kadant inc. (kai) - oil absorbent granules
Washington, D. C. Securities and Exchange CommissionC.
20549___ form month-K(mark one)
Annual reports submitted under sections 13 or 15 (D)
In the Securities Trading Act of 1934 as of fiscal 30, under the transitional report of Section 13 or 15 (D)
1934 securities trading law of the Commission File No. 001-11406 Cardan company(
The exact name of the registrant specified in the articles of association)Delaware52-1762325(
State or other jurisdiction registered or organized)(I. R. S.
Employer identity number)
Drive Westford, a science park, Massimo usetts01886 (
Main executive office address)(Zip Code)
The registrant's telephone number, including the area code :(978)776-
2000 securities registered under article 12 (b)
Title of the act: each class name of each exchange registered for common stock, $.
01 face value New York Stock Exchange Bonds registered under section 12th (g)
Key points of the act: if the registrant is healthy, it is not indicated by a check mark
Well-known experienced issuers as defined in Rule 405 of the Securities Act.
Yes x no? Indicate by check mark whether the registrant does not need to submit a report under Section 13 or section 15 (d)of the Act.
Whether to indicate the registrant by checking mark (1)
All reports requested by Article 13 or 15 have been submitted (d)
Securities Trading Act of 1934 within the first 12 months (
Or a short period of time required for the registrant to submit such reports), and (2)
This filing requirement has been bound for the last 90 days.
Yes x no? Indicate by check mark whether the registrant is electronically submitted and posted on its company website (if any), each Interactive Data File submitted and published in accordance with S-Regulation section 405th
12 months before T (
Or in such a short time that the registrant is required to submit and publish these documents).
Yes x no? If the declaration of arrears is disclosed in accordance with section S-405 of the regulations, please indicate by check mark
To the knowledge of the registrant, K is not included in the final proxy or information statement referenced in Part 3 of this Form 10 and will not be included in it
K or any amendments to this form 10K.
X indicates whether the registrant is a large accelerated filer, non-accelerated filer by check mark
A smaller reporting company, or an emerging growth company.
See the definition of "large accelerated reporting companies", "smaller reporting companies" and "emerging growth companies" in rule 12b-
2 of the Trading Act.
Non-accelerated files for large accelerated files
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Do not check if there are smaller reporting companies)
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The Trading Act.
Indicate whether the registrant is a shell company by check mark (
Defined in Rule 12b-
2 parts of the transaction law).
Is x total market value for voting and non-voting
2017 of the voting common stock held by the registrant's non-affiliated company is approximately $804,721,000.
As far as the previous sentence is concerned, the term "affiliate" consists of each director and executive officer of the registrant.
As of 2018, the registrant had issued 11,028,033 shares of common stock.
According to Regulation 14A promulgated by the Securities Trading Act, as amended on 1934, the documents incorporated in the reference section of the registrant's final agency statement, references for use in connection with the registrant's 2018 annual general meeting are included in Part 3 of this form --K. Kadant Inc.
Form 10-Annual Report
In the financial year, the force published 2017 lists of contents. Business 1A.
Risk factor 1B.
Unresolved employee reviews 2.
Property item month.
Legal action 4.
The third part is the fifth mine safety disclosure.
The market in which the registrant's common stock, related shareholder matters and the issuer purchase equity securities.
Selected Financial Data Items 7.
Management Discussion and Analysis of operational financial status and results
Quantitative and qualitative disclosure of market risks
Financial statements and supplementary data items 9.
Changes and disagreements with accountants on accounting and financial disclosure project 9A.
Control and procedure 9B.
Section IIIItem 10 of other information.
Project 11 directors, executive officers and corporate governance.
Item 12 of administrative compensation.
Secured ownership of certain beneficial owners and management and related shareholders.
Relationship with directors and related transactions.
Main accounting fees and services section IVItem 15.
Annex and schedule 16 to the financial statements. Form 10-
K summary table for ContentsKadant Inc. PART IForward-
This annual report on Form 10
K and the documents we cited in this report include
Statement of outlook in the sense of article 21E of the Securities Trading Act of 1934 as amended (Exchange Act)
And Article 27A of the revised Securities Law of 1933. These forward-
It appears that the statement is not a statement of historical facts and may include a statement of possible or hypothetical future operational results. Forward-
Forward-looking statements are influenced by risks and uncertainties, and based on the beliefs and assumptions of our management, use the information that our management currently has.
When we use words such as "believe", "expect", "intend", "plan", "estimate", "seek", "should, "may", "will", "may", "continue", "may" or similar expressions, we are moving forward --
Look at the report. Forward-
Performance cannot be guaranteed by looking at the report.
They involve risks, uncertainties and assumptions.
The results of our future operations may be very different from the results of future operations.
Look at the report.
Many important factors that determine these results and values are beyond our control or predictive power.
You should not rely too much on any progress.
Look at the report.
We have no obligation to update any forwarding publicly.
Whether it is due to new information, future events or other reasons, it is a forward-looking statement.
Discussion of important factors that may lead to significant differences between our actual results and the results of forward suggestions
It seems that you should read carefully the section entitled "risk factors" in Item 1A of Part I of this report. Item 1.
The term "we", "our", "registrant" or "Company" in this report of the business refers to Kadant Inc.
And its merged subsidiaries.
We are the world's leading supplier of equipment and key components for the global process industry.
In addition, we make the particles made from paperproducts.
We have a rich and diverse customer base, including most of the world's major paper, wood and directional chain plates (OSB)
Manufacturers and our products, technologies and services play an integral role in improving process efficiency, optimizing energy utilization and maximizing resource productivity
Our ongoing operations include two reportable operations for paper systems and wood processing systems, as well as a separate product line-fiber-based Products.
Through our paper systems division, we develop, manufacture and sell a range of equipment and products for global paper making, paper recycling, recycling and waste management, and other process industries.
