<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 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ______
Commission File Number 0-9576
K-TRON INTERNATIONAL, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1759452
(State or other jurisdiction of (IRS Employer ID #)
incorporation of organization)
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 28, 1996 was:
3,126,657 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
September 28, 1996 and December 30, 1995 1
Consolidated Statements of Operations
and Retained Earnings for the Three and
Nine Months Ended September 28, 1996 and
September 30, 1995 2
Consolidated Statements of Cash Flows
Nine Months Ended September 28, 1996 and
September 30, 1995 3
Notes to Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5-10
PART II. OTHER INFORMATION
Item 3. Defaults upon Senior Securities 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
PART I. FINANCIAL STATEMENTS
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
Sept. 28, December 30,
1996 1995
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,253 $ 3,239
Accounts receivable (less allowance for doubtful accounts of
$960 and $1,077) 18,130 20,849
Inventories 14,876 18,534
Deferred income taxes 714 1,088
Prepaid expenses and other current assets 1,373 1,512
-------- --------
TOTAL CURRENT ASSETS 37,346 45,222
PROPERTY, PLANT AND EQUIPMENT, net 16,238 17,595
PATENTS AND LICENSES (Net of accumulated amortization
of $4,670 and $4,644) 500 480
EXCESS OF COST OVER NET ASSETS ACQUIRED
(Net of accumulated amortization of $3,198 and $3,009) 4,911 5,597
OTHER ASSETS 280 402
-------- --------
TOTAL ASSETS $ 59,275 $ 69,296
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 21,970 $ 2,133
Revolver borrowings 1,356 --
Accounts payable 5,368 9,250
Accrued expenses & other current liabilities 5,038 2,558
Accrued payroll 2,781 1,459
Accrued commissions 2,154 2,523
Customer advances 2,052 2,612
Accrued warranty 762 893
Income taxes payable 931 680
-------- --------
TOTAL CURRENT LIABILITIES 42,412 22,108
LONG-TERM DEBT, NET OF CURRENT PORTION 2,772 35,004
DEFERRED INCOME TAXES 466 466
OTHER NONCURRENT LIABILITIES 1,801 2,297
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 4,189,607 shares and 4,175,585 shares 42 42
Paid-in capital 14,049 13,980
Retained earnings 8,617 5,776
Cumulative translation adjustments (320) 187
-------- --------
22,388 19,985
Treasury stock, 1,062,950 shares - at cost (10,564) (10,564)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 11,824 9,421
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 59,275 $ 69,296
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
-1-
<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. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
REVENUES $22,547 $22,297 $68,006 $ 85,782
COST OF REVENUES 12,943 13,180 38,393 53,346
------- ------- ------- --------
Gross profit 9,604 9,117 29,613 32,436
OPERATING EXPENSES
Selling, general and administrative 7,145 7,080 22,063 27,015
Research and development 523 535 1,755 2,515
Loss on disposition of businesses -- 380 -- 10,909
------- ------- ------- --------
7,668 7,995 23,818 40,439
------- ------- ------- --------
OPERATING PROFIT (LOSS) 1,936 1,122 5,795 (8,003)
INTEREST EXPENSE 505 747 1,684 3,402
------- ------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES 1,431 375 4,111 (11,405)
INCOME TAX PROVISION (BENEFIT) 270 -- 1,270 (1,550)
------- ------- ------- --------
NET INCOME (LOSS) 1,161 375 2,841 (9,855)
RETAINED EARNINGS
Beginning of period 7,456 4,840 5,776 15,070
------- ------- ------- --------
End of period $ 8,617 $ 5,215 $ 8,617 $ 5,215
======= ======= ======= ========
EARNINGS (LOSS) PER SHARE $ .37 $ .12 $ .91 $ (3.19)
======= ======= ======= ========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 3,138,000 3,104,000 3,128,000 3,093,000
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
-2-
<PAGE> 5
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------
Sept. 28, Sept. 30,
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (loss) $ 2,841 $(9,855)
Adjustment to reconcile net income (loss) to net cash provided
by operating activities:
Loss on disposition of businesses - 10,909
Depreciation and amortization 2,461 3,985
Amortization of deferred gain on sale/leaseback transaction (340) (351)
Deferred income taxes 343 (1,474)
Changes in assets and liabilities:
Accounts receivable, net 1,941 521
Inventories 3,028 (75)
Prepaid expenses and other current assets 86 (929)
Other assets (102) 658
Accounts payable (3,646) (1,008)
Accrued expenses and other current liabilities 2,846 (230)
Accrued warranty (86) 606
Income taxes 256 (274)
-------- -------
Net cash provided by operating activities 9,628 2,483
-------- -------
INVESTING ACTIVITIES:
Proceeds from disposition of business -- 9,000
Capital expenditures (1,356) (356)
Investment in patents and licenses (46) (27)
-------- -------
Net cash (used in) provided by investing activities (1,402) 8,617
-------- -------
FINANCING ACTIVITIES:
Net payments under notes payable to banks (14,907) (9,222)
Principal payments on long-term debt (213) (376)
Proceeds from issuance of debt 5,949 --
Proceeds from issuance of common stock 70 74
-------- -------
Net cash used in financing activities (9,101) (9,524)
-------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (111) (155)
-------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (986) 1,421
CASH AND CASH EQUIVALENTS
Beginning of period 3,239 1,086
-------- -------
End of period $ 2,253 $ 2,507
======== =======
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 6
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 30, 1995
which was previously filed with the Securities and Exchange Commission.
2. Supplemental Disclosures of Cash Flow Information
The Company considers all highly liquid short-term investments purchased with a
maturity of three months or less to be cash equivalents. Cash paid in the
first nine months of 1996 and 1995 for interest was $1.1 million and $2.9
million, respectively and for income taxes was $.6 million and $.6 million,
respectively.
3. Disposition of Businesses
In June 1995 the Company sold Colortronic GmbH and rights to several related
patents and patent applications, resulting in a pretax loss of $10.5 million in
1995. In the fourth quarter of 1995, the Company sold certain operations in
France and Brazil, resulting in a pretax loss of $0.7 million in 1995, of which
$0.4 million was provided for in the third quarter of 1995.
See Management's Discussion and Analysis of Financial Conditions and Results of
Operations ("MD&A") for the pro forma impact of the sale of these businesses on
the results of operations for the third quarter and nine months ended September
1995.
4. Maturity of Debt
As discussed in the MD&A, the Company is currently operating under a Swiss
forbearance agreement, which is scheduled to expire March 31, 1997. Swiss debt
of $21.3 million as of September 28, 1996, is reclassified as short-term debt.
The Company is exploring ways to extend the maturity, refinance or reduce its
bank indebtedness in Switzerland.
-4-
<PAGE> 7
ITEM 2.
K-TRON INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 28, 1996
Overview
As reported in the Company's Annual Report on Form 10-K for the fiscal
year ended December 30, 1995, at the end of that year the Company and its U.S.
manufacturing subsidiary were in default under several financial covenants
contained in their loan agreement with three U.S. banks, while the Company's
Swiss manufacturing subsidiary was in violation of certain equity guarantees
contained in its loan agreements with several Swiss lenders, resulting in a
default under each of the loan agreements. In June 1996 the Company's U.S.
manufacturing subsidiary refinanced the U.S. bank debt with two new lenders.
The new loans were made directly to the subsidiary and consisted of a mortgage
loan in the amount of $2.7 million and a two-year secured revolving credit
facility with maximum availability of $5.7 million. Borrowings under the new
loan agreements of $5.9 million along with $1.4 million of cash were used to
repay the $7.3 million outstanding under the old loan agreement and that loan
facility and related forbearance agreement were terminated. The Swiss loan
agreement defaults are continuing, however, and have not been waived. A
forbearance agreement exists with Swiss lenders which is described in more
detail in the 1995 Form 10-K and which expires on March 31, 1997. At September
28, 1996, the principal amount outstanding under the Swiss loan agreements was
$19.6 million. The Company will be requesting an extension to the Swiss
forbearance agreement for at least one year.
Since the 1995 dispositions of the Company's Colortronic, Brazilian
and Hasler France businesses and the discontinuance of the other Colortronic
brand business (collectively the "Discontinued Businesses"), the Company's
results have improved significantly, and it reported net income of $1,161,000,
$928,000 and $752,000 for the third, second and first quarters of 1996,
respectively, as well as $561,000 and $375,000 for the fourth and third
quarters of 1995, respectively. Cash flow from operations has also improved,
enabling the Company to reduce indebtedness for monies borrowed in the first
nine months of 1996 by $9,171,000 and by $5,368,000 in the second half of 1995
($11,039,000 and $5,978,000, respectively, after taking into account the effect
of foreign exchange translation).
