<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended October 2, 1999
-----------------------
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)
<TABLE>
<S> <C>
New Jersey 22-1759452
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification #)
or Organization)
</TABLE>
Routes 55 & 553, P.O. Box 888, Pitman, New Jersey 08071-0888
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (856) 589-0500
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name, Former Address and Formal Fiscal Year, if Changed Since Last
Report)
Indicate by check X 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 Registrant had 2,965,578 shares of Common Stock outstanding as of
October 2, 1999.
<PAGE> 2
K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I. FINANCIAL INFORMATION
---------------------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets 1
October 2, 1999 and January 2, 1999
Consolidated Statements of Income 2
& Retained Earnings for the Three and
Nine Months Ended October 2, 1999 and
October 3, 1998
Consolidated Statements of Cash Flows 3
for the Nine Months Ended October 2, 1999
and October 3, 1998
Notes to Consolidated Financial Statements 4 - 7
Item 2. Management's Discussion and Analysis 8 - 12
of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
October 2, January 2,
1999 1999
(Unaudited) (Audited)
----------- ---------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,750 $ 3,220
Accounts receivable (less allowance for doubtful accounts of
$1,219 and $1,286) 20,325 19,034
Inventories 11,575 10,743
Deferred income taxes 819 819
Prepaid expenses and other current assets 1,597 1,177
-------- --------
Total current assets 36,066 34,993
PROPERTY, PLANT AND EQUIPMENT, net 15,567 16,215
PATENTS, net 793 751
GOODWILL, net 3,801 4,454
OTHER ASSETS -- 204
-------- --------
Total assets $ 56,227 $ 56,617
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
CURRENT LIABILITIES:
Notes payable to banks $ 678 $ 254
Current portion of long-term debt 887 1,280
Accounts payable 6,890 6,965
Accrued expenses & other current liabilities 3,898 4,034
Accrued payroll 3,324 4,307
Accrued commissions 2,095 2,609
Customer advances 1,807 1,810
Accrued warranty 874 1,055
Income taxes payable 1,351 1,233
-------- --------
Total current liabilities 21,804 23,547
LONG-TERM DEBT, net of current portion 8,920 9,638
DEFERRED INCOME TAXES 423 423
OTHER NONCURRENT LIABILITIES 401 735
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 50,000,000 shares;
issued 4,362,928 shares and 4,328,555 shares 44 43
Paid-in capital 15,918 15,505
Retained earnings 26,688 21,839
Cumulative translation adjustments (1,107) (192)
-------- --------
41,543 37,195
-------- --------
Treasury stock, 1,397,350 and 1,295,450 shares - at cost (16,864) (14,921)
-------- --------
Total shareholders' equity 24,679 22,274
-------- --------
Total liabilities and shareholders' equity $ 56,227 $ 56,617
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
-1-
<PAGE> 4
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & RETAINED EARNINGS
(Dollars in Thousands except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 2, Oct.3, Oct. 2, Oct. 3,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $21,688 $21,244 $64,145 $65,065
COST OF REVENUES 11,763 11,751 35,072 35,559
------- ------- ------- -------
Gross profit 9,925 9,493 29,073 29,506
OPERATING EXPENSES
Selling, general and administrative 6,689 6,456 20,003 20,512
Research and development 843 661 2,569 2,080
------- ------- ------- -------
7,532 7,117 22,572 22,592
------- ------- ------- -------
Operating income 2,393 2,376 6,501 6,914
INTEREST EXPENSE 124 166 380 522
------- ------- ------- -------
Income before income taxes 2,269 2,210 6,121 6,392
INCOME TAX PROVISION 599 632 1,272 1,692
------- ------- ------- -------
Net income 1,670 1,578 4,849 4,700
RETAINED EARNINGS
Beginning of period 25,018 18,368 21,839 15,246
------- ------- ------- -------
End of period $26,688 $19,946 $26,688 $19,946
======= ======= ======= =======
EARNINGS PER SHARE
Basic $ .56 $ .52 $ 1.64 $ 1.48
======= ======= ======= =======
Diluted $ .55 $ .51 $ 1.60 $ 1.44
======= ======= ======= =======
</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
-----------------
Oct. 2, Oct. 3,
1999 1998
---- ----
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 4,849 $ 4,700
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,418 2,270
Amortization of deferred gain on sale/leaseback transaction (278) (281)
