886346--3/11/2008--KADANT

related topics

{operation, international, foreign}

{debt, indebtedness, cash}

{competitive, industry, competition}

{acquisition, growth, future}

{provision, law, control}

{property, intellectual, protect}

{interest, director, officer}

{loss, insurance, financial}

{stock, price, operating}

{cost, contract, operation}

{condition, economic, financial}

{cost, regulation, environmental}

Our business is dependent on the condition of the pulp and paper industry. A significant portion of our international sales has, and may in the future, come from China and we operate several manufacturing facilities in China, which expose us to political, economic, operational and other risks. Our business is subject to economic, currency, political, and other risks associated with international sales and operations. We are subject to intense competition in all our markets. Our debt may adversely affect our cash flow and may restrict our investment opportunities. Restrictions in our 2008 Credit Agreement may limit our activities. The inability of Kadant Composites LLC to pay claims against it has exposed us to litigation, which if we are unable to successfully defend, could have a material adverse effect on our consolidated financial results. An increase in the accrual for warranty costs of the discontinued operation adversely affects our consolidated financial results. Our inability to successfully identify and complete acquisitions or successfully integrate any new or previous acquisitions could have a material adverse effect on our business. We may be required to reorganize our operations in response to changing conditions in the paper industry, and such actions may require significant expenditures and may not be successful. Our fiber-based products business is subject to a number of factors that may adversely influence its profitability, including high costs of natural gas and dependence on a few suppliers of raw materials. Our inability to protect our intellectual property could have a material adverse effect on our business. In addition, third parties may claim that we infringe their intellectual property, and we could suffer significant litigation or licensing expense as a result. Fluctuations in our quarterly operating results may cause our stock price to decline. Anti-takeover provisions in our charter documents, under Delaware law, and in our shareholder rights plan could prevent or delay transactions that our shareholders may favor.

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886346--3/11/2008--KADANT_INC