17 unchanged sentences
Other Information
−Removed: Not applicable.
+Added: Insider Trading Arrangements and Policies
+Added: None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended December 30, 2023.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
2 unchanged sentences
Information about our Directors
−Removed: This information will be included under the heading "Election of Directors" in our 2023 proxy statement for our 2023 Annual Meeting of Shareholders and is incorporated in this report by reference, except for the information concerning executive officers, which is included under the heading "Information about our Executive Officers" in Item 1 of Part I of this report.
+Added: This information will be included under the heading "Election of Directors" in our 2024 proxy statement for our 2024 Annual Meeting of Shareholders and is incorporated in this report by reference, except for the information concerning executive officers, which is included under the heading "Information about our Executive Officers" in Part I , Item 1 of this report.
Section 16(a) Beneficial Ownership Reporting Compliance
5 unchanged sentences
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
−Removed: Except for the information concerning equity compensation plans, this information will be included under the heading "Stock Ownership" in our 2023 proxy statement and is incorporated in this report by reference.
−Removed: The following table provides information about the securities authorized for issuance under our equity compensation plans at year-end 2022:
−Removed: Equity Compensation Plan Information
−Removed: Plan Category Number of Securities
−Removed: to be Issued upon
−Removed: Outstanding Options,
−Removed: Warrants, and
−Removed: Rights Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights Number of Securities
−Removed: Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column)
−Removed: Equity compensation plans approved by security holders 85,477 (a) $ — (b) 395,636 (c)
−Removed: Equity compensation plans not approved by security holders — $ — —
−Removed: Total 85,477 (a) $ — (b) 395,636 (c)
−Removed: (a) Consists of shares of our common stock issuable upon the vesting of restricted stock units and performance-based restricted stock units under the Amended and Restated 2006 Equity Incentive Plan.
−Removed: (b) Shares of restricted stock units and performance-based restricted stock units outstanding on December 31, 2022 had a weighted average grant date fair value of $153.98.
−Removed: (c) Includes an aggregate of 82,532 shares of common stock issuable under our employees' stock purchase plan in connection with current and future offering periods under the plan.
+Added: This information will be included under the heading "Stock Ownership" and "Equity Compensation Plan Information" in our 2024 proxy statement and is incorporated in this report by reference.
Certain Relationships and Related Transactions, and Director Independence
17 unchanged sentences
Number Description of Exhibit
+Added: 2.1 Securities Purchase Agreement dated as of December 22, 2023, by and among Key Knife, Inc., Key Knife Canadian Investments Corporation, Key Knife, Inc., Employee Stock Ownership Trust, Kadant Inc.
+Added: and Kadant Canada Corp.
3.1 Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 [File No.
45 unchanged sentences
001-11406] and incorporated in this document by reference).
−Removed: 10.20 Fifth Amendment, dated as of December 9, 2021, to the Amended and Restated Credit Agreement, dated as of March 1, 2017, by and among the Registrant, the Foreign Subsidiary Borrowers from time to time parties thereto, the several banks and other financial institutions or entities from time to time parties thereto, and Citizens Bank, N.A., as Administrative Agent and Multicurrency Administrative Agent.
−Removed: (filed as Exhibit 10.21 to the Registrant's Annual Report on Form 10-K for the year ended January 1, 2022 [File No.
+Added: 10.20 Fifth Amendment, dated as of December 9, 2021, to the Amended and Restated Credit Agreement, dated as of March 1, 2017, by and among the Registrant, the Foreign Subsidiary Borrowers from time to time parties thereto, the several banks and other financial institutions or entities from time to time parties thereto, and Citizens Bank, N.A., as Administrative Agent and Multicurrency Administrative Agent (filed as Exhibit 10.21 to the Registrant's Annual Report on Form 10-K for the year ended January 1, 2022 [File No.
001-11406] and incorporated in this document by reference).
−Removed: 10.21 Sixth Amendment, dated as of November 30, 2022, to the Amended and Restated Credit Agreement, dated as of March 1, 2017, by and among the Registrant, the Foreign Subsidiary Borrowers from time to time parties thereto, the several banks and other financial institutions or entities from time to time parties thereto, and Citizens Bank, N.A., as Administrative Agent and Multicurrency Administrative Agent.
+Added: 10.21 Sixth Amendment, dated as of November 30, 2022, to the Amended and Restated Credit Agreement, dated as of March 1, 2017, by and among the Registrant, the Foreign Subsidiary Borrowers from time to time parties thereto, the several banks and other financial institutions or entities from time to time parties thereto, and Citizens Bank, N.A., as Administrative Agent and Multicurrency Administrative Agent (filed as Exhibit 10.21 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2022 [File No.
+Added: 001-11406] and incorporated in this document by reference).
10.22 Amended and Restated Guarantee Agreement dated as of March 1, 2017, among the Registrant, as Borrower, and each of the Subsidiary Guarantors, in favor of Citizens Bank, N.A., as Administrative Agent and as Multicurrency Administrative Agent for the bank and other financial institutions or entities from time to time parties to the Amended and Restated Credit Facility (filed as Exhibit 99.2 to the Registrant's Current Report on Form 8-K [File No.
6 unchanged sentences
001-11406] and incorporated in this document by reference).
−Removed: 10.25 International Swap Dealers Association, Inc.
−Removed: Master Agreement dated May 13, 2005 between the Registrant and Citizens Bank of Massachusetts and Swap Confirmation dated May 18, 2005 (filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 2, 2005 [File No.
−Removed: 001-11406] filed with the Commission on August 11, 2005 and incorporated in this document by reference).
−Removed: 10.26 Swap Confirmation dated May 16, 2018 between the Registrant and Citizens Bank, National Association (filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 [File No.
−Removed: 001-11406] filed with the Commission on August 8, 2018 and incorporated in this document by reference).
21 Subsidiaries of the Registrant.
1 unchanged sentence
24 Power of Attorney (included on the signatures page to the Annual Report on Form 10-K).
−Removed: Number Description of Exhibit
31.1 Certification of the Principal Executive Officer of the Registrant Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
2 unchanged sentences
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
+Added: 97 Dodd-Frank Compensation Recovery Policy (adopted May 2023) .
+Added: Number Description of Exhibit
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File
7 unchanged sentences
* Management contract or compensatory plan or arrangement.
+Added: The schedules to this document have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.
+Added: The Company will furnish copies of any of the schedules to the U.S.
+Added: Securities and Exchange Commission upon request.
Form 10-K Summary
32 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: Consolidated Balance Sheet as of December 31, 2022 and January 1, 2022
−Removed: Consolidated Statement of Income for the fiscal years ended December 31, 2022, January 1, 2022 , and January 2, 2021
−Removed: Consolidated Statement of Comprehensive Income for the fiscal years ended Decemb er 31, 2022, January 1, 2022, and January 2, 2021
−Removed: Consolidated Statement of Cash Flows for the fiscal years ended Decembe r 31, 2022, January 1, 2022, and January 2, 2021
−Removed: Consolidated Statement of Stockholders' Equity for the fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021
+Added: Consolidated Balance Sheet as of December 30, 2023 and December 31, 2022
+Added: Consolidated Statement of Income for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022
+Added: Consolidated Statement of Comprehensive Income for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022
+Added: Consolidated Statement of Cash Flows for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022
+Added: Consolidated Statement of Stockholders' Equity for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022
Notes to Consolidated Financial Statements
3 unchanged sentences
We have audited the accompanying consolidated balance sheets of Kadant Inc.
−Removed: and subsidiaries (the Company) as of December 31, 2022 and January 1, 2022, the related consolidated statements of income, comprehensive income, cash flows, and stockholders' equity for each of the fiscal years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).
+Added: and subsidiaries (the Company) as of December 30, 2023 and December 31, 2022, the related consolidated statements of income, comprehensive income, cash flows, and stockholders’ equity for each of the fiscal years in the three-year period ended December 30, 2023, and the related notes (collectively, the consolidated financial statements).
We also have audited the Company’s internal control over financial reporting as of December 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended December 31, 2022, in conformity with U.S.
+Added: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended December 30, 2023, in conformity with U.S.
generally accepted accounting principles.
34 unchanged sentences
We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to assess specific uncertain tax positions.
−Removed: This included controls related to the identification of those uncertain tax positions, interpretation of tax law and its application in the liability estimation process.
+Added: This included controls related to the evaluation of those uncertain tax positions, interpretation of tax law and its application in the liability estimation process.
We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the Company’s intercompany transfer pricing studies for compliance with applicable tax laws and regulations, evaluating the impact of intercompany transfer pricing policies on its uncertain tax positions, and assessing the expiration of statutes of limitations with applicable laws and regulations.