Our main products include customization.
Preparation systems and equipment for the preparation of waste paper for conversion into recycled paper and Baler, as well as related equipment for the treatment of recyclable and waste materials; fluid-
Processing systems and equipment for industrial piping systems to compensate for movement and to efficiently transmit fluid, power and data;
Medical systems, equipment and related consumables critical to the efficient operation of paper machines and other industrial processes;
And filtration and cleaning systems that are critical to drain, purify and recycle process water and clean fabrics, belts and rolls in various process industries.
Through our wood processing systems division, we develop, manufacture and sell wood processing machinery, dehair machines, chippers and logging machinery for timber and OSB harvesting and production.
Through this section, we also provide renovation and repair of pulp equipment for the pulp and paper industry.
Through our fiber
Based on our product business, we produce and sell biodegradable, absorbent paper particles
Mainly used as a product for agriculture, home lawn and garden, as well as professional lawn, lawn and decorative applications, as well as carrier for oil absorption.
In July 5, 2017, we acquired the Forest Products business of National Forest Corporation (NII FPG)
Under the May 24, 2017 stock and asset purchase agreement, the price was $170.
8 million net cash acquisition.
NII fpga is a global leader in the design and manufacture of equipment used by sawmill, veneer mill and other forest products industry manufacturers.
The national forest administration also designs and manufactures logging equipment for harvesting timber from forest plantations.
This acquisition extends our business to the forest products industry and complements our existing wood processing systems division.
In August 14, 2017, we acquired certain assets of Unaflex Co. , Ltd (Unaflex)for $31.
3 million cash, subject to mail
Unaflex is a leading manufacturer of expansion joints and related products in the process industry.
This acquisition complements what we have.
The processing product line of our paper system department.
Table 1 ContentsKadant Inc.
Our paper system department has a long way to go.
History of the development, manufacture and marketing of equipment and products for global paper, paper recycling, recycling and waste management and other process industries.
Some of our businesses or its predecessor companies have been in operation for more than 100 years.
Our customer base includes the world's leading paper manufacturers, and we believe we have one of the largest equipment installation bases in the market serving the pulp and paper industry.
We produce our paper system products in nine countries in Europe, North America and South America, and Asia.
Our paper system department consists of the following product lines: inventory-Preparation;
Medical care, cleaning and filtration; and Fluid-Handling. Stock-
We develop, manufacture and market customization-
Engineering systems and equipment for bundling, beating, and salt removal, as well as standard individual components
Inks, screening, cleaning and refining are primarily recycled fibers for preparation for entry into the paper machine, as well as reprocessing and evaporation equipment and systems for the production of raw pulp.
Our baling equipment is also used to compress a variety of other auxiliary materials to prepare for transportation or storage.
Our main Stock
Preparation products include:-recycling and proximity process system: Our equipment includes pulp, screening, cleaning and deashing
Ink Systems for mixing pulp mixtures and removing contaminants such as ink, glue, metals and other impurities to prepare them to enter the paper machine during the production of recycled paper.
-Original pulp process equipment: our equipment includes pulp washing, evaporator, re-heat treatment and condensation treatment systems for the removal of wood, concentration and recovery of process chemicals, and for the removal of condensed gases.
-Balers and related equipment: our equipment includes horizontal channel balers, vertical balers, conveyors, comp machines and balers for handling recyclable and scrap materials.
We develop, manufacture and sell a wide range of medical, cleaning, and filtration systems and related consumables to continuously clean the roll to maintain efficient operation of paper machines and other industrial processes;
The doctor blade is made of a variety of materials for performing functions such as cleaning, creaking, Web removal, peeling and coating applications;
A contour system that controls moisture, curling and gloss during paper conversion;
Systems and equipment for continuous cleaning of fabrics and rolls, drainage from pulp mixtures, formation of paper or networks, and water for reuse in filtration processes.
Medical and cleaning systems are also used in other process industries such as carbon fiber, textiles and food processing.
Our main medical, cleaning and filtration products include:-Doctor systems and brackets: our doctor system cleans paper-making rollers by placing the blades on the rollers under constant and uniform pressure, maintain efficient operation of paper machines and other equipment.
The doctor system consists of the structure of the support blade and the blade bracket.
-Analysis system: we provide an analysis system to control moisture, curling and gloss during paper conversion.
-Doctor blade: we manufacture doctor blade and scraper blade made of various materials, including metal, double
Metal or synthetic materials with multiple functions, including cleaning, creaking, mesh removal, peeling and coating.
Depending on the application, the life of a typical doctor blade ranges from 8 hours to 2 months.
-Shower and fabric-
Our shower and fabric-
The adjustment system helps to remove contaminants collected on the fabric of the paper machine and is used to transmit the paper mesh through the forming, pressing and drying parts of the paper machine.
The typical paper machine has three to twelve fabrics.
These fabrics are easily contaminated with fibers, fillers, asphalt, and dirt that can adversely affect paper machine performance and paper quality.
Our shower and fabric
The air conditioning system helps to remove these contaminants.
-Molding system: we provide the structure for discharging, purifying and recycling process water from the pulp mixture during paper and mesh forming.
Table 2 ContentsKadant Inc. –Water-
Filtration system: we offer a variety of filtration systems and filters to remove contaminants from process water before reuse and recycling reusable fibers to be recycled into pulp mixtures. Fluid-
HandlingWe develops, manufactures and sells fluid handling systems and equipment used in industrial plumbing systems to compensate for movement and efficiently transmit fluid, power and data.
Our products include: rotary joints, precision joints, steam and condensation systems, components and control devices, mainly used in the drying part of the paper making process and in the production process of corrugated packaging, metal, plastics, medicines, energy, rubber, textiles, chemicals and food.
Expansion joints are used in industrial pipe systems.
