10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended      June 30, 2007          

OR

o 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 or Organization)	(I.R.S. Employer Identification No.)

Routes 55 & 553, P.O. Box 888, Pitman, New Jersey	08071-0888
(Address of Principal Executive Offices)	(Zip Code)

(856) 589-0500

Registrant’s Telephone Number, Including Area Code

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o Accelerated Filer þ Non-Accelerated Filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The Registrant had 2,695,759 shares of Common Stock outstanding as of July 30, 2007.

K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 30, 2006		1
	Consolidated Statements of Income and Retained Earnings (Unaudited) for the Three and Six Months Ended June 30, 2007 and July 1, 2006		2
	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2007 and July 1, 2006		3
	Notes to Consolidated Financial Statements (Unaudited)		4 - 13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		14 - 21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		21-22
Item 4.	Controls and Procedures.		22-23
PART II.	OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders.		24
Item 6.	Exhibits.		24
SIGNATURES			25
K-Tron International, Inc. 2006 Equity Compensation Plan
Certification
Certification
Certification pursuant to 18 U.S.C. Section 1350

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands except Per Share Data)

	(Unaudited)
	June 30,			December 30,
	2007			2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	16,678		$	14,038
Restricted cash		45			420
Accounts receivable, net of allowance for doubtful accounts of $799 and $852		29,217			23,364
Inventories, net		24,685			23,467
Deferred income taxes		1,617			1,617
Prepaid expenses and other current assets		3,212			3,649
Total current assets		75,454			66,555
PROPERTY, PLANT AND EQUIPMENT, net		27,722			29,316
PATENTS, net		1,402			1,457
GOODWILL		25,046			24,094
OTHER INTANGIBLES, net		17,454			17,762
NOTES RECEIVABLE AND OTHER ASSETS		1,494			1,665
DEFERRED INCOME TAXES		113			147
Total assets	$	148,685		$	140,996
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	1,416		$	404
Accounts payable		10,958			8,397
Accrued expenses and other current liabilities		9,590			11,618
Accrued commissions		3,486			3,009
Customer advances		7,629			8,233
Income taxes payable		4,775			4,270
Deferred income taxes		1,662			1,662
Total current liabilities		39,516			37,593
LONG-TERM DEBT, net of current portion		26,565			34,364
DEFERRED INCOME TAXES		3,583			3,583
OTHER NON-CURRENT LIABILITIES		—			75
SERIES B 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 4,697,333 shares and 4,615,623 shares		47			46
Paid-in capital		23,741			20,319
Retained earnings		79,387			69,255
Accumulated other comprehensive income		3,360			3,275
		106,535			92,895
Treasury stock, 2,002,574 shares — at cost		(27,514	)		(27,514	)
Total shareholders’ equity		79,021			65,381
Total liabilities and shareholders’ equity	$	148,685		$	140,996

See Notes to Consolidated Financial Statements

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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Dollars in Thousands except Per Share Data)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,			July 1,			June 30,			July 1,
	2007			2006			2007			2006
REVENUES:
Equipment and parts	$	44,077		$	34,436		$	88,416		$	64,614
Services and freight		3,397			2,325			5,942			4,261
Other		92			—			92			—
Total revenues		47,566			36,761			94,450			68,875
COST OF REVENUES:
Equipment and parts		24,317			18,375			49,080			35,412
Services and freight		2,692			2,121			5,174			4,047
Total cost of revenues		27,009			20,496			54,254			39,459
Gross profit		20,557			16,265			40,196			29,416
OPERATING EXPENSES:
Selling, general and administrative		12,320			10,321			23,926			19,191
Research and development		611			588			1,202			1,173
		12,931			10,909			25,128			20,364
Operating income		7,626			5,356			15,068			9,052
INTEREST (EXPENSE), net		(433	)		(210	)		(900	)		(366	)
Income before income taxes		7,193			5,146			14,168			8,686
INCOME TAX PROVISION		1,940			1,790			4,036			3,013
NET INCOME		5,253			3,356			10,132			5,673
RETAINED EARNINGS:
Beginning of period		74,134			58,700			69,255			56,383
End of period	$	79,387		$	62,056		$	79,387		$	62,056
EARNINGS PER SHARE:
Basic	$	1.96		$	1.29		$	3.79		$	2.19
Diluted	$	1.84		$	1.20		$	3.56		$	2.04
Weighted average common shares outstanding (basic)		2,684,000			2,597,000			2,674,000			2,587,000
Weighted average common and common equivalent shares outstanding (diluted)		2,859,000			2,796,000			2,846,000			2,777,000

See Notes to Consolidated Financial Statements

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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

	Six Months Ended
	June 30,			July 1,
	2007			2006
OPERATING ACTIVITIES:
Net income	$	10,132		$	5,673
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of asset		(92	)		—
Depreciation and amortization		2,677			2,238
Non-cash compensation		192			118
Deferred income taxes		34			(36	)
Changes in assets and liabilities, net of business acquired:
Accounts receivable, net		(5,642	)		(1,069	)
Inventories, net		(1,083	)		(2,001	)
Prepaid expenses and other current assets		616			(140	)
Other assets		241			297
Accounts payable		2,509			1,460
Accrued expenses and other current liabilities		(722	)		149
Net cash provided by operating activities		8,862			6,689
INVESTING ACTIVITIES:
Proceeds from disposition of asset		406			—
Businesses acquired, net of cash received		(1,854	)		(7,116	)
Capital expenditures		(903	)		(1,615	)
Restricted cash		375			(221	)
Other		(26	)		(35	)
Net cash used in investing activities		(2,002	)		(8,987	)
FINANCING ACTIVITIES:
Net repayments under notes payable to banks		—			(804	)
Proceeds from issuance of long-term debt		4,010			—
Principal payments on long-term debt		(10,803	)		(3,713	)
Tax benefit from stock option exercises		1,518			—
Proceeds from issuance of common stock		1,064			460
Net cash used in financing activities		(4,211	)		(4,057	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(9	)		412
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,640			(5,943	)
CASH AND CASH EQUIVALENTS:
Beginning of period		14,038			15,051
End of period	$	16,678		$	9,108
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	1,223		$	455
Income taxes	$	2,108		$	3,814
Seller financing for businesses acquired	$	635		$	3,000

See Notes to Consolidated Financial Statements

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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007
(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated 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 accounting principles generally accepted in the United States of America 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. All references to the second quarter or first six months of 2007 or 2006 mean the 13-week or 26-week period ended June 30, 2007 or July 1, 2006.

The unaudited financial statements herein should be read in conjunction with the Company’s annual report on Form 10-K for the fiscal year ended December 30, 2006 which was previously filed with the Securities and Exchange Commission (the “SEC”).

Certain reclassifications were made to the prior year’s consolidated financial statements to conform them to the current year presentation.

2. Acquisition

On March 27, 2007, the Company purchased certain assets of Wuxi Chenghao Machinery Co., Ltd. (“Wuxi Chenghao”), a privately-owned company in the People’s Republic of China. The purchased assets were transferred from the seller to a newly-created Wholly Foreign-Owned Enterprise established by the Company which conducts its business under the name Wuxi K-Tron Colormax Machinery Co., Ltd. (“Wuxi K-Tron Colormax”). The total cost of the transaction over a five-year period, including the $1,000,000 purchase price and payments under related employment and other arrangements with Wuxi Chenghao’s owner, could be as much as approximately $3,500,000.

3. New Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes: an interpretation of FASB Statement No. 109”. Interpretation 48, which clarifies Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes”, establishes the criterion that an individual tax position has to meet for some or all of the benefits of that position to be recognized in the Company’s financial statements. Interpretation 48 was effective for fiscal years beginning after December 15, 2006, and was adopted by the Company effective December 31, 2006. On initial application, Interpretation 48 was

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applied to all tax positions for which the statute of limitations remained open. Only tax positions that met the more-likely-than-not recognition threshold at the adoption date were recognized and, with respect to later dates, only those that met or meet the threshold on those later dates have been or will be recognized at those dates. The Company is subject to income taxes in the U.S. federal jurisdiction and also in various state, local and foreign jurisdictions. Tax laws and regulations within each jurisdiction are subject to interpretation and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local or non-U.S. income tax examinations by tax authorities for years before 2003. The Company recognizes interest accrued related to unrecognized tax liabilities in interest expense and recognizes penalties in operating expenses. The Company had accrued approximately $153,000 for the payment of interest and penalties at December 30, 2006. Subsequent changes to accrued interest and penalties have not been significant. The adoption of Interpretation 48 did not have a material impact on the Company’s consolidated financial statements.

