-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B0KCI9oIObSfJGp7FMEcSAKa3kkKE7sto/jtRWCoMT9JS1L151u2ZMmmDfomotMB EEuFYTUztaHwMYAB92D4sw== /in/edgar/work/20000803/0000893220-00-000917/0000893220-00-000917.txt : 20000921 0000893220-00-000917.hdr.sgml : 20000921 ACCESSION NUMBER: 0000893220-00-000917 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20000803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: K TRON INTERNATIONAL INC CENTRAL INDEX KEY: 0000000020 STANDARD INDUSTRIAL CLASSIFICATION: [3823 ] IRS NUMBER: 221759452 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09576 FILM NUMBER: 685009 BUSINESS ADDRESS: STREET 1: ROUTE 55 & 553 STREET 2: BOX 888 CITY: PITMAN STATE: NJ ZIP: 08071-0888 BUSINESS PHONE: 8562563318 MAIL ADDRESS: STREET 1: ROUTE 55 & 553 STREET 2: P O BOX 888 CITY: PITMAN STATE: NJ ZIP: 08071-0888 10-Q 1 e10-q.txt K-TRON INTERNATIONAL, INC. FORM 10-Q 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 July 1, 2000 ------------------------------- 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 (I.R.S. Employer Identification #) Incorporation or Organization) 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 2,431,537 shares of Common Stock outstanding as of July 1, 2000. 2 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets 1 July 1, 2000 and January 1, 2000 Consolidated Statements of Income 2 & Retained Earnings for the Three and Six Months Ended July 1, 2000 and July 3, 1999 Consolidated Statements of Cash Flows 3 for the Six Months Ended July 1, 2000 and July 3, 1999 Notes to Consolidated Financial Statements 4 - 7 Item 2. Management's Discussion and Analysis 8 - 13 of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands except Share Data)
July 1, January 1, 2000 2000 (Unaudited) (Audited) ---------- --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 901 $ 3,093 Accounts receivable (less allowance for doubtful accounts of $816 and $924) 18,521 20,500 Inventories 11,031 10,193 Deferred income taxes 473 473 Prepaid expenses and other current assets 1,417 1,516 -------- -------- Total current assets 32,343 35,775 PROPERTY, PLANT AND EQUIPMENT, net 14,962 14,611 PATENTS, net 883 879 GOODWILL, net 3,175 3,486 OTHER ASSETS 46 19 -------- -------- Total assets $ 51,409 $ 54,770 ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable to banks $ -- $ 2,543 Current portion of long-term debt 3,696 2,084 Accounts payable 6,226 5,691 Accrued expenses & other current liabilities 2,095 3,200 Accrued payroll 1,747 2,713 Accrued commissions 1,822 1,971 Customer advances 1,689 1,134 Accrued warranty 1,072 1,294 Income taxes payable 1,297 1,088 -------- -------- Total current liabilities 19,644 21,718 LONG-TERM DEBT, net of current portion 12,619 7,252 DEFERRED INCOME TAXES 303 303 OTHER NONCURRENT LIABILITIES 111 287 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 4,386,887 shares and 4,374,505 shares 44 44 Paid-in capital 16,245 16,103 Retained earnings 31,803 28,598 Cumulative translation adjustments (2,522) (1,946) -------- -------- 45,570 42,799 -------- -------- Treasury stock, 1,955,350 and 1,447,350 shares - at cost (26,838) (17,589) -------- -------- Total shareholders' equity 18,732 25,210 -------- -------- Total liabilities and shareholders' equity $ 51,409 $ 54,770 ======== ========
See Notes to Consolidated Financial Statements -1- 4 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME & RETAINED EARNINGS (Dollars in Thousands except Share Data) (Unaudited)
Three Months Ended Six Months Ended ------------------ ---------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 ---- ---- ---- ---- REVENUES $22,084 $22,617 $42,372 $42,457 COST OF REVENUES 11,627 12,590 22,639 23,309 ------- ------- ------- ------- Gross Profit 10,457 10,027 19,733 19,148 OPERATING EXPENSES Selling, general and administrative 6,757 6,708 13,081 13,314 Research and development 816 905 1,643 1,726 ------- ------- ------- ------- 7,573 7,613 14,724 15,040 ------- ------- ------- ------- Operating income 2,884 2,414 5,009 4,108 INTEREST EXPENSE 333 122 455 256 ------- ------- ------- ------- Income before income taxes 2,551 2,292 4,554 3,852 INCOME TAX PROVISION 719 473 1,349 673 ------- ------- ------- ------- Net income 1,832 1,819 3,205 3,179 RETAINED EARNINGS Beginning of period 29,971 23,199 28,598 21,839 ------- ------- ------- ------- End of period $31,803 $25,018 $31,803 $25,018 ======= ======= ======= ======= EARNINGS PER SHARE Basic $ 0.76 $ 0.62 $ 1.21 $ 1.07 ======= ======= ======= ======= Diluted $ 0.74 $ 0.60 $ 1.19 $ 1.04 ======= ======= ======= =======