Our main fluid
Processing systems and equipment include:-Rotary Joints: our mechanical equipment is used with the rotary axis, allowing the transfer of pressurized fluid from a fixed source to a rotating machine, used for the transfer of heating, cooling, or fluid power.
-Syphons: our equipment is installed in a rotating cylinder for the removal of fluid from a rotating cylinder by means of a rotating joint or joint located at both ends of the cylinder.
-Turbulence®Rod: our steel or stainless steel axial rod installed inside the cylinder is used to induce turbulence in the condensate layer to improve the heat transfer uniformity and speed through the cylinder.
-Expansion joints: our rubber, metal, fabric and other materials are used to compensate for movement caused by thermal expansion, vibration and other reasons.
-Engineering steam and condensation system: Our steam system controls the flow of steam from the boiler to the paper drying cylinder, collects the condensed steam and returns it to the boiler to improve energy efficiency during paper drying.
Our systems and equipment are also used to efficiently and efficiently distribute steam in a variety of industrial processing applications.
Wood processing systems are part of our development, manufacture and sale of OSB products and related equipment.
We also supply stranders, debarkers, chip machines and logging machinery for timber and OSB harvesting and production.
In addition, we also provide renovation and repair of pulp equipment for the pulp and paper industry.
We produce our wood.
Mainly processed products in Canada, Finland and the United States.
Our main Wood
Processed products and services include:-rings and rotating debarkers: our fixed and sliding rings debarkers take advantage of rotating multiple
Tools will bark from nonrotating log.
Before further processing into wood, our ring car was used for the wood mill to remove the bark from the tree.
Mechanical wear and logs are used for our rotary discharger and related parts and consumables-to-
Log contact can effectively remove bark from logs of various shapes and species.
-Walking line: mass cutting of our drive and loop lines and related parts and consumables-
Send logs to shares for OSB production and use our patented delivery and feeding equipment real time management unit.
-Slicer: Our disc, roller and single board slicer and related parts and consumables are high
High quality, robust chipper system for waste disposalwood and whole-
Log applications found in pulp mills, chip mills, sawmill and planing mill.
-Logging machinery: Our logging machines, log loaders and rocker arm machines are used for harvesting wood and collecting wood for wood production.
-Repair: we also renovate and repair the pulp equipment used in the pulp and paper industry. Fiber-
We produce and sell biodegradable, absorbent particles extracted from paper making
Mainly used as a product for agriculture, home lawn and garden, as well as professional lawn, lawn and decorative applications, as well as carrier for oil absorption.
Table 3 ContentsKadant Inc.
We develop a wide range of products for all aspects of the market we serve.
We operate R & D facilities in the US, Europe and Canada and focus our product innovation on process industry challenges and the need to improve fiber processing, heat transfer, roll and fabric cleaning, fluid handling, wood harvesting, wood processing and secondary material handling.
In addition to internal product development activities, our research center allows customers to simulate their own operating conditions and applications to identify and quantify opportunities for improvement.
Our R & D cost is $9.
$7 in 6 million.
$6 for 4 million.
7 million in205.
Raw materials the main raw materials used by our paper system department are steel, stainless steel, cast iron, brass, bronze, aluminum and rubber, which are usually available through many suppliers.
The main raw materials used by our wood processing system department are steel and stainless steel, which can usually be obtained through some suppliers.
Raw materials used to make our fibers-
Based on the particle is a-
We get paper production products from two paper mills.
If the factory is unable or unwilling to provide us with enough fiber, we will be forced to find one or more alternative suppliers for this raw material.
So far, to ensure availability, we do not need to maintain stock of raw materials that exceed current requirements.
Patents, licenses and trademarks we protect our intellectual property rights by applying and obtaining patents in due course.
We also rely on technical knowledge.
How do trade secrets and trademarks maintain our competitive position.
We also enter into licensing agreements with others to Grant and/or acquire the rights to patents and knowledgehow.
No particular patent or associated patent group is so important that its expiration or loss can have a significant impact on our operations.
We have a large number of US paper systems. S.
Foreign patents, including those in the United States. S.
The patent expires on different dates from 2018 to 2038.
From time to time we sign product licenses with other companies serving the pulp, paper, conversion and paper recycling industries.
We have many wood processing systems in the United States. S.
Foreign patents, including those in the United States. S.
Patents relating to wood processing and peeling equipment expired on different dates from 2019 to 2037. Fiber-
We currently have multiple products in the US. S.
Patent, due on different dates from 2019 to 2034, covering all aspects of fiber processing
Use of particles and these materials in agriculture, professional lawns, home lawns and gardens, General absorption, grease absorption and catbox filling materials, and catbox filling materials
The seasonal impact of the paper system sector has no substantial seasonal impact on the sales of products and services in the sector.
Wood Processing System Division our wood processing system division is affected by seasonal changes, in the season of construction and wood harvest, the demand for many of our products tends to be greater, this usually happens in the second and third quarters of North America. Fiber-
Our fiber products
The product-based business experienced fluctuations in sales, typically in the third quarter, with sales falling due to the seasonality of the agricultural and home lawn and garden markets.
Unless otherwise stated, references 2017, 2016 and 2015 in this annual report on Forms 10-
In December 31, 2016, K was fiscal 30, 2017 and 2016 respectively.
Table 4 ContentsKadant Inc.
Liquidity requirements do not have special inventory requirements or credit terms for customers can have a significant adverse effect on our liquidity.
Reliance on a single customer in the last three years, no single customer accounts for 10% or more of our consolidated revenue.
In addition, the revenue of our paper system department does not depend on any one customer.
As a percentage of revenue, the two largest customers in our wood processing systems division accounted for 29% of in, 2016 of 48%, and 2015 of 32%.
Our sales are around 65% in207, 60% in2016 and 50% in 2015, for customers outside the US, mainly in Europe, Asia and Canada.
The backlog of corporate orders in the paper system division was $116.