In September 2006, the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”. SAB No. 108 expresses the SEC staff’s views regarding the process of quantifying financial statement misstatements. The SEC staff believes registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. The SEC staff will not object if a registrant records a one-time cumulative effect adjustment to correct errors existing in prior years that previously had been considered immaterial, quantitatively and qualitatively, based on appropriate use of the registrant’s approach. SAB No. 108 describes the circumstances where this would be appropriate as well as required disclosures to investors. SAB No. 108 is effective for fiscal years ending on or after November 15, 2006. The Company adopted SAB No. 108 during its fiscal year ended December 30, 2006. The adoption of SAB No. 108 did not have a material impact on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, a standard that provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. SFAS No. 157 does not expand the use of fair value in any new circumstances. SFAS No. 157 establishes a fair value hierarchy that prioritizes the information used to develop fair value assumptions. SFAS No. 157 is effective for fiscal years and interim periods beginning after November 15, 2007. The Company has not yet determined the impact on its consolidated financial statements of adopting SFAS No. 157 effective December 30, 2007.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option of Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115”, which provides companies with an option to report selected financial assets and liabilities at fair value. The objective of SFAS No. 159 is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets

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and liabilities differently. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years and interim periods beginning after November 15, 2007. The Company has not yet determined the impact on its consolidated financial statements of adopting SFAS No. 159 effective December 30, 2007.

4. Inventories

Inventories consist of the following:

	June 30,			December 30,
	2007			2006
	(in thousands)
Components	$	17,961		$	18,697
Work-in-process		7,930			5,580
Finished goods		643			739
Inventory reserves		(1,849	)		(1,549	)
	$	24,685		$	23,467

5. Intangible Assets

Intangible assets consist of the following:

	June 30, 2007				December 30, 2006
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
			(in thousands)
Amortized intangible assets
Patents	$	2,881	$	1,479	$	2,855	$	1,398
Drawings		4,980		644		4,980		545
Customer relationships		8,598		690		8,598		481
	$	16,459	$	2,813	$	16,433	$	2,424
Unamortized intangible assets
Trademarks and tradenames	$	5,210			$	5,210

The amortized intangible assets are being amortized on the straight-line basis (half-year expense in the year of acquisition for patents) over the expected periods of benefit, which range from 10 to 50 years. The weighted average remaining life of the amortizable intangible assets is 29 years. The amortization expense of intangible assets for the six-month periods ended June 30, 2007 and July 1, 2006 was $389,000 and $264,000.

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Goodwill increased by $952,000 during the first six months of 2007 with $1,105,000 related to the purchase of certain assets of Wuxi Chenghao, partially offset by a $153,000 tax gross-up refund from the shareholder of Premier Pneumatics, Inc., which was acquired on October 5, 2006.

6. Accrued Warranty

The Company offers a one-year warranty on a majority of its products. Warranty is accrued as a percentage of sales, based upon historical experience, on a monthly basis and is included in accrued expenses and other current liabilities. The following is an analysis of accrued warranty for the six-month periods ended June 30, 2007 and July 1, 2006:

	Six Months Ended
	June 30,			July 1,
	2007			2006
	(in thousands)
Beginning balance	$	1,538		$	989
Accrued warranty of acquired business		50			150
Accrual of warranty expense		970			613
Warranty costs incurred		(636	)		(444	)
Foreign exchange adjustment		(1	)		30
Ending balance	$	1,921		$	1,338

7. Long-Term Debt

Long-term debt consists of the following, with the annual interest rates shown being those in effect on June 30, 2007:

	June 30,			December 30,
	2007			2006
	(in thousands)
U.S. revolving line of credit	$	23,300		$	30,000
U.S. mortgage, interest at 6.45%		1,460			1,553
U.S. term note, interest at 5.00%		3,000			3,000
Other		221			215
		27,981			34,768
Less current portion		(1,416	)		(404	)
	$	26,565		$	34,364

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As of June 30, 2007, interest on the $23,300,000 borrowing under the U.S. revolving line of credit was payable at the following interest rates for the periods ending on the dates indicated:

			Expiration of
			Interest Rate
	Amount		Period		Per Annum Rate
Prime rate loan	$	550,000		—		7.250	%
Three-month LIBOR loan		6,000,000		7/31/2007		6.230	%
Two-month LIBOR loan		2,500,000		8/29/2007		6.215	%
Six-month LIBOR loan		4,250,000		11/30/2007		6.255	%
Three-year interest rate swap		5,000,000		10/13/2009		6.085	%
Four-year interest rate swap		5,000,000		10/13/2010		6.095	%
	$	23,300,000

On July 31, 2007, the $6,000,000 expiring LIBOR loan was replaced by a six-month $4,000,000 LIBOR loan at 6.245% per annum which becomes due on January 31, 2008, and by a $2,000,000 Prime rate loan at 7.250% per annum.

8. Earnings Per Share

The Company previously 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 number of common shares outstanding. Diluted Earnings Per Share is calculated similarly, except that the denominator includes the weighted average number of 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 June 30, 2007
(Dollars and Shares in Thousands
except Per Share Data)	Net Income Available
	To Common				Earnings
	Shareholders		Shares		Per Share
Basic	$	5,253		2,684	$	1.96
Common share equivalent of outstanding options		—		175		(0.12	)
Diluted	$	5,253		2,859	$	1.84

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	For the Three Months Ended July 1, 2006
(Dollars and Shares in Thousands
except Per Share Data)	Net Income Available
	To Common				Earnings
	Shareholders		Shares		Per Share
Basic	$	3,356		2,597	$	1.29
Common share equivalent of outstanding options		—		199		(0.09	)
Diluted	$	3,356		2,796	$	1.20

	For the Six Months Ended June 30, 2007
(Dollars and Shares in Thousands
except Per Share Data)	Net Income Available
	To Common				Earnings
	Shareholders		Shares		Per Share
Basic	$	10,132		2,674	$	3.79
Common share equivalent of outstanding options		—		172		(0.23	)
Diluted	$	10,132		2,846	$	3.56

	For the Six Months Ended July 1, 2006
(Dollars and Shares in Thousands
except Per Share Data)	Net Income Available
	To Common				Earnings
	Shareholders		Shares		Per Share
Basic	$	5,673		2,587	$	2.19
Common share equivalent of outstanding options		—		190		(0.15	)
Diluted	$	5,673		2,777	$	2.04

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 weighted average number includes the weighted average number of common shares outstanding plus the shares issuable upon the exercise of stock options after the assumed repurchase of common shares with the related proceeds at the average market price during the period.

9. Share-Based Compensation

The Company adopted SFAS No. 123(R), “Share-Based Payment”, effective January 1, 2006. SFAS No. 123(R) requires the Company to recognize expense related to the fair value of share-based compensation awards, including employee and director stock grants and options.

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Prior to the adoption of SFAS No. 123(R), the Company accounted for stock options using the intrinsic value method of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and it did not recognize compensation expense in its income statement for options granted that had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. However, the Company did record compensation expense related to restricted stock grants based on the market value of its common stock at the date of grant and the vesting period of the grant. As required by SFAS No. 123, “Accounting for Stock-Based Compensation”, the Company also provided certain pro forma disclosures for stock option awards as if the fair value-based approach of SFAS No. 123 had been applied.

The Company has elected to use the modified prospective transition method as permitted by SFAS No. 123(R) and therefore has not restated its financial results for prior periods. Under this transition method, the Company applies the provisions of SFAS No. 123(R) to stock option awards granted, modified, repurchased or cancelled after December 31, 2005. Additionally, for unvested stock option awards granted prior to the effective date of the Company’s adoption of SFAS No. 123(R) which have not been fully expensed in prior years, either in the Company’s income statement or in pro forma disclosures in the notes thereto, the Company recognizes compensation expense in the same manner as was used in its income statement or for pro forma disclosures prior to the effective date of its adoption of SFAS No. 123(R).

There was no cost for stock option compensation for the first six months of 2007. The pre-tax cost for stock option compensation was approximately $62,000 ($38,000 after tax) for the first six months of 2006.

As of June 30, 2007, the Company did not have any prospective cost of stock option compensation to be expensed.

The Company issued 9,000 shares of restricted common stock in May of each of 2007 and 2006, with each grant vesting on the four-year anniversary of the date of grant. Compensation expense related to this restricted stock is recognized ratably over the four years based on the fair value of the shares at date of grant, which was $93.50 per share in 2007 and $51.50 per share in 2006.