4 unchanged sentences
Consolidated Balance Sheet
−Removed: (In thousands, except share and per share amounts) December 31, 2022 January 1, 2022
+Added: (In thousands, except share and per share amounts) December 30, 2023 December 31, 2022
Current Assets:
41 unchanged sentences
Consolidated Statement of Income
−Removed: (In thousands, except per share amounts) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands, except per share amounts) December 30, 2023 December 31, 2022 January 1, 2022
Revenue (Notes 1 and 12) $ 957,672 $ 904,739 $ 786,579
3 unchanged sentences
Research and development expenses 13,562 12,724 11,403
−Removed: Gain on sale and other costs, net (Note 8) ( 18,856 ) 465 2,979
+Added: Gain on sale and other items, net (Note 8)
723 ( 18,856 ) 465
+Added: 791,915 733,457 669,869
Operating Income 165,757 171,282 116,710
16 unchanged sentences
Consolidated Statement of Comprehensive Income
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Net Income $ 116,806 $ 121,730 $ 84,881
3 unchanged sentences
137 644 ( 22 )
−Removed: Effect of pension plan settlement — — ( 119 )
−Removed: Deferred gain (loss) on cash flow hedges (net of tax of $ 147 , $ 118 , and $( 57 ))
+Added: Deferred (loss) gain on cash flow hedges (net of tax of $( 32 ), $ 147 , and $ 118 )
( 96 ) 520 366
6 unchanged sentences
Consolidated Statement of Cash Flows
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Operating Activities
6 unchanged sentences
Provision for losses on accounts receivable 531 1,165 5
−Removed: Gain on sale of assets (Note 8) ( 20,190 ) ( 515 ) —
+Added: Gain on sale of assets and other income (Note 8) ( 841 ) ( 20,190 ) ( 515 )
Non-cash impairment costs (Note 8) 36 731 804
−Removed: Deferred income tax provision (benefit) 7,159 ( 1,384 ) 142
+Added: Deferred income tax (benefit) provision ( 1,949 ) 7,159 ( 1,384 )
Other items, net 4,612 6,658 6,473
24 unchanged sentences
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash 3,084 ( 6,972 ) ( 3,232 )
−Removed: (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash ( 14,436 ) 27,521 ( 1,633 )
+Added: Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
+Added: 26,728 ( 14,436 ) 27,521
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year 79,725 94,161 66,640
8 unchanged sentences
Shares Amount Shares Amount
−Removed: Balance at December 28, 2019 14,624,159 $ 146 $ 106,698 $ 435,249 3,214,888 $ ( 78,778 ) $ ( 37,620 ) $ 1,384 $ 427,079
+Added: Balance at January 2, 2021 14,624,159 $ 146 $ 110,824 $ 479,400 3,081,919 $ ( 75,519 ) $ ( 19,492 ) $ 1,546 $ 496,905
Net income — — — 84,043 — — — 838 84,881
2 unchanged sentences
Dividend paid to noncontrolling interest — — — — — — — ( 560 ) ( 560 )
+Added: Noncontrolling interest acquired (Note 2) — — — — — — — 367 367
+Added: Purchase of shares of noncontrolling interest (Note 2) — — — — — — — ( 389 ) ( 389 )
Activity under stock plans — — 5,064 — ( 78,500 ) 1,923 — — 6,987
5 unchanged sentences
Dividend paid to noncontrolling interest — — — — — — — ( 630 ) ( 630 )
−Removed: Noncontrolling interest acquired (Note 2) — — — — — — — 367 367
−Removed: Purchase of shares of noncontrolling interest (Note 2) — — — — — — — ( 389 ) ( 389 )
Activity under stock plans — — 4,036 — ( 53,422 ) 1,309 — — 5,345
Other comprehensive items — — — — — — ( 24,228 ) ( 130 ) ( 24,358 )
−Removed: Balance at January 1, 2022 14,624,159 $ 146 $ 115,888 $ 551,848 3,003,419 $ ( 73,596 ) $ ( 30,350 ) $ 1,680 $ 565,616
+Added: Balance at December 31, 2022 14,624,159 $ 146 $ 119,924 $ 660,644 2,949,997 $ ( 72,287 ) $ ( 54,578 ) $ 1,722 $ 655,571
Net income — — — 116,069 — — — 737 116,806
1 unchanged sentence
— — — ( 13,582 ) — — — — ( 13,582 )
−Removed: Dividend paid to noncontrolling interest — — — — — — — ( 630 ) ( 630 )
Activity under stock plans — — 5,016 — ( 34,019 ) 834 — — 5,850
17 unchanged sentences
All material intercompany accounts and transactions have been eliminated.
−Removed: Typically, the Company's fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to the end of the corresponding calendar quarter for its fiscal quarters and on the Saturday closest to December 31 for its fourth fiscal quarter and fiscal year.
−Removed: As a result of the difference between the fiscal and calendar periods, a 53rd week is added to the Company's fiscal year every five or six years.
−Removed: In a 53-week fiscal year, the Company's fourth fiscal quarter contains 14 weeks.
−Removed: The Company's fiscal years ended December 31, 2022 (fiscal 2022 or 2022) and January 1, 2022 (fiscal 2021 or 2021) contained 52 weeks and its fiscal year ended January 2, 2021 (fiscal 2020 or 2020) contained 53 weeks.
−Removed: Each quarter of fiscal 2022, 2021 and 2020 contained 13 weeks, except the fourth quarter of 2020, which contained 14 weeks.
−Removed: The impact of the additional week in 2020 was not material to the Company's financial results.
+Added: The Company has adopted a fiscal year ending on the Saturday nearest to December 31.
+Added: References to 2023, 2022, and 2021 are for the Company's fiscal years ended December 30, 2023 (fiscal 2023), December 31, 2022 (fiscal 2022) and January 1, 2022 (fiscal 2021).
+Added: Financial Statement Presentation
+Added: Certain reclassifications have been made to prior periods to conform with the current period presentation.
+Added: Within operating activities in the consolidated statement of cash flows, the Company previously included certain non-cash movements between right-of-use assets and operating lease liabilities as a decrease in other assets and an increase in other liabilities, respectively.
+Added: The Company recast the prior periods to exclude this non-cash movement, which did not result in a change to net cash provided by operating activities within the consolidated statement of cash flows in these periods.
Use of Estimates and Critical Accounting Policies
8 unchanged sentences
Most of the Company’s revenue is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service.
−Removed: Most of the Company’s parts and consumables products and its capital products with minimal customization are accounted for at a point in time.
−Removed: The Company has made a policy election to not treat the obligation to ship as a separate performance
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: obligation under the contract and, as a result, the associated shipping costs are reflected in the cost of revenue when revenue is recognized.
+Added: Company’s parts and consumables products and its capital products with minimal customization are accounted for at a point in time.
+Added: The Company has made a policy election to not treat the obligation to ship as a separate performance obligation under the contract and, as a result, the associated shipping costs are reflected in the cost of revenue when revenue is recognized.
The remaining portion of the Company's revenue is recognized over time based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation.
3 unchanged sentences
The following table presents revenue by revenue recognition method:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Point in Time $ 849,507 $ 807,966 $ 705,709
7 unchanged sentences
The following table presents the disaggregation of revenue by product type and geography:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Revenue by Product Type:
10 unchanged sentences
The following table presents contract balances from contracts with customers:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Contract Assets $ 8,366 $ 14,898
5 unchanged sentences
The majority of the contract liabilities relate to advance payments on contracts accounted for at a point in time.
−Removed: These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer.
+Added: These advance payments will be recognized as revenue when the
2023 Financial Statements
Notes to Consolidated Financial Statements
+Added: Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer.
The Company recognized revenue of $ 65,562,000 in 2023 and $ 61,804,000 in 2022 that was included in the contract liabilities balance at the beginning of 2023 and 2022, respectively.
18 unchanged sentences
The changes in the allowance for credit losses are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Balance at Beginning of Year $ 3,595 $ 2,735 $ 2,977
10 unchanged sentences
The Company's contracts covering the sale of its products include warranty provisions that provide assurance to its customers that the products will comply with agreed-upon specifications during a defined period of time.
−Removed: The Company provides for the estimated cost of product warranties at the time of sale based on the historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: historical patterns.
+Added: provides for the estimated cost of product warranties at the time of sale based on the historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns.
The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.
3 unchanged sentences
The changes in the carrying amount of product warranty obligations are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Balance at Beginning of Year $ 7,283 $ 7,298
1 unchanged sentence
Usage ( 4,606 ) ( 4,587 )
−Removed: Acquisitions — 429
Currency translation 222 ( 383 )
10 unchanged sentences
Variable lease costs are not included in fixed lease payments and, as a result, are excluded from the measurement of the ROU assets and lease liabilities.
−Removed: The Company expenses all variable lease costs as incurred, which were not material in 2022, 2021 and 2020.
+Added: The Company expenses all variable lease costs as incurred.
As a lessee, the Company accounts for the lease and non-lease components of its real estate and equipment leases as a single lease component.
8 unchanged sentences
To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established, the statute of limitations expires for a tax jurisdiction year, or the Company is required to pay amounts in excess of the liability, its effective tax rate in a given financial statement period may be affected.
+Added: In December 2021, the Organisation for Economic Co-operation and Development (OECD) released model rules introducing a new 15% global minimum tax for large multinational enterprises with an annual global revenue exceeding 750,000,000 euros (Pillar Two Rules).
+Added: Since the release of the Pillar Two Rules, the OECD has issued three tranches of
2023 Financial Statements
Notes to Consolidated Financial Statements
+Added: administrative guidance, as well as guidance on transitional safe harbor relief.
+Added: Various countries, including the member states of the European Union, have adopted the Pillar Two Rules into their domestic laws, with certain rules coming into effect for fiscal years beginning in 2024.
+Added: Some countries are in the process of drafting legislation for adoption in future years.
+Added: While the Pillar Two Rules serve as a framework for implementing the minimum tax, countries may enact domestic laws that vary slightly from the Pillar Two Rules and may also adjust domestic tax incentives to align with the Pillar Two Rules on different timelines.
+Added: The Company is monitoring developments of the Pillar Two Rules and is evaluating the potential impact they may have on the jurisdictions in which it operates.
Earnings per Share
Basic earnings per share (EPS) is computed by dividing net income attributable to Kadant by the weighted average number of shares outstanding during the year.
−Removed: Diluted EPS is computed using the treasury stock method assuming the effect of all potentially dilutive securities, including stock options, restricted stock units (RSUs) and employee stock purchase plan shares.
+Added: Diluted EPS is computed using the treasury stock method assuming the effect of all potentially dilutive securities, including stock options (in 2021), restricted stock units (RSUs) and employee stock purchase plan shares.
Cash, Cash Equivalents, and Restricted Cash
1 unchanged sentence
The carrying amounts of cash equivalents approximate their fair values due to the short-term nature of these instruments.
−Removed: The Company's restricted cash generally serves as collateral for certain banker's acceptance drafts issued to vendors and for bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business.
+Added: The Company's restricted cash generally serves as collateral for bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business and for certain banker's acceptance drafts issued to vendors.