Year 3 millionEnd207 and $89.
Year 6 millionend2016.
Our backlog of fixed orders for the wood processing systems division is $27.
Year 6 millionend2017 and $8.
The combined backlog of company orders totaled $145.
Year 3 millionEnd207 and $98.
Year 6 millionend2016.
We expect all the backlog this year
End207 will be shipped or completed on 2018.
Some of these orders can be canceled by the customer after the cancellation fee is paid.
Sales and marketing we sell and sell our engineering products, services and systems to handle the industry using a combination of direct sales personnel and independent sales agents and distributors, depending on the market and the products sold.
Use technical service personnel, product experts and independent sales agents and distributors in certain markets and certain product lines.
Our application expertise has been praised by consulting sales methods to ensure that we meet the needs of our customers.
Competitive we are the leading supplier of systems and equipment for each product line in our paper systems division, with several global and many local competitors in each market.
In our field of wood processing systems, we compete with a major global competitor in the OSB market for stranded equipment, which is our limited competitor for debarkers in forest products, and several global and local competitors of our other products.
Due to the diversity of our products, we are faced with many different types of competitors and competitors.
Our competition is mainly based on technical expertise, product innovation and product performance.
We believe in the reputation we have built
High performance, high
Our in-supported reliability products
In-depth process knowledge and application expertise provide us with a competitive advantage.
In addition, a large part of our business comes from a global customer base.
To maintain this foundation, we highlight our global presence, local support, and a problem --
Resolve relationships with customers.
Our success depends mainly on the following factors:-technical expertise and process knowledge;
-Product quality, reliability and performance;
-Operational efficiency of our products;
-Customer service and support;
-Relative price of our products;
The total cost of ownership of our products.
We believe that our compliance with federal, state and local environmental protection regulations will not have a significant adverse effect on our capital expenditures, revenues or competitive positions.
We have about 2,400 employees worldwide.
Table 5 ContentsKadant Inc.
Financial information about divisions and geographies financial information about our divisions, product lines, and geographies is summarized in Note 11 to consolidated financial statements, which start on F-page
The first of this report
Available information we submit annual, quarterly and current reports, agency statements and other documents to the Securities and Exchange Commission (SEC)
Under the transaction act.
The SEC maintains a website that contains reports, agency and information statements, as well as other information from issuers, including US, which are submitted electronically to the SEC.
The public can obtain any documents we submit to SEC on www. sec. gov.
The public can also read and copy any material we submit to SEC at SEC's public information room on NE 100 F Street, DC. C. 20549.
The public can get information about the operation of the public data room by calling SEC 1-1800-SEC-0330.
In addition, we provide free on www through our website. kadant.
Our Annual Report on Form 10
Quarterly Report on table 10
Q: Current Report of Form 8
K, and amendments to these reports submitted or provided under section 13th, if applicable)a)or 15(d)
After we submit these materials electronically to the SEC or provide them to the SEC, take exchange actions as quickly as possible.
We do not include the information contained on our website as part of this report, nor do we include the information on our website as a reference in this report.
As of February 16, the table below summarizes certain information relating to our executive officers: Name
Become an executive officer in the first fiscal year)Jonathan W.
President and Chief Executive Officer (1997)Eric T.
Executive vice president and chief operating officer (2006)Jeffrey L.
Executive Vice President (2009)Michael J.
Senior Vice President and Chief Financial Officer (2002)Sandra L.
General Counsel and Secretary (2001)Deborah S.
Vice President and Chief Accounting Officer (2015)Mr.
Painter has been our chief executive officer and director since January 2010 and has been our President since September 1, 2009.
He served as chief operating officer from September 2009 to January 2010.
Between 1997 and September 2009
Painter served as executive vice president, and from March 2007 to September 2009 he has oversight responsibility for our stock
Preparation and fiber-
Based on product business.
From 2001 to 2005, he served as president of our composite building products business.
He also acts as our Treasurer and treasurer of thermal electronics (Thermal electronics)
From 1994 to 1997.
Before 1994, sir.
Painters hold various business processes with the United States and hot electronics. Mr.
Langevin has served as executive vice president and chief operating officer since January 2010.
Before January 2010, Sir.
Langevin has served as senior vice president since March 2007 and has oversight responsibility for our fluid
Handle and guide, clean and filter business.
From 2006 to 2007, he served as vice president in charge of our medical, cleaning and filtration business.
From 2001 to 2006
Langevin is president of Kadant Web Systems. (
Our solutions department)
Prior to that, he served as senior vice president and vice president of operations of the company.
Before 2001, Sir.
Langevin managed several product groups and departments in Kadant Web systems after joining us as a product development engineer in 1986. Mr.
Powell has served as executive vice president since March 2013 and has oversight responsibility for our stock
Preparation, wood processing and fiber-
Based on product business.
He served as senior vice president from September 2009 to March 2013.
From January 2008 to September 2009, Sir.
Powell is the vice president of the new enterprise, mainly responsible for the acquisition-
Before joining us, sir.
From April 2003 to December 2007, Powell served as chairman and chief executive of Castion Corporation. Mr.
McKinney has served as senior vice president and chief financial officer since June 2015.
From 2002 to 2015 he served as our Vice President, Finance and Chief Accounting Officer; from 1997 to 2007 he served as the company's chief financial officer. Mr.
McKinney is the chief financial officer of cadhatte AES, which we acquired from Albany International.
From 1993 to 1997
Before 1993, sir.
McKinney holds various financial positions at Albany International. Ms.
Since 2001, Lambert has served as vice president and general counsel and has served as our secretary since his establishment in 1991.
Prior to joining us, she served as vice president and secretary of thermal electronics from 1999 and 1990 to 2001, respectively, prior to which she was a member of the thermal electronics legal department.
Table 6 ContentsKadant Inc. Ms.
Selwood has served as vice president and chief accounting officer since June 2015.