Changes in assets and liabilities:
Accounts receivable, net (2,396) (2,691)
Inventories (1,295) (832)
Prepaid expenses and other current assets (480) (300)
Other assets 206 218
Accounts payable 298 169
Accrued expenses and other current liabilities (872) 2,528
Accrued warranty (130) 95
Income taxes 137 73
------- -------
Net cash provided by operating activities 2,457 5,949
------- -------
INVESTING ACTIVITIES:
Capital expenditures (2,134) (1,870)
Investment in patents (105) (94)
------- -------
Net cash used in investing activities (2,239) (1,964)
------- -------
FINANCING ACTIVITIES:
Net borrowings (repayments) under notes payable to banks 462 (1,393)
Principal payments on long-term debt (561) (1,075)
Proceeds from issuance of long-term debt -- 1,005
Purchase of treasury stock (2,110) (4,531)
Proceeds from issuance of common stock 581 517
------- -------
Net cash used in financing activities (1,628) (5,477)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (60) 176
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,470) (1,316)
------- -------
CASH AND CASH EQUIVALENTS
Beginning of period 3,220 5,154
------- -------
End of period $ 1,750 $ 3,838
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 6
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 2, 1999
(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. and its subsidiaries ("K-Tron" or the "Company").
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 January 2, 1999 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 1999 and 1998 for interest was $.4 million and $.5 million,
respectively, and for income taxes was $1.2 million and $1.7 million,
respectively.
3. Earnings per Share
The Company previously adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." SFAS No. 128 requires that the Company
report Basic and Diluted Earnings Per Share. Basic Earnings Per Share represents
net income less preferred dividends divided by the weighted average common
shares outstanding. Diluted Earnings Per Share is calculated similarly, except
that the denominator includes weighted average common shares outstanding plus
the dilutive effect of options, warrants, convertible securities and other
instruments with dilutive effects if exercised.
The Company's Basic and Diluted Earnings Per Share are calculated as follows:
<TABLE>
<CAPTION>
For the Three Months Ended October 2, 1999
------------------------------------------
(Dollars and Shares in Thousands except Per Share Data)
Income Available
To Common Per Share
Shareholders Shares Amount
-------------- ------ ---------
<S> <C> <C> <C> <C>
Basic Net Income $1,670 2,965 $ .56
Common Share Equivalent -- 64 (.01)
of Outstanding Options
------ -------- -------
Diluted $1,670 3,029 $ .55
====== ======== =======
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
For the Three Months Ended October 3, 1998
------------------------------------------
(Dollars and Shares in Thousands except Per Share Data)
Income Available
To Common Per Share
Shareholders Shares Amount
-------------- ------- --------
<S> <C> <C> <C> <C>
Basic Net Income $1,578 3,019 $ .52
Common Share Equivalent -- 97 (.01)
of Outstanding Options ------ -------- -------
Diluted $1,578 3,116 $ .51
====== ======== =======
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended October 2, 1999
-----------------------------------------
(Dollars and Shares in Thousands except Per Share Data)
Income Available
To Common Per Share
Shareholders Shares Amount
------------ ------ --------
<S> <C> <C> <C> <C>
Basic Net Income $4,849 2,965 $ 1.64
Common Share Equivalent -- 64 (.04)
of Outstanding Options
------ -------- --------
Diluted $4,849 3,029 $ 1.60
====== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended October 3, 1998
-----------------------------------------
(Dollars and Shares in Thousands except Per Share Data)
Income Available
To Common Per Share
Shareholders Shares Amount
---------------- ------ ---------
<S> <C> <C> <C>
Basic Net Income $4,700 3,169 $ 1.48
Common Share Equivalent -- 97 (.04)
of Outstanding Options
------ -------- -------
Diluted $4,700 3,266 $ 1.44
====== ======== =======
</TABLE>
Diluted earnings per common share are based on the weighted average number of
common and common equivalent shares outstanding. Such average shares include the
weighted average number of common shares outstanding plus the shares issuable
upon exercise of stock options after the assumed repurchase of common shares
with the related proceeds.
