10-Q 1 w51783e10-q.txt QUARTERLY REPORT PERIOD ENDED JUNE 30, 2001 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 June 30, 2001 ----------------------------------- 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 Incorporation (I.R.S. Employer Identification #) 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 2,434,180 shares of Common Stock outstanding as of June 30, 2001. 2 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES INDEX
Page No. -------- PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements. Consolidated Balance Sheets 1 June 30, 2001 and December 30, 2000 Consolidated Statements of Income 2 & Retained Earnings for the Three and Six Months Ended June 30, 2001 and July 1, 2000 Consolidated Statements of Cash Flows 3 for the Six Months Ended June 30, 2001 and July 1, 2000 Notes to Consolidated Financial Statements 4 - 8 Item 2. Management's Discussion and Analysis 9 - 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)
June 30, December 30, 2001 2000 ---- ---- (Unaudited) (Audited) ----------- --------- ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 1,207 $ 553 Accounts receivable (less allowance for doubtful accounts of $697 and $778) 16,699 19,139 Inventories 12,253 12,446 Deferred income taxes 326 326 Prepaid expenses and other current assets 1,406 1,723 -------- -------- Total current assets 31,891 34,187 PROPERTY, PLANT AND EQUIPMENT, net 14,569 15,470 PATENTS, net 897 879 GOODWILL, net 3,378 3,825 OTHER ASSETS 38 60 -------- -------- Total assets $ 50,773 $ 54,421 ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY ---------------------------------- CURRENT LIABILITIES: Notes payable to bank $ 64 $ -- Current portion of long-term debt 3,854 3,595 Accounts payable 5,823 8,889 Accrued expenses & other current liabilities 4,046 3,485 Accrued commissions 1,242 1,572 Customer advances 975 1,314 Accrued warranty 630 762 Income taxes payable 1,200 800 -------- -------- Total current liabilities 17,834 20,417 LONG-TERM DEBT, net of current portion 11,309 12,390 DEFERRED INCOME TAXES 303 303 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 4,428,930 shares and 4,403,871 shares 44 44 Paid-in capital 16,691 16,437 Retained earnings 36,021 34,436 Cumulative translation adjustments (3,962) (2,547) -------- -------- 48,794 48,370 -------- -------- Treasury stock, 1,994,750 and 1,967,550 shares - at cost (27,467) (27,059) -------- -------- Total shareholders' equity 21,327 21,311 -------- -------- Total liabilities and shareholders' equity $ 50,773 $ 54,421 ======== ========
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 ------------------ ---------------- June 30, July 1, June 30, July 1, 2001 2000 2001 2000 ---- ---- ---- ---- REVENUES $19,318 $22,084 $40,876 $42,372 COST OF REVENUES 11,635 11,627 24,293 22,639 ------- ------- ------- ------- Gross Profit 7,683 10,457 16,583 19,733 OPERATING EXPENSES Selling, general and administrative 5,859 6,757 12,355 13,081 Research and development 772 816 1,521 1,643 ------- ------- ------- ------- 6,631 7,573 13,876 14,724 ------- ------- ------- ------- Operating Income 1,052 2,884 2,707 5,009 INTEREST EXPENSE 275 333 586 455 ------- ------- ------- ------- Income before income taxes 777 2,551 2,121 4,554 INCOME TAX PROVISION 167 719 536 1,349 ------- ------- ------- ------- Net income 610 1,832 1,585 3,205 RETAINED EARNINGS Beginning of period 35,411 29,971 34,436 28,598 ------- ------- ------- ------- End of period $36,021 $31,803 $36,021 $31,803 ======= ======= ======= ======= EARNINGS PER SHARE Basic $ 0.25 $ 0.76 $ 0.65 $ 1.21 ======= ======= ======= ======= Diluted $ 0.25 $ 0.74 $ 0.64 $ 1.19 ======= ======= ======= =======
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 ---------------- June 30, July 1, 2001 2000 ---- ---- OPERATING ACTIVITIES: Net income $ 1,585 $ 3,205 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,629 1,662 Amortization of deferred gain on sale/leaseback transaction -- (167) Changes in assets and liabilities: Accounts receivable, net 1,239 1,578 Inventories (499) (1,017) Prepaid expenses and other current assets 225 65 Other assets 10 (29) Accounts payable (2,597) 671 Accrued expenses and other current liabilities 551 (1,553) Accrued warranty (80) (199) Income taxes payable 403 210 ------- ------- Net cash provided by operating activities 2,466 4,426 ------- ------- INVESTING ACTIVITIES: Capital expenditures (1,432) (2,067) Investment in patents (47) (42) ------- ------- Net cash used in investing activities (1,479) (2,109) ------- ------- FINANCING ACTIVITIES: Net (repayments) borrowings under notes payable to banks 67 (2,510) Proceeds from issuance of long-term debt 851 7,950 Principal payments on long-term debt (995) (799) Purchase of treasury stock (408) (9,249) Proceeds from issuance of common stock 254 142 ------- ------- Net cash used in financing activities (231) (4,466) ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (102) (43) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 654 (2,192) ------- ------- CASH AND CASH EQUIVALENTS Beginning of period 553 3,093 ------- ------- End of period $ 1,207 $ 901 ======= =======