At September 28, 1996, the Company had $4.3 million of availability
under its U.S. revolving credit agreement and $7.6 million of availability
under certain of its Swiss loan agreements. Management believes that cash flow
will be sufficient in 1996 to sustain the business and further that the Company
and its subsidiaries will be able to comply with all of the covenants and
payment provisions contained in the U.S. loan agreements and Swiss forbearance
agreement. Management further believes that with the new U.S. financings and
continuing operating improvement, the Company will be able to either refinance
or extend the maturity of the Swiss forbearance agreement before it expires in
1997, but there can be no assurance that this will happen.
K-Tron is an international company with approximately 60% of its
revenues from products manufactured and services performed from its facilities
outside the United States, primarily Europe. As such the financial position
and performance of the Company is sensitive to both translation and transaction
fluctuations in foreign currency exchange rates.
-5-
<PAGE> 8
Results of Operations
For the third quarter and first nine months of 1996, the Company
reported net income of $1,161,000 and $2,841,000, respectively, as compared to
a net income of $375,000 and a net loss of $9,855,000, respectively, for the
same periods in 1995. On a pro forma basis, if the actions regarding the
Discontinued Businesses had occurred at the beginning of the 1995 fiscal year,
the Company would have had net income of $412,000 and $790,000 for the third
quarter and first nine months of 1995, respectively.
The following table sets forth the Company's results of operations for
the periods indicated, as well as 1995 on a pro forma basis as described above:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
($ in 000's) Sept. 28, 1996 Sept. 30, 1995
------------------ --------------------------------------------------------
Proforma As Reported
-------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total Revenues $22,547 100.0% $22,097 100.0% $22,297 100.0%
Cost of Revenues 12,943 57.4 13,307 60.2 13,180 59.1
------- ----- ------- ----- ------- -----
Gross Profit 9,604 42.6 8,790 39.8 9,117 40.9
Selling, General & Administrative 7,145 31.7 6,629 30.0 7,080 31.8
Research & Development 523 2.3 529 2.4 535 2.4
Loss on Disposition of Business -- -- -- -- 380 1.7
------- ----- ------- ----- ------- -----
Operating Profit 1,936 8.6 1,632 7.4 1,122 5.0
Interest 505 2.2 780 3.5 747 3.3
------- ----- ------- ----- ------- -----
Income before income taxes 1,431 6.4 852 3.9 375 1.7
Income tax 270 1.2 440 2.0 -- --
------- ----- ------- ----- ------- -----
Net income $ 1,161 5.2% $ 412 1.9% $ 375 1.7%
======= ===== ======= ===== ======= =====
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------------------------------------------------------
($ in 000's) Sept. 28, 1996 Sept. 30,1995
------------------ --------------------------------------------------------
Proforma As Reported
-------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total Revenues $68,006 100.0% $65,033 100.0% $85,782 100.0%
Cost of Revenues 38,393 56.5 38,469 59.2 53,346 62.2
------- ----- ------- ----- ------- -----
Gross Profit 29,613 43.5 26,564 40.8 32,436 37.8
Selling, General & Administrative 22,063 32.4 21,206 32.6 27,015 31.5
Research & Development 1,755 2.6 1,850 2.8 2,515 2.9
Loss on Disposition of Business -- -- -- -- 10,909 12.7
------- ----- ------- ----- ------- -----
Operating Profit (loss) 5,795 8.5 3,508 5.4 (8,003) (9.3)
Interest 1,684 2.5 2,128 3.3 3,402 4.0
------- ----- ------- ----- ------- -----
Income (loss) before income taxes 4,111 6.0 1,380 2.1 (11,405) (13.3)
Income tax (benefit) 1,270 1.8 590 .9 (1,550) (1.8)
------- ----- ------- ----- ------- -----
Net income (loss) $ 2,841 4.2% $ 790 1.2% $(9,855) (11.5)%
======= ===== ======= ===== ======= =====
Backlog after excluding the
Discontinued Businesses
(at a constant foreign
exchange rate) $21,100 $24,800
======= =======
</TABLE>
-6-
<PAGE> 9
Translation of the Company's foreign revenues and results of
operations into U.S. dollars is affected by changes in foreign currency
exchange rates, particularly with respect to the Swiss franc and the Deutsche
mark. Revenues and earnings for the third quarter and first nine months of
1996 as well as for the same periods in 1995 were affected by changes in
various foreign currency exchange rates, including in particular the average
U.S. dollar/Swiss franc, average U.S. dollar/Deutsche mark and average Deutsche
mark/Swiss franc exchange rates, as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Swiss franc average rate $.820 $.848 $.822 $.841
% devaluation vs. prior year -3.3% -2.3%
Deutsche mark average rate $.670 $.698 $.670 $.698
% devaluation vs. prior year -4.0% -4.0%
Deutsche mark average rate vs.
Swiss franc average rate .817 .823 .815 .830
% devaluation vs. prior year -0.7% -1.8%
</TABLE>
Total revenues increased by $.3 million or 1.1% (3.3% when using a
constant foreign exchange rate) in the third quarter of 1996 when compared to
the same period in 1995 and increased by $.5 million or 2.0% (4.3% when using a
constant foreign exchange rate) in the third quarter of 1996 when compared to
the pro forma 1995 third quarter revenues. Total revenues for the third
quarter of 1996 increased as compared to the pro forma 1995 third quarter
revenues primarily due to an increased level of shipments from the U.S. despite
the effect of a stronger U.S. dollar relative to the Swiss franc and Deutsche
mark. Total revenues increased by $3.0 million or 4.6% for the first nine
months of 1996 as compared to the pro forma 1995 revenues for this same period,
primarily due to a strong United States and European backlog at the end of 1995
and strong 1996 order inflow offset in part by a lower foreign exchange
translation rate.
Gross margin as a percent of revenues improved to 42.6% and 43.5% in
the third quarter and first nine months of 1996, respectively, as compared to
40.9% and 37.8% for the same periods in 1995 (39.8% and 40.8% in 1995,
respectively, after excluding the Discontinued Businesses). The improvement in
gross margin in 1996 was due to volume, mix, price increases and cost
reductions as well as the June 1995 sale and discontinuance of the Colortronic
business which had low margins, offset in part by the inability to pass on
increased costs caused by the appreciation of the Swiss franc to customers in
certain European countries, primarily Germany. The increase in margin when
compared to the margins without the Discontinued Businesses was primarily due
to volume, mix, price increases and cost reductions.
-7-
<PAGE> 10
Selling, general and administrative (SG&A) expense increased by $.1
million or 0.9% in the third quarter of 1996 and decreased by $5.0 million or
18.3% for the first nine months of 1996 as compared to the same periods in
1995. The decrease in SG&A for the nine months was due to the elimination of
SG&A expenses associated with the Discontinued Businesses as well as lower
foreign exchange translation rates. After excluding the SG&A expenses relating
to the Discontinued Businesses from 1995, the 1996 third quarter SG&A increased
by $.5 million and increased by 1.7% as a percent of revenues. For the first
nine months of 1996, SG&A increased by $.9 million but decreased by 0.2% as a
percent of revenue when compared to the 1995 pro forma. The increase in dollars
for the first nine months of 1996 was due to higher commissions and selling
expenses related to the increased sales volume offset by lower foreign exchange
translation rates. The decrease as a percentage of revenues was due to an
increase in revenues.
Research and development (R&D) expenditures were constant in the third
quarter of 1996 as compared to the same period in 1995. R&D decreased by $.8
million or 30.2% for the first nine months of 1996 as compared to the same
period in 1995 due to the elimination of Colortronic expenses and lower foreign
exchange translation rates, offset in part by using for other purposes certain
resources previously allocated to Colortronic. R&D expense as a percent of
revenues was 2.3% in the third quarter of 1996 and 2.6% for the first nine
months of 1996, and 2.4% and 2.9%, respectively, for the same periods in 1995
(2.4% and 2.8%, respectively, excluding the Discontinued Businesses).
Interest expense decreased by $.2 million or 32.4% in the third
quarter of 1996 and $1.7 million or 50.5% for the first nine months of 1996 as
compared to the same periods in 1995 due to lower debt levels and lower foreign
exchange translation rates, offset in part by increased interest rates in the
United States. Interest expense as a percent of revenues was 2.2% in the third
quarter of 1996 and 2.5% for the first nine months of 1996 and 3.3% and 4.0%,
respectively, for the same periods in 1995 (3.5% and 3.3% in 1995,
respectively, excluding Discontinued Businesses).
A provision for income taxes was recorded on the third quarter and
first nine months of 1996 income. A tax benefit was recorded in 1995 due to
the significant loss generated from the sale of Colortronic. The effective tax
rates for the third quarter and first nine months of 1996 were 18.9% and 30.9%,
respectively. The effective tax rate in the third quarter of 1996 was lower
than the anticipated annual rate due to the reduction of the valuation
allowance for certain foreign net operating loss carryforwards as a result of
foreign operation restructuring.
The Company's backlog decreased by 14.9% at the end of the third
quarter of 1996 compared to the same period in 1995 (excluding the Discontinued
Businesses and at a constant foreign exchange rate), primarily due to a reduced
backlog in Germany.