-5-
<PAGE> 8
4. Impact of New Accounting Pronouncements
The Company previously adopted SFAS No. 130, "Reporting Comprehensive Income".
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components. Comprehensive income is the total of
net income and the current year change in cumulative translation adjustments
which is the only nonowner change in equity. For the three and nine months in
the periods ended October 2, 1999 and October 3, 1998, the following table sets
forth the Company's comprehensive income:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
1999 1998 1999 1998
---- ----- ----- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net Income $1,670 $ 1,578 $4,849 $4,700
Cumulative Translation Adjustments 708 1,311 (915) 780
------ ------- ------ ------
Comprehensive Income $2,378 $ 2,889 $3,934 $5,480
====== ======= ====== ======
</TABLE>
The Company previously adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 introduces a new model for
segment reporting called the management approach. The management approach is
based on the way that the chief operating decision maker organizes segments
within a company for making operating decisions and assessing performance.
The Company is engaged in one business segment, the development, manufacturing
and marketing of gravimetric and volumetric feeders, pneumatic conveying systems
and related equipment. The Company operates in two primary geographic locations,
North America and Western Europe. For the three and nine months in the periods
ended October 2, 1999 and October 3, 1998, the following tables set forth the
Company's segment information:
<TABLE>
<CAPTION>
North Western Elimi- Consoli-
America Europe nations dated
------- ------ ------- -----
(in thousands)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED
October 2, 1999:
Revenues-
Sales to unaffiliated customers $8,300 $13,388 $ -- $21,688
Sales to affiliates 893 674 (1,567) --
------ ------- -------- --------
Total sales $9,193 $14,062 $(1,567) $21,688
====== ======= ======== =======
Operating income $1,473 $ 852 $ 68 $ 2,393
====== ======= ========
Interest expense (124)
-------
Income before income taxes $ 2,269
=======
</TABLE>
-6-
<PAGE> 9
<TABLE>
<CAPTION>
North Western Elimi- Consoli-
America Europe nations dated
------- ------ ------- -----
(in thousands)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED
October 3, 1998:
Revenues-
Sales to unaffiliated customers $ 9,568 $11,676 $ -- $ 21,244
Sales to affiliates 1,012 503 (1,515) --
------- ------- --------- --------
Total sales $ 10,580 $12,179 $ (1,515) $ 21,244
======= ======= ========= ========
Operating income $ 1,939 $ 436 $ 1 $ 2,376
======== ======= =========
Interest expense (166)
--------
Income before income taxes $ 2,210
========
NINE MONTHS ENDED
October 2, 1999:
Revenues-
Sales to unaffiliated customers $24,849 $39,296 $ $64,145
Sales to affiliates 2,733 1,784 (4,517) --
------- ------- -------- -------
Total sales $27,582 $41,080 $(4,517) $64,145
======= ======= ======== =======
Operating income $ 3,628 $ 2,822 $ 51 $ 6,501
======= ======= =========
Interest expense (380)
-------
Income before income taxes $ 6,121
=======
NINE MONTHS ENDED
October 3, 1998:
Revenues-
Sales to unaffiliated customers $28,239 $36,826 $ -- $65,065
Sales to affiliates 2,420 1,452 (3,872) --
-------- ------- -------- -------
Total sales $30,659 $38,278 $(3,872) $65,065
======== ======= ======== =======
Operating income $ 4,158 $ 2,627 $ 129 $ 6,914
======== ======= ========
Interest expense (522)
--------
Income before income taxes $ 6,392
========
</TABLE>
-7-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
For the third quarter and first nine months of 1999, the Company
reported net income of $1,670,000 and $4,849,000, respectively, compared to
$1,578,000 and $4,700,000 for the same periods in 1998.
