Exhibit 99
[LOGO]
NEWS
KADANT
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 2005 First Quarter Results
ACTON, Mass., April 27, 2005 - For the first quarter of 2005, Kadant Inc.
(NYSE:KAI) reported that revenues from continuing operations increased 7 percent
to $50.7 million (including a 2 percent benefit from currency translation),
compared with $47.5 million in the first quarter of 2004. Income from continuing
operations was $3.1 million in the 2005 quarter, or $.22 per diluted share,
versus $3.3 million, or $.23 per diluted share, a year ago. Earnings per share
(EPS) in 2005 included a $.06 gain from a cash reimbursement related to Kadant's
tax agreement with our former parent company, and in 2004 included a $.04 gain
associated with renegotiating a series of agreements with a licensee. Excluding
these gains, adjusted diluted EPS was $.16 in the 2005 quarter, compared with
$.19 in 2004. Net income, including the discontinued composite building products
business, was $2.7 million, or $.19 per diluted share, in both periods.
"We are pleased to report that both revenues and earnings exceeded our
expectations for the quarter," said William A. Rainville, chairman and chief
executive officer of Kadant. "Growth in papermaking systems revenues was
primarily the result of increased demand for our stock-preparation products,
particularly our Chemi-Washer(R) pulp-washing systems, for which we received
more than $11 million in orders in the first quarter from customers in different
parts of the world.
"We are especially encouraged by a 13 percent increase in bookings this
quarter over the first quarter last year, making this the best bookings quarter
we've had in five years. Our order backlog is also up - 26 percent higher than
the end of 2004. Once we complete our acquisition of The Johnson Corporation,
expected in the second quarter, our footprint in the paper industry will be
considerably larger. Johnson will also give us access to new industries
currently served by its rotary joints and other fluid-handling products."
Mr. Rainville added, "Even after the acquisition, our balance sheet
will remain strong, with an expected ratio of net debt to total capital of
approximately 14 percent - below our targeted upper limit of 20 percent. Looking
ahead to the second quarter of 2005, we expect to report GAAP diluted EPS of
$.19 to $.21 from continuing operations, on revenues of $54 to $56 million. Our
guidance for the year is now $.86 to $.96 of GAAP diluted EPS, reflecting the
$.06 tax gain, and we expect to report revenues of $205 to $215 million. This
guidance does not include results from the pending acquisition of Johnson."
Kadant will hold its earnings conference call on Thursday, April 28,
2005, 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 May 27, 2005.
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Financial Highlights (unaudited) (a)
(In thousands, except per share amounts and percentages)
Three Months Ended
--------------------------------
Consolidated Statement of Operations April 2, 2005 April 3, 2004
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Revenues $ 50,744 $ 47,500
-------- --------
Costs and Operating Expenses:
Cost of revenues 31,982 28,033
Selling, general, and administrative expenses 14,894 13,771
Research and development expenses 1,048 888
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47,924 42,692
-------- --------
Operating Income 2,820 4,808
Interest Income 472 329
Interest Expense (2) (8)
-------- --------
Income from Continuing Operations Before Income Taxes 3,290 5,129
Provision for Income Taxes (203) (1,795)
-------- --------
Income from Continuing Operations 3,087 3,334
Loss from Discontinued Operation, Net of Tax (363) (606)
-------- --------
Net Income $ 2,724 $ 2,728
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Earnings per Share
Basic
Income from Continuing Operations $ .22 $ .23
Loss from Discontinued Operation (.02) (.04)
-------- --------
Net Income $ .20 $ .19
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Diluted
Income from Continuing Operations $ .22 $ .23
Loss from Discontinued Operation (.03) (.04)
-------- --------
Net Income $ .19 $ .19
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Weighted Average Shares
Basic 13,926 14,222
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Diluted 14,211 14,603
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Three Months Ended
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Adjusted Net Income and Diluted EPS (b) April 2, 2005 April 3, 2004
----------------------------------------------------------------------------------------------------------------------
Net Income $ 2,724 $ 2,728
Loss from Discontinued Operation, Net of Tax 363 606
Royalty Gain (c) - (631)
Income Taxes (d) (882) -
-------- --------
Adjusted Net Income $ 2,205 $ 2,703
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Diluted Earnings per Share $ .19 $ .19
Loss from Discontinued Operation .03 .04
