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 25, 2015

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 25, 2015, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended January 3, 2015. 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.

(d) 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 25, 2015.

2

KADANT INC.

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 25, 2015	By	/s/ Thomas M. O’Brien
		Thomas M. O’Brien Executive Vice President and    Chief Financial Officer

3

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 2014 Fourth Quarter and Fiscal Year Results

Achieves Record Revenue and Adjusted EPS for Q4 and FY 2014

Provides Financial Guidance for 2015

WESTFORD, Mass., February 25, 2015 - Kadant Inc. (NYSE:KAI) reported its financial results for the fourth quarter and fiscal year ended January 3, 2015.

Fourth Quarter and Fiscal Year 2014 Financial Highlights

• GAAP diluted earnings per share (EPS) from continuing operations increased 58% to $0.82 in the fourth quarter of 2014 compared to $0.52 in the fourth quarter of 2013. Compared to the fourth quarter of 2013, diluted EPS in the fourth quarter of 2014 included expenses of $0.05 related to the unfavorable effects of foreign currency translation, $0.05 associated with a higher effective tax rate, and $0.04 of dilution from the acquisition and relocation of a screen cylinder product line in October 2014. Guidance for the fourth quarter of 2014 was $0.72 to $0.74.

• Net income from continuing operations increased 53% to $9 million in the fourth quarter of 2014 compared to $6 million in the fourth quarter of 2013 and increased 22% to $29 million in 2014 compared to $23 million in 2013.

• Adjusted diluted EPS increased 29% to a record $0.81 in the fourth quarter of 2014 compared to $0.63 in the fourth quarter of 2013.

• For 2014, GAAP diluted EPS from continuing operations increased 24% to $2.56 compared to $2.07 in 2013. Adjusted diluted EPS increased 24% to a record $2.78 in 2014 compared to $2.24 in 2013.

• Adjusted EBITDA increased 26% to a record $56 million in 2014 compared to $45 million in 2013.

• Revenue increased 11% to a record $105 million in the fourth quarter of 2014 compared to $95 million in the fourth quarter of 2013, including a 5% decrease from the unfavorable effects of currency translation. For 2014, revenue increased 17% to a record $402 million compared to $344 million in 2013, including an 11% increase from acquisitions. Excluding acquisitions and the foreign currency translation effects, revenue increased 16% in the fourth quarter of 2014 compared to the fourth quarter of 2013 and 6% in 2014 compared to 2013.

• Bookings increased 23% to $103 million in the fourth quarter of 2014 compared to $84 million in the fourth quarter of 2013, including a 4% decrease from the unfavorable effects of foreign currency translation and a 1% increase from acquisitions. For 2014, bookings increased 26% to a record $433 million compared to $343 million in 2013, including a 12% increase from acquisitions and a 1% decrease from the unfavorable effects of foreign currency translation. Excluding acquisitions and the foreign currency translation effects, bookings increased 26% in the fourth quarter of 2014 compared to the fourth quarter of 2013 and 15% in 2014 compared to 2013.

• Cash flows from continuing operations were $18 million in the fourth quarter of 2014, the second highest level ever achieved, and increased 22% to a record $49 million in 2014 compared to $40 million in 2013.

Note: Revenue excluding acquisitions and the effects of foreign currency translation, adjusted diluted EPS, and adjusted EBITDA are non-GAAP measures that exclude certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures” and in the reconciliation tables below. The fourth quarter and fiscal year 2014 included an additional week compared with the comparable periods in fiscal 2013.

Management Commentary

“We had excellent results in fiscal year 2014 and ended the year with record-setting fourth quarter performances in revenue, adjusted EBITDA, and adjusted diluted EPS,” said Jonathan W. Painter, president and chief executive officer of Kadant. “Our record results for the fourth quarter of 2014 were achieved despite the negative effects of foreign currency translation due to a stronger U.S. dollar, which reduced revenue by $5 million and diluted EPS by $0.05 compared to the fourth quarter of 2013.

“Revenue in the fourth quarter was a record $105 million, increasing 11 percent compared to the fourth quarter of 2013, including a 35 percent increase in North America primarily due to strong performances in our Wood Processing Systems, Stock-Preparation, and Fluid-Handling product lines. For 2014, revenue increased 17 percent to a record $402 million, including 11 percent from acquisitions. Excluding acquisitions and the unfavorable impact of currency rates, revenue increased a solid six percent in 2014.