K-Tron is an international company which derived approximately 61%
and 57% of its first nine months of 1999 and 1998 revenues, respectively, from
products manufactured in, and services performed from, its facilities located
outside the United States, primarily in Europe. As such, the financial position
and performance of the Company is sensitive to changes in foreign currency
exchange rates ("foreign exchange rates"), which can affect both the translation
of financial statement items into U.S. dollars and the impact of transactions
where the revenues and related expenses may initially be accounted for in
different currencies, such as sales made from the Company's Swiss manufacturing
facilities in currencies other than the Swiss franc.
The following table sets forth the Company's results of operations
expressed as a percentage of total revenues for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
1999 1998 1999 1998
---- ---- ---- -----
<S> <C> <C> <C> <C>
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 54.2 55.3 54.7 54.7
---- ---- ---- -----
Gross profit 45.8 44.7 45.3 45.3
Selling, general & administrative 30.8 30.4 31.2 31.5
Research & development 3.9 3.1 4.0 3.2
---- ----- --- -----
Operating income 11.1 11.2 10.1 10.6
Interest .6 .8 .6 .8
---- ----- ----- -----
Income before income taxes 10.5% 10.4% 9.5% 9.8%
==== ======= ==== ======
<CAPTION>
Backlog at end of period (at October 2, 1999 January 2, 1999 October 3, 1998
--------------- --------------- ---------------
<S> <C> <C> <C>
October 2, 1999 foreign exchange $19,154 $21,352 $23,366
======= ======= =======
rates, in thousands)
</TABLE>
-8-
<PAGE> 11
As noted above, more than half of the Company's revenues are
normally derived from activities in foreign jurisdictions. Consequently, the
Company's results can be significantly affected by changes in foreign exchange
rates, particularly in U.S. dollar exchange rates with respect to the Swiss
franc, German mark and euro and, to a lesser degree, the British pound sterling,
French franc and other currencies. When the U.S. dollar strengthens against
these currencies, the U.S. dollar value of non-U.S. dollar-based sales
decreases. When the U.S. dollar weakens against these currencies, the U.S.
dollar value of such sales increases. Correspondingly, the U.S. dollar value of
non-U.S. dollar-based costs increases when the U.S. dollar weakens and decreases
when the U.S. dollar strengthens. Overall, the Company typically receives a
majority of its revenues in currencies other than the U.S. dollar and, as such,
benefits from a weaker dollar and is adversely affected by a stronger dollar
relative to major currencies worldwide, especially those identified above.
Accordingly, changes in foreign exchange rates, and in particular a
strengthening of the U.S. dollar, may adversely affect the Company's total
revenues, gross profit and operating income as expressed in U.S. dollars.
In addition, revenues and income of the Company with respect to
particular transactions may be affected by changes in foreign exchange rates
where sales are made in currencies other than the functional currency of the
facility manufacturing the product subject to the sale, including in particular
the U.S. dollar/Swiss franc exchange rate (for inter-company transactions) and
the euro/Swiss franc and German mark/Swiss franc exchange rates (for sales from
the Company's Swiss manufacturing facilities which are made in euros or German
marks). For the first nine months of 1999 as well as the same period in 1998,
the changes in these and the U.S. dollar/euro and U.S. dollar/German mark
exchange rates were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Oct. 2, Oct. 3, Oct. 2 Oct. 3,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Average U.S. dollar equivalent of .656 .688 .671 .678
one Swiss franc
% change vs. prior year -4.7% -1.0%
Average U.S. dollar equivalent of 1.051 N/A 1.074 N/A
one euro
Average U.S. dollar equivalent of .537 .572 .549 .560
one German mark
% change vs. prior year -6.1% -2.0%
Average Swiss franc equivalent of .819 .831 .818 .826
one German mark
% change vs. prior year -1.4% -1.0%
Average Swiss franc equivalent of 1.602 N/A 1.601 N/A
one euro
</TABLE>
-9-
<PAGE> 12
Total revenues increased $.4 million or 2.1% in the third quarter of
1999 and decreased by $.9 million or 1.4% in the first nine months of 1999
compared to the same periods in 1998. Western European revenues increased and
North American revenues decreased in the third quarter and first nine months of
1999 compared to the same periods in 1998. As reflected in the preceding chart,
revenues for the third quarter and first nine months of 1999 would have been
somewhat higher than the same period in 1998 if translated at prior year rates.