She served as our chief financial officer from 2007 to 2015 and as an assistant chief financial officer from 2004 to 2007.
Prior to 2004, Madam
Selwood holds various financial positions in the firm of Certified Public Accountants and Genuity Inc. Item 1A.
Risk factors business, results of operations and financial position, as well as investments in our securities, are all affected by some risks.
The risks and uncertainties described below are the risks and uncertainties that we have identified as substantial, but not the only ones we face.
Our business also faces General risks and uncertainties that affect many other companies, including the overall economy and the state of the industry.
Additional risks and uncertainties that we do not currently know or which we currently consider unimportant may also harm our business, our consolidated financial position and the results of operations.
Adverse changes in global and local economic conditions may have a negative impact on our industry, business and operational results.
We sell products to the global process industry globally, and a large part of our revenue comes from customers in North America, Europe and China.
The uncertainty of the global and regional economic outlook has had a negative impact on the products of our customers and the needs of our products and services, and may have a negative impact in the future, in particular, our capital equipment systems and products, as well as our operating results.
In addition, the uncertainty of the economic situation has and may lead to the liquidity and credit problems of many enterprises in the future, including our customers in the pulp and paper industry and other processing industries, it can cause them to be unable to fund projects, capacity expansion plans, and, to some extent, day-to-day operations and capital expenditures.
These situations have and may lead to some structural changes in the process industry in the future, including reduced expenditures, factory closures, mergers and bankruptcies, all of this has had a negative impact on our business, revenue and profitability.
Financial and economic turmoil affecting the global economy or banking system and financial markets, especially due to political or economic development, may lead to significant differences in the expectations of our business in the future.
The sales revenue of large capital equipment and system projects is usually difficult to accurately predict, especially during periods of economic uncertainty, large capital equipment projects require a lot of investment and require financing from our customers, it may be difficult.
We produce capital equipment and systems for the processing industry, including wood processing and paper industry.
In 2017, about 39% of our revenue came from the sale of capital equipment for the process industry.
The demand for capital equipment is variable and depends on many factors, including the consumer's demand for the final product, the existing manufacturing capacity, the customer's level of capital expenditure and economic conditions.
Therefore, our bookings and revenues for capital projects are often variable and difficult to predict.
In times of economic uncertainty, it is especially difficult to accurately predict the results of our operations.
During periods of economic uncertainty, paper and wood processing companies have cut capital and operating expenditures, and they are cautious about restoring spending as the market conditions improve.
Level of non-consumption expenditure
The demand for durable goods, food and beverage packaging, and the demand for new housing and renovation are all factors that affect the demand of paper and wood processing companies for our products, these lower levels of demand can have a negative impact on our business.
As paper and wood processing companies integrate operations in response to weak markets, they often reduce production capacity, increase downtime, delay maintenance and upgrades, and delay or even cancel capacity increases or expansion projects.
Capacity growth and investment may be uneven, larger paper producers have been delayed and may be delayed in the future, with additional new capacity beginning --
Reaction to weak market.
As a general rule, as a large number of capacity increases online and economic growth slows, paper producers have been delayed and may delay further investment or delivery of previous products in the future
Order equipment before the market absorbs new production.
Large capital equipment projects require significant investment and may require financing from outside from our customers.
If there is a delay in the customer's access to financing, or if our customer is unable to obtain financing due to various factors, including tightening monetary policy or system, our financial performance will be negatively affected --
Sanctions imposed on Russia.
The delay in financing of our customers may cause us to delay the booking of pending orders as well as the shipment of some orders.
The inability of the customer to obtain credit may affect our ability to confirm revenue and income, especially large capital equipment orders from new customers, and we may require letters of credit.
During periods of economic uncertainty, we may also not be able to issue letters of credit to our customers, which in some cases is necessary to guarantee performance.
This has had a negative impact on our bookings and revenues in the past, especially in China, and may have a negative impact on our future operational results.
Our capital equipment sales in China tend to be more volatile and subject to some uncertainty.
Our bookings and revenues from China tend to be more volatile than other geographic regions, as the pulp and paper industry in China has experienced a period of substantial capacity expansion to meet demand, it was followed by a period of reduced activity in which overcapacity was absorbed.
These cycles lead to a large number of booking activities for our capital products.
Revenue increases, subsequent bookings are drastically reduced, or our customers may delay shipping and placing orders when trying to balance supply and demand.
In addition, orders from Chinese customers, especially orders in large stock
According to the specific requirements of the customer, the credit risk of the customized preparation system is higher than the risk we usually take elsewhere, and some orders need to be approved by the Chinese government for financing, or may be affected by the supply of credit and by a more stringent monetary policy.
We usually do not record bookings for large inventory contracts from Chinese customers
Prepare the system until we receive a down payment for such a contract.
The time of receipt of these orders and down payments is uncertain and there is no guarantee that we will be able to confirm the income of these contracts.
Delays in receipt of payments and credit certificates affect when revenue on these contracts can be recognized, which makes it difficult for us to accurately predict future financial performance.
If the contract is canceled before the down payment is received, we may suffer losses if we have started the work or other work related to the contract.
We usually have stock waiting to ship to the customer, we can not re-ship if the contract is canceled, we may suffer loss
Sold the equipment.
In addition, if the contract is canceled, or if the customer does not perform the obligations set out in the contract, we may suffer losses, before receiving the letter of credit or the final payment covering the balance remaining in the contract, this may account for 80% or more of the total order volume.
Due to these factors, our income in China is different, and it will be very different in the future, and it is difficult to predict.
Our global operations expose us to various risks that may adversely affect the results of our operations.
We sell our products worldwide, including to customers in China, South America, Russia and India, and operate multiple manufacturing operations worldwide, including in Canada, China, Europe and Brazil.