-8-
<PAGE> 11
Liquidity and Capital Resources
The Company's capitalization as of the end of the fiscal quarters from
June 1995 through September 1996 is set forth below:
<TABLE>
<CAPTION>
Sept. 28, June 29, March 30, Dec. 30, Sept. 30, July 1,
(Dollars in Thousands) 1996 1996 1996 1995 1995 1995
--------- -------- ---------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Short-term debt including
current portion of
long-term debt $23,326 $27,322 $ 7,882 $ 2,133 $41,114 $42,890
Long-term debt 2,772 2,725 26,593 35,004 189 225
----- ----- ------ ------- -------- --------
Total debt 26,098 30,047 34,475 37,137 41,303 43,115
Shareholders' equity 11,824 10,592 9,897 9,421 8,439 8,152
------ -------- ------- ----- ------- -------
Total debt and
shareholders' equity $37,922 $40,639 $44,372 $46,558 $49,742 $51,267
======= ======= ======= ======= ======= =======
Percent debt to total
capitalization 69% 74% 78% 80% 83% 84%
Percent long-term
debt to equity 23% 26% 269% 372% 2% 3%
Percent total debt to
equity 221% 284% 348% 394% 489% 529%
</TABLE>
In June 1996 the Company's U.S. manufacturing subsidiary obtained a
mortgage and a two-year secured revolving credit facility from two new lenders.
Proceeds of $5.9 million together with $1.4 million of cash were used to repay
all the outstanding U.S. debt under the old loan agreement. The Company and
its U.S. manufacturing subsidiary are no longer operating under a U.S.
forbearance agreement.
In order to comply with a consensus issued in November 1995 set forth
by the Emerging Issues Task Force in EITF 95-22 regarding classification of
certain debt instruments that include both a requirement for a lock box
arrangement and a subjective acceleration clause, $1.4 million of the
borrowings under the new revolving line of credit in the U. S. have been
classified as a current liability. Under the terms of the revolving credit
agreement, however, K-Tron will not be required to repay this amount during the
next fiscal year. Payment will only be required at the expiration of the
agreement on June 14, 1998 or if the borrowing base is reduced below the amount
outstanding. Based on anticipated borrowing base levels, K-Tron believes the
amount outstanding will be due and payable in June 1998.
-9-
<PAGE> 12
Total debt decreased by $11.0 million for the first nine months of
1996, of which $1.8 million was due to the effect of foreign exchange
translation. Total debt without the effect of the foreign exchange translation
decreased by $9.2 million. European and U.S. debt decreased by $3.8 million
and $5.4 million, respectively. At September 28, 1996, the Company had $4.3
million of availability under its U.S. revolving credit agreement and $7.6
million of availability under certain of its Swiss loan agreements.
The increase in short-term debt of $21.2 million was primarily due to
the reclassification which took place in the second quarter of 1996 of the
Swiss bank debt to short-term as a result of the maturity in March 1997 of the
debt in accordance with the forbearance agreement.
At September 28, 1996, there was a working capital deficit of $5.1
million as compared to working capital of $23.1 million at December 1995, and
the ratio of current assets to current liabilities at those dates was .88 and
2.05, respectively. Working capital decreased in 1996 primarily due to the
reclassification of long-term debt to short-term debt as discussed above.
For the first nine months of 1996, the Company utilized earnings from
operations and internally-generated funds to meet its working capital needs and
reduce debt. In 1995, the Company met its working capital needs by utilizing
its short and long-term borrowings.
Operating activities provided $9.6 million in positive cash flow in
the first nine months of 1996 as compared to providing $2.5 million in the same
period of 1995. The increase in operating cash flow was primarily the result of
operating profits generated in the first nine months of 1996, and reduction of
accounts receivable and inventory levels, offset in part by a net reduction in
accounts payable and accrued expenses. The significant loss in 1995 was the
primary reason for the use of cash in 1995.
Cash used in investing activities for the first nine months of 1996
was for capital additions. The funds provided in 1995 were primarily due to
the funds received from the sale of Colortronic.
Cash used in financing activities for the first nine months of 1996
was for the reduction of debt and was obtained from the cash provided from
operating activities. The funds used in 1995 were the result of using the
proceeds from the sale of Colortronic to reduce bank debt.
Changes in foreign exchange rates, particularly with respect to the
Swiss franc and Deutsche mark, caused a translation adjustment decrease in
shareholders' equity of $.5 million in the first nine months of 1996.
-10-
<PAGE> 13
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 30, 1995, at the end of that year the Company and its U.S.
manufacturing subsidiary were in default under several financial covenants
contained in their loan agreement with three U.S. banks, while the Company's
Swiss manufacturing subsidiary was in violation of certain equity guarantees
contained in its loan agreements with several Swiss lenders, resulting in a
default under each of the loan agreements. In June 1996 the Company's U.S.
manufacturing subsidiary refinanced the U.S. bank debt with two new lenders,
the old lenders were repaid and the related loan and forbearance agreement was
terminated. The Swiss defaults are continuing, however, and have not been
waived.
In early 1996, an agreement was entered into among the Company's Swiss
subsidiary, several other K-Tron companies and the lenders to the Swiss
subsidiary under which the lenders have agreed to defer until March 31, 1997
the repayment of credit lines and the principal payments on fixed loans that
become due prior to that date. At September 28, 1996, the principal amount
outstanding under the Swiss loan agreements was $19.6 million.
More details about the Swiss Forbearance Agreement are contained in
the Company's Annual Report on Form 10-K for the fiscal year ending December
30, 1995.
The Company will be requesting an extension to the Swiss forbearance
agreement for at least one year.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 1996 Equity Compensation Plan as Amended
10.2 Amended and Restated Employee Stock Purchase Plan as
Amended
11.1 Computation of Earnings (Loss) Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K for the nine months ended September
28, 1996.
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<PAGE> 14
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: October 30, 1996
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)
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<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
10.1 1996 Equity Compensation Plan as Amended
10.2 Amended and Restated Employee Stock Purchase Plan as Amended
11.1 Computation of Earnings (Loss) Per Share
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 10.1
K-TRON INTERNATIONAL, INC.
1996 EQUITY COMPENSATION PLAN
(September 11, 1996 Revision)
The purpose of the K-Tron International, Inc. 1996 Equity Compensation
Plan (the "Plan") is to provide officers and other employees of K-Tron
International, Inc. (the "Company") and its subsidiaries with the opportunity
to receive grants of incentive stock options, nonqualified stock options, stock
appreciation rights and restricted stock. The Company believes that the Plan
will provide an incentive to the participants to contribute materially to the
long-term growth of the Company, will align the economic interests of the
participants with those of the Company's shareholders and will aid the Company
and its subsidiaries in attracting and retaining officers and employees of
outstanding ability.
1. Administration
The Plan shall be administered and interpreted by a committee (the
"Committee"), which shall consist of two or more persons appointed by the
Company's Board of Directors (the "Board"), all of whom shall be "non-employee
directors" as defined in Rule 16b-3 under the Securities Exchange Act of 1934
(the "Exchange Act") and "outside directors" as defined in Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") and related Treasury
regulations.
The Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for vesting
and the acceleration of vesting and (iv) deal with any other matters arising
under the Plan.
The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and
for the conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in
any awards granted hereunder. All powers of the Committee shall be executed in
its sole discretion, in the best interest of the Company and in keeping with
the objectives of the Plan and need not be uniform as to similarly situated
individuals.
2. Grants
Incentives under the Plan shall consist of incentive stock options,
nonqualified stock options, stock appreciation rights and restricted stock
(hereinafter collectively referred to as "Grants"). All Grants shall be
subject to the terms and conditions set forth herein and to those
<PAGE> 2
other terms and conditions consistent with the Plan as the Committee deems
appropriate and as are specified in writing by the Committee to the individual
in a grant letter (the "Grant Letter") or an amendment thereto. The Committee
shall approve the form and provisions of each Grant Letter or amendment.
Grants under a particular Section of the Plan need not be uniform as among the
grantees.
3. Shares Subject to the Plan
(a) Subject to the adjustments specified in Section 3(b), the
aggregate number of shares of common stock of the Company (the "Company Stock")
that may be issued or transferred pursuant to Grants or otherwise under the
Plan is 450,000 shares. Notwithstanding anything in the Plan to the contrary,
the maximum aggregate number of shares of Company Stock that shall be subject
to Grants made under the Plan to any single employee during any one year period
shall be 100,000 shares. The shares may be authorized but unissued shares of
Company Stock or reacquired shares of Company Stock, including shares purchased
by the Company on the open market for purposes of the Plan. If and to the
extent options granted under the Plan terminate, expire or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any
shares of restricted stock are forfeited, the shares subject to such Grants
shall again be available for purposes of the Plan.