Royalty Gain (c) - (.04)
Income Taxes (d) (.06) -
-------- --------
Adjusted Diluted Earnings per Share $ .16 $ .19
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Three Months Ended
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Business Segment Information April 2, 2005 April 3, 2004
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Revenues:
Pulp and Papermaking Systems $ 47,571 $ 45,564
Fiber-based Products 3,173 1,936
-------- --------
$ 50,744 $ 47,500
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Gross Profit Margin:
Pulp and Papermaking Systems 37% 41%
Fiber-based Products 43% 34%
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37% 41%
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Operating Income:
Pulp and Papermaking Systems $ 3,374 $ 6,343
Corporate and Other (e) (554) (1,535)
-------- --------
$ 2,820 $ 4,808
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Three Months Ended
--------------------------------
Business Segment Information April 2, 2005 April 3, 2004
----------------------------------------------------------------------------------------------------------------------
Adjusted Operating Income:
Pulp and Papermaking Systems (c) $ 3,374 $ 5,373
Corporate and Other (e) (554) (1,535)
-------- --------
$ 2,820 $ 3,838
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Bookings from Continuing Operations:
Pulp and Papermaking Systems $ 56,442 $ 51,143
Fiber-based Products 3,378 1,867
-------- --------
$ 59,820 $ 53,010
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Capital Expenditures from Continuing Operations:
Pulp and Papermaking Systems $ 140 $ 330
Corporate and Other (e) 26 32
-------- --------
$ 166 $ 362
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Three Months Ended
--------------------------------
Cash Flow and Other Data from Continuing Operations April 2, 2005 April 3, 2004
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Cash Provided by Operations $ 448 $ 2,285
Depreciation and Amortization Expense $ 1,016 $ 933
Balance Sheet Data April 2, 2005 January 1, 2005
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Cash and Cash Equivalents $ 80,473 $ 82,089
Shareholders' Investment $214,717 $212,461
(a) All prior-period information has been restated to reflect the composite building products business as a discontinued
operation.
(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 net income, adjusted diluted EPS, and adjusted operating income, which
exclude certain non-recurring items. We exclude these items because they are outside our normal operations. We believe
that providing such non-GAAP measures helps investors 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) Repesents a pre-tax gain of $970 in the 2004 period, which resulted from renegotiating a series of agreements with one of
our licensees, excluded from adjusted operating income.
(d) Represents effect of a tax benefit of $882 in the 2005 period received from our former parent company under a tax
agreement.
(e) Corporate and Other includes the results from our Fiber-based Products business and corporate.
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Kadant Inc. is a leading global supplier of a range of products that
improve quality and productivity in pulp and paper production, including
stock-preparation equipment, water-management systems, and paper machine
accessories. Kadant, based in Acton, Massachusetts, had approximately $195
million in revenues from continuing operations in 2004 and 950 employees
worldwide. For more information, please visit www.kadant.com.
The completion of the acquisition of The Johnson Corporation is subject
to customary closing conditions, including regulatory approvals and the approval
of Johnson's stockholders, as well as Kadant securing at least $55 million in
financing.
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 expected future business and
financial performance, the expected timing for the completion of the acquisition
of The Johnson Corporation, the benefits and synergies of the acquisition and
the expected future business and financial performance of the combined company
following the transaction. 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 year-end report on Form 10-K for the
fiscal year ended January 1, 2005. These include risks and uncertainties
relating to our dependence on the pulp and paper industry; international sales
and operations; competition; acquisition strategy; our ability to complete the
proposed restructuring of our French subsidiary; ability to sell the composite
building products business on favorable terms; ability to manufacture and
distribute composite building products, and the economic conditions, 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; protection of patents and
proprietary rights; fluctuations in quarterly operating results; 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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