See Notes to Consolidated Financial Statements -3- 6 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2001 (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 December 30, 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 2001 and 2000 for interest was $0.5 million and $0.3 million, respectively, and for income taxes was $0.2 million and $1.1 million, respectively. 3. Inventories Inventories consist of the following: June 30, December 30, 2001 2000 ---- ---- (in thousands) Components $ 9,812 $ 9,773 Work-in-process 2,289 2,530 Finished goods 152 143 -------- --------- $ 12,253 $ 12,446 ======== ======== -4- 7 4. Earnings per Share The Company's Basic and Diluted Earnings Per Share are calculated as follows:
For the Three Months Ended June 30, 2001 ---------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Net Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $ 610 2,430 $ 0.25 Common Share Equivalent -- 39 (0.00) of Outstanding Options ----- ----- -------- Diluted $ 610 2,469 $ 0.25 ===== ===== ========
For the Three Months Ended July 1, 2000 --------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Net Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $1,832 2,422 $ 0.76 Common Share Equivalent -- 52 (0.02) of Outstanding Options ------ ------ -------- Diluted $1,832 2,474 $ 0.74 ====== ====== ========
For the Six Months Ended June 30, 2001 -------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Net Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $1,585 2,436 $ 0.65 Common Share Equivalent -- 39 (0.01) of Outstanding Options ------ ------ -------- Diluted $1,585 2,475 $ 0.64 ====== ====== ========
For the Six Months Ended July 1, 2000 ------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Net Income Available To Common Earnings Shareholders Shares Per Share ------------ ------ --------- Basic $3,205 2,649 $ 1.21 Common Share Equivalent -- 52 (0.02) of Outstanding Options ------ ------ -------- Diluted $3,205 2,701 $ 1.19 ====== ====== ========
-5- 8 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. Comprehensive Income
(Dollars in Thousands) Three Months Ended Six Months Ended ------------------ ---------------- June 30, July 1, June 30, July 1, 2001 2000 2001 2000 ---- ---- ---- ---- Net Income $ 610 $ 1,832 $ 1,585 $ 3,205 Cumulative Translation Adjustments (262) 120 (1,415) (576) ------- ------- ------- ------- Comprehensive Income $ 348 $ 1,952 $ 170 $ 2,629 ======= ======= ======= =======
6. Management Segment Information 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 June 30, 2001 and July 1, 2000, the following tables set forth the Company's segment information:
(Dollars in Thousands) North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- THREE MONTHS ENDED June 30, 2001: Revenues- Sales to unaffiliated customers $ 7,423 $11,895 $ -- $19,318 Sales to affiliates 1,268 507 (1,775) -- ------- ------- ------- ------- Total sales $ 8,691 $12,402 $(1,775) $19,318 ======= ======= ======= ======= Operating income $ 151 $ 926 $ (25) $ 1,052 ======= ======= ======= Interest expense (275) ------- Income before income taxes $ 777 =======
-6- 9
(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 ========
(Dollars in Thousands) North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- SIX MONTHS ENDED June 30, 2001: Revenues- Sales to unaffiliated customers $ 16,492 $ 24,384 $ -- $ 40,876 Sales to affiliates 2,548 1,088 (3,636) -- -------- -------- -------- -------- Total sales $ 19,040 $ 25,472 $ (3,636) $ 40,876 ======== ======== ======== ======== Operating income $ 1,219 $ 1,513 $ (25) $ 2,707 ======== ======== ======== Interest expense (586) -------- Income before income taxes $ 2,121 ========
(Dollars in Thousands) North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- 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 ========
-7- 10 7. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 addresses financial accounting and reporting for business combinations and supersedes APB No. 16 "Business Combinations" and FASB Statement No. 38, "Accounting for Preacquisition Contingencies of Purchased Enterprises." All business combinations in the scope of this Statement are to be accounted for using one method, the purchase method. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB No. 17, "Intangible Assets". It changes the accounting for goodwill from an amortization method to an impairment only approach. K-Tron will cease the amortization of goodwill which was recorded in past business combinations on December 31, 2001, as required by SFAS No. 142. Amortization expense was $487,000 during fiscal 2000, or $0.19 per share. The Company is still evaluating the impact of adopting these pronouncements on the financial statements. -8- 11 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 2001, K-Tron reported net income of $0.610 million and $1.585 million, respectively, compared to $1.832 million and $3.205 million for the same periods in 2000. Revenues and profits for the second quarter declined significantly from year ago levels reflecting the weak U.S. economy and a dramatic slowdown in capital spending, especially in the plastics and chemical industries. By contrast, last year's second quarter profit was at a record level, driven by strong domestic sales. We are an international company, and we derived approximately 60% and 52% of our first six months 2001 and 2000 revenues, respectively, from products manufactured in, and services performed from, our facilities located outside the United States, primarily in Europe. Accordingly, we are 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 our Swiss manufacturing facility in currencies other than the Swiss franc. The following table sets forth our results of operations expressed as a percentage of total revenues for the periods indicated:
Three Months Ended Six Months Ended ------------------ ----------------- June 30, July 1, June 30, July 1, 2001 2000 2001 2000 ---- ---- ---- ---- Total revenues 100.0% 100.0% 100.0% 100.0% Cost of revenues 60.2 52.6 59.4 53.4 ---- ---- ---- ---- Gross profit 39.8 47.4 40.6 46.6 Selling, general & administrative 30.4 30.6 30.3 30.9 Research & development 4.0 3.7 3.7 3.9 --- --- --- --- Operating income 5.4 13.1 6.6 11.8 Interest 1.4 1.5 1.4 1.1 --- --- --- --- Income before income taxes 4.0% 11.6% 5.2% 10.7% ==== ===== ==== =====
June 30, 2001 December 30, 2000 July 1, 2000 ------------- ----------------- ------------ Backlog at end of period (at June 30, 2001 foreign exchange rates, in thousands) $15,079 $18,144 $19,930 ======= ======= =======
-9- 12 More than half of our revenues are normally derived from activities in foreign jurisdictions. Consequently, our results can be significantly affected by changes in foreign exchange rates, particularly in U.S. dollar exchange rates with respect to the Swiss franc and euro and, to a lesser degree, the British pound sterling 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, since we typically receive a majority of our revenues in currencies other than the U.S. dollar, we generally benefit from a weaker dollar and are 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 our total revenues, gross profit and operating income as expressed in U.S. dollars. In addition, our revenues and income 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 (for sales from the Company's Swiss manufacturing facility) exchange rates. For the first three and six months of 2001and 2000, the changes in these and the U.S. dollar/euro exchange rates were as follows:
Three Months Ended Six Months Ended ------------------ ---------------- June 30, July 1, June 30, July 1, 2001 2000 2001 2000 ---- ---- ---- ---- Average U.S. dollar equivalent of one Swiss franc 0.570 0.598 0.586 0.605 % change vs. prior year -4.7% -3.1% Average U.S. dollar equivalent of one euro 0.872 0.934 0.898 0.959 % change vs. prior year -6.6% -6.4% Average Swiss franc equivalent of one euro 1.530 1.562 1.532 1.585 % change vs. prior year -2.0% -3.3%
Total revenues decreased by $2.8 million or 12.5% in the second quarter of 2001and by $1.5 million or 3.5% in the first six months of 2001 compared to the same periods in 2000. North American revenues decreased and Western European revenues increased in the second quarter and first six months of 2001 compared to the same periods in 2000. If the average foreign exchange rates for the second quarter and first six months of 2001 were applied to the same periods in 2000, total revenues would have decreased by $2.2 million or 10.0% for the quarter and by $0.5 million or 1.2% for the first six months. Gross profit as a percent of revenues decreased to 39.8% for the second quarter of 2001 and 40.6% for the first six months of 2001 compared to 47.4% and 46.6% for the same periods in 2000. The decrease in gross margin in 2001 was primarily due to geographic and product sales mix. The decrease in gross profit was also due to the deterioration of economic conditions discussed above, which led to fixed costs being absorbed over a smaller revenue base. -10- 13 Selling, general and administrative (SG&A) expense decreased by $0.9 million or 13.3% for the second quarter of 2001 and decreased by $0.7 million or 5.6% for the first six months of 2001 compared to the same periods in 2000. The decrease in SG&A for the second quarter and first six months was primarily due to lower sales commissions resulting from reduced revenues and lower foreign exchange translation rates. As a percent of total revenues, SG&A for the second quarter and first six months of 2001 was 30.4% and 30.3%, respectively, compared to 30.6% and 30.9% for the same periods in 2000. Research and development (R&D) expenditures decreased by $44 thousand or 5.4% for the second quarter of 2001 and by $122 thousand or 7.4% for the first six months of 2001 compared to the same periods in 2000. R&D expenses decreased due to lower staff costs as well as the effect of lower foreign exchange translation rates. R&D expense as a percent of total revenues was 4.0% for the second quarter and 3.7% for the first six months of 2001 compared to 3.7% and 3.9%, respectively, for the same periods in 2000. Interest expense decreased by $58 thousand or 17.4% for the second quarter of 2001 and increased by $131 thousand or 28.8% for the first six months of 2001 compared to the same periods in 2000. The decrease for the second quarter was primarily due to reduced interest rates while the increase for the six months was primarily due to interest on funds borrowed in March 2000 related to the repurchase of 508 thousand shares of our Common Stock, partially offset by