There are some risks to international income and business, including the following:-agreements may be difficult to implement and receivables may be difficult to collect through foreign legal systems;
-The payment period for foreign customers may be longer;
-Foreign countries may impose additional withholding taxes or other taxes on our foreign income, impose tariffs, impose other restrictions on foreign trade, impose monetary restrictions, or enact other protectionism or counter-lawstrade measures;
-Environmental and other regulations may adversely affect the operational capacity of our facilities;
-Damage caused by climate change, natural disasters, fires, wars, terrorist activities and other force majeure events beyond our control;
-Deterioration of the economic situation may lead to worker unrest, labor action and potential shutdown;
-Political unrest may disrupt the business activities of US or our clients;
-It may be difficult to remit funds due to adverse domestic and foreign tax consequences or other restrictions or restrictions imposed by foreign governments;
In foreign countries, the protection of intellectual property rights may be more difficult to implement.
Some of these situations are more likely to occur in certain geographical areas where we operate.
Operating globally has affected us by changes in government regulations and policies in multiple jurisdictions around the world, including tariff and trade barriers, taxes, foreign exchange controls and political risks.
Changes in government policies, political unrest, economic sanctions, trade embargo or other adverse trade regulations may have a negative impact on our business.
We operate in Mexico and Canada and we benefit from the North American Free Trade Agreement (NAFTA (NAFTA).
If the United States withdraws or substantially modifies the North American Free Trade Agreement, or imposes significant tariffs or taxes on goods imported to the United States, the cost of our products may increase substantially or no longer be competitive, this, in turn, may have a significant adverse effect on our business and operational results.
Thanks to our recent acquisition of the forest products business, our customer sales in Russia and other parts of Europe have increased.
Our sales to Russia were $10 in 2017.
8 million or 2% of our income.
In August 2017, in addition to the previous sanctions imposed in 2014, the United States imposed new trade sanctions on some people in Russia.
In response, Russia may impose trade sanctions on the United States. S. -
The implementation of trade sanctions may make it more difficult to do business in Russia and cause delays or prevent our personnel from shipping products or services or receiving payments for products or services.
These restrictions may have a significant adverse effect on our future business and operational results.
We operate a large number of production facilities in China, and we have received considerable income from China.
Changes in Chinese government policies, devaluation of the renminbi, restrictions on cash assignments, political turmoil, unstable economic conditions, or other developments in China or the United StatesS. -
Chinese relations that are not conducive to trade, including the development of protectionist legislation or trade or monetary restrictions, may have a negative impact on our business and operating results.
The Chinese government's policy on slowing economic growth may have a negative impact on our business in China.
Customers are unable to expand capacity or obtain financing for expansion or improvement projects.
The Chinese government's policy of advancing internal political priorities may have a negative impact on our business in any way we cannot foresee.
For example, China has banned the import of mixed waste paper and reported that all recycled paper imports will be limited to 0.
The level of contaminants after March 1, 2018 was 5%, well below what the supplier considered feasible.
These policies may have a significant impact on the price, type and supply of paper imported into China, and may have a negative impact on the operational capabilities of our customers in China, and may have a negative impact on our product needs and future operational results.
We produce equipment for the production of forest products, including wood and OSB, and our financial performance may be adversely affected by the decline in the level of residential building activity.
We produce out-of-stock, out-of-line and related equipment for wood and OSB production, OSB is an engineering wood board product mainly used in home buildings.
Our customers mainly produce these products for new homes, home repair and renovation activities.
As a result, the operational results of our timber processing systems sector are largely related to the level of this residential building activity, mainly in North America, and to a lesser extent in Europe.
Residential construction activities are affected by many factors, including supply and demand for new and existing houses, start-up of new houses, unemployment rate, level of interest rates, availability of mortgage financing, mortgage redemption rate, availability of construction labor and suitable land, seasonal and unusual weather conditions, overall economic conditions and consumer confidence.
Significant growth for a long time
Regular interest rates, changes in tax policies that deduct mortgages, tightening lending standards, high unemployment and other factors that reduce the level of residential construction activity may have a significant adverse impact on our financial performance.
The OSB market is highly concentrated and the market competition for construction products is fierce.
Loss of significant customers or a decrease in capital expenditure of our customers or OSB production may have a significant adverse effect on our financial performance.
The OSB market is highly concentrated and the number of OSB manufacturers is limited.
In we of wood processing system department income in two maximum of OSB customer accounted for 29% accounted for 48%, accounted for 32%.
Losing one or more of these customers to a competitor may adversely affect our revenue and profitability.
In addition, the market competition for construction products is fierce.
Products competing with OSB include other wood panel products and alternatives to wood building products such as non-fiber
Based on alternatives.
For example, builders can use plastic, wood/plastic or composite materials as a replacement for OSB products.
Changes in the price of energy, chemicals, wood and other parts
Base Fiber and non-fiber alternatives can change the competitive position of OSB relative to other available alternatives and may increase the replacement.
Our customer OSB production may be adversely affected by the following factors
Cost producers of other wood panel products and replacement of wood building products.
The decline in demand for OSB products, or the decline in profitability of one or more of our customers, may lead to a decrease in capital equipment expenditures, or the closure or closure of OSB factories, this may have a significant adverse effect on our financial performance.
The development and increasing use of digital media has and will continue to adversely affect our paper system sector.
The development of digital media has had an adverse effect on the demand for news paper as well as for paper printing and writing grades, especially in North America and Europe, a trend that is expected to continue.
We in 2017 of income in about 12% from production newsprint and printing and writing level paper of customer.
A significant drop in the grade of printing and writing paper also led to a drop in construction of recycling organization factories, which use the grade of printing and writing of waste paper as their fiber source.
The increased use of digital media has and will continue to adversely affect the demand for our products in these markets.
Our results may be adversely affected by currency fluctuations.
As a multinational company, we are faced with exchange rate fluctuations in many ways.