(b) If there is any change in the number or kind of shares of
Company Stock outstanding by reason of (i) a stock dividend, (ii) a
recapitalization, (iii) a stock split, combination or exchange of shares, (iv)
a merger, reorganization or consolidation in which the Company is the surviving
corporation, (v) a reclassification or (vi) any other extraordinary or unusual
event affecting the outstanding Company Stock as a class without in any of such
cases the Company's receipt of consideration, or if in the opinion of the
Committee the value of outstanding shares of Company Stock is substantially
reduced due to the Company's payment of an extraordinary dividend or
distribution, the maximum number of shares of Company Stock available for
Grants, the maximum number of shares of Company Stock which any one individual
participating in the Plan may be granted during any one year, the number of
shares covered by outstanding Grants and the price per share or the applicable
market value of such Grants shall be proportionately adjusted by the Committee
to reflect any increase or decrease in the number or kind of issued shares of
Company Stock to preclude the enlargement or dilution of rights and benefits
under such Grants; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated. The adjustments determined by the
Committee shall be final, binding and conclusive. Notwithstanding the
foregoing, no adjustment shall be authorized or made pursuant to this Section
if such authorization or adjustment would cause any Incentive Stock Option to
fail to comply with Section 422 of the Code.
4. Eligibility for Participation
All employees employed by the Company or any subsidiary ("Employees")
(including Employees who are officers or members of the Board) shall be
eligible to participate in the Plan.
<PAGE> 3
The Committee shall select the Employees to receive Grants and determine the
number of shares of Company Stock subject to a particular Grant in such manner
as the Committee determines. (Employees who receive Grants under this Plan
shall hereinafter be referred to as "Grantees".) The term "Company" as used
hereinafter when referring to Employees or matters involving Employees (such as
termination of employment or the withholding of taxes) shall include the
Company's subsidiaries.
Nothing contained in this Plan shall be construed to limit the right
of the Company to make Grants in connection with the acquisition, by purchase,
lease, merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including options granted to employees
thereof who become Employees of the Company, or for any other proper corporate
purpose.
5. Granting of Stock Options
(a) Number of Shares. The Committee, in its sole discretion,
shall determine the number of shares of Company Stock that will be subject to
each Grant of stock options.
(b) Type of Option and Price. The Committee may grant options
intended to qualify as incentive stock options ("Incentive Stock Options")
within the meaning of Section 422 of the Code or options which are not intended
so to qualify ("Nonqualified Stock Options") (hereinafter collectively referred
to as "Stock Options") or any combination of Incentive Stock Options and
Nonqualified Stock Options, all in accordance with the terms and conditions set
forth herein.
The per share purchase price of Company Stock subject to a Stock
Option shall be determined by the Committee and may be equal to, greater than
or less than the Fair Market Value (as defined in the next paragraph) of a
share of such Stock on the date such Stock Option is granted; provided,
however, that (i) the per share purchase price of Company Stock subject to an
Incentive Stock Option shall be equal to, or greater than, the Fair Market
Value of a share of such Stock on the date such Stock Option is granted and
(ii) an Incentive Stock Option may not be granted to an Employee who, at the
time of grant, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, unless the purchase price per share is not less than
one hundred ten percent (110%) of the Fair Market Value of a share of such
Stock on the date of grant.
If the Company Stock is traded in a public market, then the Fair
Market Value per share shall be determined as follows: (i) if the principal
trading market for the Company Stock is a national securities exchange or the
National Market segment of The Nasdaq Stock Market, the last reported sale
price thereof on the relevant date or, if there were no trades on that date,
the latest preceding date upon which a sale was reported, or (ii) if the
Company Stock is not principally traded on any such exchange or market, the
mean between the last reported "bid" and "asked" prices thereof on the relevant
date, as reported on Nasdaq or, if not so reported, as
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<PAGE> 4
reported by the National Daily Quotation Bureau, Inc. or as reported in a
customary financial reporting service, as applicable and as the Committee
determines. If the Company Stock is not traded in a public market or subject
to reported transactions or "bid" and "asked" quotations as set forth above,
the Fair Market Value per share shall be as determined by the Committee.
(c) Exercise Period. The Committee shall determine the option
exercise period of each Stock Option. The exercise period shall not exceed ten
(10) years from the date of grant. However, an Incentive Stock Option that is
granted to an Employee who, at the time of grant, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or any parent or subsidiary of the Company, may not have
a term that exceeds five (5) years from the date of grant.
(d) Vesting and Exercisability of Options. Stock Options shall
become vested and exercisable in accordance with the terms and conditions
determined by the Committee, in its sole discretion and as specified in the
applicable Grant Letter. The Committee, in its sole discretion, may accelerate
the exercisability of any or all outstanding Stock Options at any time for any
reason. In addition, all outstanding Stock Options shall vest upon a Change of
Control (as defined in Section 9) unless the Committee determines otherwise
pursuant to Section 10.
(e) Manner of Exercise. A Grantee may exercise a Stock Option
which has become exercisable, in whole or in part, by delivering a written
notice of exercise to the Committee or other recipient designated by the
Committee for this purpose, with accompanying payment of the option price in
accordance with Section 5(g). Such notice may instruct the Company to deliver
shares of Company Stock due upon the exercise of the Stock Option to any
registered broker or dealer designated by the Committee in lieu of delivery to
the Grantee, in which case such instructions must also designate the account
into which the shares are to be deposited.
(f) Termination of Employment, Disability or Death.
(1) In the event that a Grantee ceases to be an employee of
the Company for any reason other than "disability", death or "termination for
cause", any Stock Option which is otherwise vested and exercisable by the
Grantee shall terminate unless exercised within thirty (30) days of the date on
which the Grantee ceases to be an employee of the Company (or within such other
period of time as may be specified in the Grant Letter), but in any event no
later than the date of expiration of the option exercise period. Any of the
Grantee's Stock Options which are not otherwise vested and exercisable as of
the date on which the Grantee ceases to be an employee of the Company shall
terminate as of such date.
(2) In the event that a Grantee ceases to be an employee of
the Company on account of a "termination for cause" by the Company, any Stock
Option held by the Grantee shall terminate as of the date the Grantee ceases to
be an employee of the Company.
(3) In the event that a Grantee ceases to be an employee of
the Company because
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<PAGE> 5
the Grantee is "disabled", any Stock Option which is otherwise vested and
exercisable by the Grantee shall terminate unless exercised within one (1) year
of the date on which the Grantee ceases to be an employee of the Company (or
within such other period of time as may be specified in the Grant Letter), but
in any event no later than the date of expiration of the option exercise
period. Any of the Grantee's Stock Options which are not otherwise vested and
exercisable as of the date on which the Grantee ceases to be an employee of the
Company shall terminate as of such date.
(4) In the event of the death of a Grantee while the Grantee
is an employee of the Company or within not more than thirty (30) days of the
date on which the Grantee ceases to be an employee of the Company on account of
a termination of employment for any reason other than "termination for cause"
or "disability" (or within such other period of time as may be specified in the
Grant Letter), any Stock Option which is otherwise vested and exercisable by
the Grantee shall terminate unless exercised within one (1) year of the date on
which the Grantee ceases to be an employee of the Company (or within such other
period of time as may be specified in the Grant Letter), but in any event no
later than the date of expiration of the option exercise period. Any of the
Grantee's Stock Options which are not otherwise vested and exercisable as of
the date on which the Grantee ceases to be an employee of the Company shall
terminate as of such date.
(5) For purposes of this Section 5(f), the following terms
shall be defined as follows: (A) "disability" shall mean a Grantee's becoming
disabled within the meaning of section 22(e)(3) of the Code and (B)
"termination for cause" shall mean, except to the extent otherwise provided in
a Grantee's Grant Letter, a finding by the Committee, after full consideration
of the facts presented on behalf of both the Company and the Grantee, that the
Grantee has (i) breached his or her employment or service contract with the
Company, or (ii) has engaged in disloyalty to the Company, fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course of his or her
employment by or service to the Company, or (iii) has disclosed trade secrets
or other confidential information of the Company to persons not entitled to
receive the same. In the event of a finding by the Committee of "termination
for cause" with respect to a Grantee, in addition to the immediate termination
of all Stock Options held by such Grantee, the Grantee shall automatically
forfeit all option shares for any exercised portion of a Stock Option for which
the Company has not yet delivered the share certificates upon refund by the
Company of the option price paid by the Grantee for such option shares.
(g) Satisfaction of Option Price. The Grantee shall pay the
option price specified in the Grant Letter in (i) cash, (ii) with the approval
of the Committee, by delivering shares of Company Stock owned by the Grantee
(including Company Stock acquired in connection with the exercise of a Stock
Option), subject to such restrictions as the Committee deems appropriate, and
having a Fair Market Value on the date of exercise equal to the option price or
(iii) through any combination of (i) and (ii). The Grantee shall pay the
option price and the amount of withholding tax due, if any, at the time of
exercise. Shares of Company Stock shall not be issued
-5-
<PAGE> 6
or transferred upon exercise of a Stock Option until the option price is fully
paid and any required withholding is made.