“Cash flow was excellent in the fourth quarter of 2014 at $18 million and contributed to a new record cash flow of $49 million in 2014, up 22 percent compared to 2013. We ended the year with net cash of $20 million.

“Overall, we are very pleased with the record financial performance in fiscal year 2014 that resulted from solid contributions both from our businesses acquired in 2014 and 2013 and from well-executed internal growth initiatives. Our adjusted return on invested capital increased to 12.7% in 2014. We returned more than $21 million of capital to our shareholders through share repurchases and dividends, representing 75 percent of our net income in 2014.”

Fourth Quarter 2014

Kadant reported revenue from continuing operations of $105.2 million in the fourth quarter of 2014, an increase of $10.4 million, or 11 percent, compared to $94.8 million in the fourth quarter of 2013. Revenue for the fourth quarter of 2014 included $0.4 million from acquisitions and a $4.8 million decrease from the unfavorable effects of foreign currency translation compared to the fourth quarter of 2013. Excluding acquisitions and the unfavorable effects of foreign currency translation, revenue increased $14.8 million, or 16%, to $109.6 million in the fourth quarter of 2014 compared to $94.8 million in the fourth quarter of 2013.

Operating income from continuing operations was $12.3 million in the fourth quarter of 2014 compared to $7.6 million in the fourth quarter of 2013. Operating income in the fourth quarter of 2014 includes a $0.1 million restructuring benefit. Operating income in the fourth quarter of 2013 includes $1.9 million of expense related to acquired inventory and backlog and a $0.2 million restructuring benefit. Adjusted operating income, a non-GAAP measure, was $12.2 million in the fourth quarter of 2014 compared to $9.3 million in the fourth quarter of 2013.

Net income from continuing operations was $9.1 million in the fourth quarter of 2014, or $0.82 per diluted share, compared to $5.9 million, or $0.52 per diluted share, in the fourth quarter of 2013. Net income from continuing operations in the fourth quarter of 2014 included a $0.1 million, or $0.01 per diluted share, after-tax restructuring benefit. Net income from continuing operations in the fourth quarter of 2013 included after-tax expense related to acquired inventory and backlog of $1.4 million, or $0.12 per diluted share, and a $0.1 million, or $0.01 per diluted share, after-tax restructuring benefit. Adjusted net income, a non-GAAP measure, was $9.0 million, or $0.81 per diluted share, in the fourth quarter of 2014 compared to $7.2 million, or $0.63 per diluted share, in the fourth quarter of 2013.

Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP)	Three Months Ended Jan. 3, 2015						Three Months Ended Dec. 28, 2013
	($ in millions)			Diluted EPS			($ in millions)			Diluted EPS
Net Income and Diluted EPS Attributable to Kadant, as reported	$	9.1		$	0.82		$	5.9		$	0.52
Adjustments for the following:
Amortization of acquired backlog and profit in inventory, net of tax	—			—			1.4			0.12
Restructuring benefit, net of tax	(0.1		)	(0.01		)	(0.1		)	(0.01		)
Adjusted Net Income and Adjusted Diluted EPS	$	9.0		$	0.81		$	7.2		$	0.63

Fiscal Year 2014

For fiscal year 2014, Kadant reported revenue from continuing operations of $402.1 million, an increase of $57.6 million, or 17 percent, compared with $344.5 million in 2013. Revenue for 2014 included $38.1 million from acquisitions and a $2.8 million decrease from the unfavorable effects of foreign currency translation. Excluding acquisitions and the unfavorable effects of foreign currency translation, revenue increased $22.3 million, or 6%, to $366.8 million in 2014 compared to $344.5 million in 2013.

Operating income from continuing operations was $42.1 million in 2014 compared to $33.3 million in 2013. Operating income in 2014 includes $2.6 million of expense related to acquired inventory and backlog and $0.8 million of restructuring costs. Operating income in 2013 includes $2.6 million of expense related to acquired inventory and backlog and $0.1 million of restructuring costs. Adjusted operating income, a non-GAAP measure, was $45.5 million in 2014 compared to $36.0 million in 2013.