The majority of these restrictions will expire over the next twelve months.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying consolidated balance sheet that are shown in aggregate in the consolidated statement of cash flows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Cash and cash equivalents $ 103,832 $ 76,371 $ 91,186
2 unchanged sentences
Supplemental Cash Flow Information
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Cash Paid for Interest $ 8,071 $ 6,053 $ 4,441
2 unchanged sentences
Fair value of assets acquired $ 1,338 $ 2,785 $ 190,977
−Removed: Cash paid for acquired businesses ( 3,597 ) ( 152,661 ) ( 7,565 )
−Removed: Liabilities (adjusted) assumed of acquired businesses $ ( 812 ) $ 38,316 $ 1,730
+Added: Cash paid for acquired businesses, net ( 1,074 ) ( 3,597 ) ( 152,661 )
+Added: Increase (decrease) in liabilities assumed $ 264 $ ( 812 ) $ 38,316
Purchase of property with outstanding loan receivable $ — $ 1,397 $ —
5 unchanged sentences
or weighted average basis) or net realizable value and include materials, labor, and manufacturing overhead.
−Removed: The Company regularly reviews its quantities of inventories on hand and compares these amounts to the historical and forecasted usage of and demand for each particular product or product line.
−Removed: The Company records a charge to cost of revenue for excess and obsolete inventory to reduce the carrying value of inventories to net realizable value.
+Added: The Company regularly reviews its quantities of inventories on hand and compares these amounts to the historical and forecasted usage of and demand for each particular product or
2023 Financial Statements
Notes to Consolidated Financial Statements
+Added: product line.
+Added: The Company records a charge to cost of revenue for excess and obsolete inventory to reduce the carrying value of inventories to net realizable value.
The components of inventories are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Raw Materials $ 66,738 $ 71,040
13 unchanged sentences
Property, plant, and equipment consist of the following:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Land $ 10,769 $ 10,729
27 unchanged sentences
Translation Net
−Removed: January 1, 2022
+Added: December 31, 2022
Definite-Lived
7 unchanged sentences
Acquired Intangible Assets $ 343,130 $ ( 155,834 ) $ ( 11,651 ) $ 175,645
−Removed: In connection with its impairment analysis, the Company reduced its definite-lived intangible assets by $ 499,000 in 2021.
−Removed: See Impairment of Long-Lived Assets under the heading Intangible Assets within this note for further details.
Intangible assets are recorded at fair value at the date of acquisition.
2 unchanged sentences
The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset.
−Removed: Intangible assets acquired related to the Company's acquisition in 2022 were $ 2,183,000 , which primarily consisted of customer relationships, and have a weighted-average amortization period of 14 years (see Note 2 , Acquisitions).
−Removed: Definite-lived intangible assets as of year-end 2022 have a weighted average amortization period of 13 years.
+Added: Intangible assets acquired related to the Company's acquisition in 2023 were $ 211,000 , which primarily consisted of customer relationships (see Note 2 , Acquisitions).
+Added: Definite-lived intangible assets at year-end 2023 have a weighted average amortization period of 13 years.
Amortization of definite-lived intangible assets was $ 18,448,000 in 2023, $ 20,507,000 in 2022, and $ 20,869,000 in 2021 and was included in selling, general, and administrative (SG&A) expenses in the accompanying consolidated statement of income.
14 unchanged sentences
2022 Activity
−Removed: Acquisitions (Note 2) 25,805 1,116 26,836 53,757
+Added: Acquisitions (Note 2) (a) ( 33 ) — 1,231 1,198
+Added: Impairment loss — ( 29 ) — ( 29 )
Currency translation ( 5,247 ) ( 5,063 ) ( 2,291 ) ( 12,601 )
Total 2022 activity
−Removed: Balance at January 1, 2022
+Added: ( 5,280 ) ( 5,092 ) ( 1,060 ) ( 11,432 )
+Added: Balance at December 31, 2022
Gross balance 118,309 209,919 142,765 470,993
5 unchanged sentences
2023 Activity
−Removed: Acquisition (a) (Note 2) ( 33 ) — 1,231 1,198
−Removed: Impairment loss — ( 29 ) — ( 29 )
+Added: Acquisition (Note 2) $ — $ 793 $ 4 $ 797
Currency translation 2,473 2,020 1,339 5,832
Total 2023 activity
+Added: 2,473 2,813 1,343 6,629
Balance at December 30, 2023
4 unchanged sentences
Impairment of Long-Lived Assets
−Removed: The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets as of the end of each fiscal year, or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired.
+Added: Beginning in 2023, the Company evaluates the recoverability of goodwill and indefinite-lived intangible assets as of the first day of the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired.
+Added: Prior to 2023, this evaluation was performed as of the end of each fiscal year, or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired.
Potential impairment indicators include a significant decline in sales, earnings, or cash flows, material adverse changes in the business climate, and a significant decline in the market capitalization due to a sustained decrease in the Company's stock price.
+Added: The Company is permitted to first assess qualitative factors to determine whether the quantitative impairment test is necessary.
+Added: If the qualitative assessment (Step 0) results in a determination that the fair value of a reporting unit or indefinite-lived intangible asset is more likely than not less than its carrying amount, the Company performs a quantitative impairment analysis (Step 1).
+Added: The Company may bypass the qualitative assessment and proceed directly to the quantitative assessment.
The Company assesses its definite-lived intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable.
2 unchanged sentences
The impairment loss would be measured based upon the difference between the carrying amounts of the assets and their fair values calculated using projected discounted cash flows.
−Removed: At year-end 2022 and 2021, in connection with its annual impairment analysis, the Company performed a qualitative goodwill impairment assessment (Step 0) for each of its reporting units, which indicated that the fair value of each reporting unit exceeded its carrying value, and determined that the assets were not impaired.
+Added: At October 1, 2023 (the first day of the fourth quarter of 2023), the Company performed a quantitative goodwill impairment analysis (Step 1) for all of its reporting units, which indicated that the fair value of each reporting unit exceeded its carrying value, and determined that the assets were no t impaired.
+Added: At year-end 2023, no factors were identified that would alter the conclusions of the October 1, 2023 goodwill impairment analysis.
+Added: At year-end 2022, the Company performed a qualitative goodwill impairment assessment (Step 0) for each of its reporting units, which indicated that the fair value of each reporting unit exceeded its carrying value, and determined that the asset was not impaired.
The impairment analysis included an assessment of certain qualitative factors including, but not limited to, the results of prior fair value calculations, the movement of the Company's share price and market capitalization, the reporting units' and the Company's overall financial performance, and macroeconomic and industry conditions.
1 unchanged sentence
Although the Company believes the factors considered in the impairment analysis are reasonable, significant changes in any one of the assumptions used could have produced a different result.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
Goodwill by reporting unit is as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Fluid-Handling $ 63,180 $ 62,426
5 unchanged sentences
Intangible Assets
−Removed: At year-end 2022 and 2021, the Company performed a qualitative impairment analysis on its indefinite-lived intangible assets and determined that the assets were not impaired.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
−Removed: No triggering events or indicators of impairment were identified in 2022 or 2021 related to the Company's definite-lived intangible assets, except for the definite-lived intangible assets associated with its existing ceramic blade product line in France in 2021.
−Removed: In the fourth quarter of 2021, the Company decided to exit its ceramic blade business in France, which became a redundant manufacturing operation as a result of its acquisition of The Clouth Group of Companies (Clouth) in the third quarter of 2021.
−Removed: As a result of this decision, the Company recorded an impairment charge of $ 499,000 in the fourth quarter of 2021 related to its product technology intangible asset, which is included in gain on sale and other costs, net in the accompanying consolidated statement of income.
−Removed: The Company ceased production at this business during the last quarter of 2022.
+Added: At October 1, 2023, the Company performed a quantitative impairment analysis (Step 1) on its indefinite-lived intangible assets and determined that the assets were not impaired.
+Added: At year-end 2023, no factors were identified that would alter the conclusions of the October 1, 2023 indefinite-lived intangible asset impairment analysis.
+Added: At year-end 2022, the Company performed a qualitative impairment analysis (Step 0) on its indefinite-lived intangible assets and determined that the assets were not impaired.
+Added: No triggering events or indicators of impairment were identified in 2023 or 2022 related to the Company's definite-lived intangible assets.
Business Combinations
6 unchanged sentences
Subsequent to the purchase price allocation period, any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determ ined.
−Removed: Acquisition transaction costs are recorded as incurred in SG&A expenses in the accompanying consolidated statement of income and were $ 668,000 in 2022, $ 3,655,000 in 2021, and $ 485,000 in 2020.
+Added: Acquisition transaction costs are recorded as incurred in SG&A expenses in the accompanying consolidated statement of income and were $ 1,442,000 in 2023 (see Note 15 , Subsequent Events), $ 668,000 in 2022, and $ 3,655,000 in 2021.
Foreign Currency Translation and Transactions
6 unchanged sentences
For time-based RSUs, compensation expense is recognized ratably over the requisite service period for the entire award based on the grant date fair value, and net of actual forfeitures recorded when they occur.
−Removed: For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known.
+Added: For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
+Added: the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known.
Compensation expense related to any modified stock-based awards is based on the fair value for those awards as of the modification date with any remaining incremental compensation expense recognized ratably over the remaining requisite service period.
2 unchanged sentences
If a contract is deemed a hedge, the Company formally documents the relationship between the derivative instrument and the risk being hedged.
−Removed: In this documentation, the Company specifically identifies the asset, liability, forecasted transaction, cash flow, or net investment that has been designated as the hedged item, and evaluates whether the derivative instrument is expected to reduce the risks associated
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
−Removed: with the hedged item.
+Added: In this documentation, the Company specifically identifies the asset, liability, forecasted transaction, cash flow, or net investment that has been designated as the hedged item, and evaluates whether the derivative instrument is expected to reduce the risks associated with the hedged item.
To the extent these criteria are not met, the Company does not use hedge accounting for the derivative.
7 unchanged sentences
The ineffective portion of a hedge, if any, and changes in the fair value of a derivative not deemed to be a hedge, are recorded in the accompanying consolidated statement of income.
−Removed: Recently Adopted Accounting Pronouncements
−Removed: Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
−Removed: In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
−Removed: 2020-04 which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of reference rates, such as the London Interbank Offered Rate (LIBOR), if certain criteria are met.
−Removed: Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date.
−Removed: The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR .
−Removed: The Company adopted this ASU during the fourth quarter of 2022 and its adoption did not have a material impact on the consolidated financial statements.