There were no stock options granted in 2006 or in the first six months of 2007.

10. Comprehensive Income

Comprehensive income is the total of net income, the changes (net of tax) in the unrealized gain or loss on a foreign exchange hedge and on interest rate swaps and the change in foreign currency translation adjustments, which were the Company’s only non-owner changes in equity in the first six months of 2007 and 2006. For the three and six-month periods ended June 30, 2007 and July 1, 2006, the following table sets forth the Company’s comprehensive income:

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	Three Months Ended						Six Months Ended
	June 30,			July 1,			June 30,		July 1,
	2007			2006			2007		2006
				(in thousands)
Net income	$	5,253		$	3,356		$	10,132	$	5,673
Unrealized gain (loss) on foreign exchange hedge, net of tax		—			(114	)		—		(114	)
Unrealized gain (loss) on interest rate swaps, net of tax		71			(6	)		50		(6	)
Foreign currency translation gain (loss)		(104	)		1,455			35		1,688
Comprehensive income	$	5,220		$	4,691		$	10,217	$	7,241

11. Management Geographic Information

The Company has adopted the provisions of SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information”. SFAS No. 131 introduced a 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, material handling equipment and systems. The Company operates in two primary geographic locations, North and South America (the “Americas”) and Europe, the Middle East, Africa and Asia (“EMEA/Asia”).

For the three and six-month periods ended June 30, 2007 and July 1, 2006, the following table sets forth the Company’s geographic information:

			EMEA/		Elimi-			Consoli-
	Americas		Asia		nations			dated
			(in thousands)
THREE MONTHS ENDED June 30, 2007
Revenues
Sales to unaffiliated customers	$	31,756	$	15,810	$	—		$	47,566
Sales to affiliates		1,269		1,515		(2,784	)		—
Total sales	$	33,025	$	17,325	$	(2,784	)	$	47,566
Operating income (loss)	$	4,861	$	2,800	$	(35	)	$	7,626
Interest (expense), net									(433	)
Income before income taxes								$	7,193

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			EMEA/		Elimi-			Consoli-
	Americas		Asia		nations			dated
			(in thousands)
THREE MONTHS ENDED July 1, 2006
Revenues
Sales to unaffiliated customers	$	24,557	$	12,204	$	—		$	36,761
Sales to affiliates		794		906		(1,700	)		—
Total sales	$	25,351	$	13,110	$	(1,700	)	$	36,761
Operating income (loss)	$	4,342	$	1,024	$	(10	)	$	5,356
Interest (expense), net									(210	)
Income before income taxes								$	5,146

			EMEA/		Elimi-			Consoli-
	Americas		Asia		nations			dated
			(in thousands)
SIX MONTHS ENDED June 30, 2007
Revenues
Sales to unaffiliated customers	$	60,097	$	34,353	$	—		$	94,450
Sales to affiliates		2,305		2,528		(4,833	)		—
Total sales	$	62,402	$	36,881	$	(4,833	)	$	94,450
Operating income (loss)	$	8,092	$	6,998	$	(22	)	$	15,068
Interest (expense), net									(900	)
Income before income taxes								$	14,168

			EMEA/		Elimi-			Consoli-
	Americas		Asia		nations			dated
			(in thousands)
SIX MONTHS ENDED July 1, 2006
Revenues
Sales to unaffiliated customers	$	45,446	$	23,429	$	—		$	68,875
Sales to affiliates		1,472		1,636		(3,108	)		—
Total sales	$	46,918	$	25,065	$	(3,108	)	$	68,875
Operating income (loss)	$	7,228	$	1,864	$	(40	)	$	9,052
Interest (expense), net									(366	)
Income before income taxes								$	8,686

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For the three and six-month periods ended June 30, 2007 and July 1, 2006, the following table sets forth revenues from external customers:

	Three Months Ended				Six Months Ended
	June 30,		July 1,		June 30,		July 1,
	2007		2006		2007		2006
			(in thousands)
Americas
U.S.	$	25,230	$	20,102	$	47,665	$	37,810
All others		6,526		4,455		12,432		7,636
Total		31,756		24,557		60,097		45,446
EMEA/Asia
France		937		850		1,639		1,586
Germany		2,723		1,887		5,489		4,312
Netherlands		1,463		241		6,576		612
United Kingdom		2,445		2,881		3,935		5,107
All others		8,242		6,345		16,714		11,812
Total		15,810		12,204		34,353		23,429
	$	47,566	$	36,761	$	94,450	$	68,875

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

     We are engaged in one principal business segment — material handling equipment and systems. We operate in two primary geographic locations — North and South America (the “Americas”) and Europe, the Middle East, Africa and Asia (“EMEA/Asia”).

     Within the material handling equipment and systems segment, we have two main business lines, which are our process and size reduction business lines.

     On March 3, 2006, we purchased all of the outstanding stock of J.M.J. Industries, Inc., which operated its business under the Gundlach tradename (“Gundlach”). The purchase price was $9,154,500, of which $6,154,500 was paid in cash and $3,000,000 by delivery of an unsecured promissory note bearing interest at 5% per annum and payable in three equal, annual installments of $1,000,000 on March 3 in each of 2008, 2009 and 2010. We also paid off all of the acquired company’s bank debt, which amounted to approximately $1,347,000. We did not borrow any money in connection with either the acquisition or the payoff of the bank debt. The Gundlach operation is part of our size reduction business line.

     On October 5, 2006, we purchased all of the outstanding stock of Premier Pneumatics, Inc. (“Premier”). The preliminary purchase price was $27,565,000, all of which was paid in cash, including a $2,000,000 escrow. The final purchase price of $27,453,000 included a $112,000 adjustment paid to us based on Premier’s net working capital as of the closing date. In February 2007, we also made a preliminary payment of $1,567,000 to the seller in connection with our Internal Revenue Code section 338(h)(10) election (“Premier 338(h)(10) election”) with respect to this acquisition. The amount owed to the seller under the Premier 338(h)(10) election was finalized in April 2007 and reduced by $153,000 to $1,414,000, and the seller returned $153,000 to us. We financed the purchase price and related costs of the Premier acquisition under a new five-year, $50,000,000 unsecured credit facility entered into on September 29, 2006 between Citizens Bank of Pennsylvania and us and our U.S. subsidiaries (the “Citizens Credit Facility”). The Premier operation is part of our process business line.

     On March 27, 2007, we purchased certain assets of Wuxi Chenghao Machinery Co., Ltd. (“Wuxi Chenghao”), a privately-owned company in the People’s Republic of China. The purchased assets were transferred from the seller to a newly-created Wholly Foreign-Owned Enterprise which we established that conducts its business under the name Wuxi K-Tron Colormax Machinery Co., Ltd. (“Wuxi K-Tron Colormax”). The total cost of the transaction over a five-year period, including the $1,000,000 purchase price and payments under related employment and other arrangements with Wuxi Chenghao’s owner, could be as much as approximately $3,500,000. The Wuxi K-Tron Colormax operation is part of our process business line.

     The following provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with our consolidated financial statements and accompanying notes. All references in this Item 2 to the second quarter or first six months of 2007 or 2006 mean the 13-week or 26-week period ended June 30, 2007 or July 1, 2006.

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Critical Accounting Assumptions, Estimates and Policies; Recent Accounting Pronouncements

     This discussion and analysis of our financial condition and results of operations is based on the accounting policies used and disclosed in our 2006 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of our annual report on Form 10-K for the fiscal year ended December 30, 2006 (our “2006 Form 10-K”). The preparation of those financial statements required management to make assumptions and estimates that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those based on such assumptions and estimates.

     Our critical accounting policies are described in Management’s Discussion and Analysis included in our 2006 Form 10-K. There have been no changes in these accounting policies.

     Our significant accounting policies are described in Note 2 to our 2006 consolidated financial statements contained in our 2006 Form 10-K. Information concerning our implementation and the impact of recent accounting standards issued by the Financial Accounting Standards Board is included in the notes to our 2006 consolidated financial statements and also in Note 3 to our consolidated financial statements contained in this quarterly report on Form 10-Q. We did not adopt any accounting policy in the first six months of 2007 that had a material impact on our consolidated financial statements.

