Exhibit 99
[LOGO]
KADANT NEWS
AN ACCENT ON INNOVATION
One Acton Place, Suite 202
Acton, MA 01720
Investor contact: Thomas M. O'Brien, 978-776-2000
Media contact: GreatPoint Communications, 978-392-6866
Kadant Reports Third Quarter 2003 Results
ACTON, Mass., October 22, 2003 - For the third quarter of 2003, Kadant Inc.
(NYSE:KAI) reported GAAP diluted earnings per share of $.19, versus $.20 in the
2002 period. Earnings in 2003 included a $.01 charge for restructuring and
unusual items. GAAP net income was $2.7 million in both periods. Revenues in the
third quarter of 2003 were $45.9 million (including $2.2 million from the
favorable effect of currency translation), compared with $50.1 million a year
ago.
William A. Rainville, chairman and chief executive officer of Kadant,
said, "Our EPS results this quarter were slightly better than we expected
despite weak performance from our composite building products business, which
reported an operating loss of $771,000. We were pleased to generate a record $17
million of operating cash in the quarter - all from our core papermaking
equipment segment. The strong cash flows contributed to a cash balance of $66
million at quarter-end, up more than $21 million since the beginning of the
year. These results attest to the strength of our core business in spite of
ongoing challenges in some of our markets.
"Another positive was our 15 percent increase in total bookings for the
quarter over last year, led by strong orders for stock-preparation systems,
particularly in China. Just after quarter-end, we received an order for
approximately $3.5 million of these systems, which are used to recover usable
fiber from wastepaper in the production of recycled-paper products.
"While the composite building products industry has been experiencing
lower-than-expected demand, we continue to believe in the potential
opportunities that our business represents. We recently launched an aggressive
program to further expand our dealer base, and expect to see the benefit in
2004."
Mr. Rainville added, "With the loss in composites likely to be from
$1.0 to $1.3 million in the fourth quarter of 2003, we expect to earn $.15 to
$.17 per diluted share (on a GAAP basis) for the quarter, on revenues of $45 to
$47 million. For the full year, we expect to earn $.84 to $.86 per diluted share
(on a GAAP basis), on revenues of $198 to $200 million."
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Financial Highlights (unaudited)
(In thousands except per share amounts and percentages)
Three Months Ended Nine Months Ended
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Consolidated Statement of Operations Sept. 27, 2003 Sept. 28, 2002(a) Sept. 27, 2003 Sept. 28, 2002(a)
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Revenues $ 45,906 $ 50,084 $ 153,065 $ 139,802
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Costs and Operating Expenses:
Cost of revenues 27,768 31,576 95,062 87,141
Selling, general, and administrative expenses 12,775 12,490 39,669 37,757
Research and development expenses 1,149 1,149 3,502 3,589
Restructuring and unusual items 157 101 (23) 3,738
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41,849 45,316 138,210 132,225
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Operating Income 4,057 4,768 14,855 7,577
Interest Income 243 676 693 1,954
Interest Expense (11) (1,084) (39) (3,720)
Other Income - 8 - 469
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Income Before Provision for Income Taxes, Minority
Interest, and Cumulative Effect of Change in
Accounting Principle 4,289 4,368 15,509 6,280
Provision for Income Taxes 1,630 1,660 5,894 2,380
Minority Interest Expense (Income) (4) 1 68 3
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Income Before Cumulative Effect of Change in
Accounting Principle 2,663 2,707 9,547 3,897
Cumulative Effect of Change in Accounting Principle
(net of income tax benefit of $12,420) - - - (32,756)
-------------- -------------- -------------- --------------
Net Income (Loss) $ 2,663 $ 2,707 $ 9,547 $ (28,859)
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Earnings per Share Before Cumulative Effect of
Change in Accounting Principle
Basic $ .20 $ .20 $ .70 $ .31
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Diluted $ .19 $ .20 $ .69 $ .30
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Earnings (Loss) per Share
Basic $ .20 $ .20 $ .70 $ (2.26)
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Diluted $ .19 $ .20 $ .69 $ (2.24)
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Weighted Average Shares
Basic 13,632 13,547 13,602 12,744
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Diluted 14,041 13,716 13,905 12,911
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Three Months Ended Nine Months Ended
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Adjusted Diluted Earnings per Share (b) Sept. 27, 2003 Sept. 28, 2002 Sept. 27, 2003 Sept. 28, 2002
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GAAP Diluted Earnings (Loss) per Share $ .19 $ .20 $ .69 $ (2.24)
Restructuring and Unusual Items .01 - - .18
Gain on Repurchases of Debt - - - (.02)
Cumulative Effect of Change in Accounting Principle - - - 2.54
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$ .20 $ .20 $ .69 $ .46
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> Three Months Ended Nine Months Ended
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Business Segment Information Sept. 27, 2003 Sept. 28, 2002 Sept. 27, 2003 Sept. 28, 2002
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Revenues:
Pulp and Papermaking Equipment and Systems $ 42,023 $ 46,322 $ 138,254 $ 128,822
Composite and Fiber-based Products 3,883 3,762 14,811 10,980
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$ 45,906 $ 50,084 $ 153,065 $ 139,802
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Gross Profit Margin:
Pulp and Papermaking Equipment and Systems 42% 38% 39% 39%
Composite and Fiber-based Products 11% 27% 28% 26%
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40% 37% 38% 38%