−Removed: Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
−Removed: In October 2021, the FASB issued ASU No.
−Removed: 2021-08 which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU No.2014-09, Revenue from Contracts with Customers (Topic 606) .
−Removed: The guidance in this ASU will generally result in the Company recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value.
−Removed: This new guidance is effective on a prospective basis in fiscal 2023, with early adoption permitted.
−Removed: The impact of the adoption of this ASU on the Company's consolidated financial statements will be dependent on the contract assets and liabilities acquired in future business combinations.
+Added: Recent Accounting Pronouncements Not Yet Adopted
+Added: Business Combinations - Joint Venture Formations (Topic 805), Recognition and Initiation Measurement.
+Added: In August 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
+Added: 2023-05, to address the diversity in practice on the accounting treatment of joint venture formations.
+Added: Under this ASU, a joint venture is required to apply a new basis of accounting at its formation date by valuing the net assets contributed at fair value for both business and asset transactions.
+Added: The value of the net assets in total is then allocated to individual assets and liabilities by applying Topic 805 with certain exceptions.
+Added: This new guidance is effective for joint ventures with a formation date on or after January 1, 2025 and is required to be applied prospectively.
+Added: Additionally, joint ventures with a formation date prior to January 1, 2025 have an option to elect to apply the guidance retrospectively, provided adequate information is available.
+Added: The impact of the adoption of this ASU on the Company's consolidated financial statements will be dependent upon joint ventures formed in future periods.
+Added: Segment Reporting - Improving Reportable Segment Disclosures (Topic 280).
+Added: In November 2023, the FASB issued ASU No.
+Added: 2023-07, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.
+Added: Under this ASU, a company is required to enhance its segment disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.
+Added: This ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.
+Added: This ASU is effective for the Company's fiscal year ending December 28, 2024, and interim periods beginning in fiscal 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.
+Added: The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
+Added: Income Taxes - Improvements to Income Tax Disclosures (Topic 740) .
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09, to improve income tax disclosure requirements, primarily through enhanced disclosures related to the income tax rate reconciliation and income taxes paid.
+Added: This ASU is effective for fiscal 2025, with early adoption permitted and may be applied retrospectively.
+Added: The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
+Added: On December 19, 2023, the Company acquired a business in Sweden, which is included in the Company's Industrial Processing segment, for approximately $ 895,000 , net of cash acquired.
On November 14, 2022, the Company acquired a business in Canada, which is included in the Company's Material Handling segment, for approximately $ 3,622,000 , net of cash acquired.
3 unchanged sentences
Clouth, which is included in the Company's Flow Control segment, is a leading manufacturer of doctor blades and related equipment used in the production of paper, packaging, and tissue.
−Removed: The Company expects several synergies in connection with this acquisition, including deepening its presence in the growing ceramic blade market and expansion of sales at its existing businesses by leveraging Clouth's complementary global geographic footprint.
Clouth has three manufacturing facilities in Germany and one in Poland.
3 unchanged sentences
On August 23, 2021, the Company acquired all the outstanding equity securities in East Chicago Machine Tool Corporation (Balemaster) and certain assets of affiliated companies for $ 53,547,000 , net of cash acquired.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
−Removed: which is included in the Company's Material Handling segment, is a leading U.S.
+Added: Balemaster, which is included in the Company's Material Handling segment, is a leading U.S.
manufacturer of horizontal balers and related equipment used primarily for recycling packaging waste at corrugated box plants and large retail and distribution centers.
The Company funded the purchase price with borrowings under its revolving credit facility.
−Removed: The Company expects several synergies in connection with the acquisition, including expansion of its presence in the secondary material processing market and creation of new opportunities for leveraging its high-performance balers produced in Europe.
Goodwill from the Balemaster acquisition was $ 26,334,000 , none of which is deductible for tax purposes.
4 unchanged sentences
Measurement period adjustments in 2022 were not material to the Company's results of operations.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
(In thousands) Clouth Other Total
25 unchanged sentences
The weighted-average amortization period for the Company's other 2021 acquisitions' definite-lived intangible assets is 16 years, including weighted-average amortization periods of 17 years for customer relationships, 13 years for product technology, and 16 years for tradenames.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
Unaudited Supplemental Pro Forma Information
1 unchanged sentence
(In thousands, except per share amounts) January 1,
−Removed: 2022 January 2,
Revenue $ 812,016
1 unchanged sentence
Earnings per Share Attributable to Kadant
−Removed: Basic $ 7.79 $ 4.86
Diluted $ 7.74
1 unchanged sentence
Pro forma results include the following non-recurring pro forma adjustments:
−Removed: • Pre-tax charge to cost of revenue of $ 3,082,000 in 2020 and reversal of $ 3,082,000 in 2021, for the sale of inventory revalued at the date of acquisition.
−Removed: • Pre-tax charge to SG&A expenses of $ 3,109,000 in 2020 and reversal of $ 2,710,000 in 2021 and $ 399,000 in 2021, for acquisition costs and intangible asset amortization related to acquired backlog, respectively.
+Added: • Pre-tax reversal to cost of revenue of $ 3,082,000 in 2021, for the sale of inventory revalued at the date of acquisition.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
+Added: • Pre-tax reversal to SG&A expenses of $ 2,710,000 in 2021 and $ 399,000 in 2021, for acquisition costs and intangible asset amortization related to acquired backlog, respectively.
• Estimated tax effects related to the pro forma adjustments.
−Removed: Pro forma results in 2020 include a pre-tax gain of $ 4,409,000 from the forgiveness of a shareholder loan at Clouth.
These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that would have resulted had the acquisition of Clouth occurred as of the beginning of 2020, or that may result in the future.
The Company's pro forma results exclude the Company's other acquisitions in 2021 as the inclusion of those results would not have been materially different from the pro forma results presented above had the acquisitions occurred at the beginning of 2020.
−Removed: On June 1, 2020, the Company acquired Cogent Industrial Technologies Ltd.
−Removed: (Cogent), which is included in its Industrial Processing segment, for approximately $ 6,866,000 , net of cash acquired.
−Removed: The Company funded the acquisition through borrowings under its revolving credit facility.
−Removed: Intangible assets acquired primarily relate to customer relationships with a fair value of $ 3,350,000 .
−Removed: Cogent, based in British Columbia, Canada, is an industrial automation and controls solution provider that offers expertise in process technology integration, industrial automation and controls, industrial safety, project management, and operational performance management systems.
−Removed: On May 28, 2020, the Company also acquired certain intellectual property from a company in Austria, which is included in its Industrial Processing segment, for $ 416,000 , of which $ 229,000 was paid in the second quarter of 2020, $ 125,000 in the first quarter of 2021, and $ 62,000 in the first quarter of 2022.
−Removed: Intangible assets acquired represent product technology with a fair value of $ 557,000 at acquisition date.
Employee Benefit Plans
3 unchanged sentences
The award recipients and the terms of awards granted under these plans are determined by the board committee.
−Removed: Upon a change of control, as defined in the plans, all options or other awards become
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
−Removed: fully vested and all restrictions lapse.
+Added: Upon a change of control, as defined in the plans, all options or other awards become fully vested and all restrictions lapse.
The Company had 281,708 shares available for grant under these stock-based compensation plans at year-end 2023.
3 unchanged sentences
The components of pre-tax stock-based compensation expense included in SG&A expenses in the accompanying consolidated statement of income are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
RSU Awards $ 9,376 $ 8,222 $ 8,224
6 unchanged sentences
Half of the RSUs vested on June 1 of each year and the remaining RSUs vested ratably on the last day of the third and fourth fiscal quarters of each year.
−Removed: In addition, the Company granted RSU awards consisting of 470 RSUs in May 2022, which vested ratably on the last day of the third and fourth fiscal quarters of 2022 and 1,042 RSUs in July 2020, which vested ratably on the last day of the third and fourth fiscal quarters of 2020 to its then new non-employee director.
+Added: In addition, the Company granted RSU awards consisting of 470 RSUs in May 2022, which vested ratably on the last day of the third and fourth fiscal quarters of 2022, to its then new non-employee director.
Each RSU issued to the directors represents the right to receive one share of the Company's common stock upon vesting.
4 unchanged sentences
Following the adjustment, the RSUs are subject to additional time-based vesting, and vest in three equal annual installments, provided that the officer is employed by the Company on the applicable vesting dates.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
The Company recognizes compensation expense associated with performance-based RSUs ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known.
9 unchanged sentences
Unrecognized compensation expense related to the time-based RSUs totaled $ 3,954,000 at year-end 2023, and will be recognized over a weighted average period of 1.8 years.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
Vesting of Restricted Stock Units
3 unchanged sentences
Date Fair Value
−Removed: Unvested RSUs at January 1, 2022 107 $ 127.70
+Added: Unvested RSUs at December 31, 2022 85 $ 153.98
Granted 51 $ 212.92
7 unchanged sentences
Prior to 2014, the Company granted nonqualified stock options to its executive officers that vested over three years and were not exercisable until vested.
−Removed: All options awarded in prior periods were granted at an exercise price equal to the fair market value of the Company's common stock on the date of grant.
+Added: Options awarded were granted at an exercise price equal to the fair market value of the Company's common stock on the date of grant.
There were no stock options outstanding at year-end 2023, 2022 and 2021 as all remaining stock options were exercised prior to the end of 2021.
−Removed: A summary of the Company's stock option exercises are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
−Removed: Total Intrinsic Value of Options Exercised $ — $ 4,986 $ 4,071
−Removed: Cash Received from Options Exercised $ — $ 665 $ 1,123
+Added: The total intrinsic value of options exercised and total cash received from options exercised during the year ended January 1, 2022 were $ 4,986,000 and $ 665,000 , respectively.
Employee Stock Purchase Plan
3 unchanged sentences
Shares purchased under the plan are subject to a one-year resale restriction and are purchased through payroll deductions of up to 10 % of each participating employee's gross wages.
−Removed: The Company issued 9,111 shares in 2022, 10,230 shares in 2021, and 13,062 shares in 2020 of its common stock under this plan.