Results of Operations

Overview

     For the second quarter and first six months of 2007, we reported revenues of $47,566,000 and $94,450,000 and net income of $5,253,000 and $10,132,000, compared to revenues of $36,761,000 and $68,875,000 and net income of $3,356,000 and $5,673,000 for the same periods in 2006. We believe that the increases in our revenues and net income in the second quarter and first six months of 2007 compared to the same periods in 2006 were primarily the result of generally stronger business conditions and increased capital spending by our customers in EMEA/Asia (including the recognition of approximately $5,000,000 in revenues in the first quarter of 2007 from the second of two large orders previously disclosed), contributions from the October 5, 2006 Premier and March 3, 2006 Gundlach acquisitions and, to a lesser degree, the positive effect of a weaker U.S. dollar in the second quarter and first six months of 2007 versus the same periods in 2006 on the translation of the revenues and profits of our foreign operations into U.S. dollars. Our effective tax rates for the second quarter and first six months of 2007 were 27.0% and 28.5%, down from 34.8% and 34.7% in the same periods of 2006. These decreases were primarily due to a second quarter 2007 income tax benefit of approximately $410,000 from the finalization of a Swiss tax audit for the years 2004 and 2005 and to a higher proportion of earnings from EMEA/Asia in the second quarter and first six months of 2007, which are taxed at an overall lower rate than earnings in the United States.

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Foreign Exchange Rates

     We are an international company, and we derived approximately 36% and 34% of our revenues for the first six months of 2007 and 2006 from products manufactured in, and services performed from, our facilities located outside the United States, primarily in Europe. With our global operations, we are sensitive to changes in foreign currency exchange rates, also referred to as foreign exchange rates, which can affect both the translation of financial statement items into U.S. dollars as well as 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.

     Since we receive substantial revenues from activities in foreign jurisdictions, 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, euro and British pound sterling and, to a lesser degree, other currencies. When the U.S. dollar weakens against these currencies, the U.S. dollar value of non-U.S. dollar-based sales increases. When the U.S. dollar strengthens against these currencies, the U.S. dollar value of non-U.S. dollar-based sales decreases. 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, our revenues in U.S. dollars generally benefit from a weaker dollar and are adversely affected by a stronger dollar relative to major currencies worldwide, especially those identified above. In particular, a general weakening of the U.S. dollar against other currencies would positively affect our revenues, gross profit and operating income as expressed in U.S. dollars (provided that the gross profit and operating income numbers from foreign operations are not losses, since in the case of a loss, the effect would be to increase the loss), whereas a general strengthening of the U.S. dollar against such currencies would have the opposite effect. In addition, our revenues and income with respect to sales transactions may be affected by changes in foreign exchange rates where the sale is made in a currency other than the functional currency of the facility manufacturing the product subject to the sale.

     For the second quarter and first six months of 2007 and 2006, the changes in certain key foreign exchange rates affecting us were as follows:

	Three Months Ended						Six Months Ended
	June 30,				July 1,		June 30,				July 1,
	2007				2006		2007				2006
Average U.S. dollar equivalent of one Swiss franc		0.818				0.807		0.814				0.789
% change vs. prior year			+1.4	%					+3.2	%
Average U.S. dollar equivalent of one euro		1.349				1.260		1.329				1.232
% change vs. prior year			+7.1	%					+7.9	%

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	Three Months Ended						Six Months Ended
	June 30,				July 1,		June 30,				July 1,
	2007				2006		2007				2006
Average U.S. dollar equivalent of one British pound sterling		1.987				1.833		1.970				1.793
% change vs. prior year			+8.4	%					+9.9	%
Average Swiss franc equivalent of one euro		1.649				1.561		1.633				1.561
% change vs. prior year			+5.6	%					+4.6	%
Average Swiss franc equivalent of one British pound sterling		2.429				2.271		2.420				2.272
% change vs. prior year			+7.0	%					+6.5	%

Presentation of Results and Analysis

     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
	2007			2006			2007			2006
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues		56.8			55.8			57.4			57.3
Gross profit		43.2			44.2			42.6			42.7
Selling, general and administrative		25.9			28.0			25.3			27.9
Research and development		1.3			1.6			1.3			1.7
Operating income		16.0			14.6			16.0			13.1
Interest expense, net		0.9			0.6			1.0			0.5
Income before income taxes		15.1			14.0			15.0			12.6
Income tax provision		4.1			4.9			4.3			4.4
Net income		11.0	%		9.1	%		10.7	%		8.2	%

     The following table sets forth our backlog at the end of the periods indicated:

	June 30, 2007		Dec. 30, 2006		July 1, 2006
Backlog (at June 30, 2007 foreign exchange rates, in thousands of dollars)	$	54,412	$	49,893	$	40,944

     Total revenues increased by $10,805,000 or 29.4% in the second quarter of 2007 and by $25,575,000 or 37.1% in the first six months of 2007 compared to the same periods in 2006. We believe that these increases were primarily the result of generally stronger business conditions and increased spending on capital equipment by our customers in EMEA/Asia (including the

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recognition of approximately $5,000,000 in revenues in the first quarter of 2007 from the second of two large orders previously disclosed), contributions from the October 5, 2006 Premier and March 3, 2006 Gundlach acquisitions and, to a lesser degree, a $365,000 and $1,315,000 positive effect of a weaker U.S. dollar in the second quarter and first six months of 2007 versus the same periods in 2006 on the translation of the revenues of our foreign operations into U.S. dollars.

     Gross profit as a percentage of total revenues decreased to 43.2% in the second quarter of 2007 from 44.2% for the same period in 2006 and decreased to 42.6% in the first six months of 2007 from 42.7% for the same period last year. We believe that these decreases primarily reflected a change in the sales mix of the products and services that we sold within our two business lines. Sales mix refers to the relative amounts of different products sold and services provided. Gross margin levels vary with the product sold or service provided. For example, sales of replacement parts in the size reduction business line generally carry a higher gross margin than sales of equipment within that line.

     Selling, general and administrative (“SG&A”) expense increased by $1,999,000 or 19.4% in the second quarter of 2007 and by $4,735,000 or 24.7% in the first six months of 2007 compared to the same periods in 2006. We believe that the increase in the second quarter of 2007 was primarily due to the inclusion of the Premier business that was acquired October 5, 2006, a higher employee bonus accrual, higher sales commissions related to increased revenues and the unfavorable effect of a weaker U.S. dollar on the translation of foreign costs into U.S. dollars. The increase for the first six months of 2007 was primarily the result of these same items and also the inclusion in 2007 of six months of the Gundlach business acquired March 3, 2006 versus four months in 2006. As a percentage of revenues, SG&A decreased to 25.9% and 25.3% in the second quarter and first six months of 2007 versus 28.0% and 27.9% in the second quarter and first six months of 2006.

     Research and development (“R&D”) expense increased 3.9% in the second quarter and 2.5% for the first six months of 2007 compared to the same periods in 2006 due primarily to the effect of a weaker U.S. dollar in the second quarter and first six months of 2007 on the translation into U.S. dollars of our R&D expenses incurred in Switzerland.

     Interest expense, net of interest income, increased by $223,000 or 106.2% in the second quarter of 2007 and by $534,000 or 145.9% in the first six months of 2007 compared to the same periods in 2006. These increases were primarily due to the financing of the October 5, 2006 acquisition of Premier and, in the case of the six month comparison, also because of lower interest income in the first quarter of 2007, the effects of which were partially offset by the effect of lower debt levels, excluding the borrowings related to the Premier acquisition, in the second quarter and first six months of 2007 versus the same periods in 2006.

     Income before income taxes increased to $7,193,000 in the second quarter of 2007 and $14,168,000 in the first six months of 2007 compared to $5,146,000 and $8,686,000 for the same periods in 2006. The increases of $2,047,000 in the second quarter of 2007 and $5,482,000 for the first six months of 2007 were primarily the net result of the items discussed above.

     The income tax provisions for the second quarters of 2007 and 2006 were $1,940,000 and $1,790,000, and the overall effective tax rates were 27.0% and 34.8%. The income tax provisions for the first six months of 2007 and 2006 were $4,036,000 and $3,013,000, and the

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overall effective tax rates were 28.5% and 34.7%. The lower effective tax rates in 2007 versus 2006 were primarily due to a second quarter 2007 income tax benefit of approximately $410,000 from the finalization of a Swiss tax audit for the years 2004 and 2005 and to a higher proportion of earnings from EMEA/Asia in the second quarter and first six months of 2007, which are taxed at an overall lower rate than earnings in the United States.