We face translation and trading risks associated with transactions denominated in currencies that are different from our subsidiary's functional currencies.
While the cost of most of our subsidiaries is denominated in the same currency as their income, changes in the relative value of the currency occur from time to time and may adversely affect our operating results.
When foreign subsidiaries have income and expenses in the same foreign currency, the risk of some foreign currency translation is reduced.
In addition, some foreign subsidiaries may hold US Treasury bonds. S.
Assets or liabilities in dollars, such as the United StatesS.
The appreciation of the dollar against the applicable functional currency will result in the loss of the currency transaction income or liabilities of the asset.
While some foreign currency risks can be hedging or insured using derivatives or other financial instruments, this attempt to mitigate these risks may be costly and not always successful.
When we translate the local currency results of foreign subsidiaries into US currencyS.
For a period of time, the US dollarS.
The dollar is strengthening, and our financial results will reflect a decrease due to foreign currency conversion.
Also, 9 tables for ContentsKadant
When a foreign government depreciates its currency, the financial results of the merger will be adversely affected.
Our main foreign currency exchange business involves currencies in Europe, China, Brazil, Canada and Mexico.
In 2016, for example, the central bank devalued the renminbi in an effort to boost the Chinese economy. This has a negative translation effect on our consolidated income, and if this happens again, it will continue to have a negative translation effect.
In 2016 and 2015, foreign currency translations had a negative impact on our financial results and had a positive impact in 2017.
We will not enter derivatives or other financial instruments to hedge against this foreign currency conversion risk.
Rising prices and shortages of raw materials and components, as well as reliance on certain suppliers of these raw materials and components, may adversely affect our operational results.
We manufacture our products using a variety of raw materials, including a large number of stainless steel, goods and key components.
The price increases in these raw materials, commodities and key components may adversely affect our operating results, if we are unable to fully offset the impact of these cost increases through price increases, productivity increases, or items that reduce costs.
Some of our businesses rely on limited suppliers to provide critical components used in our product manufacturing.
If we do not have access to sufficient supply for these components, or if these supply sources are no longer available to us, we may encounter a shortage of critical components or fail to meet our commitment to our customers.
Alternative supply sources may be more expensive or may not be available in some cases.
We believe that in the foreseeable future, the source of our raw materials, goods and key components is usually sufficient to meet our needs.
However, if our operating supply is insufficient, our operating results may be negatively affected.
The implementation of our acquisition strategy involves risks and if we fail to implement it successfully, it may have a significant adverse impact on our business.
We expect that an important driver of our growth in the coming years will be the acquisition of technologies and businesses that complement or enhance our existing products and services, or may involve moving into new process industries.
We continue to actively seek additional acquisition opportunities, some of which may be critical to our business and financial performance and involve significant cash expenditures and large amounts of debt.
Although we have succeeded in this strategy in the past, we may not be able to develop our business through acquisitions for multiple reasons, including:-difficulties in identifying and executing acquisitions;
-Competition with other potential buyers, resulting in us being unable to complete the acquisition, or we pay a greater premium than the fair value of the net assets of the acquisition business;
-It is not possible to obtain approval from the regulatory authorities, including those from the antitrust authorities;
-Difficulty in integrating operations, technologies, product products and key employees of past business acquired;
-The inability to maintain existing customers of the acquired business and to sell the products and services of the acquired business to our existing customers;
-The key management of the acquisition business cannot be retained;
-Shifting the attention of management from other business issues;
-The inability to increase revenue and profitability and to achieve the expected cost savings and synergies of the acquisition;
-Take significant responsibility, some of which may be unknown at the time of acquisition;
-Potential future impairment of the value of goodwill and intangible assets;
And-identify internal control defects in the acquisition business.
We need to record deals and acquisitions-
Related expenses incurred during the period.
Once completed, the acquisition could involve significant consolidation costs.
During the reporting period, the associated costs may be significant and adversely affect our operating results.
Any acquisition we complete may be at a fair value premium than the identifiable net assets of the acquisition business.
We need to assess good faith and indefinite fulfillment.
Each year, goodwill and intangible assets are indicated when an event or situation changes, including explicit-
Living Intangible assets may be damaged.
These events or situations typically include a significant decline in operating losses or revenues associated with the acquisition of business or assets, and our ability to achieve the value of goodwill and intangible assets will depend on the future cash flow of these enterprises.
If the assets are deemed unrecoverable, we may incur impairment costs to write down the value of our goodwill and the intangible assets acquired, which may have a significant adverse effect on our operating results.
Table 10 ContentsKadant Inc.
If our information system fails, or data security is compromised, or the network is stolen, it will affect our business.
We operate geographically dispersed businesses and rely on electronic storage and transmission of proprietary and confidential information, including technical and financial information, between our operations, customers and suppliers.
In addition, for some of our businesses, we rely on information systems controlled by third parties.
Although we have taken security measures, our information technology and infrastructure may be vulnerable to attacks or damage by hackers or cyber thieves due to employee errors, malpractices or other interruptions.
As part of our ongoing efforts to upgrade our current information system, we are implementing new enterprise resource planning software to manage certain of our business operations.
When we implement and add features, there may be problems that we do not foresee.
System failures, network outages, and data security loopholes may limit our ability to conduct business as usual, including our ability to communicate and trade business with customers and suppliers;
Resulting in the loss or misuse of such information, including credit card numbers or other personal information, loss of business or customer, or damage to our brand or reputation;
Or to interrupt or delay the reporting of our financial results.
These system failures or unauthorized access may be caused by external theft or attacks, misconduct by our employees, suppliers or competitors, or natural disasters.
In addition, the implementation of further data protection measures such as compliance with local privacy laws, such as the General Data Protection Regulations of the European Union, may have significant cost and operational consequences.
We must comply with a wide range of laws and regulations and be regulated by various federal, state and foreign agencies.