See Notes to Consolidated Financial Statements -2- 5 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Six Months Ended --------------------- July 1, July 3, 2000 1999 ---- ---- OPERATING ACTIVITIES: Net income $ 3,205 $ 3,179 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,662 1,601 Amortization of deferred gain on sale/leaseback transaction (167) (187) Changes in assets and liabilities: Accounts receivable, net 1,578 (2,912) Inventories (1,017) (1,064) Prepaid expenses and other current assets 65 (747) Other assets (29) 76 Accounts payable 671 435 Accrued expenses and other current liabilities (1,553) (572) Accrued warranty (199) (80) Income taxes payable 210 327 ------- ------- Net cash provided by operating activities 4,426 56 ------- ------- INVESTING ACTIVITIES: Capital expenditures (2,067) (1,659) Investment in patents (42) (86) ------- ------- Net cash used in investing activities (2,109) (1,745) ------- ------- FINANCING ACTIVITIES: Net (repayments) borrowings under notes payable to banks (2,510) 2,139 Proceeds from issuance of long-term debt 7,950 -- Principal payments on long-term debt (799) (479) Purchase of treasury stock (9,249) (2,110) Proceeds from issuance of common stock 142 581 ------- ------- Net cash (used in) provided by financing activities (4,466) 131 ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (43) (164) ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (2,192) (1,722) ------- ------- CASH AND CASH EQUIVALENTS Beginning of period 3,093 3,220 ------- ------- End of period $ 901 $ 1,498 ======= =======
See Notes to Consolidated Financial Statements -3- 6 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS July 1, 2000 ------------ (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 1, 2000 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 an original maturity of three months or less to be cash equivalents. Cash paid in the first six months of 2000 and 1999 for interest was $0.3 million and $0.2 million, respectively, and for income taxes was $1.1 million and $0.4 million, respectively. 3. Earnings per Share The Company adopted SFAS No. 128, "Earnings per Share," which 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:
For the Three Months Ended July 1, 2000 ---------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $ 1,832 2,422 $ 0.76 Common Share Equivalent of Outstanding Options -- 52 (0.02) ------- ------- -------- Diluted $ 1,832 2,474 $ 0.74 ======= ======= =======
-4- 7
For the Three Months Ended July 3, 1999 --------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $ 1,819 2,948 $ 0.62 Common Share Equivalent of Outstanding Options -- 80 (0.02) ------- ------- ------- Diluted $ 1,819 3,028 $ 0.60 ======= ======= =======
For the Six Months Ended July 1, 2000 ------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $ 3,205 2,649 $ 1.21 Common Share Equivalent of Outstanding Options -- 52 (0.02) ------- ------- -------- Diluted $ 3,205 2,701 $ 1.19 ======= ======= ========
For the Six Months Ended July 3, 1999 ------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $ 3,179 2,965 $ 1.07 Common Share Equivalent of Outstanding Options -- 80 (0.03) ------- ------- -------- Diluted $ 3,179 3,045 $ 1.04 ======= ======= ========
Diluted earnings per common share are based on the weighted average number of common and common equivalent shares outstanding during a given time period. 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- 8 4. Comprehensive Income The Company adopted SFAS No. 130, "Reporting Comprehensive Income," which 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 six months in the periods ended July 1, 2000 and July 3, 1999, the following table sets forth the Company's comprehensive income:
(Dollars in Thousands) Three Months Ended Six Months Ended ------------------ ---------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 ---- ---- ---- ---- Net Income $1,832 $1,819 $3,205 $ 3,179 Cumulative Translation Adjustments 120 (616) (576) (1,623) ------ ------ ------ ------- Comprehensive Income $1,952 $1,203 $2,629 $ 1,556 ====== ====== ====== =======
5. Management Segment Information The Company adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," which introduced 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 six months in the periods ended July 1, 2000 and July 3, 1999, the following tables set forth the Company's segment information:
(Dollars in Thousands) North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- THREE MONTHS ENDED July 1, 2000: Revenues- Sales to unaffiliated customers $ 10,864 $11,220 $ -- $22,084 Sales to affiliates 1,082 709 (1,791) -- -------- ------- ------- ------- Total sales $ 11,946 $11,929 $(1,791) $22,084 ======== ======= ======= ======= Operating income $ 2,271 $ 587 $ 26 $ 2,884 ======== ======= ======= Interest expense (333) ------- Income before income taxes $ 2,551 =======