+Added: The Company issued 10,627 shares for 2023 (issued in fiscal 2024), 9,111 shares in 2022, and 10,230 shares in 2021 of its common stock under this plan.
The Company had 82,532 shares available for grant under the employee stock purchase plan at year-end 2023.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
401(k) Savings and Other Defined Contribution Plans
12 unchanged sentences
The amounts in AOCI are recognized as net periodic benefit cost pursuant to the Company's accounting policy for amortizing such amounts.
−Removed: Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic benefit cost will be recognized as a component of AOCI, net of tax.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
+Added: Actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic benefit cost will be recognized as a component of AOCI, net of tax.
The Company records the non-service component of net periodic pension cost in other expense, net in the accompanying consolidated statement of income.
5 unchanged sentences
The components of income before provision for income taxes are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Domestic $ 57,810 $ 46,558 $ 26,599
2 unchanged sentences
The components of the provision for income taxes are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Current Provision:
9 unchanged sentences
$ 42,210 $ 43,906 $ 27,171
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
The Company receives a tax deduction upon the exercise of nonqualified stock options and the vesting of RSUs.
1 unchanged sentence
The Company recognized an income tax benefit of $ 354,000 in 2023, $ 501,000 in 2022 and $ 1,808,000 in 2021 in the accompanying consolidated statement of income.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
The provision for income taxes in the accompanying consolidated statement of income differs from the provision calculated by applying the statutory federal income tax rate of 21% to income before provision for income taxes due to the following:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Provision for Income Taxes at Statutory Rate $ 33,393 $ 34,784 $ 23,531
1 unchanged sentence
Foreign tax rate differential 5,070 5,770 2,819
−Removed: Nondeductible expenses 2,683 1,673 2,117
State income taxes, net of federal income tax 2,965 2,316 863
−Removed: Reversal of tax benefit reserves, net ( 1,368 ) ( 444 ) ( 730 )
+Added: Nondeductible expenses 1,730 2,683 1,673
tax cost of foreign earnings 1,270 932 481
+Added: Provision for (reversal of) tax benefit reserves, net 386 ( 1,368 ) ( 444 )
Research and development tax credits ( 520 ) ( 425 ) ( 454 )
4 unchanged sentences
The Company's net deferred tax liability consists of the following:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Deferred Tax Asset:
7 unchanged sentences
Foreign, state, and alternative minimum tax credit carryforwards 490 490
+Added: Other 214 122
Deferred tax asset, gross 36,447 33,535
12 unchanged sentences
The valuation allowance at year-end 2023 was $ 7,829,000 , consisting of $ 68,000 in the United States and $ 7,761,000 in foreign jurisdictions.
−Removed: The decrease in the valuation allowance in 2022 of $ 229,000 is related primarily to fluctuations in foreign currency exchange rates and utilization of net operating losses, partially offset by an increase in valuation allowance associated with restructuring losses.
−Removed: Compliance with ASC 740 requires the Company to periodically evaluate the necessity of establishing or adjusting a valuation allowance for deferred tax assets depending on whether it is more likely than not that a related tax benefit will be realized in future periods.
−Removed: When assessing the need for a valuation allowance in a tax jurisdiction, the Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
−Removed: As part of this evaluation,
+Added: The decrease in the valuation allowance in 2023 of $ 1,154,000 is related primarily to utilization of net operating losses and a decrease in unbenefited deferred tax assets from a restructuring,
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: the Company considers its cumulative three-year history of earnings before income taxes, taxable income in prior carryback years, future reversals of existing taxable temporary differences, prudent and feasible tax planning strategies, and expected future results of operations.
−Removed: As of year-end 2022, the Company continued to maintain a valuation allowance in the United States against a portion of its state net operating loss carryforwards due to the uncertainty of future profitability in certain state jurisdictions.
−Removed: As of year-end 2022, the Company maintained valuation allowances in certain foreign jurisdictions because of the uncertainty of future profitability within those foreign jurisdictions.
−Removed: At year-end 2022, the Company had U.S.
−Removed: federal and state net operating loss carryforwards of $ 1,002,000 and $ 22,587,000 , respectively, and foreign net operating loss carryforwards of $ 51,804,000 .
−Removed: federal net operating loss carryforward does not expire.
−Removed: The state net operating loss carryforwards begin to expire in 2024 and a portion does not expire.
+Added: partially offset by fluctuations in foreign currency exchange rates.
+Added: Compliance with ASC 740 requires the Company to periodically evaluate the necessity of establishing or adjusting a valuation allowance for deferred tax assets depending on whether it is more likely than not that a related tax benefit will be realized in future periods.
+Added: When assessing the need for a valuation allowance in a tax jurisdiction, the Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
+Added: As part of this evaluation, the Company considers its cumulative three-year history of earnings before income taxes, taxable income in prior carryback years, future reversals of existing taxable temporary differences, prudent and feasible tax planning strategies, and expected future results of operations.
+Added: As of year-end 2023, the Company maintained a valuation allowance in the United States against a portion of its state net operating loss carryforwards in the United States and a valuation allowance in certain foreign jurisdictions due to the uncertainty of future profitability in the state and those foreign jurisdictions.
+Added: At year-end 2023, the Company had state net operating loss carryforwards of $ 13,683,000 and foreign net operating loss carryforwards of $ 46,852,000 .
+Added: state net operating loss carryforwards begin to expire in 2024 and a portion does not expire.
Of the foreign net operating loss carryforwards, $ 965,000 will expire in the years 2025 through 2043, and the remainder do not expire.
−Removed: As of year-end 2022, the Company also had state disallowed business interest expense carryforwards of $ 71,000 and foreign tax credits of $ 368,000 , of which $ 120,000 came from the acquisition of Syntron Material Handling Group, LLC and certain of its affiliates (SMH) in 2019.
+Added: As of year-end 2023, the Company also had state disallowed business interest expense carryforwards of $ 71,000 and foreign tax credits of $ 382,000 , of which $ 120,000 came from the acquisition of Syntron Material Handling Group, LLC and certain of its affiliates in 2019.
The disallowed business interest expense carryforward does not expire, and the foreign tax credit carryforward begins to expire in 2024.
−Removed: The utilization of these tax attributes is limited to the Company’s future taxable income, and certain of these tax attributes are subject to an annual limitation as a result of the acquisition of SMH, which constitutes a change of ownership as defined under Internal Revenue Code Section 382.
+Added: The utilization of these tax attributes is limited to the Company’s future taxable income.
At year-end 2023, the Company had approximately $ 284,980,000 of unremitted foreign earnings.
During 2023, the Company repatriated $ 27,957,000 of previously taxed foreign earnings to the United States and recognized a foreign exchange loss of $ 1,211,000 associated with these earnings.
−Removed: The Company intends to repatriate the distributable reserves of select foreign subsidiaries back to the United States and has recognized $ 764,000 of net tax expense on the estimated repatriation amount during 2022.
+Added: The Company intends to repatriate the distributable reserves of select foreign subsidiaries back to the United States and has recognized $ 653,000 of tax expense on the estimated repatriation amount during 2023.
Except for these select foreign subsidiaries, the Company intends to indefinitely reinvest $ 253,469,000 of earnings of its foreign subsidiaries in order to support the current and future capital needs of their operations, including the repayment of the Company’s foreign debt.
5 unchanged sentences
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Unrecognized Tax Benefits, Beginning of Year $ 10,354 $ 9,731
2 unchanged sentences
Gross Increases—Current-Period Tax Positions 1,589 1,260
+Added: Settlements ( 130 ) —
Lapses of Statutes of Limitations ( 749 ) ( 2,251 )
4 unchanged sentences
The Company has accrued $ 2,017,000 at year-end 2023 and $ 1,806,000 at year-end 2022 for the potential payment of interest and penalties.
−Removed: The interest and penalties included in the accompanying consolidated statement of income was a benefit of $ 333,000 in 2022 and $ 129,000 in 2021.
−Removed: The Company is currently under audit in four of its foreign tax jurisdictions.
+Added: The interest and penalties included in the accompanying consolidated statement of income was an expense of $ 120,000 in 2023 and a benefit of $ 333,000 in 2022.
+Added: The Company is currently under audit in certain of its foreign tax jurisdictions.
During 2021, the Company finalized its examination with the Internal Revenue Service for the tax years 2017 and 2018 with no material adjustments.
It is reasonably possible that over the next fiscal year the amount of liability for unrecognized tax benefits may be reduced by up to $ 413,000 primarily from the expiration of tax statutes of limitations.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
The Company remains subject to U.S.
2 unchanged sentences
In addition, the Company remains subject to state and local income tax examinations in the United States for the tax years 2003 through 2023.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
Short- and Long-Term Obligations
Short- and long-term obligations are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022
+Added: (In thousands) December 30, 2023 December 31, 2022
Revolving Credit Facility, due 2027 $ 98,761 $ 186,131
5 unchanged sentences
Long-Term Obligations $ 107,666 $ 197,340
−Removed: See Note 11 for the fair value information related to the Company's long-term obligations.
+Added: See Note 11 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value information related to the Company's long-term obligations.
Revolving Credit Facility
11 unchanged sentences
The weighted average interest rate for the outstanding balance under the Credit Agreement was 5.24 % as of year-end 2023 and 4.33 % as of year-end 2022.
−Removed: See Note 10 , Derivatives, under the heading Interest Rate Swap Agreement , for information relating to the Company's swap agreement.
+Added: See Note 10 , Derivatives, under the heading Interest Rate Swap Agreement , for information relating to the Company's swap agreement, which matured on June 30, 2023.
Senior Promissory Notes
1 unchanged sentence
Simultaneous with the execution of the Note Purchase Agreement, the Company issued senior promissory notes (Initial Notes) in an aggregate principal amount of $ 10,000,000 , with a per annum interest rate of 4.90 % payable semiannually, and a maturity date of December 14, 2028.
−Removed: The Company is required to prepay a portion of the principal of the Initial Notes beginning on December 14, 2023 and each year thereafter, and may optionally prepay the principal on the Initial Notes, together with any prepayment premium, at any time in accordance with the Note Purchase Agreement.