Net income from continuing operations was $28.7 million in 2014, or $2.56 per diluted share, compared to $23.5 million, or $2.07 per diluted share, in 2013. Net income from continuing operations in 2014 included after-tax expense related to acquired inventory and backlog of $1.9 million, or $0.17 per diluted share, and after-tax restructuring costs of $0.6 million, or $0.05 per diluted share. Net income from continuing operations in 2013 included after-tax expense related to acquired inventory and backlog of $1.9 million, or $0.17 per diluted share. Adjusted net income, a non-GAAP measure, was $31.2 million, or $2.78 per diluted share, in 2014 compared to $25.4 million, or $2.24 per diluted share, in 2013.

Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP)	Twelve Months Ended Jan. 3, 2015				Twelve Months Ended Dec. 28, 2013
	($ in millions)		Diluted EPS		($ in millions)		Diluted EPS
Net Income and Diluted EPS Attributable to Kadant, as reported	$	28.7	$	2.56	$	23.4	$	2.07
Loss from discontinued operation	—		—		0.1		—
Income and Diluted EPS from Continuing Operations, as reported	28.7		2.56		23.5		2.07
Adjustments for the following:
Amortization of acquired backlog and profit in inventory, net of tax	1.9		0.17		1.9		0.17
Restructuring costs and other income, net of tax	0.6		0.05		—		—
Adjusted Net Income and Adjusted Diluted EPS	$	31.2	$	2.78	$	25.4	$	2.24

Guidance

“We expect to achieve GAAP diluted EPS from continuing operations of $3.05 to $3.15 in 2015 on revenue of $413 to $423 million,” Mr. Painter continued. “The 2015 guidance includes an unfavorable foreign currency translation effect of $17 million on revenue and $0.12 on diluted EPS compared to 2014. Due to the variability of order flow and shipments of capital projects, we expect the first quarter of 2015 to be weaker with stronger successive quarterly operating results for the remainder of the year. For the first

quarter of 2015, we expect to achieve GAAP diluted EPS from continuing operations of $0.57 to $0.59, including $0.01 of restructuring costs and $0.01 of expense related to acquired inventory and backlog, on revenue of $94 to $96 million.”

Conference Call

Kadant will hold a webcast with a slide presentation for investors on Thursday, February 26, 2015, at 11 a.m. eastern time to discuss its fourth quarter and fiscal year performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on the “Investors” tab. To listen to the webcast via teleconference, call 877-703-6107 within the U.S., or +1-857-244-7306 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 27, 2015.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the fourth quarter and fiscal 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 revenue excluding acquisitions and the effects of foreign currency translation, adjusted operating income, adjusted net income, adjusted diluted EPS, earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted EBITDA.

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 an 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 additional measures 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.

Revenue included $0.4 million and $38.1 million from acquisitions in the fourth quarter and fiscal year 2014, respectively. Revenue included $4.8 million and $2.8 million of unfavorable foreign currency translation effects in the fourth quarter and fiscal year 2014, respectively. We present increases or decreases in revenue excluding the effects of acquisitions and foreign currency translation to provide investors insight into underlying revenue trends.

Adjusted operating income, adjusted EBITDA, adjusted net income, and adjusted diluted EPS exclude expense related to acquired inventory and backlog, restructuring costs (benefit), and other income. 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.

Adjusted operating income and adjusted EBITDA exclude:

• Pre-tax restructuring benefit of $0.1 million in both the fourth quarters of 2014 and 2013 and pre-tax expense related to acquired inventory and backlog of $1.9 million in the fourth quarter of 2013.

• Pre-tax expense of $2.6 million related to acquired inventory and backlog and pre-tax restructuring costs of $0.8 million in 2014; and pre-tax expense of $2.6 million related to acquired inventory and backlog, pre-tax restructuring costs of $1.8 million, and a pre-tax gain of $1.7 million in 2013.

Adjusted net income and adjusted diluted EPS exclude:

• After-tax expense related to acquired inventory and backlog of $1.4 million ($1.9 million net of tax of $0.5 million) in the fourth quarter of 2013 and after-tax expense related to acquired inventory and backlog of $1.9 million ($2.6 million net of tax of $0.7 million) in both 2014 and 2013.

• Restructuring benefit of $0.1 million in both the fourth quarters of 2014 and 2013, restructuring costs of $0.6 million ($0.8 million net of tax of $0.2 million) in 2014, and restructuring costs of $1.3 million ($1.8 million net of tax of $0.5 million), net of a gain of $1.3 million ($1.7 million net of tax of $0.4 million) on the sale of assets, in 2013.

