<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period _______ to _______
Commission File Number 0-9576
----------
K-TRON INTERNATIONAL, INC.
-------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
New Jersey 22-1759452
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer ID #)
incorporation of organization)
</TABLE>
Routes 55 & 553
P.O. Box 888
Pitman, New Jersey
08071-0888
---------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(609) 589-0500
--------------------------------------------------
(Registrant's Telephone Number Including Area Code)
Not Applicable
---------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
The number of shares of Common Stock outstanding as of September 30, 1995 was
------------------
3,103,573 Shares
---------
<PAGE> 2
K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
Consolidated Balance Sheets 1
September 30, 1995 and December 31, 1994
Consolidated Statements of Operations 2
and Retained Earnings
Three Months and Nine Months Ended
September 30, 1995 and October 1, 1994
Consolidated Statements of Cash Flows 3-4
Nine Months Ended September 30, 1995 and
October 1, 1994
Notes to Consolidated Financial 5
Statements
Item 2. Management's Discussion and Analysis 6-11
of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
-----------------
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12-13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE> 3
ITEM 1. Financial Statements PART I. FINANCIAL INFORMATION
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
Sept. 30, December 31,
1995 1994
ASSETS (Unaudited) (Audited)
------ ----------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,507 $ 1,086
Accounts receivable (less allowance for
doubtful accts. of $959 & $1,523) 22,259 29,214
Inventories 20,633 25,458
Deferred income taxes 753 328
Income Tax Receivable 400 442
Prepaid expenses & other current assets 1,912 1,145
------- --------
TOTAL CURRENT ASSETS 48,464 57,673
PROPERTY, PLANT AND EQUIPMENT (Net) 19,033 31,673
PATENTS AND LICENSES (Net of accumulated
amortization of $4,690 and $7,657) 567 908
EXCESS OF COST OVER NET ASSETS ACQUIRED
(Net of accumulated amortization of $2,889 & $4,888) 5,925 18,661
OTHER ASSETS 333 650
DEFERRED INCOME TAXES, Net 810 385
------- --------
TOTAL ASSETS $75,132 $109,950
======= ========
LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
CURRENT LIABILITIES:
Notes payable to banks $40,969 $ 31,175
Current portion of long-term debt 145 1,337
Accounts payable 8,645 12,251
Accrued expenses & other current liabilities 4,115 2,469
Accrued payroll 2,445 2,211
Accrued commissions 1,930 3,039
Customer advances 2,931 2,720
Accrued warranty 1,357 930
Income taxes payable 996 1,241
Deferred income taxes 336 849
------- --------
TOTAL CURRENT LIABILITIES 63,869 58,222
LONG-TERM DEBT 189 27,413
DEFERRED GAIN ON SALE/LEASEBACK 2,436 2,456
DEFERRED INCOME TAXES 199 399
NONCURRENT PENSION LIABILITY -- 2,939
COMMITMENTS AND CONTINGENCIES
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES,
$.01 par value - authorized 50,000 shares; none issued -- --
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value - authorized,
950,000 shares; none issued -- --
Common stock, $.01 par value - authorized,
15,000,000 shares; issued 4,166,523 shares
and 4,150,887 shares 42 41
Paid-in capital 13,938 13,865
Retained earnings 5,215 15,070
Cumulative translation adjustments (192) 109
------- --------
19,003 29,085
Treasury stock, 1,062,950 shares - at cost (10,564) (10,564)
------- --------
TOTAL SHAREHOLDERS' EQUITY 8,439 18,521
------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $75,132 $109,950
======= ========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 4
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS
---------------------------------------------------------
(Dollars in Thousands except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Oct.1, Sept. 30, Oct.1,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE: $22,297 $26,336 $85,782 $73,062
------- ------- ------- -------
COSTS AND EXPENSES:
Cost of sales 13,180 15,627 53,346 43,438
Selling, general
& administrative 7,460 8,274 27,395 23,760
Research & development 535 1,197 2,515 3,302
Interest 747 1,177 3,402 3,127
------- ------- ------- -------
Total costs & expenses 21,922 26,275 86,658 73,627
------- ------- ------- -------
(LOSS) ON DISPOSITION OF
BUSINESS -- -- (10,529) --
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME
TAXES 375 61 (11,405) (565)