     Our backlog at constant foreign exchange rates increased by $4,519,000 or 9.1% at the end of the second quarter of 2007 compared to the end of fiscal year 2006, from $49,893,000 to $54,412,000. Our backlog at constant foreign exchange rates increased by $13,468,000 or 32.9% at the end of the second quarter of 2007 compared to the end of the second quarter of 2006, from $40,944,000 to $54,412,000. These increases primarily reflected stronger demand for equipment in our process and size reduction business lines in the Americas as well as our acquisition of Premier in the fourth quarter of 2006. A significant part of our backlog at June 30, 2007 consisted of orders that were expected to be shipped within 120 days.

Liquidity and Capital Resources

Capitalization

     Our capitalization at the end of the second quarter of 2007 and at the end of fiscal years 2006 and 2005 is summarized below:

	June 30,			December 30,			December 31,
(Dollars in Thousands)	2007			2006			2005
Short-term debt, including current portion of long-term debt	$	1,416		$	404		$	4,316
Long-term debt		26,565			34,364			12,675
Total debt		27,981			34,768			16,991
Shareholders’ equity		79,021			65,381			49,520
Total debt and shareholders’ equity	$	107,002		$	100,149		$	66,511
(total capitalization)
Percent total debt to total capitalization		26	%		35	%		26	%
Percent long-term debt to equity		34	%		53	%		26	%
Percent total debt to equity		35	%		53	%		34	%

     The weighted average annual interest rate on total debt at June 30, 2007 was 6.11%.

     Total debt decreased by $6,787,000 in the first six months of 2007 ($6,793,000 at constant foreign exchange rates). At June 30, 2007, and subject to certain conditions which may limit the amount that may be borrowed at any particular time, we had $26,700,000 of unused borrowing capacity under the Citizens Credit Facility and $8,712,000 of unused borrowing capacity under our foreign loan agreements.

Other Items

     At June 30, 2007, working capital was $35,938,000 compared to $28,962,000 at December 30, 2006, and the ratio of current assets to current liabilities at those dates was 1.91 and 1.77. In the first six months of 2007 and 2006, we utilized internally generated funds and our lines of credit to meet our working capital needs.

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     Net cash provided by operating activities was $8,862,000 in the first six months of 2007 compared to $6,689,000 for the same period of 2006. This $2,173,000 increase in operating cash flow was primarily due to higher net income, a greater increase in accounts payable, a smaller increase in inventories and an increase in prepaid expenses and other current assets, partially offset by a larger increase in accounts receivable and a decrease in accrued expenses and other current liabilities, in each case when comparing changes in these categories of assets and liabilities for this year’s first six months versus last year’s first six months.

     Net cash used in investing activities for the first six months of 2007 was primarily for the Premier 338(h)(10) election, the purchase of certain assets of Wuxi Chenghao and capital additions, partially offset by a reduction of restricted cash associated with letters of credit and proceeds from the disposition of an asset, while net cash used in investing activities for the first six months of 2006 was primarily for the acquisition of Gundlach and capital additions.

     Net cash used in financing activities in the first six months of 2007 was for net reductions in debt, partially offset by the proceeds of stock option exercises and the tax benefit associated therewith. Net cash used in financing activities in the first six months of 2006 was primarily for net reductions in debt, partially offset by the proceeds from stock option exercises.

     Shareholders’ equity increased $13,640,000 in the first six months of 2007 compared to the end of fiscal year 2006, of which $10,132,000 was from net income, $1,905,000 was from the issuance of common stock pursuant to restricted stock grants and the exercise of stock options, $1,518,000 was from the tax benefit associated with such stock option exercises, $35,000 was from favorable changes in foreign exchange rates, primarily the translation of Swiss francs into U.S. dollars between the beginning and the end of the six-month period, and $50,000 was from an unrealized gain, net of taxes, attributable to two interest rate swaps.

Future Payments Under Contractual Obligations

     We are obligated to make future payments under various contracts such as debt agreements and lease agreements, and we are subject to certain other commitments and contingencies. There have been no material changes to Future Payments Under Contractual Obligations as reflected in the Liquidity and Capital Resources section of Management’s Discussion and Analysis in our 2006 Form 10-K, except for a $6,700,000 reduction in the balance due in 2011 under the Citizens Credit Facility. Refer to Notes 8 and 15 to the consolidated financial statements in our 2006 Form 10-K for additional information on long-term debt and commitments and contingencies.

Risk Factors

     In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors.” in our 2006 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2006 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

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Forward-Looking Statements

     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 or 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 contingencies which are difficult to predict. These risks and uncertainties include, but are not limited to, the risks described above under the heading “Risk Factors”. Many of the factors that will determine our future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by any forward-looking statements that we may make. The forward-looking statements contained in this report include, but are not limited to, statements regarding the effect of changes in foreign exchange rates and interest rates on our business and financial results. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     We are currently exposed to certain market risks related to (i) fluctuations in foreign exchange rates and (ii) interest rate changes.

Foreign Exchange Rate Risk

     The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the Swiss franc, the U.S. dollar versus the euro, the U.S. dollar versus the British pound sterling, the Swiss franc versus the euro and the Swiss franc versus the British pound sterling. We do not, as a routine matter, use hedging vehicles to manage foreign exchange exposures. Foreign cash balances in currencies other than the Swiss franc are limited in amount in order to manage the transaction exposure caused by the marking to market of non-Swiss franc balances to Swiss franc values on the balance sheet of our Swiss subsidiary.

     As of June 30, 2007, a 10% unfavorable change in the foreign exchange rates affecting balance sheet transactional exposures would have resulted in a reduction in our pre-tax income for the first six months of 2007 of approximately $825,000, or 6%. This hypothetical reduction on transactional exposures is based on the differences between the June 30, 2007 actual foreign exchange rates and hypothetical rates assuming a 10% unfavorable change in foreign exchange rates on that date.

     The translation of the balance sheets of our non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign exchange rates. These translation gains or losses are recorded as translation adjustments within the accumulated other comprehensive

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income component of shareholders’ equity on our balance sheet. Using the above example, a hypothetical change in translation adjustments would be calculated by multiplying the net assets of our non-U.S. operations by a 10% unfavorable change in the applicable foreign exchange rates. The result of this calculation would be to reduce shareholders’ equity by approximately $4,959,000, or 6% of our June 30, 2007 shareholders’ equity of $79,021,000.

Interest Rate Risk

     We have credit facilities or loans that require us to pay interest at rates that may change periodically. These variable rate obligations expose us to the risk of increased interest expense if short-term interest rates rise. We limit our exposure to increased interest expense from rising short-term interest rates by including in our debt portfolio various amounts of fixed rate debt as well as by the use of interest rate swaps. As of June 30, 2007, we had total debt of $27,981,000, $4,460,000 of which was subject to fixed interest rates which ranged from 5.00% to 6.45%, $13,521,000 of which was subject to variable interest rates which ranged from 6.215% to 7.25% and $10,000,000 of which was variable rate debt subject to two interest rate swaps with fixed interest rates at 6.085% and 6.095%, subject to increase or decrease in the event of a change in the level of our ratio of funded debt to adjusted earnings before interest expense, tax expense and depreciation and amortization expenses at the end of the most recent measurement period, as described in the Citizens Credit Facility. A 100 basis point increase in interest rates on the $13,521,000 of variable rate debt would increase annual interest expense by approximately $135,000.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

     An evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report was carried out by us under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities and Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, since we acquired certain assets of Wuxi Chenghao Machinery Co., Ltd. on March 27, 2007 and transferred them to Wuxi K-Tron Colormax Machinery Co., Ltd., a newly-formed business, our ability to effectively apply our disclosure controls and procedures to Wuxi K-Tron Colormax Machinery Co., Ltd. is inherently limited by the short period of time that we have had to evaluate that operation since the acquisition.

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Change in Internal Control over Financial Reporting

     No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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, 2007.
(b)	Not applicable
(c)	Shareholders of the Company were asked to vote on a proposal to elect one Class II director. The Board of Directors nominated Robert A. Engel as the Class II director. There were no other nominations. Mr. Engel was elected as the Class II director, with the result of the vote being as follows:

	Number of Votes
	For		Withheld
Robert A. Engel		2,409,286		82,578

	Directors are elected by a plurality of the votes cast; therefore, votes cast in the election were not recorded against or as an abstention, nor were broker non-votes recorded.
(d)	Not applicable

Item 6. Exhibits.