Adjusted diluted EPS in the three-month and twelve-month periods ended January 3, 2015 and December 28, 2013 was calculated using the reported weighted average diluted shares for each period.

Adjusted return on invested capital is based on adjusted net income divided by the sum of stockholders’ equity less net cash. Net cash is the total of cash, cash equivalents, and restricted cash less short- and long-term debt.

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			Jan. 3, 2015			Dec. 28, 2013			Jan. 3, 2015			Dec. 28, 2013
Revenues			$	105,206		$	94,815		$	402,127		$	344,499
Costs and Operating Expenses:
	Cost of revenues		58,207			53,198			223,754			186,795
	Selling, general, and administrative expenses		33,377			32,580			129,319			117,581
	Research and development expenses		1,467			1,603			6,163			6,717
	Restructuring costs and other income, net (a)		(123		)	(160		)	805			103
			92,928			87,221			360,041			311,196
Operating Income			12,278			7,594			42,086			33,303
Interest Income			52			217			398			623
Interest Expense			(200		)	(265		)	(966		)	(900		)
Income from Continuing Operations before Provision
	for Income Taxes		12,130			7,546			41,518			33,026
Provision for Income Taxes			2,979			1,530			12,447			9,316
Income from Continuing Operations			9,151			6,016			29,071			23,710
Loss from Discontinued Operation, Net of Tax			(5		)	(7		)	(23		)	(62		)
Net Income			9,146			6,009			29,048			23,648
Net Income Attributable to Noncontrolling Interest			(45		)	(81		)	(389		)	(229		)
Net Income Attributable to Kadant			$	9,101		$	5,928		$	28,659		$	23,419
Amounts Attributable to Kadant:
		Income from Continuing Operations	$	9,106		$	5,935		$	28,682		$	23,481
		Loss from Discontinued Operation, Net of Tax	(5		)	(7		)	(23		)	(62		)
		Net Income Attributable to Kadant	$	9,101		$	5,928		$	28,659		$	23,419
Earnings per Share from Continuing Operations
	Attributable to Kadant:
		Basic	$	0.84		$	0.53		$	2.61		$	2.11
		Diluted	$	0.82		$	0.52		$	2.56		$	2.07
Earnings per Share Attributable to Kadant:
		Basic	$	0.84		$	0.53		$	2.61		$	2.10
		Diluted	$	0.82		$	0.52		$	2.56		$	2.07
Weighted Average Shares:
		Basic	10,873			11,117			10,988			11,153
		Diluted	11,146			11,395			11,210			11,340

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									Increase
									Excluding Effect
		Three Months Ended							of Currency
Revenues by Product Line		Jan. 3, 2015		Dec. 28, 2013		Increase			Translation (b,c)
Stock-Preparation		$	33,828	$	32,382	$	1,446		$	2,492
Doctoring, Cleaning, & Filtration		30,497		30,271		226			1,697
Fluid-Handling		25,346		24,940		406			1,676
	Papermaking Systems	89,671		87,593		2,078			5,865
	Wood Processing Systems	12,057		4,573		7,484			8,497
	Fiber-Based Products	3,478		2,649		829			829
		$	105,206	$	94,815	$	10,391		$	15,191
									Increase
									Excluding Effect
		Twelve Months Ended							of Currency
		Jan. 3, 2015		Dec. 28, 2013		Increase			Translation (b,c)
Stock-Preparation		$	127,496	$	122,704	$	4,792		$	4,787
Doctoring, Cleaning, & Filtration		117,389		112,600		4,789			5,725
Fluid-Handling		103,314		93,404		9,910			10,799
	Papermaking Systems	348,199		328,708		19,491			21,311
	Wood Processing Systems	41,647		4,573		37,074			38,087
	Fiber-Based Products	12,281		11,218		1,063			1,063
		$	402,127	$	344,499	$	57,628		$	60,461
									Increase
									(Decrease)
									Excluding Effect
		Three Months Ended				Increase			of Currency
Sequential Revenues by Product Line		Jan. 3, 2015		Sept. 27, 2014		(Decrease)			Translation (b,c)
Stock-Preparation		$	33,828	$	31,246	$	2,582		$	3,276
Doctoring, Cleaning, & Filtration		30,497		31,703		(1,206		)	(14		)
Fluid-Handling		25,346		25,420		(74		)	929
	Papermaking Systems	89,671		88,369		1,302			4,191
	Wood Processing Systems	12,057		8,480		3,577			4,124
	Fiber-Based Products	3,478		1,870		1,608			1,608
		$	105,206	$	98,719	$	6,487		$	9,923