reduced interest rates. The effective tax rates for the second quarter and first six months of 2001 were 21.5% and 25.3%, respectively, compared to 28.2% and 29.6% for the same periods in 2000. The lower effective tax rate in 2001 was primarily due to decreased taxable income in the United States. The backlog of customer orders decreased by 24.3% at the end of the second quarter of 2001 compared to the end of 2000 and by 16.9% compared to the end of the second quarter in 2000, in each case at constant foreign exchange rates. Most of the decrease was the result of lower orders received at our facility in the United States. At the end of June 2001, our worldwide backlog was $15.1 million, representing the lowest quarterly backlog in several years. -11- 14 Liquidity and Capital Resources Our capitalization as of the end of the second quarter of 2001 and as of the end of fiscal years 2000 and 1999 is set forth below:
June 30, Dec. 30, Jan. 1, (Dollars in Thousands) 2001 2000 2000 --------- ---------- -------- Short-term debt, including current portion of long-term debt $ 3,918 $ 3,595 $ 4,627 Long-term debt 11,309 12,390 7,252 --------- -------- -------- Total debt 15,227 15,985 11,879 Shareholders' equity 21,327 21,311 25,210 --------- -------- -------- Total debt and shareholders' equity $ 36,554 $ 37,296 $ 37,089 (total capitalization) ========= ======== ======== Percent total debt to total capitalization 42% 43% 32% Percent long-term debt to equity 53% 58% 29% Percent total debt to equity 71% 75% 47%
Total debt decreased by $0.8 million in the first six months of 2001 or $0.1 million when adjusted to a constant foreign exchange rate, with U.S. debt decreasing by $0.7 million and debt in Switzerland decreasing by $0.1 million. At June 30, 2001, we had $4.0 million of borrowing availability under our U.S. loan agreements and $4.1 million of borrowing availability under our Swiss loan agreements. At June 30, 2001, working capital was $14.1 million compared to $13.8 million at December 30, 2000, and the ratio of current assets to current liabilities at those dates was 1.79 and 1.67, respectively. The increase in working capital was primarily due to a decrease in accounts payables partially offset by a decrease in accounts receivable. In the first six months of 2001 and 2000, we utilized internally-generated funds and our lines of credit to meet our working capital needs while in 2000 we also used bank borrowings and available cash to complete a share repurchase. Net cash provided by operating activities was $2.5 million in the first six months of 2001 compared to $4.4 million in the same period of 2000. The first six months of 2001 decrease in operating cash flow as compared to the same period in 2000 was primarily due to lower net income and a decrease in accounts payable net of accrued expenses. Net cash used in investing activities in the first six months of 2001 and 2000 was primarily for capital additions. -12- 15 Cash used in financing activities in the first six months of 2000 was primarily for the purchase of 508,000 shares of common stock. Changes in foreign exchange rates, particularly with respect to the Swiss franc and euro, caused a translation adjustment decrease in shareholders' equity of $1.4 million in the first six months of 2001. FORWARD-LOOKING STATEMENTS AND RISK FACTORS The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by us or on our behalf. We and our 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 our 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 us or on our behalf. 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. We undertake 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 our future performance and financial and competitive position, 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 us; (iii) rapid technological changes and developments and our 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 held by us and our competitors; (vi) the cyclical nature of our 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 our 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 to integrate acquired businesses without substantial costs, delays 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 our future performance and financial and competitive position and also 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 11, 2001. (b) Not applicable. (c) Shareholders of the Company were asked to vote on a proposal to elect two Class IV directors. The Board of Directors nominated Leo C. Beebe and Edward B. Cloues, II as Class IV directors. There were no other nominations. Messrs. Beebe and Cloues were then elected, with the result of the vote taken at the Annual Meeting being as follows:
Number of Votes --------------- FOR WITHHELD --- -------- Leo C. Beebe 2,024,223 17,439 Edward B. Cloues, II 1,954,901 91,761
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. Mr. Beebe died on June 30, 2001 after a brief illness and therefore the Board position in Class IV is now vacant. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Reports on Form 8-K There were no reports on Form 8-K for the quarter ended June 30, 2001. -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: July 26, 2001 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-