INCOME TAXES (Benefit) -- -- (1,550) --
------- ------- ------- -------
NET INCOME (LOSS) 375 61 (9,855) (565)
RETAINED EARNINGS
Beginning of Period 4,840 21,270 15,070 21,896
------- ------- ------- -------
End of Period $ 5,215 $ 21,331 $ 5,215 $21,331
======= ======= ======= =======
EARNINGS (LOSS) PER SHARE $ .12 $ .02 $( 3.19) $ (.18)
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,104,000 3,081,000 3,093,000 3,071,000
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 5
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------
Sept. 30, Oct. 1,
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) $(9,855) $(565)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Loss on disposition of business 10,529 --
Depreciation and amortization 3,985 4,759
Amortization of deferred gain on
sale/leaseback transaction (351) (289)
Deferred income taxes (1,474) (167)
Changes in assets and liabilities
which provided (used) cash:
Accounts receivable, net 521 68
Inventories (75) (5,609)
Prepaid expenses and other current assets (929) (632)
Other assets 658 (513)
Accounts payable (1,008) 1,925
Accrued expenses and other current liabilities 150 (109)
Accrued warranty 606 20
Income taxes payable (274) (513)
-------- -------
Net cash provided by (used in) operating activities 2,483 (1,625)
-------- -------
INVESTING ACTIVITIES:
Proceeds from disposition of business 9,000 --
Capital expenditures (356) (1,414)
Investment in patents and licenses (27) (131)
-------- -------
Net cash provided by (used in) investing activities 8,617 (1,545)
-------- -------
FINANCING ACTIVITIES:
Net (payments) borrowings under notes payable
to banks (9,222) 13,901
Net (payments) under long-term lines of credit -- (9,550)
Principal payments on long-term debt (376) (1,642)
Proceeds from issuance of common stock 74 129
-------- -------
Net cash (used in) provided by financing activities (9,524) 2,838
-------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (155) (98)
-------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,421 (430)
-------- -------
CASH AND CASH EQUIVALENTS
Beginning of Period 1,086 1,643
-------- -------
End of Period $ 2,507 $1,213
======== =======
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 6
Consolidated Statements of Cash Flows (continued):
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------
Sept. 30, Oct. 1,
1995 1994
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $2,903 $2,957
Income taxes 585 416
</TABLE>
Disclosure of Accounting Policy:
For purposes of the statement of cash flows, the Company considers all highly
liquid short-term investments purchased with a maturity of three months or less
to be cash equivalents.
See Notes to Consolidated Financial Statements
-4-
<PAGE> 7
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. The consolidated financial
statements include the accounts of K-Tron International, Inc. ("K-Tron" or
the "Company") and its subsidiaries. All intercompany transactions have
been eliminated in consolidation. In the opinion of management, all
adjustments (consisting of a normal recurring nature) considered necessary
for a fair presentation of results for interim periods have been made.
The results for the interim periods are not necessarily indicative of the
results for a full year.
The unaudited financial statements herein should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended December
31, 1994 which was previously filed with the Securities and Exchange
Commission.
2. Disposition of Business
-----------------------
On June 23, 1995, subsidiaries of the Company sold Colortronic GmbH and
rights to several related patents and patent applications to an investment
group for $9 million.
The Swiss banks have not yet allocated $5,150,000 of the proceeds to
specific debt outstanding, but are expected to do so in the near future.
Accordingly, this amount has been reflected as a reduction to notes
payable to banks in the accompanying balance sheet as of September 30,
1995.
The Company recorded a pre-tax loss of $10,529,000 on the disposition.
The Company has generated a significant tax loss carry forward due to the
sale of Colortronic GmbH. In the second quarter the Company recorded a
$1,550,000 tax benefit relating to this loss based upon the existence of
deferred tax liabilities which no longer will be required and estimates of
future income. The Company has set up a valuation allowance of
approximately half of the tax benefit associated with the sale.