−Removed: At year-end 2022, $ 1,670,000 was included in current maturities of long-term obligations in the accompanying consolidated balance sheet related to this obligation.
−Removed: The obligations of the Initial Notes may be accelerated
+Added: The Company is required to prepay a
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: upon an event of default as defined in the Note Purchase Agreement, which includes customary events of default under such financing arrangements.
+Added: portion of the principal of the Initial Notes beginning on December 14, 2023 and each year thereafter, and may optionally prepay the principal on the Initial Notes, together with any prepayment premium, at any time in accordance with the Note Purchase Agreement.
+Added: The obligations of the Initial Notes may be accelerated upon an event of default as defined in the Note Purchase Agreement, which includes customary events of default under such financing arrangements.
The Initial Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement.
6 unchanged sentences
Other Borrowings
−Removed: Prior to August 2022, other borrowings included a sale-leaseback financing arrangement for a manufacturing facility in Germany.
−Removed: This arrangement provided for a fixed price purchase option of the facility from the landlord at the end of the lease term in August 2022.
−Removed: The Company exercised this option and acquired the facility from the landlord for 2,722,000 euros, or approximately $ 2,730,000 .
−Removed: The Company applied its outstanding loan receivable due from the landlord of 1,393,000 euros, or approximately $ 1,397,000 , towards the purchase of the facility.
−Removed: At year-end 2022, other borrowings included $ 665,000 of short-term obligations and $ 1,920,000 of long-term debt obligations outstanding assumed in the acquisition of Clouth, which have maturity dates ranging from 2023 to 2028 and interest rates up to 1.70 %.
+Added: At year-end 2023, other borrowings included $ 556,000 of short-term obligations and $ 1,439,000 of long-term debt obligations outstanding assumed in the acquisition of Clouth, which have maturity dates ranging from 2026 to 2028 and interest rates of up to 1.70 %.
Annual Repayment Requirements
The following schedule presents the annual repayment requirements for the Company’s short-and long-term obligations, excluding finance leases, as of year-end 2023.
−Removed: (In thousands)
+Added: (In thousands) Total
Commitments and Contingencies
5 unchanged sentences
In the ordinary course of business, the Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable.
−Removed: The drafts are noninterest-bearing obligations of the issuing bank and generally mature within six months of the origination date.
+Added: The drafts are non-interest-bearing obligations of the issuing bank and generally mature within six months of the origination date.
The Company's Chinese subsidiaries may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors.
−Removed: Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
−Removed: scheduled maturity dates.
+Added: Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates.
The Company had $ 9,090,000 at year-end 2023 and $ 11,238,000 at year-end 2022 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates.
Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
Contingencies
6 unchanged sentences
If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals.
−Removed: Gain on Sale and Other Costs, Net
−Removed: A summary of the items included in gain on sale and other costs, net is as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: Gain on Sale and Other Items, Net
+Added: The components of gain on sale and other items, net are as follows:
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Gain on Sale of Assets $ — $ ( 20,190 ) $ ( 515 )
−Removed: Impairment Costs 731 804 1,861
+Added: Relocation Costs
Restructuring Costs
+Added: Impairment Costs
$ 723 $ ( 18,856 ) $ 465
Gain on Sale of Assets
−Removed: The Company entered into several agreements with the local government in China to sell the existing manufacturing building and land use rights at one of its subsidiaries in China for $ 25,159,000 and relocate to a new facility (China Transaction).
+Added: The Company entered into several agreements with the local government in China to sell its then existing manufacturing building and land use rights at one of its subsidiaries in China for $ 25,159,000 and relocate to a new facility (China Transaction).
The agreements became effective in the first quarter of 2022 after a 31 % down payment was received, including 25 % in 2021 and 6 % in the first quarter of 2022, and a land use right in a new location was secured.
1 unchanged sentence
A receivable of $ 16,082,000 was recognized for the present value of the remaining amount of the sale proceeds, which is due the earlier of when the government sells the property or within two years from the effective date of the agreements.
−Removed: The receivable outstanding at December 31, 2022 was $ 15,181,000 and is included in other long-term assets in the consolidated balance sheet.
−Removed: The subsidiary, which is part of the Industrial Processing segment, will continue to occupy its current facility until construction of its new facility is complete, which is expected in 2023.
+Added: The subsidiary, which is part of the Industrial Processing segment, relocated to its new facility during the third quarter of 2023.
A summary of the change in the outstanding receivable on the China Transaction is as follows:
−Removed: (In thousands) December 31, 2022
+Added: (In thousands) Total
Balance at Inception $ 17,294
3 unchanged sentences
Currency translation ( 1,323 )
−Removed: Balance at End of Year $ 15,181
+Added: Balance at December 31, 2022 (included in other assets)
+Added: Accretion of interest income 545
+Added: Currency translation ( 316 )
+Added: Balance at December 30, 2023 (included in other current assets)
+Added: In 2021, gain on sale of assets included $ 515,000 related to a gain on the sale of a building in Theodore, Alabama, within the Company's Industrial Processing segment for net cash proceeds of $ 1,634,000 .
+Added: The building was vacated as part
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: In 2021, gain on sale of assets included $ 515,000 related to a gain on the sale of a building in Theodore, Alabama, within the Company's Industrial Processing segment for net cash proceeds of $ 1,634,000 .
−Removed: The building was vacated as part of the Company's 2017 restructuring plan to consolidate three of its stock-preparation operations into a single new facility, which was completed in 2018.
−Removed: Impairment and Restructuring Costs
−Removed: During 2022, the Company recorded impairment costs of $ 731,000 and restructuring costs of $ 35,000 within its Industrial Processing segment.
−Removed: The impairment costs included $ 549,000 primarily related to the write-down of inventory at the Company's business in Russia and $ 182,000 related to the write-down of certain fixed assets that will not be moved to the new manufacturing facility in China.
−Removed: During the fourth quarter of 2021, the Company initiated a restructuring plan within its Flow Control segment to eliminate a redundant ceramic blade manufacturing operation that resulted from its acquisition of Clouth.
−Removed: The plan consisted of severance costs related to the termination of five employees, and facility and other closure costs.
−Removed: Severance costs totaled $ 381,000 , of which $ 205,000 were recorded in 2022 and $ 176,000 in 2021, and facility and other closure costs totaled $ 363,000 , all of which were recorded in 2022.
−Removed: During 2021, the Company also recorded asset impairment charges related this restructuring plan of $ 499,000 for the write-down of an intangible asset, $ 226,000 for the write-down of certain machinery and equipment, and $ 79,000 for the write-down of a ROU asset.
−Removed: The Company does not expect to incur additional restructuring charges related to this restructuring plan.
−Removed: During 2020, the Company recorded restructuring costs totaling $ 1,118,000 , representing severance costs of $ 659,000 for 34 employees within its Flow Control segment, $ 277,000 for 26 employees in its Industrial Processing segment, and $ 182,000 for four employees in its Material Handling segment.
−Removed: The Company also reduced its workforce by 21 employees in its Industrial Processing segment with no associated severance costs.
−Removed: The Company took these cost-containment actions to reduce payroll-related overhead and operating costs in response to the slowdown in the global economy, largely driven by the COVID-19 pandemic.
−Removed: A summary of the changes in accrued restructuring costs included in other current liabilities in the accompanying consolidated balance sheet, which are expected to be paid in 2023, are as follows:
−Removed: (In thousands) Severance Costs Facility and Other Closure Costs Total
+Added: of the Company's 2017 restructuring plan to consolidate three of its stock-preparation operations into a single new facility, which was completed in 2018.
+Added: Other Items, Net
+Added: Other Income and Relocation Costs
+Added: In 2023, in connection with the China Transaction, the Company recognized income of $ 841,000 from outsourcing the demolition and cleanup of the then existing manufacturing building in China and sale of the remaining fixed assets.
+Added: In addition, the Company incurred costs of $ 798,000 related to the relocation of machinery and equipment and administrative offices to the new manufacturing facility.
+Added: Restructuring and Impairment Costs
+Added: The Company's restructuring plans within its Flow Control Segment are as follows:
+Added: 2023 Restructuring Plans
+Added: • The Company incurred restructuring and impairment costs of $ 400,000 in 2023 related to consolidating a small manufacturing operation into a larger facility in Germany.
+Added: These charges consisted of severance costs of $ 335,000 for the termination of 10 employees, facility and other closure costs of $ 29,000 , and asset-write downs of $ 36,000 .
+Added: • The Company incurred restructuring costs of $ 366,000 related to the termination of a contract at one of its operations in Germany.
+Added: The Company does not expect to incur additional costs related to its 2023 restructuring plans.
2021 Restructuring Plan
−Removed: Provision $ 176 $ — $ 176
−Removed: Usage ( 19 ) — ( 19 )
−Removed: Currency translation ( 1 ) — ( 1 )
−Removed: Balance at January 1, 2022 156 — 156
+Added: • The Company incurred restructuring costs of $ 568,000 in 2022 and $ 176,000 in 2021 related to its plan to eliminate a redundant ceramic blade manufacturing operation in France.
+Added: These charges consisted of severance costs for the termination of five employees and facility and other closure costs.
+Added: During 2021, the Company also recorded asset impairment charges of $ 499,000 for the write-down of an intangible asset, $ 226,000 for the write-down of certain machinery and equipment, and $ 79,000 for the write-down of a ROU asset.
+Added: The Company also recorded restructuring costs of $ 35,000 and impairment costs of $ 731,000 within its Industrial Processing segment during 2022.
+Added: The impairment costs included $ 549,000 primarily related to the write-down of inventory from the Company's operations in Russia and $ 182,000 related to the write-down of certain fixed assets that were not moved to the new manufacturing facility in China as part of the China Transaction.
