UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): October 21, 2005
KADANT INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11406 52-1762325
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
One Acton Place 01720
Acton, Massachusetts (Zip Code)
(Address of Principal Executive Offices)
(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:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
KADANT INC.
Item 1.01 Entry into a Material Definitive Agreement.
On October 21, 2005, Kadant Inc. (the "Company") and Kadant Composites
LLC, a Delaware limited liability company and subsidiary of the Company (the
"Seller"), entered into an asset purchase agreement (the "Purchase Agreement")
with LDI Composites Co., a Minnesota corporation ("Buyer"), and Liberty
Diversified Industries, Inc., a Minnesota corporation and parent corporation of
the Buyer, to sell substantially all of the assets of its composite building
products business (the "Composites Business") to the Buyer for approximately $11
million in cash, subject to a post-closing adjustment. Pursuant to the Purchase
Agreement, approximately $0.6 million of the sale price was deposited in an
escrow fund until May 1, 2007 and approximately $0.6 million of the sale price
will be held by the buyer for one year to satisfy certain indemnification
obligations. The sale price, net of transaction costs, is slightly above the net
book value of the assets sold and the liabilities assumed, and as a result, the
Company does not expect the resulting gain on the sale to be material to its
consolidated operating results for the fourth quarter of 2005. The Composites
Business is accounted for as a discontinued operation in the Company's
consolidated financial statements.
Pursuant to the Purchase Agreement, the Seller retained warranty
obligations for products manufactured prior to the sale. The Seller agreed to
deposit $3.5 million of the sale proceeds into a special escrow fund to satisfy
warranty claims associated with products manufactured prior to the sale. The
warranty escrow fund will be administered by the Buyer for five years or until
the funds are exhausted, after which time the Seller will administer any
warranty claims associated with products manufactured prior to the sale.
The foregoing description of the transaction contemplated by the
Purchase Agreement does not purport to be a complete statement of the parties'
rights under the Purchase Agreement, and is qualified in its entirety by
reference to the full text of the Purchase Agreement, which is filed with this
report as Exhibit 99.1. A copy of the press release announcing the sale of the
Composites Business is filed with this report as Exhibit 99.2.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The sale of the Composites Business was completed on October 21, 2005.
The information set forth in Item 1.01 above is incorporated herein in its
entirety.
Item 8.01 Other Events.
In the third quarter of 2005, Kadant Inc. (the "Company") experienced a
higher than expected level of warranty claims in its Composites Business
associated with previously identified issues with some of its products. As a
result of the increase in warranty claims, the Company evaluated the adequacy of
its warranty reserve and increased its pre-tax warranty provision by $4.0
million in the third quarter of 2005 resulting in a total warranty reserve of
$6.0 million as of October 1, 2005. This increased warranty provision is
included in the results for the discontinued operation.
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KADANT INC.
(c) Exhibits
No. Description
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99.1 Purchase Agreement dated October 21, 2005, among Kadant
Inc., Kadant Composites LLC subsidiary ("Seller"), LDI
Composites Co., a Minnesota corporation ("Buyer"), and
Liberty Diversified Industries, Inc., a Minnesota
corporation, and parent corporation of the Buyer ("Buyer
Parent").
99.2 Press Release dated October 27, 2005 announcing the
closing of the Composites Business sale.
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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: October 27, 2005 By: /s/ Thomas M. O'Brien
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Thomas M. O'Brien
Executive Vice President and
Chief Financial Officer
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