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Operating Income:
Pulp and Papermaking Equipment and Systems $ 5,702 $ 5,839 $ 17,633 $ 12,746
Composite and Fiber-based Products (c) (669) (272) 314 (2,647)
Corporate (976) (799) (3,092) (2,522)
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$ 4,057 $ 4,768 $ 14,855 $ 7,577
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Adjusted Operating Income (Excludes Restructuring
and Unusual Items) (b):
Pulp and Papermaking Equipment and Systems (d) $ 5,859 $ 5,940 $ 17,610 $ 14,845
Composite and Fiber-based Products (e) (669) (272) 314 (1,008)
Corporate (976) (799) (3,092) (2,522)
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$ 4,214 $ 4,869 $ 14,832 $ 11,315
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Bookings:
Pulp and Papermaking Equipment and Systems $ 44,559 $ 38,983 $ 141,203 $ 125,275
Composite and Fiber-based Products 2,638 1,919 10,463 11,175
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$ 47,197 $ 40,902 $ 151,666 $ 136,450
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Capital Expenditures:
Pulp and Papermaking Equipment and Systems $ 537 $ 266 $ 1,098 $ 897
Composite and Fiber-based Products 585 583 1,461 1,173
Corporate - 18 11 145
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$ 1,122 $ 867 $ 2,570 $ 2,215
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Three Months Ended Nine Months Ended
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Cash Flow and Other Data Sept. 27, 2003 Sept. 28, 2002 Sept. 27, 2003 Sept. 28, 2002
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Cash Provided by Operations $ 16,953 $ 4,557 $ 20,011 $ 17,174
Depreciation and Amortization Expense 1,248 1,306 3,855 3,893
Balance Sheet Data Sept. 27, 2003 Dec. 28, 2002
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Cash and Short-term Investments $ 65,687 $ 44,429
Short- and Long-term Debt 598 1,165
Shareholders' Investment 197,424 181,257
(a) Restated to reflect the reclassification to other income of an extraordinary item in accordance with the adoption of SFAS
No. 145, resulting from repurchases of our subordinated convertible debentures. In addition, the nine-month period ended
September 28, 2002, was restated to include a transitional goodwill impairment charge recorded as a cumulative effect of
change in accounting principle in accordance with the adoption of SFAS No. 142.
(b) In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use the
non-GAAP financial measures of adjusted diluted EPS and adjusted operating income, which exclude restructuring and other
non-recurring items. We exclude these items because they are outside our normal operations. We believe that providing such
non-GAAP measures helps investors to gain a more meaningful understanding of our operating results from period to period,
and is consistent with how we measure our performance. The non-GAAP financial measures included in this press release are
not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In
addition, the non-GAAP financial measures included in this press release may be different from, and therefore may not be
comparable to, similar measures used by other companies.
(c) Includes operating losses from the composite building products business of $771 and $661 in the three- and nine-month periods
ended September 27, 2003, respectively; $376 in the three-month period ended September 28, 2002; and $3,285 (including
restructuring and unusual costs of $1,178) in the nine-month period ended September 28, 2002.
(d) Excludes restructuring costs of $157 in the three-month period ended September 27, 2003; net restructuring and unusual income
of $23 in the nine-month period ended September 27, 2003; and restructuring and unusual costs of $101 and $2,099 in the
three- and nine-month periods ended September 28, 2002, respectively.
(e) Excludes restructuring and unusual costs of $1,639 in the nine-month period ended September 28, 2002.
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> Kadant will hold its earnings conference call on Thursday, October 23,
2003, at 11 a.m. Eastern time. To listen, call 800-709-2159 within the U.S., or
973-582-2810 outside the U.S. You can also listen to the call live on the Web by
visiting www.kadant.com and clicking on "Investors." An audio archive of the
call will be available on our Web site until Thursday, November 20, 2003.
Kadant Inc. is a leading supplier of a range of products for the global
papermaking and paper recycling industries, including stock-preparation
equipment, water-management systems, and papermaking accessories. We also
develop and manufacture composite building materials produced from recycled
fiber and plastic. Kadant, based in Acton, Massachusetts, had $186 million in
revenues in 2002 and approximately 1,100 employees worldwide. For more
information, please 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 regarding our projected operating results
and the future performance of our businesses, particularly our composites
building products business. Important factors that could cause actual results to
differ materially from those indicated by such statements are set forth under
the heading "Risk Factors" in Kadant's quarterly report on Form 10-Q for the
period ended June 28, 2003. These include risks and uncertainties relating to
our dependence on the pulp and paper industry; international sales and
operations; competition; ability to manufacture and distribute composite
building products, and the seasonality in sales and the long-term performance of
such products; availability of raw materials and exposure to commodity price
fluctuations related to the manufacture of composite and fiber-based products;
acquisition strategy; protection of patents and proprietary rights; fluctuations
in quarterly operating results; and obligations or other consequences arising
from our spinoff from Thermo Electron Corporation. 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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