(h) Limits on Incentive Stock Options. Each Incentive Stock
Option shall provide that, if the aggregate Fair Market Value on the date of
the Grant of the Company Stock with respect to which Incentive Stock Options
are exercisable for the first time by a Grantee during any calendar year (under
the Plan or any other stock option plan of the Company or a parent or
subsidiary corporation) exceeds $100,000, then such option, as to the excess,
shall be treated as a Nonqualified Stock Option.
6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to an
Employee under a Grant (a "Restricted Stock Grant"), upon such terms as the
Committee deems appropriate. The following provisions are applicable to
Restricted Stock Grants:
(a) General Requirements. Shares of Company Stock issued or
transferred pursuant to Restricted Stock Grants may be issued or transferred
for consideration or for no consideration, at the sole discretion of the
Committee. The Committee shall establish conditions under which restrictions
on the transfer of shares of Company Stock shall lapse over a period of time or
according to such other criteria as the Committee deems appropriate. The
period of years during which the Restricted Stock Grant will remain subject to
restrictions will be designated in the Grant Letter as the "Restriction
Period."
(b) Number of Shares. The Committee shall issue or transfer to
each Grantee of a Restricted Stock Grant such number of shares of restricted
Company Stock as the Committee deems appropriate.
(c) Requirement of Employment. If a Grantee's employment
terminates during the period designated in the Grant Letter as the Restriction
Period, or if other specified conditions are not met, the Restricted Stock
Grant shall terminate as to all shares covered by the Grant as to which the
restrictions on transfer have not lapsed, and those shares of Company Stock
must be immediately returned to the Company. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
equitable.
(d) Restrictions on Transfer and Legend on Share Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Company Stock to which such Restriction
Period applies except to a Successor Grantee under Section 8(a). Each
certificate for shares issued or transferred under a Restricted Stock Grant
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the share
certificate covering any of the shares subject to restrictions when all
restrictions on such shares have lapsed. The Committee, in its sole
discretion, may determine that the Company will not issue certificates for
shares of
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<PAGE> 7
Restricted Stock until all restrictions on such shares have lapsed, or that the
Company will retain possession of certificates for shares of Restricted Stock
until all restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. During the
Restriction Period, unless the Committee determines otherwise, the Grantee
shall have the right to vote shares subject to the Restricted Stock Grant and
to receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed under a
Restricted Stock Grant shall lapse upon the expiration of the applicable
Restriction Period and the satisfaction of any conditions imposed by the
Committee. The Committee may determine, as to any or all Restricted Stock
Grants, that all the restrictions shall lapse without regard to any Restriction
Period. All outstanding Restricted Stock Grants shall vest upon a Change of
Control, unless the Committee determines otherwise pursuant to Section 10.
7. Stock Appreciation Rights
(a) The Committee may grant stock appreciation rights ("SARs") to
any Grantee in tandem with any Stock Option, for all or a portion of the
applicable Stock Option, either at the time the Stock Option is granted or at
any time thereafter while the Stock Option remains outstanding; provided,
however, that in the case of an Incentive Stock Option, such rights may be
granted only at the time of the Grant of such Incentive Stock Option. Unless
the Committee determines otherwise, the base price of each SAR shall be equal to
the greater of (i) the exercise price of the related Stock Option or (ii) the
Fair Market Value of a share of Company Stock as of the date of Grant of such
SAR.
(b) The number of SARs granted to a Grantee which shall be
exercisable during any given period of time shall not exceed the number of
shares of Company Stock which the Grantee may purchase upon the exercise of the
related Stock Option during such period of time. Upon the exercise of a Stock
Option, the SARs relating to the Company Stock covered by such Stock Option
shall terminate. Upon the exercise of SARs, the related Stock Option shall
terminate to the extent of an equal number of shares of Company Stock.
(c) Upon a Grantee's exercise of some or all of the Grantee's SARs,
the Grantee shall receive in settlement of such SARs an amount equal to the
value of the stock appreciation for the number of SARs exercised, payable in
cash, Company Stock or a combination thereof. The stock appreciation for an
SAR is the difference between the base price of the SAR as described in Section
7(a) and the Fair Market Value of the underlying Company Stock on the date of
exercise of such SAR.
(d) At the time of such exercise, the Grantee shall have the right
to elect the portion of the amount to be received that shall consist of cash
and the portion that shall consist of
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<PAGE> 8
Company Stock, which, for purposes of calculating the number of shares of
Company Stock to be received, shall be valued at their Fair Market Value on the
date of exercise of such SARs. The Committee shall have the right to
disapprove a Grantee's election to receive cash in full or partial settlement
of the SARs exercised and to require that shares of Company Stock be delivered
in lieu of cash. If shares of Company Stock are to be received upon exercise
of an SAR, cash shall be delivered in lieu of any fractional share. A SAR
shall be exercisable only during the period when the Stock Option to which it
is related is also exercisable.
8. Transferability of Grants
(a) Only the Grantee or a Successor Grantee (as defined below) may
exercise rights under a Grant. Such persons may not transfer those rights,
except that a Grantee may transfer rights under a Grant by will or by the laws
of descent and distribution or, with respect to Grants other than Incentive
Stock Options, if permitted under Rule 16b-3 of the Exchange Act and if
permitted in any specific case by the Committee in its sole discretion,
pursuant to a domestic relations order as defined under the Code or Title I of
the Employee Retirement Income Security Act of 1974, as amended, or the
regulations thereunder. When a Grantee dies, the representative or other
person entitled to succeed to the rights of the Grantee ("Successor Grantee")
may exercise such rights. A Successor Grantee must furnish proof satisfactory
to the Company of his or her right to receive the Grant under the Grantee's
will or under the applicable laws of descent and distribution.
(b) Notwithstanding the foregoing, the Committee may provide, in a
Grant Letter, that a Grantee may transfer Nonqualified Stock Options to family
members or other persons or entities according to such terms as the Committee
may determine.
9. Change of Control of the Company
As used herein, a "Change of Control" shall be deemed to have occurred
if:
(a) A liquidation or dissolution of the Company or the sale
(excluding transfers to subsidiaries) of all or substantially all of the
Company's assets occurs;
(b) As a result of a tender offer, stock purchase, other stock
acquisition, merger, consolidation, recapitalization, reverse split or sale or
transfer of assets, any person or group (as such terms are used in and under
Section 13(d) of the Exchange Act) becomes the beneficial owner (as defined in
Rule 13-d under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 20% of the common stock of the Company or the
combined voting power of the Company's then outstanding securities; or
(c) During any period of two consecutive years, individuals who,
at the beginning of such period, constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company's shareholders, of at least two-
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<PAGE> 9
thirds of the directors who were not directors at the beginning of such period
was approved by a vote of at least two-thirds of the directors then still in
office who were either directors at the beginning of the period or who, in
connection with their election or nomination, received the foregoing two-thirds
approval.
10. Consequences of a Change of Control
(a) Upon a Change of Control, unless the Committee determines
otherwise, (i) the Company shall provide to each Grantee who holds an
outstanding Grant written notice of such Change of Control, (ii) all
outstanding Stock Options and SARs shall automatically accelerate and become
fully exercisable, and (iii) the restrictions and conditions on all outstanding
Restricted Stock shall immediately lapse. Notwithstanding the foregoing, if a
Change of Control described in Section 9(a) will occur, or if a Change of
Control described in Section 9(b) will occur and the Company will not be the
surviving corporation (or will survive only as a subsidiary of another
corporation), then the provisions of this Section 10(a) shall be mandatory,
subject to the provisions of Section 10(d) below.
(b) In the event of a Change of Control where the Company is not
the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding Stock
Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation.
(c) In addition, in the event of a Change of Control, the
Committee may take one or both of the following actions: the Committee may (i)
require that Grantees surrender their outstanding Stock Options and SARs in
exchange for a payment by the Company, in cash or Company Stock as determined
by the Committee, in an amount equal to the amount by which the then Fair
Market Value of the shares of Company Stock subject to the Grantee's
outstanding Stock Options and SARs exceeds the purchase price of the Options or
the base price of the SARs, as applicable, or (ii) after giving Grantees an
opportunity to exercise their outstanding Stock Options and SARs, terminate any
or all outstanding Stock Options and SARs at such time as the Committee deems
appropriate. Such surrender or termination shall take place as of the date of
the Change of Control or such other date as the Committee may specify.
(d) Notwithstanding anything in the Plan to the contrary, in the
event of a Change of Control, the Committee shall not have the right to take
any actions described in the Plan (including without limitation actions
described in Section 10(c) above) that would make the Change of Control
ineligible for pooling of interest accounting treatment or that would make the
Change of Control ineligible for desired tax treatment if, in the absence of
such right, the Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Change of Control.