+Added: A summary of the changes in accrued restructuring costs included in other current liabilities in the accompanying consolidated balance sheet, which are expected to be paid in the first half 2024, are as follows:
+Added: (In thousands) Severance Costs Contract Termination Costs
+Added: Facility and Other Closure Costs Total
+Added: 2023 Restructuring Plans
Provision $ 335 $ 366 $ 29 $ 730
2 unchanged sentences
Balance at December 30, 2023
+Added: $ 201 $ 313 $ — $ 514
2021 Restructuring Plan
3 unchanged sentences
Balance at January 1, 2022 156 — — 156
+Added: Provision 205 — 398 603
Usage ( 159 ) — ( 231 ) ( 390 )
−Removed: Balance at January 1, 2022 $ — $ — $ —
−Removed: During the fourth quarter of 2020, due to the continued and anticipated decline in demand for the Company's timber-harvesting business' products, the Company performed a quantitative analysis of the recoverability of the related intangible assets in which the income approach discounted cash flow methodology was used.
−Removed: As a result of this analysis, the Company determined that the fair values of the timber-harvesting product line's definite-lived intangible assets related to customer relationships, product technology and tradename were less than their carrying values, and therefore recorded additional impairment charges totaling $ 1,861,000 in 2020 following $ 2,336,000 of impairment charges recognized in 2019.
+Added: Currency translation ( 13 ) — 33 20
+Added: Balance at December 31, 2022 189 — 200 389
+Added: Usage ( 187 ) — ( 199 ) ( 386 )
+Added: Currency translation ( 2 ) — ( 1 ) ( 3 )
+Added: Balance at December 30, 2023 $ — $ — $ — $ —
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment that expire on various dates over the next 12 years, some of which include one or more options to extend the lease for up to 5 years.
+Added: The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment that expire on various dates over the next 11 years, some of which include one or more options to extend the lease for up to five years .
In addition, the Company leases land associated with certain of its buildings in Canada and China under long-term leases expiring in 2032 to 2071.
1 unchanged sentence
The components of lease expense are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
−Removed: Operating Lease Cost $ 5,870 $ 5,895 $ 5,602
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
+Added: Operating Lease Cost (a)
+Added: $ 6,355 $ 5,870 $ 5,895
Short-Term Lease Cost 698 697 674
4 unchanged sentences
Total Lease Costs $ 8,230 $ 7,645 $ 7,660
+Added: (a) Includes variable lease costs of $ 961,000 in 2023, $ 478,000 in 2022, and $ 670,000 in 2021.
Supplemental cash flow information related to leases is as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
6 unchanged sentences
Supplemental balance sheet information related to leases is as follows:
−Removed: (In thousands) Balance Sheet Line Item December 31, 2022 January 1, 2022
+Added: (In thousands) Balance Sheet Line Item December 30, 2023 December 31, 2022
Operating Leases:
−Removed: ROU assets Other current assets $ — $ 2,341
ROU assets Other assets 25,129 22,642
12 unchanged sentences
Notes to Consolidated Financial Statements
−Removed: December 31, 2022 January 1, 2022
+Added: December 30, 2023 December 31, 2022
Weighted Average Remaining Lease Term (in years):
18 unchanged sentences
dollar-denominated debt.
−Removed: The 2018 Swap Agreement has a $ 15,000,000 notional value and expires on June 30, 2023.
−Removed: On a quarterly basis, the Company receives three-month USD LIBOR, which is subject to a zero percent floor, and pays a fixed rate of interest of 3.15 % plus an applicable margin as defined in the Credit Agreement.
−Removed: The Company designated its 2018 Swap Agreement as a cash flow hedge and structured it to be 100 % effective.
−Removed: Unrealized gains and losses related to the fair value of the 2018 Swap Agreement are recorded to AOCI, net of tax.
−Removed: In the event of early termination, the Company will receive from or pay to the counterparty the fair value of the 2018 Swap Agreement, and the unrealized gain or loss outstanding will be recognized in earnings.
−Removed: The counterparty to the 2018 Swap Agreement could demand an early termination of that agreement if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if it were to be unable to cure the default.
−Removed: See Note 6 , Short- and Long-Term Obligations, for further details.
+Added: The 2018 Swap Agreement, which had a $ 15,000,000 notional value, matured on June 30, 2023.
+Added: Prior to the maturity of the 2018 Swap Agreement, on a quarterly basis, the Company received three-month USD LIBOR, which was subject to a zero percent floor, and paid a fixed rate of interest of 3.15 % plus an applicable margin as defined in the Credit Agreement.
+Added: The Company had designated its 2018 Swap Agreement as a cash flow hedge and structured it to be 100 % effective.
+Added: Unrealized gains and losses related to the fair value of the 2018 Swap Agreement were recorded to AOCI, net of tax.
Forward Currency-Exchange Contracts
4 unchanged sentences
The fair values of forward currency-exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.
+Added: Gains and losses reported within SG&A expenses in the accompanying consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material in 2023, 2022, and 2021.
2023 Financial Statements
Notes to Consolidated Financial Statements
−Removed: Gains and losses reported within SG&A expenses in the accompanying consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material in 2022, 2021, and 2020.
The following table summarizes the fair value of derivative instruments in the accompanying consolidated balance sheet:
−Removed: December 31, 2022 January 1, 2022
+Added: December 30, 2023 December 31, 2022
(In thousands) Balance Sheet
7 unchanged sentences
Derivatives in a Liability Position:
−Removed: 2018 Swap Agreement Other Long-Term
−Removed: Liabilities $ — $ — $ ( 550 ) $ 15,000
Forward currency-exchange contract Other Current
7 unchanged sentences
(In thousands) Interest Rate Swap
−Removed: Agreements Forward Currency-
−Removed: Exchange Contracts Total
−Removed: Unrealized Loss, Net of Tax, at January 1, 2022 $ ( 429 ) $ ( 33 ) $ ( 462 )
−Removed: Loss reclassified to earnings (a) 158 — 158
−Removed: Gain (loss) recognized in AOCI 370 ( 8 ) 362
+Added: Agreement Forward Currency-
+Added: Exchange Contract Total
Unrealized Gain (Loss), Net of Tax, at December 31, 2022 $ 99 $ ( 41 ) $ 58
+Added: Gain reclassified to earnings (a)
+Added: ( 99 ) — ( 99 )
+Added: Gain recognized in AOCI
+Added: Unrealized Loss, Net of Tax, at December 30, 2023
+Added: $ — $ ( 38 ) $ ( 38 )
(a) See Note 14 , Accumulated Other Comprehensive Items, for the income statement classification.
−Removed: At year-end 2022, the Company expects to reclassify gains of $ 58,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity date of the forward currency-exchange contract.
+Added: At year-end 2023, the Company expects to reclassify losses of $ 38,000 from AOCI to earnings over the next twelve months based on the maturity date of the forward currency-exchange contract.
Fair Value Measurements and Fair Value of Financial Instruments
11 unchanged sentences
Banker's acceptance drafts (a) $ — $ 10,826 $ — $ 10,826
−Removed: 2018 Swap Agreement $ — $ 131 $ — $ 131
−Removed: Forward currency-exchange contracts (b) $ — $ 15 $ — $ 15
−Removed: Forward currency-exchange contract (c) $ — $ 54 $ — $ 54
−Removed: Fair Value as of January 1, 2022
+Added: Forward currency-exchange contracts $ — $ 8 $ — $ 8
+Added: Forward currency-exchange contract $ — $ 51 $ — $ 51
+Added: Fair Value as of December 31, 2022
(In thousands) Level 1 Level 2 Level 3 Total
1 unchanged sentence
Banker's acceptance drafts (a) $ — $ 5,729 $ — $ 5,729
−Removed: Forward currency-exchange contracts (b) $ — $ 14 $ — $ 14
−Removed: 2018 Swap Agreement $ — $ 550 $ — $ 550
−Removed: Forward currency-exchange contracts (c) $ — $ 44 $ — $ 44
+Added: 2018 Swap Agreement (b) $ 131 $ 131
+Added: Forward currency-exchange contracts $ — $ 15 $ — $ 15
+Added: Forward currency-exchange contract $ — $ 54 $ — $ 54
(a) Included in accounts receivable in the accompanying consolidated balance sheet.
−Removed: (b) Represents derivative instruments not designated as hedging instruments.
−Removed: (c) Represents derivative instruments designated as hedging instruments.
+Added: (b) The 2018 Swap Agreement matured on June 30, 2023.
The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during 2023.
1 unchanged sentence
The fair values of the forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date.
−Removed: The fair value of the 2018 Swap Agreement is based on USD LIBOR yield curves at the reporting date.
−Removed: The forward currency-exchange contracts and the 2018 Swap Agreement are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts.
+Added: The fair value of the 2018 Swap Agreement was based on USD LIBOR yield curves at the reporting date.
+Added: The forward currency-exchange contracts and the 2018 Swap Agreement prior to its maturity were hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts.
Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.
The carrying value and fair value of the Company's debt obligations, excluding lease obligations, are as follows:
−Removed: December 31, 2022 January 1, 2022
+Added: December 30, 2023 December 31, 2022
(In thousands) Carrying
7 unchanged sentences
The fair values of the senior promissory notes are primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period ends, which represent Level 2 measurements.
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
Business Segment and Geographical Information
5 unchanged sentences
A description of each segment follows.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
• Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food, metals, and other industrial sectors.
1 unchanged sentence
• Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products and alternative fuel industries, among others.
−Removed: The Company's primary products include stock-preparation systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, and logging machinery.
+Added: The Company's primary products include stock-preparation systems and recycling equipment, chemical pulping equipment, debarkers, stranders, and chippers.
In addition, the Company provides industrial automation and digitization solutions to process industries.