-6- 9
(Dollars in Thousands) North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- THREE MONTHS ENDED July 3, 1999: Revenues- Sales to unaffiliated customers $ 9,222 $13,395 $ -- $22,617 Sales to affiliates 829 589 (1,418) -- -------- ------- ------- ------- Total sales $ 10,051 $13,984 $(1,418) $22,617 ======== ======= ======= ======= Operating income $ 1,564 $ 863 $ (13) $ 2,414 ======== ======= ======= Interest expense (122) ------- Income before income taxes $ 2,292 ======= SIX MONTHS ENDED July 1, 2000: Revenues- Sales to unaffiliated customers $ 20,346 $22,026 $ -- $42,372 Sales to affiliates 2,196 1,530 (3,726) -- -------- ------- ------- ------- Total sales $ 22,542 $23,556 $(3,726) $42,372 ======== ======= ======= ======= Operating income $ 3,939 $ 994 $ 76 $ 5,009 ======== ======= ======= Interest expense (455) ------- Income before income taxes $ 4,554 ======= SIX MONTHS ENDED July 3, 1999: Revenues- Sales to unaffiliated customers $ 16,549 $25,908 $ -- $42,457 Sales to affiliates 1,840 1,110 (2,950) -- -------- ------- ------- ------- Total sales $ 18,389 $27,018 $(2,950) $42,457 ======== ======= ======= ======= Operating income $ 2,155 $ 1,970 $ 17 $ 4,108 ======== ======= ======= Interest expense (256) ------- Income before income taxes $ 3,852 =======
-7- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations For the second quarter and first six months of 2000, the Company reported net income of $1,832,000 and $3,205,000, respectively, compared to $1,819,000 and $3,179,000 for the same periods in 1999. K-Tron is an international company which derived approximately 52% and 61% of its first six months of 2000 and 1999 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:
Three Months Ended Six Months Ended ------------------ ---------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 ---- ---- ---- ---- Total revenues 100.0% 100.0% 100.0% 100.0% Cost of revenues 52.6 55.7 53.4 54.9 ----- ----- ----- ----- Gross profit 47.4 44.3 46.6 45.1 Selling, general & administrative 30.6 29.6 30.9 31.4 Research & development 3.7 4.0 3.9 4.0 ----- ----- ----- ----- Operating income 13.1 10.7 11.8 9.7 Interest 1.5 0.6 1.1 0.6 ----- ----- ----- ----- Income before income taxes 11.6% 10.1% 10.7% 9.1% ===== ===== ===== =====
June 2000 December 1999 June 1999 --------- ------------- --------- Backlog at end of period (at July 1, 2000 foreign exchange rates, in thousands) $21,055 $17,448 $19,907 ======= ======= =======
-8- 11 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 non-U.S. dollar-based 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 (for inter-company transactions) and the euro/Swiss franc and German mark/Swiss franc (for sales from the Company's Swiss manufacturing facilities which are made in euros or German marks) exchange rates. For the first three and six months of each of 2000 and 1999, the changes in these and the U.S. dollar/euro and U.S. dollar/German mark exchange rates were as follows:
Three Months Ended Six Months Ended ------------------ ---------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 ---- ---- ---- ---- Average U.S. dollar equivalent of 0.598 0.658 0.605 0.678 one Swiss franc % change vs. prior year (9.1)% (10.8)% Average U.S. dollar equivalent of 0.934 1.054 0.959 1.086 one euro % change vs. prior year (11.4)% (11.7)% Average U.S. dollar equivalent of 0.478 0.539 0.490 0.555 one German mark % change vs. prior year (11.3)% (11.7)% Average Swiss franc equivalent of 0.799 0.819 0.810 0.819 one German mark % change vs. prior year (2.4)% (1.1)% Average Swiss franc equivalent of 1.562 1.602 1.585 1.602 one euro % change vs. prior year (2.5)% (1.1)%
-9- 12 Total revenues decreased by $0.5 million or 2.4% in the second quarter of 2000 and by $0.1 million or 0.2% in the first six months of 2000 compared to the same periods in 1999. North American revenues increased and Western European revenues decreased in the second quarter and first six months of 2000 compared to the same periods in 1999. If the average foreign exchange rates for the second quarter and first six months of 2000 were applied to the same periods in 1999, total revenues would have increased by $0.5 million or 2.5% for the quarter and by $2.5 million or 6.3% for the first six months. Gross profit as a percent of revenues increased to 47.4% for the second quarter of 2000 and 46.6% for the first six months of 2000 compared to 44.3% and 45.1% for the same periods in 1999. The increase in gross margin in 2000 was primarily due to sales mix. Selling, general and administrative (SG&A) expense remained constant for the second quarter of 2000 and decreased by $0.2 million or 1.8% for the first six months of 2000 compared