-5-
<PAGE> 8
ITEM 2. K-TRON INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995
Financial Condition
- -------------------
As reported in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, the Company and its U.S. manufacturing subsidiary
are in default under several financial covenants contained in their loan
agreement with three U.S. banks. These defaults are continuing and have not
been waived. However, on April 28, 1995, the Company and its U.S. subsidiaries
entered into a forbearance agreement with the U.S. banks in which such banks
agreed to forbear in the exercise of their rights and remedies under the loan
documents. On June 22, 1995 this agreement was amended and extended through
the earlier of February 28, 1996 or the occurrence of a new event of default
thereunder. See subsequent discussion of the effect of a default under Swiss
loan agreements. The forbearance agreement also modified the existing loan
documents in certain aspects, including the granting of additional collateral.
At September 30, 1995, the principal amount outstanding under the Company's
U.S. loan agreement was $9.4 million.
On June 23, 1995, subsidiaries of K-Tron sold Colortronic GmbH and rights
to several related patents and patent applications to an investment group for
$9 million. The group included two K-Tron executives, including its president
and CEO. Both subsequently resigned their K-Tron positions, and Leo C. Beebe,
K-Tron's chairman, assumed the duties of chief executive officer.
The pro forma results of K-Tron without Colortronic are shown below:
K-Tron International, Inc.
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Less Pro Forma
As Reported Colortronic Consolidated
from Operations Related Without Colortronic
--------------- ------- -------------------
<S> <C> <C> <C>
Revenue
1994 $104,772 $(35,234) $69,538
======== ========= =======
1995: 1st Qtr. $ 30,503 $(11,179) $19,324
2nd Qtr. 32,982 (8,824) 24,158
3rd Qtr. 22,297 -- 22,297
-------- --------- -------
Nine Months $ 85,782 $ (20,003) $65,779
======== ========= =======
</TABLE>
-6-
<PAGE> 9
(Loss) Earnings from Operations
- -------------------------------
<TABLE>
<CAPTION>
Less Pro Forma
As Reported Colortronic Consolidated
from Operations Related Without Colortronic
--------------- ------- -------------------
<S> <C> <C> <C>
1994 $(7,052) $(5,576) $(1,476)
======== ======== ========
1995: 1st Qtr. $(1,280) $(1,314) $ 34
2nd Qtr.* 29 ( 410) 439
3rd Qtr. 375 -- 375
------- ------- -------
Nine Months* $ (876) $(1,724) $ 848
======== ======== =======
</TABLE>
*Excluding the after-tax loss on sale of Colortronic of $8.979 million.
The Colortronic divestiture generated a pre-tax loss of $10.529 million.
This loss was primarily a non-cash write-off of goodwill. The tax loss carry
forward generated by the sale can be used to offset future cash tax payments.
As a result of the sale of Colortronic GmbH, K-Tron's debt decreased by $24.2
million as of July 1, 1995.
The loss on the sale of Colortronic caused K-Tron's Swiss subsidiary's
equity to fall below the equity guarantees in its loan agreements with Swiss
banks. As a result, the subsidiary is in default and these loans have been
reclassified as short-term.
The subsidiary is currently negotiating a revised financing agreement with
the Swiss banks, but there can be no assurance that a new agreement will be
entered into or that the Swiss banks will not demand payment of their loans.
Furthermore, such equity violation is a new event of default under the
Company's U.S. loan agreement described above. At September 30, 1995, the
principal amount outstanding under the Swiss loan agreements was $31.0 million.
The Company is seeking alternative debt or equity financing. At this
time, the Company has not obtained commitments, and its ability to continue as
a going concern depends on the future availability of its existing credit
facilities or replacement lines of credit, or the raising of cash through the
sale of assets or additional equity. If the Company is unsuccessful in these
efforts, it may be unable to meet its obligations in a timely manner, making it
necessary to undertake such other actions as may be appropriate to preserve
asset values.
Results of Operations
- ---------------------
K-Tron is an international company with two-thirds of its business arising
from sources outside the United States, primarily Europe. As such, the
financial position and performance of the Company is sensitive to both
-7-
<PAGE> 10
translation and transaction fluctuations in foreign currency exchange
rates.