3 unchanged sentences
The following table presents financial information for the Company's reportable operating segments:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Flow Control (a)
+Added: $ 363,451 $ 349,107 $ 288,788
Industrial Processing 354,703 353,698 328,762
1 unchanged sentence
239,518 201,934 169,029
+Added: $ 957,672 $ 904,739 $ 786,579
Income Before Provision for Income Taxes
−Removed: Flow Control (a,c) $ 89,942 $ 65,509 $ 51,530
+Added: Flow Control (c)
+Added: $ 95,249 $ 89,942 $ 65,509
Industrial Processing (d)
−Removed: Material Handling (b,e) 27,644 17,543 14,375
+Added: 69,281 89,754 66,569
+Added: Material Handling (e)
+Added: 40,692 27,644 17,543
Corporate (f)
+Added: ( 39,465 ) ( 36,058 ) ( 32,911 )
Total operating income 165,757 171,282 116,710
Interest expense, net (g)
+Added: ( 6,640 ) ( 5,574 ) ( 4,554 )
Other expense, net (g)
( 101 ) ( 72 ) ( 104 )
+Added: $ 159,016 $ 165,636 $ 112,052
Total Assets (h)
−Removed: Flow Control (a) $ 386,804 $ 382,379 $ 263,141
+Added: $ 391,719 $ 386,804 $ 382,379
Industrial Processing 443,189 419,095 405,575
−Removed: Material Handling (b) 336,492 334,785 273,909
+Added: Material Handling
+Added: 326,226 336,492 334,785
Corporate (i)
14,531 7,490 9,473
+Added: $ 1,175,665 $ 1,149,881 $ 1,132,212
Depreciation and Amortization
−Removed: Flow Control (a) $ 9,179 $ 8,366 $ 6,333
+Added: $ 9,047 $ 9,179 $ 8,366
Industrial Processing 11,798 12,575 13,467
−Removed: Material Handling (b) 13,085 12,341 11,628
+Added: Material Handling
+Added: 12,379 13,085 12,341
Corporate 73 97 128
$ 33,297 $ 34,936 $ 34,302
−Removed: 2022 Financial Statements
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021
Capital Expenditures
−Removed: Flow Control (a) $ 4,425 $ 4,128 $ 2,808
+Added: $ 5,920 $ 4,425 $ 4,128
Industrial Processing (j)
−Removed: Material Handling (b) 3,575 2,211 1,539
+Added: 22,068 20,137 6,412
+Added: Material Handling
+Added: 3,834 3,575 2,211
Corporate 28 62 20
$ 31,850 $ 28,199 $ 12,771
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022
Geographical Information
−Removed: United States (b) $ 404,835 $ 328,456 $ 286,015
−Removed: Canada 87,951 79,426 62,059
+Added: United States $ 448,600 $ 404,835 $ 328,456
China 81,458 85,500 82,121
−Removed: Germany (a) 45,994 37,178 23,292
+Added: Canada 73,183 87,951 79,426
+Added: Germany 43,036 45,994 37,178
Other 311,395 280,459 259,398
1 unchanged sentence
Long-lived Assets (l):
−Removed: United States (b) $ 47,483 $ 43,418 $ 40,293
−Removed: Canada 8,344 8,460 7,221
+Added: United States $ 48,394 $ 47,483 $ 43,418
China (j) 24,380 15,834 6,613
−Removed: Germany (a) 22,437 25,188 6,051
+Added: Germany 20,953 22,437 25,188
+Added: Finland 19,958 8,942 7,347
+Added: Canada 9,136 8,344 8,460
Other 17,683 15,815 16,963
2 unchanged sentences
(b) Includes results from Balemaster, which was acquired on August 23, 2021 (see Note 2 , Acquisitions).
−Removed: (c) Includes acquisition-related expenses of $ 254,000 and $ 6,191,000 in 2022 and 2021, respectively.
+Added: (c) Includes restructuring and impairment costs of $ 766,000 , $ 568,000 and $ 980,000 in 2023, 2022 and 2021, respectively.
+Added: Includes acquisition-related expenses of $ 254,000 and $ 6,191,000 in 2022 and 2021, respectively.
Acquisition-related expenses include acquisition costs and amortization expense associated with acquired profit in inventory and backlog.
Includes non-cash charges for the write-off of indemnification assets of $ 741,000 in 2022.
−Removed: Includes impairment and restructuring costs of $ 568,000 , $ 980,000 and $ 659,000 in 2022, 2021 and 2020, respectively.
−Removed: (d) Includes a gain on the sale of a facility of $ 20,190,000 (see Note 8 , Gain on Sale and Other Costs, Net), non-cash charges for the write-off of an indemnification asset of $ 575,000 and impairment and restructuring costs of $ 766,000 in 2022.
−Removed: Includ es a gain on the sale of a building of $ 515,000 and acquisition-related expenses of $ 223,000 in 2021.
−Removed: Includes acquisition-related expenses of $ 679,000 and impairment and restructuring costs of $ 2,138,000 in 2020.
+Added: (d) Includes other income of $ 841,000 , acquisition costs of $ 1,066,000 , and relocation costs of $ 798,000 in 2023.
+Added: Includes a gain on the sale of a facility of $ 20,190,000 (see Note 8 , Gain on Sale and Other Items, Net), non-cash charges for the write-off of an indemnification asset of $ 575,000 and restructuring and impairment costs of $ 766,000 in 2022.
+Added: Includes a gain on the sale of a building of $ 515,000 and acquisition-related expenses of $ 223,000 in 2021.
(e) Includes acquisition-related expenses of $ 376,000 , $ 899,000 and $ 2,851,000 in 2023, 2022 and 2021, respectively.
−Removed: (f) Represents general and administrative expenses.
−Removed: (g) The Company does not allocate interest and other expense, net to its segments.
+Added: Includes a non-cash charge for the write-off of an indemnification asset of $ 126,000 in 2023.
+Added: (f) Primarily consists of general and administrative expenses.
+Added: (g) The Company does not allocate interest expense, net and other expense, net to its segments.
(h) Excludes all intercompany receivables or payables and investment in subsidiary balances.
(i) Primarily includes cash and cash equivalents, tax assets, ROU assets, and property, plant, and equipment, net.
−Removed: (j) Includes capital expenditures of $ 10,379,000 in 2022 associated with the construction of a manufacturing facility in China.
−Removed: See Note 8, Gain on Sale and Other Costs, Net.
+Added: (j) Includes capital expenditures of $ 7,424,000 and $ 10,379,000 in 2023 and 2022, respectively, related to the construction of a new manufacturing facility in China (see Note 8 , Gain on Sale and Other Items, Net).
(k) Revenue is attributed to countries based on customer location.
4 unchanged sentences
Basic and diluted EPS were calculated as follows:
−Removed: (In thousands, except per share amounts) December 31, 2022 January 1, 2022 January 2, 2021
+Added: (In thousands, except per share amounts) December 30, 2023 December 31, 2022 January 1, 2022
Net Income Attributable to Kadant $ 116,069 $ 120,928 $ 84,043
8 unchanged sentences
Changes in each component of AOCI, net of tax, are as follows:
−Removed: (In thousands) Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Liability Adjustments Deferred (Loss) Gain on Cash Flow Hedges Total
−Removed: Balance at January 1, 2022 $ ( 29,096 ) $ ( 792 ) $ ( 462 ) $ ( 30,350 )
+Added: (In thousands) Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Liability Adjustments Deferred Gain (Loss) on Cash Flow Hedges Total
+Added: Balance at December 31, 2022 $ ( 54,488 ) $ ( 148 ) $ 58 $ ( 54,578 )
Other comprehensive items before reclassifications 11,475 124 3 11,602
3 unchanged sentences
Amounts reclassified out of AOCI are as follows:
−Removed: (In thousands) December 31, 2022 January 1, 2022 January 2, 2021 Statement of Income Line Item
+Added: (In thousands) December 30, 2023 December 31, 2022 January 1, 2022 Statement of Income Line Item
Retirement Benefit Plans
6 unchanged sentences
Interest rate swap agreements 136 ( 208 ) ( 451 ) Interest expense
−Removed: Forward currency-exchange contracts — — 28 Cost of revenue
Forward currency-exchange contracts — — 157 SG&A expense
−Removed: Total expense before income taxes ( 208 ) ( 294 ) ( 305 )
−Removed: Income tax benefit 50 70 73 Provision for income taxes
+Added: Total income (expense) before income taxes 136 ( 208 ) ( 294 )
+Added: Income tax (provision) benefit ( 37 ) 50 70 Provision for income taxes
99 ( 158 ) ( 224 )
1 unchanged sentence
(a) See Note 10 , Derivatives, for additional information.
+Added: 2023 Financial Statements
+Added: Notes to Consolidated Financial Statements
+Added: Subsequent Events
+Added: On January 1, 2024, the Company acquired Key Knife, Inc.
+Added: and certain of its affiliates (collectively, Key Knife) pursuant to a securities purchase agreement dated December 22, 2023, for approximately $ 156,000,000 in cash, subject to certain customary adjustments.
+Added: Key Knife is a global supplier of engineered knife systems for custom chipping, planing, and flaking solutions for wood products industries, with revenue of approximately $ 65,000,000 for the twelve months ended September 30, 2023 and 141 employees in the United States and Canada.
+Added: Key Knife is part of the Company's Industrial Processing segment.
+Added: On January 24, 2024, the Company acquired all of the outstanding equity securities of KWS Manufacturing Company, Ltd.
+Added: (KWS) for approximately $ 84,000,000 in cash, subject to certain customary adjustments.
+Added: KWS is a leading manufacturer of conveying equipment for the bulk material handling industry, with revenue of approximately $ 45,000,000 for the twelve months ended September 30, 2023 and 165 employees in the United States.
+Added: KWS is part of the Company's Material Handling segment.
+Added: The Company expects several synergies in connection with these acquisitions, including expansion of product sales into new markets by leveraging Key Knife's and KWS' existing presence, strengthening of relationships and sourcing efficiencies.
+Added: The excess of the purchase price for the acquisitions over the net assets acquired will be recorded as goodwill.
+Added: The Company has not yet completed its preliminary assessment of the fair value of the assets acquired and liabilities assumed in these acquisitions, including the valuation of intangible assets and goodwill, due to the proximity of the acquisitions to the issuance of these consolidated financial statements.
+Added: Accordingly and as permitted by ASC 80 5, Business Combinations , the Company is unable to provide further disclosures, including the allocation of the purchase price and pro forma financial information, for these acquisitions at this time.
+Added: Borrowings Under the Credit Agreement
+Added: In January 2024, the Company borrowed $ 230,000,000 in aggregate under its existing revolving credit facility, pursuant to the terms of the Credit Agreement, to fund the Key Knife and KWS acquisitions.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.