10.1	K-Tron International, Inc. 2006 Equity Compensation Plan, as amended on May 11, 2007**
31.1	Chief Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31.2	Chief Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32.1	Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350
**	Management contract or compensatory plan or arrangement required to be filed or incorporated as an exhibit

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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 7, 2007	By:	RONALD R. REMICK
		Ronald R. Remick
		Senior Vice President, Chief Financial Officer and Treasurer (Duly authorized officer and principal financial officer of the Registrant)
	By:	ALAN R. SUKONECK
		Alan R. Sukoneck
		Vice President, Chief Accounting and Tax Officer (Duly authorized officer and principal accounting officer of the Registrant)

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EXHIBIT INDEX

Exhibit
Number		Description
	10.1	K-Tron International, Inc. 2006 Equity Compensation Plan, as amended on May 11, 2007**
	31.1	Chief Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
	31.2	Chief Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
	32.1	Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350

** Management contract or compensatory plan or arrangement required to be filed or incorporated as an exhibit

EX-10.1

Exhibit 10.1

K-TRON INTERNATIONAL, INC.

2006 EQUITY COMPENSATION PLAN

(As amended on May 11, 2007)

K-TRON INTERNATIONAL, INC.

2006 EQUITY COMPENSATION PLAN

(As amended on May 11, 2007)

     The purpose of the K-Tron International, Inc. 2006 Equity Compensation Plan (the “Plan”) is to provide (i) employees of K-Tron International, Inc. (the “Company”) and its subsidiaries and (ii) non-employee members of the Board of Directors of the Company with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units and other stock-based awards. The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefitting the Company’s shareholders, and will align the economic interests of the participants with those of the shareholders.

     Section 1. Definitions

     The following terms shall have the meanings set forth below for purposes of the Plan:

          (a) “Board” shall mean the Board of Directors of the Company.

          (b) “Cause” shall mean, except to the extent specified otherwise by the Committee, a finding by the Committee that the Grantee (i) has breached his or her employment or service contract with the Employer, (ii) has engaged in disloyalty to the Employer, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty, (iii) has disclosed trade secrets or confidential information of the Employer to persons not entitled to receive such information, (iv) has breached any written non-competition, non-solicitation or confidentiality agreement between the Grantee and the Employer or (v) has engaged in such other behavior detrimental to the interests of the Employer as the Committee determines.

          (c) “Change of Control” shall be deemed to have occurred upon:

               (i) A liquidation or dissolution of the Company or a sale (excluding transfers to subsidiaries) of all or substantially all of the Company’s assets;

               (ii) As a result of a tender offer, stock purchase, other stock acquisition, merger, consolidation, recapitalization, reverse split or sale or transfer of assets, any person or group (as such terms are used in and under Section 13(d) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13-d under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the outstanding common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

               (iii) During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board cease for any reason to constitute at

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least a majority thereof, unless the election, or the nomination for election by the Company’s shareholders, of at least two-thirds of the directors who were not directors at the beginning of such period was approved by a vote of at least two-thirds of the directors then still in office who were either directors at the beginning of the period or who, in connection with their election or nomination, received the foregoing two-thirds approval.

          (d) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (e) “Committee” shall mean the committee, consisting of members of the Board, designated by the Board to administer the Plan.

          (f) “Company” shall mean K-Tron International, Inc. and shall include its successors.

          (g) “Company Stock” shall mean common stock of the Company.

          (h) “Disability” or “Disabled” shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3) of the Code, within the meaning of the Employer’s long-term disability plan applicable to the Grantee or as otherwise determined by the Committee.

          (i) “Dividend Equivalent” shall mean an amount determined by multiplying the number of shares of Company Stock subject to a Grant by the per-share cash dividend paid by the Company on its outstanding Company Stock, or the per-share fair market value (as determined by the Committee) of any dividend paid on its outstanding Company Stock in consideration other than cash.

          (j) “Employee” shall mean an employee of the Company or a subsidiary of the Company.

          (k) “Employed by, or providing service to, the Employer” shall mean employment or service as an Employee or member of the Board (so that, for purposes of exercising Options and SARs and satisfying conditions with respect to Stock Awards and Performance Units, a Grantee who has served as both an Employee and a director shall not be considered to have terminated employment or service until the Grantee ceases to be both an Employee and member of the Board).

          (l) “Employer” shall mean the Company and each of its subsidiaries.

          (m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          (n) “Exercise Price” shall mean the purchase price of Company Stock subject to an Option.

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          (o) “Fair Market Value” shall mean:

               (i) If the Company Stock is publicly traded, then the Fair Market Value per share shall be determined as follows: (x) if the principal trading market for the Company Stock is a national securities exchange or Nasdaq, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, or (y) if the Company Stock is not principally traded on any such exchange or on Nasdaq, the mean between the last reported “bid” and “asked” prices on a share of Company Stock on the relevant date, as reported by the OTC Bulletin Board or, if shares are not reported on the OTC Bulletin Board, on pinksheets.com.

               (ii) If the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determined by the Committee.

          (p) “Grant” shall mean a grant of Options, SARs, Stock Awards, Stock Units or Other Stock-Based Awards under the Plan.

          (q) “Grant Instrument” shall mean the agreement that sets forth the terms of a Grant, including any amendments.

          (r) “Grantee” shall mean an Employee or Non-Employee Director who receives a Grant under the Plan.

          (s) “Incentive Stock Option” shall mean an option to purchase Company Stock that is intended to meet the requirements of section 422 of the Code.

          (t) “Non-Employee Director” shall mean a member of the Board who is not an Employee.

          (u) “Nonqualified Stock Option” shall mean an option to purchase Company Stock that is not intended to meet the requirements of section 422 of the Code.

          (v) “Option” shall mean an Incentive Stock Option or Nonqualified Stock Option granted under the Plan.

          (w) “Other Stock-Based Award” shall mean any Grant based on, measured by or payable in Company Stock, as described in Section 10.

          (x) “SAR” shall mean a stock appreciation right with respect to a share of Company Stock.

          (y) “Stock Award” shall mean an award of Company Stock, with or without restrictions.

          (z) “Stock Unit” shall mean a unit that represents a hypothetical share of Company Stock.

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     Section 2. Administration

          (a) Committee. The Plan shall be administered and interpreted by the Board or by a Committee appointed by the Board. The Committee, if applicable, should consist of two or more persons who are “outside directors” as defined under section 162(m) of the Code, and related Treasury regulations, and “non-employee directors” as defined under Rule 16b-3 under the Exchange Act. The Board shall approve and administer all grants made to Non-Employee Directors. The Committee may delegate authority to one or more subcommittees, as it deems appropriate. To the extent that the Board or a subcommittee administers the Plan, references in the Plan to the “Committee” shall be deemed to refer to the Board or such subcommittee. In the absence of a specific designation by the Board to the contrary, the Plan shall be administered by the Compensation and Human Resources Committee of the Board or any successor Board committee performing substantially the same functions.

          (b) Committee Authority. The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms of any previously issued grant, subject to the provisions of Section 18 below, and (v) deal with any other matters arising under the Plan.

          (c) Committee Determinations. The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

     Section 3. Grants

     Awards under the Plan may consist of grants of Options as described in Section 6, Stock Awards as described in Section 7, Stock Units as described in Section 8, SARs as described in Section 9 and Other Stock-Based Awards as described in Section 10. All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in the Grant Instrument. All Grants shall be made conditional upon the Grantee’s acknowledgement, in writing or by acceptance of the Grant, that all decisions and determinations of the Committee shall be final and binding on the Grantee, his or her beneficiaries and any other person having or claiming an interest under such Grant. Grants under a particular Section of the Plan need not be uniform as among the Grantees.

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     Section 4. Shares Subject to the Plan

          (a) Shares Authorized. Subject to adjustment as described below, the aggregate number of shares of Company Stock that may be issued or transferred under the Plan is 200,000 shares. Shares issued or transferred under the Plan may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent Options or SARs granted under the Plan terminate, expire or are canceled, forfeited, exchanged or surrendered without having been exercised or if any Stock Awards, Stock Units or Other Stock-Based Awards are forfeited or terminated, the shares subject to such Grants shall again be available for purposes of the Plan.

          (b) Individual Limits. All Grants under the Plan shall be expressed in shares of Stock. The maximum aggregate number of shares of Company Stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 50,000 shares, subject to adjustment as described below.

          (c) Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) a merger, reorganization or consolidation, (iii) a reclassification or change in par value, or (iv) any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for issuance or transfer under the Plan, the maximum number of shares of Company Stock for which any individual may receive Grants in any year, the kind and number of shares covered by outstanding Grants, the kind and number of shares issued or transferred and to be issued or transferred under the Plan, and the price per share or the applicable market value of such Grants shall be equitably adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. In addition, in the event of a Change of Control of the Company, the provisions of Section 16 of the Plan shall apply. Any adjustments to outstanding Grants shall be consistent with section 409A or 424 of the Code, to the extent applicable. Any adjustments determined by the Committee shall be final, binding and conclusive.