Gross profit as a percent of revenues increased to 45.8% for the
third quarter of 1999 compared to 44.7% for the same period in 1998. The
improvement in gross margin in 1999 was primarily due to sales mix. Gross margin
for the first nine months of 1999 and 1998 remained constant at 45.3%.
Selling, general and administrative (SG&A) expense increased by $.2
million or 3.6 % for the third quarter of 1999 and decreased by $.5 million or
2.5% for the first nine months of 1999 compared to the same periods in 1998.
This increase in SG&A in the third quarter was due to higher selling expenses,
partly offset by lower foreign exchange translation rates. The decrease for the
first nine months was due to lower selling expenses and lower foreign exchange
translation rates. As a percent of total revenues, SG&A for the third quarter
and first nine months of 1999 was 30.8% and 31.2%, respectively, compared to
30.4% and 31.5% for the same periods in 1998.
Research and development (R&D) expenditures increased by $.2 million
or 27.5% for the third quarter of 1999 and by $.5 million or 23.5% for the first
nine months of 1999 compared to the same periods in 1998. R&D expenses increased
due to greater emphasis on the development of new products and enhancements to
existing products, offset in part by lower foreign exchange translation rates.
R&D expense as a percent of total revenues was 3.9% for the third quarter and
4.0% for the first nine months of 1999 compared to 3.1% and 3.2%, respectively,
for the same periods in 1998.
Interest expense decreased by $.1 million or 27.2% for the first
nine months of 1999 compared to the same period in 1998, primarily due to
weighted average lower debt levels and lower rates on some loans.
The effective tax rate for the third quarter and first nine months
of 1999 were 26.4% and 20.8%, respectively, compared to 28.6% and 26.5% for the
same periods in 1998. These lower rates in 1999 were due in part to reduced
taxable income in the United States. The effective tax rates for both 1999 and
1998 were also reduced by the utilization of foreign net operating loss
carryforwards with full valuation allowances.
The backlog decreased by 10.3% at the end of the third quarter
compared to the end of 1998 and by 18.0% compared to the same periods in 1998,
in each case at constant foreign exchange rates. The decrease was primarily from
orders received at the manufacturing facilities in Europe.
-10-
<PAGE> 13
Liquidity and Capital Resources
The Company's capitalization as of the end of the third quarter of 1999
and as of the end of fiscal years 1998 and 1997 is set forth below:
<TABLE>
<CAPTION>
Oct. 2, Jan. 2, Jan. 3,
(Dollars in Thousands) 1999 1999 1998
---------- ---------- ---------
<S> <C> <C> <C>
Short-term debt, including current
portion of long-term debt $1,565 $ 1,534 $ 3,148
Long-term debt 8,920 9,638 10,619
----- ----- ------
Total debt 10,485 11,172 13,767
Shareholders' equity 24,679 22,274 18,892
------ ------ ------
Total debt and shareholders' equity $35,164 $33,446 $32,659
(total capitalization) ======= ======= ======
Percent total debt to total capitalization 30% 33% 42%
Percent long-term debt to equity 36% 43% 56%
Percent total debt to equity 42% 50% 73%
</TABLE>
Total debt decreased by $.7 million in the first nine months of 1999
($.1 million using a constant foreign exchange rate). U.S. debt decreased by $.2
million while European debt decreased by $.5 million. At October 2, 1999, the
Company had $5.0 million of borrowing availability under its U.S. loan
agreements and $3.4 million of borrowing availability under its Swiss loan
agreements.
At October 2, 1999, there was working capital of $14.3 million
compared to $11.4 million at January 2, 1999, and the ratio of current assets to
current liabilities at those dates was 1.65 and 1.49, respectively.
In the first nine months of 1999 and 1998, the Company utilized
internally-generated funds to meet its working capital needs.