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								Increase
								(Decrease)
								Excluding Effect
	Three Months Ended				Increase			of Currency
Revenues by Geography (d)	Jan. 3, 2015		Dec. 28, 2013		(Decrease)			Translation (b,c)
North America	$	54,755	$	40,534	$	14,221		$	15,369
Europe	24,741		27,088		(2,347		)	(192		)
China	12,824		12,371		453			748
South America	6,164		9,926		(3,762		)	(3,104		)
Other	6,722		4,896		1,826			2,370
	$	105,206	$	94,815	$	10,391		$	15,191
								Increase
								(Decrease)
								Excluding Effect
	Twelve Months Ended				Increase			of Currency
	Jan. 3, 2015		Dec. 28, 2013		(Decrease)			Translation (b,c)
North America	$	215,880	$	156,749	$	59,131		$	60,583
Europe	93,450		87,196		6,254			6,031
China	43,867		50,678		(6,811		)	(6,816		)
South America	26,114		29,950		(3,836		)	(2,379		)
Other	22,816		19,926		2,890			3,042
	$	402,127	$	344,499	$	57,628		$	60,461
								Increase
								(Decrease)
								Excluding Effect
	Three Months Ended				Increase			of Currency
Sequential Revenues by Geography (d)	Jan. 3, 2015		Sept. 27, 2014		(Decrease)			Translation (b,c)
North America	$	54,755	$	54,359	$	396		$	1,153
Europe	24,741		20,932		3,809			5,356
China	12,824		10,700		2,124			2,235
South America	6,164		7,006		(842		)	(258		)
Other	6,722		5,722		1,000			1,437
	$	105,206	$	98,719	$	6,487		$	9,923

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			Three Months Ended						Twelve Months Ended
Business Information			Jan. 3, 2015			Dec. 28, 2013			Jan. 3, 2015			Dec. 28, 2013
Gross Profit Margin:
		Papermaking Systems	45.6		%	45.0		%	45.4		%	46.1		%
		Other	39.0		%	30.4		%	37.7		%	38.9		%
			44.7		%	43.9		%	44.4		%	45.8		%
Operating Income:
		Papermaking Systems	$	14,266		$	11,169		$	50,485		$	47,144
		Corporate and Other	(1,988		)	(3,575		)	(8,399		)	(13,841		)
			$	12,278		$	7,594		$	42,086		$	33,303
Adjusted Operating Income (c) (g)
		Papermaking Systems	$	14,183		$	11,295		$	51,391		$	48,323
		Corporate and Other	(1,988		)	(2,009		)	(5,871		)	(12,275		)
			$	12,195		$	9,286		$	45,520		$	36,048
Bookings from Continuing Operations:
	Stock-Preparation		$	36,508		$	22,576		$	160,163		$	113,277
	Doctoring, Cleaning, & Filtration		28,591			28,148			119,026			113,227
	Fluid-Handling		25,042			23,304			103,093			97,801
		Papermaking Systems	90,141			74,028			382,282			324,305
		Wood Processing Systems	8,373			6,007			38,407			6,007
		Fiber-Based Products	4,494			3,956			12,430			12,725
			$	103,008		$	83,991		$	433,119		$	343,037
Capital Expenditures from Continuing Operations:
		Papermaking Systems	$	3,026		$	2,018		$	5,640		$	5,843
		Corporate and Other	584			94			1,115			418
			$	3,610		$	2,112		$	6,755		$	6,261