(e) The Committee may make determinations under this Section 10
prior to the Change of Control or, if the Committee making such determinations
following a Change of
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<PAGE> 10
Control is comprised of the same members as served on the Committee immediately
prior to such Change of Control, within twenty (20) days following such Change
of Control.
11. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any
time; provided, however, that any amendment that increases the aggregate number
(or individual limit for any single Grantee) of shares of Company Stock that
may be issued or transferred under the Plan (other than by operation of Section
3(b)), or modifies the requirements as to eligibility for participation in the
Plan, shall be subject to approval by the shareholders of the Company and
provided, further, that the Board shall not amend the Plan without shareholder
approval if such approval is required by Section 162(m) of the Code.
(b) Termination of Plan. The Plan shall terminate on May 9, 2006
unless terminated earlier by the Board or unless extended by the Board with the
approval of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A
termination or amendment of the Plan that occurs after a Grant is made shall
not materially impair the rights of a Grantee under such Grant unless the
Grantee consents or unless the Committee acts under Section 19(b). The
termination of the Plan shall not impair the power and authority of the
Committee with respect to any outstanding Grant. Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended under Section
19(b) or may be amended by agreement of the Company and the Grantee consistent
with the Plan.
(d) Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and
assigns.
12. Funding of the Plan
The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under the Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
13. Rights of Participants
Nothing in the Plan shall entitle any Employee or other person to any
claim or right to be granted a Grant under the Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving any individual any rights
to be retained by or in the employ of the Company or any other employment
rights.
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<PAGE> 11
14. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
15. Withholding of Taxes
(a) The Company shall have the right to deduct from all Grants
paid in cash, or from other wages paid to a Grantee, any federal, state or
local taxes required by law to be withheld with respect to such cash awards
and, in the case of Grants paid in Company Stock, the Grantee or other person
receiving such shares shall be required to pay to the Company the amount of any
such taxes which the Company is required to withhold with respect to such
Grants or the Company shall have the right to deduct from other wages paid to
the Grantee by the Company the amount of any withholding due with respect to
such Grants.
(b) If the Committee so permits, a Grantee may elect to satisfy
the Company's income tax withholding obligation with respect to a Grant paid in
Company Stock by having shares withheld up to an amount that does not exceed
the Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The election must be in a form and manner prescribed by
the Committee and shall be subject to the prior approval of the Committee.
16. Requirements for Issuance or Transfer of Shares
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in
writing to comply with such restrictions on his or her subsequent disposition
of such shares of Company Stock as the Committee shall deem necessary or
advisable as a result of any applicable law, regulation or official
interpretation thereof and certificates representing such shares may be
legended to reflect any such restrictions. Certificates representing shares of
Company Stock issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be applicable under such
laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
17. Headings
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control. References herein to a Section or a Subsection are references to
Sections or Subsections of the Plan unless otherwise noted.
-11-
<PAGE> 12
18. Effective Date of the Plan
The Plan became effective on May 10, 1996 when it was approved by the
Company's shareholders.
19. Miscellaneous
(a) Substitute Grants. The Committee may make a Grant to an
employee of another corporation who becomes an Employee by reason of a
corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation ("Substituted Stock Incentives"). The terms and conditions of the
substitute grant may vary from the terms and conditions required by the Plan
and from those of the Substituted Stock Incentives. The Committee shall
prescribe the provisions of the substitute grants.
(b) Compliance with Law. The Plan, the exercise of Stock Options
and the obligation of the Company to issue or transfer shares of Company Stock
under Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The
Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation.
The Committee may also adopt rules regarding the withholding of taxes on
payments to Grantees. The Committee may, in its sole discretion, agree to
limit its authority under this Section 19(b).
(c) Ownership of Stock. A Grantee or Successor Grantee shall have
no rights as a shareholder with respect to any shares of Company Stock covered
by a Grant until the shares are issued or transferred to the Grantee or
Successor Grantee on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and
effect of the Plan and Grant Letters issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the State of New
Jersey.
-12-
<PAGE> 1
Exhibit 10.2
K-TRON INTERNATIONAL, INC.
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
(SEPTEMBER 11, 1996 REVISION)
ARTICLE I.
INTRODUCTION
Sec. 1.01 Statement of Purpose. The purpose of the K-Tron
International, Inc. Amended and Restated Employee Stock Purchase Plan is to
provide eligible employees of K-Tron International, Inc. (the Company) who wish
to become shareholders an opportunity to purchase common stock of the Company.
The Board of Directors of the Company believes that employee participation in
ownership will be to the mutual benefit of both the employees and the Company.
Sec. 1.02 Internal Revenue Code Considerations. This Plan is
intended to quality as an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended.
Sec. 1.03 History of the Plan. This Plan was adopted by the
Board of Directors and approved by the shareholders in 1981. On February 24,
1986 the Board voted to extend the Plan until June 30, 1996, which extension
was approved by the shareholders on May 2, 1986. On March 8, 1996, the Board
of Directors voted to further extend the Plan until June 30, 2001, which
extension was approved by shareholders on May 10, 1996. On September 11, 1996,
the Board authorized the amendment and restatement of the Plan to update and
correct certain Internal Revenue Code references.
ARTICLE II.
DEFINITIONS
Sec. 2.01 "Administrative Committee" shall mean the committee
appointed by the Board of Directors to administer this Plan, as provided in
Section 6.03 hereof.
Sec. 2.02 "Board of Directors" shall mean the Board of
Directors of the Company.
Sec. 2.03 "Company" shall mean K-Tron International, Inc., a
New Jersey corporation.
<PAGE> 2
Sec. 2.04 "Compensation" shall mean the total remuneration
paid, during the period of reference, to an Employee by Employer, including
regular salary or wages, overtime payments, bonuses and commissions, but
excluding expense reimbursements of all types, payments in lieu of expenses,
Employer contributions to any qualified retirement plan or other program of
deferred compensation, Employer contributions to Social Security, the costs
paid by Employer in connection with fringe benefits (whether or not the
Employee could have elected to receive cash in lieu of such benefits), and any
amounts accrued for the benefit of Employee but not paid during the period of
reference.
Sec. 2.05 "Continuous Service" shall mean the period of time,
immediately preceding the Offering Date of reference, during which the Employee
has been employed by Employer and during which there has been no interruption
of Employee's employment by Employer. For this purpose, periods of Excused
Absence shall not be considered to be interruptions of Continuous Service.
Sec. 2.06 "Effective Date" shall mean July 1, 1981.
Sec. 2.07 "Eligible Employee" shall mean each person who, on
an Offering Date, meets all of the following requirements:
(a) He/she is an Employee of Employer;
(b) He/she has completed at least twelve (12)
months of Continuous Service; and
(c) He/she is not deemed for purposes of Section
423(b)(3) of the Internal Revenue Code to
own stock possessing five percent (5%) or
more of the total combined voting power or
value of all classes of Stock of the Company
or his/her Employer.
Sec. 2.08 "Employee" shall mean each person employed by
Employer whose customary employment is for more than twenty (20) hours per week
and for more than five (5) months per year.
Sec. 2.09 "Employer" shall mean the Company and each
subsidiary of Company designated by the Board of Directors as an Employer under
the Plan. A "subsidiary" of the Company shall be any corporation in which the
Company holds, directly or indirectly, fifty percent (50%) or more of the total
combined voting power of all classes of stock of such subsidiary, as described
in Section 424(f) of the Internal Revenue Code.
-2-
<PAGE> 3
Sec. 2.10 "Excused Absence" shall mean absence pursuant to a
leave of absence granted by the Company or any other entity constituting
Employer, absence due to disability or illness, or absence by reason of a
layoff. An Excused Absence shall not exceed the greater of (a) ninety (90)
days, or (b) the period during which, an Employee on such Excused Absence has a
contractual or statutory right to reemployment (the greater of (a) or (b) being
the "Excused Period"). Any absence shall cease to be an Excused Absence upon
the earlier of (a) the last day of the Excused Period, or (1)) the last day of
the calendar month in which the leave expires by its terms, the layoff ends by
recall or permanent separation from service, or recovery from illness or
disability occurs.
Sec. 2.11 "Exercise Date" shall mean the last day of each
Purchase Period.
Sec. 2.12 "Internal Revenue Code" shall mean the United
States Internal Revenue Code of 1986, as the same is presently constituted and
as it may hereafter be amended, and successor statutes of similar purpose.
Sec. 2.13 "Market Value" shall mean the closing price (or the
average of the closing bid and asked prices) of the Stock as reported on the
principal market, trading system or exchange on which the Stock is traded (as
determined by the Administrative Committee) as of the date of reference. If
there is no such price reported for the date of reference, "Market Value" shall
mean the "Market Value," computed as aforesaid, as of the date next preceding
the date of reference on which such price is reported. If the Stock is not
publicly-traded, the "Market Value" shall mean the fair market value of the
Stock determined by the Administrative Committee, whose determination shall be
final and binding, subject to the approval of the Board of Directors.