We are bound by various local, state, federal, foreign and transnational laws and regulations, in particular, with environmental protection, import and export of products, tariff and trade barriers, taxation, exchange control, current good manufacturing practices, health and safety, and our business practices in the United StatesS.
Foreign countries, such as
Corruption and anti-corruption
Competition law and any changes to these laws and regulations in the future may adversely affect us.
Failure to comply with applicable laws and regulations or failure to maintain, update or obtain the necessary licenses and licenses may result in criminal, civil and administrative penalties and may adversely affect the results of our operations.
It may be difficult for us to implement strategies to improve internal growth.
Some of the markets we compete in are mature and the growth rate is relatively low.
We adopt a range of strategies to improve our internal growth, including:-strengthening our presence in selected geographic markets, including emerging and existing markets where we see opportunities;
-Key sales of parts and consumables; –using low-
Cost manufacturing bases such as China and Mexico;
-Allocate R & D funds for products with good growth prospects;
-Develop new applications for our technology;
-Combine sales and marketing business in the appropriate market to compete more effectively;
-Find new markets for our products and expand to different vertical or process industries;
And-continue to develop across
Provide sales opportunities for our products and services to take advantage of the depth of our products.
We may not be able to successfully implement these strategies, or they may not achieve the expected growth of our business.
All our markets are facing fierce competition.
We believe that the main competitive factors affecting our product market include technical expertise and process knowledge, product innovation, product quality and price.
Our competitors include some large multinational companies that may have far more financial, marketing and other resources than we do.
As a result, they may be able to adapt more quickly to new or emerging technologies such as the internet of things or the internet of things, as well as changes in customer needs, or invest more resources to promote and sell their services and products.
The competitor's technology may be better than ours.
Our current products, the products being developed and the ability to develop new technologies may not be enough to enable us to compete effectively.
As new companies enter the market and existing competitors expand their product lines and manufacturing businesses, competition is intensifying, especially in China.
Table 11 ContentsKadant Inc.
Adverse changes to the soundness of our suppliers and customers may affect our business and operational results.
All of our businesses are at risk related to the credibility of our major suppliers and customers, including pulp and paper manufacturers, forest products and other industrial customers, many of these countries may be adversely affected by financial market turmoil, the global recession and economic difficulties.
These circumstances may result in financial instability, insolvency or other adverse effects on any of our suppliers or customers.
The consequences of such adverse effects may include a production interruption of our supplier facilities, a reduction in customer orders, delays or cancellations, delays in the purchase of our products by customers or delays in payment of due amounts or inability to obtain financing, bankruptcy of client or other creditor.
Any adverse changes to the soundness of our suppliers or customers may adversely affect our cash flow, profitability or financial position.
Changes in our tax terms or risk of additional income tax liabilities may affect our profitability.
A large part of our income and income comes from our international operations and is subject to income tax and other taxes in the United States and many foreign jurisdictions. Changes in U. S.
Foreign income tax laws and regulations or their interpretation may result in higher or lower assessed income tax rates, or changes in the taxable nature of certain income or the deductible nature of certain expenses, thus, our income tax expenses and profitability are affected.
There are many factors that can lead to fluctuations in our actual tax rates, including: changes in tax rates in different jurisdictions;
Unexpected changes in the amount of profits in jurisdictions with low statutory tax rates;
Work with tax authorities to solve problems arising from tax audits;
Changes in the valuation of our deferred income tax assets and liabilities;
Adjustment of income tax after the finalization of various tax returns;
An increase in fees not deducted for tax purposes, including impairment of goodwill related to the acquisition;
Changes in existing tax credits or our ability to take advantage of foreign tax credits;
Changes in the tax law or interpretation of the tax law.
Any of these factors can lead us to experience a significant difference in effective tax rates from previous or current expectations, which may adversely affect our operating results or cash flows.
On December 22, 2017, the tax reduction and Employment Act (2017 Tax Act)
It was enacted in the United States. S.
This greatly modifies the domestic revenue code.
2017 the tax law reduces taxes in the United States. S.
Starting in 2018, the federal corporate tax rate has increased from 35% to 21%, and the transition from the global tax system to the collection
Time tax is imposed on all foreign unpaid income at a reduced rate.
2017 the tax law introduces a number of new provisions that come into force on 2018, including, but not limited to, global intangible lowsTaxed Income (GILTI)
Basic erosion preventionAbuse Tax (BEAT)
Intangible foreign income (FDII)
Deduction, the tax deduction of net interest expense is limited to 30% of adjusted taxable income, an immediate deduction for certain new fixed assets is added instead of depreciating the assets over time and changing
2017 many of the provisions of the tax law are not clear in their application and the United States needs to provide important guidanceS.
Tax authorities that have not yet been provided.
In addition, it is uncertain how states in the United States and other jurisdictions will respond to the 2017 tax law.
We continue to assess the impact of the new terms on the tax terms already included in our financial statements and guidelines, and as the application of the law becomes clearer, we may need to make adjustments, this may adversely affect our business and financial situation.
If we fail to manage our manufacturing business successfully, our ability to deliver our products to our customers may be disturbed and our business, financial position and operational results may be adversely affected.
Equipment and operating systems necessary for our manufacturing business may fail, perform poorly or fail.
Any such disruption may result in loss of efficiency, delay in the delivery of products and loss of sales and customers, and the insurance proceeds may not adequately compensate us for the loss.
In order to improve the efficiency and cost-effectiveness of our manufacturing business and better serve our customers in different countries, just like we used to, in the future, we may transfer several product lines from one of our factories to another and consolidate the manufacturing business in some of our factories.
For example, we completed the construction of a new facility in Lebanon, Ohio, and began to transfer the main manufacturing business of our Cardan black Crowson subsidiary from Theodore, alabama and its executive office in Mason, Ohio have entered new facilities.
We will also transfer our stocking manufacturing business from noroping, Sweden to a new factory.