EX-99 3 kaiform8kexhibit992222012.htm KAI FORM 8-K EXHIBIT 99 02-22-2012 kaiform8kexhibit992222012.htm
 
 

 
 

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."
                
                     


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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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