Sec. 2.14 "Offering" shall mean the offering of shares of
Stock under this Plan.
Sec. 2.15 "Offering Date" shall mean the first business day
of January and the first business day of July of each Plan Year, commencing
with July 1981.
Sec. 2.16 "Participant" shall mean each Employee who elects
to participate in this Plan.
Sec. 2.17 "Plan" shall mean the K-Tron International, Inc.
Amended and Restated Employee Stock Purchase Plan, as the same is set forth
herein and as the same may hereafter be amended.
Sec. 2.18 "Plan Year" shall mean the calendar year.
-3-
<PAGE> 4
Sec. 2.19 "Purchase Agreement" shall mean the document
prescribed by the Administrative Committee pursuant to which an Eligible
Employee has enrolled to be a Participant in this Plan.
Sec. 2.20 "Purchase Period" shall mean the period beginning
on an Offering Date and ending on the last business day of the fifth calendar
month following the calendar month in which such Offering Date occurred.
Sec. 2.21 "Stock" shall mean the common stock of the Company.
Such Stock may be authorized but previously unissued shares or shares
reacquired and held by the Company as treasury shares.
Sec. 2.22 "Stock Purchase Account" shall mean with respect to
any Employee a non-interest bearing account consisting of all amounts withheld
from such Employee's Compensation (or otherwise paid into the Plan) for the
purpose of purchasing shares of Stock under this Plan, reduced by all amounts
applied to the purchase of Stock under this Plan.
ARTICLE III.
ADMISSION TO PARTICIPATION
Sec. 3.01 Initial Participation. Any Eligible Employee may
elect to be a Participant and may become a Participant by executing and filing
with the Administrative Committee a Purchase Agreement on forms provided by the
Administrative Committee. The effective date of an Eligible Employee's
participation shall be the Offering Date coincident with or next following the
date on which the Administrative Committee receives from the Eligible Employee
a properly executed Purchase Agreement.
Sec. 3.02 Discontinuance of Participation. Any Participant
may voluntarily withdraw from the Plan by filing a notice of withdrawal with
the Administrative Committee prior to an Exercise Date. Upon such withdrawal,
there shall be paid to the Participant the amount, if any, standing to his/her
credit in his/her Stock Purchase Account. Amounts paid to a Participant or
former Participant pursuant to this Section 3.02 shall not be eligible for
redeposit in the Participant's Stock Purchase Account in the event of the
person's readmission to participation.
Sec. 3.03 Involuntary Withdrawal; Termination of Eligible
Employee Status. If a Participant's Continuous Service terminates for any
reason, or if a Participant ceases to be an Eligible Employee, no further
amounts shall be deducted from such Participant's compensation
-4-
<PAGE> 5
and deposited into his/her Stock Purchase Account and the entire amount
standing to the Participant's credit in his/her Stock Purchase Account on the
effective date of such occurrence shall be used to purchase whole shares of
Stock under this Plan as of the next succeeding Exercise Date, and any balance
thereafter remaining to his/her credit in his/her Stock Purchase Account shall
be refunded to him/her. Notwithstanding the foregoing, if a Participant's
Continuous Service is terminated for any reason three (3) months or more prior
to the next succeeding Exercise Date, the entire amount, if any, standing to
his/her credit in that Stock Purchase Account shall be refunded to him/her.
Sec. 3.04 Readmission to Participation. Any Eligible
Employee who has previously been a Participant, who has discontinued
participation (whether by interruption of Continuous Service or otherwise), and
who wishes to be reinstated as a Participant may again become a Participant by
executing and filing with the Administrative Committee a new Purchase Agreement
on forms provided by the Administrative Committee. Reinstatement to
Participant status shall be effective as of the Offering Date coincident with
or next following the date on which the Administrative Committee receives from
the Eligible Employee the Properly executed Purchase Agreement.
ARTICLE IV.
STOCK PURCHASE
Sec. 4.01 Reservation of Shares. There shall be 500,000
shares of Stock reserved for the Plan, subject to adjustment in accordance with
the anti-dilution provisions hereinafter set forth. Except as provided in
Section 5.02 hereof, the aggregate number of shares that may be purchased under
the Plan shall not exceed the number of shares reserved for the Plan.
Sec. 4.02 Limitation on Shares Available. Subject to the
limitations described in Sections 4.04 (a) and (b), the maximum number of
shares of Stock that may be purchased for each Participant on an Exercise Date
is the lowest of (a) the number of whole shares of Stock that can be purchased
by applying the full balance of his/her Stock Purchase Account to such purchase
of shares at the Purchase Price (as hereinafter determined), (b) the
Participant's proportionate part of the maximum number of shares of Stock
available within the limitation established by the maximum aggregate number of
such shares reserved for this Plan, as stated in Section 4.01 hereof, or (c)
5,000 shares. Notwithstanding the foregoing, if any person entitled to
purchase shares pursuant to any offering hereunder would, upon such purchase,
be deemed for the purposes of Section 423(b)(3) of the Internal Revenue Code to
own stock (including any number of shares that such person would be entitled to
purchase hereunder) possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the
-5-
<PAGE> 6
Company, the maximum number of shares that such person shall be entitled to
purchase pursuant to this Plan shall be reduced to that number which, when
added to the number of shares of Stock that such person is so deemed to own
(excluding any number of shares that such person would be entitled to purchase
hereunder), is one less than such five percent (5%). Any portion of a
Participant's Stock Purchase Account that cannot be applied by reason of the
foregoing limitation, or by reason of the fact that no fractional shares are
purchased or issued under this Plan, shall remain in the Participant's Stock
Purchase Account for application to purchase of Stock on the next Offering Date
(unless withdrawn before that Offering Date).
Sec. 4.03 Purchase Price of Shares. The Purchase Price per
share of the Stock sold to Participants pursuant to any Offering shall be
eighty-five percent (85%) of the Market Value of such share on the Offering
Date on which such Offering commences or on the Exercise Date on which such
Offering expires, whichever is the lower. If the Exercise Date with respect.
to the purchase of Stock is a day on which the Stock is selling exdividend but
is on or before the record date for such dividend, then for Plan purposes the
Purchase Price per share will be increased by an amount equal to the dividend
per share. In no event shall the Purchase Price be less than this par value of
the Stock.
Sec. 4.04 Exercise of Purchase Privilege.
(a) Subject to the provisions of Section 4.02
above and of paragraph (b) of this Section
4.04, if on the tenth business day prior to
any Exercise Date there is standing, to the
credit of a Participant in his/her Stock
Purchase Account an amount equal to, or
greater than, the Purchase Price of one share
of Stock for the Offering that expires on
such Exercise Date, there shall be purchased
for the Participant at such Purchase Price
the largest number of whole shares of Stock
as can be purchased with the amount then
standing to the Participant's credit in
his/her Stock Purchase Account. Each such
purchase shall be deemed to have occurred on
the Exercise Date occurring at the close of
the offering from which the purchase was
made.
(b) A Participant may not purchase shares of
Stock having an aggregated Market Value of
more than twenty-five thousand dollars
($25,000), determined at the time off the
Offering(s), for each calendar year in which
one or more such Offering(s) is/are
outstanding at any time, and a Participant
may not purchase a share of Stock under any
Offering after the expiration of the Purchase
Period for such Offering.
-6-
<PAGE> 7
Sec. 4.05 Establishment of Stock Purchase Account. Each
Participant shall authorize payroll deductions from Compensation for the
purposes of funding his/her Stock Purchase Account. In the Purchase Agreement,
each Participant shall authorize a deduction from each payment of his/her
Compensation during a Purchase Period, which deduction shall be not less than
two percent (2%) nor more than ten percent (10%) of the gross amount of such
payment, rounded to the nearest whole dollar amount. Any Participant who has
elected payroll deductions which exceed two percent (2%) of his/her payments of
Compensation may reduce his/her payroll deduction rate during any Purchase
Period, provided no such reduction shall reduce the payroll deduction rate
below two percent (2%). The payroll deduction rate may not be increased during
any Purchase Period. However, a Participant may change the deduction to any
permissible level for any subsequent Offering by filing notice thereof prior to
the Offering Date on which such subsequent Offering commences.
Sec. 4.06 Payment for Stock. The Purchase Price for all
shares of Stock purchased by any Participant under this Plan shall be paid out
of the Participant's Stock Purchase Account. As of each Exercise Date, the
amount standing to the credit of each Participant on the tenth (10th) business
day prior to the Exercise Date in his/her Stock Purchase Account in the
Offering that expires on such Exercise Date shall be charged with the aggregate
Purchase Price of the shares of Stock purchased by such Participant on the
Exercise Date. The remaining balance standing to the Participant's credit in
his/her Stock Purchase Account shall remain credited to such Stock Purchase
Account for the next succeeding Offering under this Plan. No interest shall be
paid or payable with respect to any amount held in the Participant's Stock
Purchase Account.