to the same periods in 1999. This decrease in SG&A for six months was primarily due to lower foreign exchange translation rates, partly offset by higher commissions. As a percent of total revenues, SG&A for the second quarter and first six months of 2000 was 30.6% and 30.9%, respectively, compared to 29.6% and 31.4% for the same periods in 1999. Research and development (R&D) expenditures decreased by $0.1 million or 9.8% for the second quarter of 2000 and by $0.1 million or 4.8% for the first six months of 2000 compared to the same periods in 1999. R&D expenses decreased due to lower foreign exchange translation rates partly offset by greater emphasis on the development of new products. R&D expense as a percent of total revenues was 3.7% for the second quarter and 3.9% for the first six months of 2000 as compared to 4.0% for the same periods in 1999. Interest expense increased by $211 thousand or 173% for the second quarter and by $199 thousand or 77.7% for the first six months of 2000 compared to the same periods in 1999, primarily due to interest on funds borrowed in March 2000 related to the Company's repurchase of 508 thousand shares of its Common Stock, which is discussed in the liquidity section, partly offset by lower foreign exchange translation rates. The effective tax rates for the second quarter and first six months of 2000 were 28.2% and 29.6%, respectively, compared to 20.6% and 17.5% for the same periods in 1999. These higher rates in 2000 were due to increased taxable income in the United States as well as providing for Swiss income taxes for the first time since fiscal 1992, since it is anticipated that the remaining net operating losses in Switzerland will be fully utilized in 2000. The backlog of customer orders increased by 20.7% at the end of the second quarter compared to the end of 1999 and by 5.8% compared to the end of the second quarter in 1999, in each case at constant foreign exchange rates. The increase was from orders received at the manufacturing facilities in both the United States and Switzerland. -10- 13 Liquidity and Capital Resources On March 23, 2000, the Company completed a tender offer begun on February 16, 2000 and repurchased 508 thousand shares of its Common Stock at $18.00 per share for a total cost of $9.244 million (including $100 thousand of costs associated with the tender offer). The share repurchase represented approximately 17.3% of the Common Stock then outstanding. The repurchase was financed by using $1.194 million of available cash, all of a $7 million loan facility obtained from a U.S. bank on February 4, 2000 and $950 thousand from an existing $5 million line of credit with that same bank. The $7 million loan is payable in equal monthly installments of principal plus accrued interest over a period of four years commencing May 1, 2000 and is secured by liens on the same collateral securing other loans from the same U.S. bank. One-half of the loan bears interest at the fixed rate of 8.23% for the first two years and the other half is subject to a variable rate of interest equal to the one-month LIBOR value plus 1.85% (7.92%). As of July 1, 2000, the Company had repaid $632 thousand and has a total of $7.318 million debt outstanding associated with the share repurchase. The Company's capitalization as of the end of the second quarter of 2000 and as of the end of fiscal years 1999 and 1998 is set forth below:
July 1, Jan. 1, Jan. 2, (Dollars in Thousands) 2000 2000 1999 ---- ---- ---- Short-term debt, including current portion of long-term debt $ 3,696 $ 4,627 $ 1,534 Long-term debt 12,619 7,252 9,638 ------- ------- ------- Total debt 16,315 11,879 11,172 Shareholders' equity 18,732 25,210 22,274 ------- ------- ------- Total debt and shareholders' equity $35,047 $37,089 $33,446 ======= ======= ======= (total capitalization) Percent total debt to total capitalization 47% 32% 33% Percent long-term debt to equity 67% 29% 43% Percent total debt to equity 87% 47% 50%
Total debt increased by $4.4 million in the first six months of 2000 ($4.7 million using a constant foreign exchange rate). U.S. debt increased by $7.1 million while debt in Switzerland decreased by $2.7 million. At July 1, 2000, the Company had $4.4 million of borrowing availability under its U.S. loan agreements and $5.5 million of borrowing availability under its Swiss loan agreements. The increase in the U.S. debt was due to the share repurchase described above. At July 1, 2000, working capital was $12.7 million compared to $14.1 million at January 1, 2000, and the ratio of current assets to current liabilities at those dates was 1.65 and 1.65, respectively. The decrease in working capital was primarily due to a decrease in cash