     Section 5. Eligibility for Participation

          (a) Eligible Persons. All Employees (including, for all purposes of the Plan, an Employee who is a member of the Board) and Non-Employee Directors shall be eligible to participate in the Plan.

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          (b) Selection of Grantees. The Committee shall select the Employees and Non-Employee Directors to receive Grants and shall determine the number of shares of Company Stock subject to a particular Grant in such manner as the Committee determines.

     Section 6. Options

     The Committee may grant Options to an Employee or Non-Employee Director upon such terms as the Committee deems appropriate. The following provisions are applicable to Options:

          (a) Number of Shares. The Committee shall determine the number of shares of Company Stock that will be subject to each Grant of Options to Employees and Non-Employee Directors.

          (b) Type of Option and Price.

               (i) The Committee may grant Incentive Stock Options or Nonqualified Stock Options or any combination of the two, all in accordance with the terms and conditions set forth herein. Incentive Stock Options may be granted only to employees of the Company or its parent or subsidiary corporations, as defined in section 424 of the Code. Nonqualified Stock Options may be granted to Employees and Non-Employee Directors.

               (ii) The Exercise Price of Company Stock subject to an Option shall be determined by the Committee and may be equal to or greater than the Fair Market Value of a share of Company Stock on the date the Option is granted; provided, however, that an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary corporation of the Company, as defined in section 424 of the Code, unless the Exercise Price per share is not less than 110% of the Fair Market Value of a share of Company Stock on the date of grant.

          (c) Option Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary corporation of the Company, as defined in section 424 of the Code, may not have a term that exceeds five years from the date of grant.

          (d) Exercisability of Options. Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason.

          (e) Termination of Employment, Disability or Death.

               (i) Except as provided below, an Option may only be exercised while the Grantee is employed by, or providing service to, the Employer as an Employee or member of the Board.

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               (ii) In the event that a Grantee ceases to be employed by, or provide service to, the Employer for any reason other than Disability, death or termination for Cause, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

               (iii) In the event the Grantee ceases to be employed by, or provide service to, the Company on account of a termination for Cause by the Employer, any Option held by the Grantee shall terminate as of the date the Grantee ceases to be employed by, or provide service to, the Employer. In addition, notwithstanding any other provisions of this Section 6, if the Committee determines that the Grantee has engaged in conduct that constitutes Cause at any time while the Grantee is employed by, or providing service to, the Employer or after the Grantee’s termination of employment or service, any Option held by the Grantee shall immediately terminate and the Grantee shall automatically forfeit all shares underlying any exercised portion of an Option for which the Company has not yet delivered the share certificates, upon refund by the Company of the Exercise Price paid by the Grantee for such shares. Upon any exercise of an Option, the Company may withhold delivery of share certificates pending resolution of an inquiry that could lead to a finding resulting in a forfeiture.

               (iv) In the event the Grantee ceases to be employed by, or provide service to, the Employer because the Grantee is Disabled, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options which are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

               (v) If the Grantee dies while employed by, or providing service to, the Employer or within 90 days after the date on which the Grantee ceases to be employed or provide service on account of a termination specified in Section 6(e)(ii) above (or within such other period of time as may be specified by the Committee), any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

          (f) Exercise of Options. A Grantee may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company. The Grantee shall pay the Exercise Price for an Option as specified by the Committee (w) in cash, (x) unless

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the Committee determines otherwise, by delivering shares of Company Stock owned by the Grantee and having a Fair Market Value on the date of exercise at least equal to the Exercise Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise at least equal to the Exercise Price, (y) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or (z) by such other method as the Committee may approve. Shares of Company Stock used to exercise an Option shall have been held by the Grantee for the requisite period of time necessary to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares to be issued or transferred pursuant to the Option, and any required withholding taxes, must be received by the Company by the time specified by the Committee depending on the type of payment being made, but in all cases prior to the issuance or transfer of such shares.

          (g) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary corporation (within the meaning of section 424(f) of the Code) of the Company.

     Section 7. Stock Awards

     The Committee may issue or transfer shares of Company Stock to an Employee or Non-Employee Director under a Stock Award, upon such terms as the Committee deems appropriate. The following provisions are applicable to Stock Awards:

          (a) General Requirements. Shares of Company Stock issued or transferred pursuant to Stock Awards may be issued or transferred for consideration or for no consideration, and subject to restrictions or no restrictions, as determined by the Committee. The Committee may, but shall not be required to, establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according to such other criteria as the Committee deems appropriate, including, without limitation, restrictions based upon the achievement of specific performance goals. The period of time during which the Stock Awards will remain subject to restrictions will be designated in the Grant Instrument as the “Restriction Period.”

          (b) Number of Shares. The Committee shall determine the number of shares of Company Stock to be issued or transferred pursuant to a Stock Award and the restrictions applicable to such shares.

          (c) Requirement of Employment or Service. If the Grantee ceases to be employed by, or provide service to, the Employer during a period designated in the Grant Instrument as the Restriction Period, or if other specified conditions are not met, the Stock Award shall terminate as to all shares covered by the Grant as to which the restrictions have not lapsed, and those shares of Company Stock must be immediately returned to the Company. The

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Committee may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.

          (d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction Period, a Grantee may not sell, assign, transfer, pledge or otherwise dispose of the shares of a Stock Award except under Section 15(a) below. Unless otherwise determined by the Committee, the Company will retain possession of certificates for shares of Stock Awards until all restrictions on such shares have lapsed. Each certificate for a Stock Award, unless held by the Company, shall contain a legend giving appropriate notice of the restrictions in the Grant. The Grantee shall be entitled to have the legend removed from the stock certificate covering the shares subject to restrictions when all restrictions on such shares have lapsed. The Committee may determine that the Company will not issue certificates for Stock Awards until all restrictions on such shares have lapsed.

          (e) Right to Vote and to Receive Dividends. Unless the Committee determines otherwise, during the Restriction Period, the Grantee shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares, subject to any restrictions deemed appropriate by the Committee, including, without limitation, the achievement of specific performance goals.

          (f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse upon the expiration of the applicable Restriction Period and the satisfaction of all conditions, if any, imposed by the Committee. The Committee may determine, as to any or all Stock Awards, that the restrictions shall lapse without regard to any Restriction Period.

     Section 8. Stock Units

     The Committee may grant Stock Units, each of which shall represent one hypothetical share of Company Stock, to an Employee or Non-Employee Director, upon such terms and conditions as the Committee deems appropriate. The following provisions are applicable to Stock Units:

          (a) Crediting of Units. Each Stock Unit shall represent the right of the Grantee to receive a share of Company Stock or an amount of cash based on the value of a share of Company Stock, if and when specified conditions are met. All Stock Units shall be credited to bookkeeping accounts established on the Company’s records for purposes of the Plan.

          (b) Terms of Stock Units. The Committee may grant Stock Units that are payable if specified performance goals or other conditions are met, or under other circumstances. Stock Units may be paid at the end of a specified performance period or other period, or payment may be deferred to a date authorized by the Committee. The Committee shall determine the number of Stock Units to be granted and the requirements applicable to such Stock Units.

          (c) Requirement of Employment or Service. If the Grantee ceases to be employed by, or provide service to, the Employer prior to the vesting of Stock Units, or if other conditions established by the Committee are not met, the Grantee’s Stock Units shall be

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forfeited. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.

          (d) Payment With Respect to Stock Units. Payments with respect to Stock Units shall be made in cash, Company Stock or any combination of the foregoing, as the Committee shall determine.

     Section 9. Stock Appreciation Rights

     The Committee may grant SARs to an Employee or Non-Employee Director separately or in tandem with any Option. The following provisions are applicable to SARs:

          (a) General Requirements. The Committee may grant SARs to an Employee or Non-Employee Director separately or in tandem with any Option (for all or a portion of the applicable Option). Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the time of the Grant of the Incentive Stock Option. The Committee shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be equal to the per share Exercise Price of the related Option or, if there is no related Option, an amount equal to or greater than the Fair Market Value of a share of Company Stock as of the date of Grant of the SAR.

          (b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a Grantee that shall be exercisable during a specified period shall not exceed the number of shares of Company Stock that the Grantee may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Company Stock covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Company Stock.