Net cash provided by operating activities was $2.5 million in the
first nine months of 1999 compared to $5.9 million in the same period of 1998,
with such lower flow being due to a reduction in accrued expenses.
Net cash used in investing activities in the first nine months of
1999 and 1998 was for capital additions.
Net cash used in financing activities in the first nine months of
1999 was primarily for the purchase of 116,400 shares of common stock from two
shareholders, partly offset by cash received from the issuance of common stock.
Changes in foreign exchange rates, particularly with respect to the
Swiss franc and German mark, caused a translation adjustment decrease in
shareholders' equity of $.9 million in the first nine months of 1999.
-11-
<PAGE> 14
Readiness for Year 2000
The Company has completed an evaluation of its information
technology infrastructure for Year 2000 compliance and has substantially
completed its Year 2000 compliance activities. The cost to modify its
information technology infrastructure to be Year 2000 compliant has not been
material to its financial condition or results of operations. The Company does
not anticipate any material disruptions in its business as a result of any
failure by the Company to be Year 2000 compliant.
The Company is continually obtaining information concerning the Year
2000 compliance status of its significant suppliers, customers and business
partners to determine the extent to which the Company is vulnerable to these
third parties' failure to remedy their Year 2000 problems. There can be no
assurance that such suppliers, customers and business partners are or will be
Year 2000 compliant. The risk to the Company resulting from the failure of third
parties in the public and private sector to attain Year 2000 readiness is the
same as for other firms in the Company's industry or other business enterprises
generally and could involve many different types of disruption to the Company's
business.
The costs to complete the Company's Year 2000 evaluation and to
secure Year 2000 compliance are based on management's best estimates. These
estimates were derived using numerous assumptions, including continued
availability of resources, third party contingency plans and other factors.
However, there can be no assurance that these estimates will be achieved and
actual results could differ materially from those anticipated. The following are
representative of the types of risks that could result in the event a critical
component of the Company's information systems, factories or facilities fails to
be Year 2000 ready, or there is a similar failure by one or more major third
party suppliers to the Company: (i) information systems--could include
interruptions or disruptions of business and transaction processing such as
customer billing, payroll, accounts payable and other operating and information
processes, until systems can be remedied or replaced; (ii) factories and
facilities--could include interruptions or disruptions of manufacturing
processes and facilities with delays in delivery of products, until
non-compliant conditions or components can be remedied or replaced; and (iii)
major suppliers to the Company--could include interruptions or disruptions of
the supply of materials and supplies which could cause interruptions or
disruptions of manufacturing and delays in delivery of products, until the third
party supplier can remedy the problem or contingency measures can be
implemented.
-12-
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended October 2,
1999.
-13-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
K-TRON INTERNATIONAL, INC.
Date: October 26, 1999 By: /s/ Ronald R. Remick
-----------------------
Ronald R. Remick
Senior Vice President & Chief
Financial Officer
(Duly authorized officer and principal
financial officer of the registrant)
By: /s/ Alan R. Sukoneck
-----------------------
Vice President, Chief Accounting
& Tax Officer
(Duly authorized officer and principal
accounting officer of the registrant)
-14-
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> OCT-02-1999
<CASH> 1,750
<SECURITIES> 0
<RECEIVABLES> 21,544
<ALLOWANCES> 1,219
<INVENTORY> 11,575
<CURRENT-ASSETS> 36,066
<PP&E> 43,358
<DEPRECIATION> 27,791
<TOTAL-ASSETS> 56,227
<CURRENT-LIABILITIES> 21,804
<BONDS> 8,920
0
0
<COMMON> 44
<OTHER-SE> 24,635
<TOTAL-LIABILITY-AND-EQUITY> 56,227
<SALES> 64,145
<TOTAL-REVENUES> 64,145
<CGS> 35,072
<TOTAL-COSTS> 35,072
<OTHER-EXPENSES> 22,572
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 380
<INCOME-PRETAX> 6,121
<INCOME-TAX> 1,272
<INCOME-CONTINUING> 4,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,849
<EPS-BASIC> 1.64
<EPS-DILUTED> 1.60
</TABLE>