Sec. 4.07 Share Ownership; Issuance of Certificates.
(a) The shares purchased by a Participant on an
Exercise Date shall, for all purposes, be deemed to have been issued and/or
sold at the close of business on such Exercise Date. Prior to that time, none
of the rights or privileges of a shareholder of the Company shall inure to the
Participant with respect to such shares. All the shares of Stock purchased
under this Plan shall be delivered by the Company in a manner as determined by
the Administrative Committee, provided, however, that all shares acquired by
Participants during any Plan Year shall be delivered not later than one hundred
twenty (120) days following the last day of such Plan Year.
(b) The Administrative Committee, in its sole
discretion, may determine that the shares of Stock shall be delivered by the
Company to the Participant by issuing and delivering to the Participant a
certificate for the number of shares of Stock purchased by a Participant on an
Exercise Date or during a Plan Year, or that the shares of Stock purchased by
all Participants shall be delivered to a member firm of the New York Stock
Exchange which
-7-
<PAGE> 8
is also a member of the National Association of Securities Dealers, as selected
by the Administrative Committee from time to time, which shares shall be
maintained by such member firm in separate brokerage accounts of each
Participant. Each certificate or brokerage account, as the case may be, may be
in the name of the Participant or, if he/she designates on his/her Stock
Purchase Agreement, in his/her name jointly with his/her spouse, with right of
survivorship. A Participant who is a resident of a jurisdiction that does not
recognize such joint tenancy may have a certificate or brokerage account in
his/her name as tenant in common with his/her spouse, without right of
survivorship. Such designation may be changed by filing notice thereof.
ARTICLE V.
SPECIAL ADJUSTMENTS
Sec. 5.01 Shares Unavailable. If, on any Exercise Date, the
aggregate funds available for the purchase of Stock would purchase a number of
shares in excess of the number of shares then available for purchase under the
Plan, the following events shall occur:
(a) The number of shares that would otherwise be
purchased by each Participant shall be
proportionately reduced on the Exercise Date
in order to eliminate such excess;
(b) The Plan shall automatically terminate
immediately after the Exercise Date as of
which the supply of available shares is
exhausted; and
(c) Any amount remaining in the Stock Purchase
Account of any Participant shall be repaid to
such Participant.
Sec. 5.02 Anti-Dilution Provisions. The aggregate number of
shares of Stock reserved for purchase under the Plan, as hereinabove provided,
and the calculation of the Purchase Price per share may be appropriately
adjusted to reflect any increase or decrease in the number of issued shares of
Stock resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend, or other increase or decrease
in such shares, if effected without receipt of consideration by the Company.
Any such adjustment shall be made by the Administrative Committee acting with
the consent of, and subject to the approval, of the Board of Directors.
Sec. 5.03 Effect of Certain Transactions. Subject to any
required action by the shareholders, it the Company shall be the surviving or
resulting corporation in any merger or
-8-
<PAGE> 9
consolidation, any Offering hereunder shall pertain to and apply to the shares
of stock of the Company. However, in the event of a dissolution or liquidation
of the Company, or of a merger or consolidation in which the Company is not the
surviving or resulting corporation, this Plan and any offering hereunder shall
terminate upon the effective date of such dissolution, liquidation, merger, or
consolidation, and the balance then standing to the credit of each Participant
in his/her Stock Purchase Account shall be returned to him/her.
ARTICLE VI.
MISCELLANEOUS
Sec. 6.01 Non-Alienation. The right to purchase shares of
Stock under this Plan is personal to the Participant, is exercisable only by
the Participant during his/her lifetime except as hereinafter set forth, and
may not be assigned or otherwise transferred by the Participant.
Notwithstanding the foregoing, there shall be delivered to the executor,
administrator or other personal representative of a deceased Participant such
shares of Stock and such residual balance as may remain in the Participant's
Stock Purchase Account as of the Exercise Date occurring at the close of the
Purchase Period in which the Participant's death occurs, including shares of
Stock purchased as of that date or prior thereto with moneys deposited by the
Participant and/or withheld from the Participant's compensation.
Sec. 6.02 Administrative Costs. The Company shall pay all
administrative expenses associated with the operation of this Plan. No
administrative charges shall be levied against the Stock Purchase Accounts of
the Participants.
Sec. 6.03 Administrative Committee. The Board of Directors
shall designate a committee to be the Administrative Committee of the Plan.
The Administrative Committee shall have the authority and power to administer
the Plan and to make, adopt, construe, and enforce rules and regulations not
inconsistent with the provisions of the Plan. The Administrative Committee
shall adopt and prescribe the contents of all forms required in connection with
the administration of this Plan, including, but not limited to, the Purchase
Agreement, payroll withholding authorizations, withdrawal documents, and all
other notices required hereunder. The Administrative Committee's
interpretations and decisions in respect of this Plan, the rules and
regulations pursuant to which it is operated, and the rights of Participants
hereunder shall be final and conclusive.
Sec. 6.04 Amendment of this Plan. The Board of Directors
may, at any time and from time to time, amend this Plan in any respect, except
that no amendment may
-9-
<PAGE> 10
(a) increase the number of shares reserved for
purposes of this Plan;
(b) reduce the Purchase Price per share; or
(c) allow any person who is not an Eligible
Employee to become a Participant
without the approval of the shareholders.
Sec. 6.05 Expiration and Termination of this Plan. Unless
terminated prior thereto pursuant to Section 5.01 to this Plan, this Plan shall
continue in effect until 11:59 p.m., Pitman, New Jersey time on June 30, 2001,
provided, however, that the Board of Directors shall have the right to
terminate this Plan at any time prior thereto without notice to any
Participant. Upon the expiration or termination of this Plan, the balance, if
any, then standing to the credit of each Participant in his/her Stock Purchase
Account shall be refunded to him/her.
Sec. 6.06 Repurchase of Stock. The Company shall not be
required to purchase or repurchase from any Participant any of the shares of
Stock that the Participant acquired under this Plan.
Sec. 6.07 Notice. A Purchase Agreement and any notice that a
Participant files pursuant to the Plan shall be on the form prescribed by the
Administrative Committee and shall be effective only when received by the
Administrative Committee. Delivery of such forms may be made by hand or by
certified mail, sent postage prepaid, to K-Tron International, Inc., Routes 55
and 553, Pitman, New Jersey 08071, Attention: Stock Purchase Plan Committee.
Sec. 6.08 Government Regulation. The Company's obligation to
sell and to deliver the Stock under the Plan is.at all times subject to all
approvals of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock.
Sec. 6.09 Headings, Captions, Gender. The headings and
captions herein are for convenience of reference only and shall not be
considered as a part of the text. The masculine shall include the feminine,
and vice versa.
Sec. 6.10 Severability of Provisions; Prevailing Law. The
provisions of this Plan shall be deemed severable. In the event any
such provision is determined to be unlawful or unenforceable by a court of
competent jurisdiction or by reason of a change in an applicable statute, this
Plan shall continue to exist as though such provision had never been included
therein. This Plan shall be governed by the laws of the State of New Jersey,
to the extent such laws are not in conflict with or superseded by federal law.
-10-
<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. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
AVERAGE COMMON AND
COMMON-EQUIVALENT
SHARES:
Weighted Average Common
Shares Outstanding per Period 3,127,000 3,104,000 3,117,000 3,093,000
Stock Options 11,000 -- 11,000 --
---------- --------- --------- -----------
ADJUSTED AVERAGE COMMON
AND COMMON-EQUIVALENT
SHARES COMPUTATION 3,138,000 3,104,000 3,128,000 3,093,000
========= ========= ========= ===========
EARNINGS FOR COMMON AND
COMMON-EQUIVALENT
SHARES COMPUTATION:
Net income (loss) applicable
to Common Stock $1,161,000 $375,000 $2,841,000 $(9,855,000)
========== ======== ========== ===========
EARNINGS (loss) PER SHARE:
Earnings (loss) per Share $ .37 $ .12 $ .91 $ (3.19)
========== ======== ========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 2,253
<SECURITIES> 0
<RECEIVABLES> 19,090
<ALLOWANCES> 960
<INVENTORY> 14,876
<CURRENT-ASSETS> 37,346
<PP&E> 44,174
<DEPRECIATION> 27,936
<TOTAL-ASSETS> 59,275
<CURRENT-LIABILITIES> 42,412
<BONDS> 2,772
0
0
<COMMON> 42
<OTHER-SE> 11,782
<TOTAL-LIABILITY-AND-EQUITY> 59,275
<SALES> 68,006
<TOTAL-REVENUES> 68,006
<CGS> 38,393
<TOTAL-COSTS> 38,393
<OTHER-EXPENSES> 23,818
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,684
<INCOME-PRETAX> 4,111
<INCOME-TAX> 1,270
<INCOME-CONTINUING> 2,841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,841
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