and receivables. -11- 14 In the first six months of 2000 and 1999, the Company utilized internally-generated funds to meet its working capital needs and used its bank borrowings and available cash to complete the share repurchase. Net cash provided by operating activities was $4.4 million in the first six months of 2000 compared to $0.1 million in the same period of 1999, with the increase being primarily due to a reduction in accounts receivable. Net cash used in investing activities in the first six months of 2000 and 1999 was primarily for capital additions. Changes in foreign exchange rates, particularly with respect to the Swiss franc and German mark, caused a translation adjustment decrease in shareholders' equity of $0.6 million in the first six months of 2000. Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are "forward-looking," including statements contained in this report and other filings with the Securities and Exchange Commission, reports to the Company's shareholders and news releases. All statements that express expectations, estimates, forecasts and projections are forward-looking statements within the meaning of the Act. In addition, other written or oral statements which constitute forward-looking statements may be made by or on behalf of the Company. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "may," "should," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. A wide range of factors could materially affect future developments and the performance of the Company, including the following: (i) increasing price and product/service competition by domestic and foreign competitors, including new entrants; (ii) the mix of products/services sold by the Company; (iii) rapid technological changes and developments and the Company's ability to continue to introduce competitive new products on a timely and cost-effective basis; (iv) changes in U.S. and global financial and currency markets, including significant interest rate and foreign currency exchange rate fluctuations; (v) protection and validity of patent and other intellectual property rights, both of the Company and its competitors; (vi) the cyclical nature of the Company's business as a capital goods supplier; (vii) possible future litigation and governmental proceedings; (viii) the availability of financing and financial resources in the amounts, at the times and on the terms required to support the Company's future business, including capacity expansions and possible acquisitions; (ix) the loss of key customers, employees or suppliers; (x) the failure to carry out marketing and sales plans; (xi) the failure successfully to integrate acquired businesses, if any, into the Company without substantial costs, delays -12- 15 or other operational or financial problems; (xii) economic, business and regulatory conditions and changes which may affect the level of new investments and purchases made by customers, including general economic and business conditions that are less favorable than expected; and (xiii) domestic and international political and economic conditions. This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but it is by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. -13- 16 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (a) The Annual Meeting of Shareholders of the Company was held on May 15, 2000. (b) Not applicable. (c) Shareholders of the Company were asked to vote on a proposal to elect two Class III directors. The Board of Directors, acting on the recommendation of its Nominating Committee, nominated Norman Cohen and Richard J. Pinola as Class III directors. There were no other nominations. Messrs. Cohen and Pinola were then elected with the result of the vote taken at the Annual Meeting being as follows: Number of Votes --------------- FOR WITHHELD --- -------- Norman Cohen 1,728,241 6,276 Richard J. Pinola 1,728,241 6,276 Directors are elected by a plurality of the votes cast; therefore, votes cast in the election could not be recorded against or as an abstention, nor could a broker non-vote be recorded. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K for the quarter ended July 1, 2000. -14- 17 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: August 3, 2000 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) -15- 18 EXHIBIT INDEX Exhibit Number Description -------------- ----------- 27.1 Financial Data Schedule EX-27.1 2 ex27-1.txt FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JAN-02-2000 JUL-01-2000 901 0 19,337 816 11,031 32,343 41,783 26,821 51,409 19,644 12,619 0 0 44 18,688 51,409 42,372 42,372 22,639 22,639 14,724 0 455 4,554 1,349 3,205 0 0 0 3,205 1.21 1.19
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