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		Three Months Ended				Twelve Months Ended
Cash Flow and Other Data from Continuing Operations		Jan. 3, 2015		Dec. 28, 2013		Jan. 3, 2015		Dec. 28, 2013
Cash Provided by Operations		$	18,465	$	9,238	$	48,867	$	39,935
Depreciation and Amortization Expense		2,631		3,045		11,189		9,775
Balance Sheet Data						Jan. 3, 2015		Dec. 28, 2013
Assets
Cash, Cash Equivalents, and Restricted Cash						$	45,793	$	50,200
Accounts Receivable, Net						58,508		70,271
Inventories						55,223		62,805
Unbilled Contract Costs and Fees						5,436		3,679
Other Current Assets						18,714		19,333
Property, Plant and Equipment, Net						44,965		44,885
Intangible Assets						46,954		47,850
Goodwill						127,882		131,915
Other Assets						10,272		11,230
						$	413,747	$	442,168
Liabilities and Stockholders' Equity
Accounts Payable						$	27,233	$	28,388
Short- and Long-term Debt						25,861		38,635
Other Liabilities						95,194		104,724
	Total Liabilities					148,288		171,747
	Stockholders' Equity					265,459		270,421
						$	413,747	$	442,168

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Adjusted Operating Income and Adjusted EBITDA		Three Months Ended						Twelve Months Ended
Reconciliation		Jan. 3, 2015			Dec. 28, 2013			Jan. 3, 2015			Dec. 28, 2013
Consolidated
	Net Income Attributable to Kadant	$	9,101		$	5,928		$	28,659		$	23,419
	Net Income Attributable to Noncontrolling Interest	45			81			389			229
	Loss from Discontinued Operation, Net of Tax	5			7			23			62
	Provision for Income Taxes	2,979			1,530			12,447			9,316
	Interest Expense, Net	148			48			568			277
	Operating Income	12,278			7,594			42,086			33,303
	Restructuring Costs and Other Income, Net (a)	(123		)	(160		)	805			103
	Acquired Backlog Amortization (e)	23			578			415			1,112
	Acquired Profit in Inventory (f)	17			1,274			2,214			1,530
	Adjusted Operating Income (c)	12,195			9,286			45,520			36,048
	Depreciation and Amortization	2,608			2,467			10,774			8,663
	Adjusted EBITDA (c)	$	14,803		$	11,753		$	56,294		$	44,711
Papermaking Systems
	Operating Income	$	14,266		$	11,169		$	50,485		$	47,144
	Restructuring Costs and Other Income, net (a)	(123		)	(160		)	805			103
	Acquired Backlog Amortization (e)	23			134			23			668
	Acquired Profit in Inventory (f)	17			152			78			408
	Adjusted Operating Income (c)	14,183			11,295			51,391			48,323
	Depreciation and Amortization	1,846			1,929			7,701			7,766
	Adjusted EBITDA (c)	$	16,029		$	13,224		$	59,092		$	56,089
Corporate and Other
	Operating Loss	$	(1,988	)	$	(3,575	)	$	(8,399	)	$	(13,841	)
	Acquired Backlog Amortization (e)	—			444			392			444
	Acquired Profit in Inventory (f)	—			1,122			2,136			1,122
	Adjusted Operating Loss (c)	(1,988		)	(2,009		)	(5,871		)	(12,275		)
	Depreciation and Amortization	762			538			3,073			897
	Adjusted EBITDA (c)	$	(1,226	)	$	(1,471	)	$	(2,798	)	$	(11,378	)
(a)	Includes restructuring income of $123 and $160 in the three-month periods ended January 3, 2015 and December 28, 2013, respectively. Includes restructuring costs of $805 in the twelve-month period ended January 3, 2015 and restructuring costs of $1,843, net of a gain of $1,740 on the sale of assets, in the twelve-month period ended December 28, 2013.
(b)	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.
(c)	Represents a non-GAAP financial measure.
(d)	Geographic revenues are attributed to regions based on customer location.
(e)	Represents intangible amortization expense associated with acquired backlog.
(f)	Represents expense within cost of revenues associated with acquired profit in inventory.
(g)	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 global supplier of high-value, critical components and engineered systems used in process industries worldwide. The Company’s products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries. Kadant is based in Westford, Massachusetts, with revenue of $402 million in fiscal year 2014 and 1,800 employees in 18 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 September 27, 2014. 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; the oriented strand board market and levels of residential construction activity; commodity and component price increases or shortages; dependence on certain suppliers; international sales and operations; our acquisition strategy; our internal growth strategy; fluctuations in currency exchange rates; competition; soundness of suppliers and customers; our effective tax rate; future restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit agreement; loss of key personnel; reliance on third-party research; 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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