The following table sets forth the Company's results of operations
expressed as a percentage of total revenues for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of Sales 59.1 59.4 62.2 59.5
---- ----- ----- -----
Gross Margin 40.9 40.6 37.8 40.5
Selling, General &
Administrative 33.5 31.4 31.9 32.5
Research & Development 2.4 4.6 2.9 4.5
Interest 3.3 4.4 4.0 4.3
--- --- --- ---
(Loss) Earnings before
income taxes and dis-
position of business 1.7% .2% (1.0)% (.8)%
==== === ====== =====
Quarter-end backlog
(in thousands) $28,532 $24,649 (1)
</TABLE> ======= =======
(1)At September 30, 1995 foreign exchange translation rates and excluding the
backlog of Colortronic GmbH.
Translation of the Company's foreign revenues and results of operations
into U.S. dollars is affected by changes in foreign exchange rates,
particularly with respect to the Swiss franc and the Deutsche mark. Revenues
and earnings for the first nine months of 1995 were affected by changes in the
average U.S. dollar/Swiss franc and average U.S. dollar/Deutsche mark exchange
rates, as follows:
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Sept. 30, Oct. 1,
1995 1994
---- ----
<S> <C> <C>
Swiss franc rate $.84 $.72
% appreciation vs. prior year +17%
Deutsche mark rate $.70 $.61
% appreciation vs. prior year +15%
</TABLE>
-8-
<PAGE> 11
Without Colortronic revenues in 1994, total revenues for the third quarter
of 1995 increased by $4.8 million or 27.1% ($3.3 million or 17.5% when using
constant foreign exchange rates) and $15.6 million or 31.2% for the first nine
months of 1995 ($8.7 million or 15.3% when using constant foreign exchange
rates) versus the same periods in 1994. Total revenues increased due to the
strong European and United States backlog at the end of the 1995 second
quarter, continued strong 1995 new order inflow and the effect of a weaker U.S.
dollar relative to the Swiss franc and Deutsche mark.
Gross margin as a percent of revenues improved to 40.9% in the third
quarter of 1995 as compared to 40.6% for the same period in 1994. Gross margin
declined to 37.8% for the first nine months of 1995 as compared to 40.5% for
the same period in 1994. The improvement in the margin in the third quarter of
1995 was due to margin improvement in the United States and the sale of the
Colortronic business which had low margins, offset in part by an increase in
warranty costs and the inability to pass on increased costs caused by the
appreciation of the Swiss franc to customers in certain European countries.
The decline in the margin for the first nine months of 1995 was primarily due
to heavily discounted orders booked in 1994, as well as the inability to pass
on increased costs caused by the appreciation of the Swiss franc to customers
in certain European countries.
Selling, general and administrative (SG&A) expense decreased by $.8 million
or 9.8% in the third quarter of 1995 while increasing by $3.6 million or 15.3%
for the first nine months of 1995 as compared to the same periods in 1994.
The decrease in SG&A in the third quarter is due to the elimination of
Colortronic expenses in the third quarter of 1995 offset by higher foreign
exchange translation rates. The increase for the nine months was primarily due
to higher foreign exchange translation rates as well as to higher commissions
and selling expenses related to the increased sales volume. In addition, the
Company incurred costs related to the forbearance agreement and costs related
to the Company's efforts to arrange new financing or sell assets. As a percent
of revenues, SG&A was 33.5% in the third quarter of 1995 and 31.9% for the
first nine months of 1995 as compared to 31.4% and 32.5%,respectively, for the
same periods in 1994. The change in SG&A as a percent of revenues in 1995 was
primarily due to the change in revenues.
Research and development (R&D) expenditures in the third quarter and first
nine months of 1995 decreased $.7 million and $.8 million as compared to the
same periods in 1994 due to the elimination of Colortronic brand expenses in
the third quarter of 1995, offset in part by redirection of existing resources
to the remaining brands and higher foreign exchange translation rates. R&D
expense as a percent of revenues was 2.4% in third
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<PAGE> 12
quarter 1995 and 2.9% for the first nine months of 1995 as compared to 4.6% and
4.5% respectively in 1994. The decrease in R&D as a percent of revenues in
1995 was due to the reductions noted above and to the change in revenues.
