473
							$	358,398		$	336,772
Liabilities and Shareholders' Investment
Accounts Payable							$	28,624		$	23,756
Short- and Long-term Debt								12,250			22,750
Other Liabilities								93,894			82,965
Total Liabilities							$	134,768		$	129,471
Shareholders' Investment							$	223,630		$	207,301
							$	358,398		$	336,772

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Adjusted Operating Income and Adjusted EBITDA	Three Months Ended						Twelve Months Ended
Reconciliation	Dec. 31, 2011			Jan. 1, 2011			Dec. 31, 2011			Jan. 1, 2011
Consolidated
Net Income Attributable to Kadant	$	11,832		$	5,179		$	33,575		$	18,507
Net Income Attributable to Noncontrolling Interest		28			89			274			241
(Income) Loss from Discontinued Operation, Net of Tax (b)		(1,156	)		(112	)		9			(98	)
Income Tax (Benefit) Provision		(1,689	)		1,334			4,285			5,198
Interest Expense, net		100			217			567			1,101
Restructuring costs and other income, net (a)		408			66			(1,874	)		(1,005	)
Adjusted Operating Income (d)		9,523			6,773			36,836			23,944
Depreciation and Amortization		1,989			1,947			7,936			7,228
Adjusted EBITDA (d)	$	11,512		$	8,720		$	44,772		$	31,172
Papermaking Systems
Operating Income	$	12,526		$	9,981		$	50,869		$	37,281
Restructuring costs and other income, net (a)		408			66			(1,874	)		(1,005	)
Adjusted Operating Income (d)		12,934			10,047			48,995			36,276
Depreciation and Amortization		1,866			1,820			7,455			6,750
Adjusted EBITDA (d)	$	14,800		$	11,867		$	56,450		$	43,026
Corporate and Fiber-based Products
Operating Loss	$	(3,411	)	$	(3,274	)	$	(12,159	)	$	(12,332	)
Depreciation and Amortization		123			127			481			478
Adjusted EBITDA (d)	$	(3,288	)	$	(3,147	)	$	(11,678	)	$	(11,854	)

(a)	Includes restructuring costs of $408 and $66 in the three-month periods ended December 31, 2011 and January 1, 2011,
	respectively. Includes a gain from the sale of assets of $2,282, offset by restructuring costs of $408 in the twelve-month
	period ended December 31, 2011. Includes gains from the sale of assets and pension curtailment of $1,252, offset by
	restructuring costs of $247 in the twelve-month period ended January 1, 2011.
(b)	Includes tax benefits of $1,282 and $157 in the three-month periods ended December 31, 2011 and January 1, 2011,
	respectively, and $1,511 and $164 in the twelve-month periods ended December 31, 2011 and January 1, 2011,
	respectively.
(c)	Represents the increase (decrease) resulting from the conversion of current period amounts reported in local currencies
	into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period.
(d)	Represents a non-GAAP financial measure.
(e)	Geographic revenues data is attributed to regions based on selling locations. For North America and China, this usually
	approximates revenues based on where the equipment is shipped to and installed. Our European geographic data,
	however, includes revenues shipped to and installed outside of Europe, including South America, Africa, the Middle East,
	and certain countries in Asia (excluding China).
(f)	See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and
	Adjusted EBITDA Reconciliation."

-more-

About Kadant

      Kadant Inc. is a leading supplier to the global pulp and paper industry. Our stock-preparation, fluid-handling, doctoring, and water-management equipment and systems are designed to increase efficiency and improve quality in pulp and paper production. Many of our products, particularly in our fluid-handling product line, are also used to optimize production in other process industries. In addition, we produce granules from papermaking byproducts for agricultural and lawn and garden applications. Kadant is based in Westford, Massachusetts, with revenues of $335 million in 2011 and 1,700 employees in 17 countries worldwide. For more information, visit www.kadant.com.

The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our expected future financial and operating performance, demand for our products, and economic and industry outlook. Our actual results may differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading “Risk Factors” in Kadant’s quarterly report on Form 10-Q for the period ended October 1, 2011. These include risks and uncertainties relating to our dependence on the pulp and paper industry; significance of sales and operation of manufacturing facilities in China; our ability to expand capacity in China to meet demand; commodity and component price increases or shortages; international sales and operations; competition; soundness of suppliers and customers; our effective tax rate; future restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit agreement; litigation and warranty costs related to our discontinued operation and the court approval of the recently filed settlement; our acquisition strategy; protection of patents and proprietary rights; failure of our information systems or breaches of data security; fluctuations in our share price; and anti-takeover provisions. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

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