Interest expense decreased in the third quarter of 1995 by $.4 million as
compared to the same period in 1994 due to lower debt levels following the sale
of Colortronic, offset in part by higher effective interest rates in the United
States and higher foreign exchange translation rates. Interest expense
increased for the first nine months of 1995 as compared to the same period in
1994 due to increased debt levels in Europe prior to the sale of Colortronic,
higher effective interest rates in the United States and higher foreign
exchange translation rates.
The Company has generated a significant tax loss carry forward due to the
sale of Colortronic GmbH. In the second quarter of 1995 the Company recorded a
$1,550,000 tax benefit relating to this loss based upon the existence of
deferred tax liabilities which no longer will be required and estimates of
future income. The Company has set up a valuation allowance of approximately
half of the tax benefit associated with the sale.
The backlog of orders excluding Colortronic GmbH increased at the end of
the third quarter of 1995 by 15.8% as compared to the same period in 1994
(using September 30, 1995 foreign exchange translation rates for both
calculations), primarily due to the European recovery from recession and
continued good bookings in the United States.
Liquidity and Capital Resources
- -------------------------------
The Company's capitalization as of the end of the first, second and third
quarters of 1995 and fiscal year 1994 is set forth below:
<TABLE>
<CAPTION>
Sept. 30, July 1, Apr. 1, Dec. 31,
(Dollars in Thousands) 1995 1995 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Short-term debt including
current portion of
long-term debt $41,114 $42,890 $36,780 $32,512
Long-term debt 189 225 31,428 27,413
------- ------- ------- -------
Total debt 41,303 43,115 68,208 59,925
Shareholders' equity 8,439 8,152 18,310 18,521
------- ------- ------- -------
Total debt and share-
holders' equity $49,742 $51,267 $86,518 $78,446
======= ======= ======= =======
Percent debt to total
capitalization 83% 84% 79% 76%
Percent debt to equity 489% 529% 373% 324%
</TABLE>
-10-
<PAGE> 13
Total debt decreased since year end 1994 by $18.6 million despite a $5.9
million increase due to the effect of foreign exchange translation. Total debt
without the effect of the foreign exchange translation decreased by $24.6
million. The debt reduction associated with the sale of Colortronic was $24.2
million. The Company had used all of its available borrowing facilities as of
September 30, 1995.
At the end of the third quarter of 1995 the Company had a deficit in
working capital of $15.4 million and the ratio of current assets to current
liabilities was .76. As explained earlier, the change in working capital was
heavily affected by reclassifying $24.3 million of Swiss bank debt from long
term to short term debt.
Operating activities provided $2.5 million in positive cash flow for the
first nine months of 1995 as compared to using $1.6 million in the same period
of 1994. In the third quarter of 1995, $2.6 million of cash was provided from
operations primarily from profits generated in the quarter and improved asset
management.
Cash provided by investing activities for the first nine months of 1995 was
primarily due to the funds received from the sale of Colortronic GmbH and
rights to several related patents and patent applications.
Cash used in finance activities for the first nine months of 1995 was
primarily the result of using the proceeds from the sale of Colortronic GmbH
and the cash provided by operating activities to reduce bank debt.
Changes in foreign exchange rates, particularly with respect to the Swiss
franc and Deutsche mark, caused a translation adjustment decrease (after the
elimination of the cumulative translation adjustments associated with the
Colortronic sale) in shareholders' equity of $.3 million in the first nine
months of 1995.
-11-
<PAGE> 14
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
-------------------------------
As reported in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, the Company and its U.S. manufacturing subsidiary are
in default under several financial covenants contained in their loan agreement
with three U.S. banks. These defaults are continuing and have not been waived.
However, on April 28, 1995, the Company and its U.S. subsidiaries entered into
a forbearance agreement with the U.S. banks in which such banks agreed to
forbear in the exercise of their rights and remedies under the loan documents.
On June 22, 1995 this agreement was amended and extended through the earlier of
February 28, 1996 or the occurrence of a new event of default thereunder. The
forbearance agreement also modified the existing loan documents in certain
aspects, including the granting of additional collateral. At September 30,
1995, the principal amount outstanding under the Company's U.S. loan agreement
was $9.4 million.
The loss on the sale of Colortronic caused K-Tron's Swiss subsidiary's
equity to fall below the equity guarantees in its loan agreements with Swiss
banks. As a result, the subsidiary is in default and these loans have been
reclassified as short-term.
The subsidiary is currently negotiating a revised financing agreement with
the Swiss banks, but there can be no assurance that a new agreement will be
entered into or that the Swiss banks will not demand payment of their loans.
Furthermore, such equity violation is a new event of default under the
Company's U.S. loan agreement described above. At September 30, 1995, the
principal amount outstanding under the Swiss loan agreements was $31.0 million.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of Shareholders of the Company was held on
October 6, 1995.
(b) Not applicable.
(c)) Shareholders of the Company were asked to vote on the election of
one Class II director. The Board of Directors, acting on the
recommendation of the Chairman of its
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<PAGE> 15
Nominating Committee, nominated Johannes Wirth for election as
the Class II director. The results of the votes taken at the
Annual Meeting were as follows:
<TABLE>
<CAPTION>
Number of Votes
FOR WITHHELD
<S> <C> <C>
Johannes Wirth 2,547,378 20,053
</TABLE>
Since directors are elected by a plurality of the votes cast, a
withheld vote had no effect. In addition, votes cast in the
election could not be recorded against or as an abstention, nor
could a broker non-vote be recorded.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
11.1 Computation of Earnings (Loss) Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
On July 10, 1995 the Company filed a Current Report on Form 8-K in
connection with the sale of Colortronic GmbH and rights to several
related patents and patent applications.
-13-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on his behalf by the
undersigned thereunto duly authorized.
K-TRON INTERNATIONAL, INC.
Date: November 3, 1995
----------------
By: /s/ Robert L. Weinberg
-----------------------
Robert L. Weinberg
Senior Vice President &
Chief Financial Officer
(Duly authorized officer
and principal financial
officer of the registrant)
By: /s/ Alan R. Sukoneck
-------------------------
Alan R. Sukoneck
Vice President & Controller
(Duly authorized officer and
principal accounting officer
of the registrant)
-14-
<PAGE> 17
EXHIBIT INDEX
Exhibit
11.1 Computation of Earnings (Loss) Per
Share
27 Financial Data Schedule
<PAGE> 1
Exhibit 11.1
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
AVERAGE COMMON AND
COMMON-EQUIVALENT
SHARES:
Weighted Average
Common Shares
Outstanding
per Period 3,104,000 3,071,700 3,093,000 3,061,700
Stock Options and
Warrants -- 9,300 -- 9,300
--------- --------- --------- ---------
ADJUSTED AVERAGE COMMON
AND COMMON-EQUIVALENT
SHARES COMPUTATION 3,104,000 3,081,000 3,093,000 3,071,000
========= ========= ========= =========
EARNINGS FOR COMMON AND
COMMON-EQUIVALENT
SHARES COMPUTATION:
Net income (loss)
applicable to
Common Stock $ 375,000 $ 61,000 $(9,855,000) $(565,000)
========= ========= ========= ==========
EARNINGS (loss) PER
SHARE:
Earnings (loss) per
Share $ .12 $ .02 $ (3.19) $ (.18)
========= ========= ========= ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,507
<SECURITIES> 0
<RECEIVABLES> 23,218
<ALLOWANCES> 959
<INVENTORY> 20,633
<CURRENT-ASSETS> 48,464
<PP&E> 46,051
<DEPRECIATION> 27,018
<TOTAL-ASSETS> 75,132
<CURRENT-LIABILITIES> 63,869
<BONDS> 189
<COMMON> 42
0
0
<OTHER-SE> 8,397
<TOTAL-LIABILITY-AND-EQUITY> 75,132
<SALES> 85,782
<TOTAL-REVENUES> 85,782
<CGS> 53,346
<TOTAL-COSTS> 53,346
<OTHER-EXPENSES> 40,439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,402
<INCOME-PRETAX> (11,405)
<INCOME-TAX> (1,550)
<INCOME-CONTINUING> (9,855)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,855)
<EPS-PRIMARY> (3.19)
<EPS-DILUTED> (3.19)
</TABLE>