          (c) Exercisability. An SAR shall be exercisable during the period specified by the Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as may be specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding SARs at any time for any reason. SARs may only be exercised while the Grantee is employed by, or providing service to, the Employer or during the applicable period after termination of employment or service as described in Section 6(e) above. A tandem SAR shall be exercisable only during the period when the Option to which it is related is also exercisable.

          (d) Value of SARs. When a Grantee exercises SARs, the Grantee shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised. The stock appreciation for an SAR is the amount by which the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR as described in subsection (a).

          (e) Form of Payment. The appreciation in an SAR shall be paid in shares of Company Stock, cash or any combination of the foregoing, as the Committee shall determine.

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For purposes of calculating the number of shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market Value on the date of exercise of the SAR.

     Section 10. Other Stock-Based Awards

     The Committee may grant Other Stock-Based Awards, which are awards (other than those described in Sections 6, 7, 8 and 9 of the Plan) that are based on or measured by Company Stock, to any Employee or Non-Employee Director, on such terms and conditions as the Committee shall determine. Other Stock-Based Awards may be awarded subject to the achievement of performance goals or other conditions and may be payable in cash, Company Stock or any combination of the foregoing, as the Committee shall determine.

     Section 11. Dividend Equivalents

     The Committee may grant Dividend Equivalents in connection Stock Units or Other Stock-Based Awards. Dividend Equivalents may be paid currently or accrued as contingent cash obligations and may be payable in cash or shares of Company Stock, and upon such terms as the Committee may establish, including, without limitation, the achievement of specific performance goals.

     Section 12. Qualified Performance-Based Compensation

     The Committee may determine that Stock Awards, Stock Units, Other Stock-Based Awards and Dividend Equivalents granted to an Employee shall be considered “qualified performance-based compensation” under section 162(m) of the Code. The following provisions shall apply to Grants of Stock Awards, Stock Units, Other Stock-Based Awards and Dividend Equivalents that are to be considered “qualified performance-based compensation” under section 162(m) of the Code:

          (a) Performance Goals.

               (i) When Stock Awards, Stock Units, Other Stock-Based Awards or Dividend Equivalents that are to be considered “qualified performance-based compensation” are granted, the Committee shall establish in writing (A) the objective performance goals that must be met, (B) the performance period during which the performance will be measured, (C) the threshold, target and maximum amounts that may be paid if the performance goals are met, and (D) any other conditions that the Committee deems appropriate and consistent with the Plan and Section 162(m) of the Code.

               (ii) The business criteria may relate to the Grantee’s business unit or the performance of the Company and its parents and subsidiaries as a whole, or any combination of the foregoing. The Committee shall use objectively determinable performance goals based on one or more of the following criteria: stock price, earnings per share, net earnings, operating earnings, earnings before income taxes, EBITDA (earnings before income tax expense, interest expense, and depreciation and amortization expense), return on assets, shareholder return, return on equity, growth in assets, unit volume, sales or market share, or

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strategic business criteria consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, geographic business expansion goals, cost targets or goals relating to acquisitions or divestitures.

          (b) Establishment of Goals. The Committee shall establish the performance goals in writing either before the beginning of the performance period or during a period ending no later than the earlier of (i) 90 days after the beginning of the performance period or (ii) the date on which 25% of the performance period has been completed, or such other date as may be required or permitted under applicable regulations under section 162(m) of the Code. The performance goals shall satisfy the requirements for “qualified performance-based compensation,” including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall not have discretion to increase the amount of compensation that is payable upon achievement of the designated performance goals.

          (c) Announcement of Grants. The Committee shall certify and announce the results for each performance period to all Grantees after the announcement of the Company’s financial results for the performance period. If and to the extent that the Committee does not certify that the performance goals have been met, the grants of Stock Awards, Stock Units, Other Stock-Based Awards and Dividend Equivalents for the performance period shall be forfeited or shall not be made, as applicable. If Dividend Equivalents are granted as “qualified performance-based compensation” under section 162(m) of the Code, a Grantee may not accrue more than $50,000 of such Dividend Equivalents during any calendar year.

          (d) Death, Disability or Other Circumstances. The Committee may provide that Stock Awards, Stock Units, Other Stock-Based Awards and Dividend Equivalents shall be payable or restrictions on such Grants shall lapse, in whole or in part, in the event of the Grantee’s death or Disability during the performance period, or under other circumstances consistent with the Treasury regulations and rulings under section 162(m) of the Code.

     Section 13. Deferrals

     The Committee may permit or require a Grantee to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to such Grantee in connection with any Stock Units or Other Stock-Based Awards. If any such deferral election is permitted or required, the Committee shall establish rules and procedures for such deferrals and may provide for interest or other earnings to be paid on such deferrals. The rules and procedures for any such deferrals shall be consistent with applicable requirements of section 409A of the Code.

     Section 14. Withholding of Taxes

     (a) Required Withholding. All Grants under the Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Employer may require that the Grantee or other person receiving or exercising Grants pay to the Employer the amount of any federal, state or local taxes that the Employer is required to

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withhold with respect to such Grants, or the Employer may deduct from other wages paid by the Employer the amount of any withholding taxes due with respect to such Grants.

          (b) Election to Withhold Shares. If the Committee so permits, a Grantee may elect to satisfy the Employer’s tax withholding obligation with respect to Grants paid in Company Stock by having shares withheld up to an amount that does not exceed the Grantee’s minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities. The election must be in a form and manner prescribed by the Committee and may be subject to the prior approval of the Committee.

     Section 15. Transferability of Grants

          (a) Nontransferability of Grants. Except as provided below, only the Grantee may exercise rights under a Grant during the Grantee’s lifetime. A Grantee may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii) with respect to Grants other than Incentive Stock Options, pursuant to a domestic relations order. When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution.

          (b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer.

     Section 16. Consequences of a Change of Control

          (a) Notice and Acceleration. If the Company becomes aware that a Change of Control has occurred or will occur, the Company shall provide to each Grantee who holds outstanding Grants written notice of such Change of Control. Effective upon the date of the Change of Control, (i) all outstanding Options and SARs shall automatically accelerate and become fully exercisable, (ii) the restrictions and conditions on all outstanding Stock Awards shall immediately lapse, and (iii) all Stock Units, Other Stock-Based Awards and Dividend Equivalents shall become fully vested and shall be paid at their target values, or in such greater amounts as the Committee may determine.

          (b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change of Control, the Committee may take one or more of the following actions with respect to any or all outstanding Grants: the Committee may (i) require that Grantees surrender their outstanding Options and SARs in exchange for one or more payments by the Company, in cash or Company Stock as determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the shares of Company Stock subject to the Grantee’s unexercised

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Options and SARs exceeds the Exercise Price of the Options or the base amount of the SARs, as applicable, (ii) after giving Grantees an opportunity to exercise their outstanding Options and SARs, terminate any or all unexercised Options and SARs at such time as the Committee deems appropriate, or (iii) determine that outstanding Options and SARs that are not exercised shall be assumed by, or replaced with comparable options or rights by, the surviving corporation (or a parent or subsidiary of the surviving corporation). Such surrender or termination shall take place as of the date of the Change of Control or such other date as the Committee may specify.

     Section 17. Requirements for Issuance or Transfer of Shares

     No Company Stock shall be issued or transferred in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Grant on the Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of the shares of Company Stock as the Committee shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee deems appropriate to comply with applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon.

     Section 18. Amendment and Termination of the Plan

          (a) Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without shareholder approval if such approval is required in order to comply with the Code or other applicable law, or to comply with applicable stock exchange requirements.

          (b) No Repricing Without Shareholder Approval. Notwithstanding anything in the Plan to the contrary, the Committee may not reprice Options, nor may the Board amend the Plan to permit repricing of Options, unless the shareholders of the Company provide prior approval for such repricing. An adjustment to an Option pursuant to Section 4(c) above shall not constitute a repricing of the Option.

          (c) Shareholder Re-Approval Requirement. If Stock Awards, Stock Units, Other Stock-Based Awards or Dividend Equivalents are granted as “qualified performance-based compensation” under Section 12 above, the Plan must be reapproved by the shareholders no later than the first shareholders meeting that occurs in the fifth year following the year in which the shareholders previously approved the provisions of Section 12, if required by section 162(m) of the Code or the regulations thereunder.

          (d) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders.

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          (e) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Committee acts under Section 19(f) below. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under Section 19(f) below or may be amended by agreement of the Company and the Grantee consistent with the Plan.

          (f) Effective Date of the Plan. The Plan was originally effective on May 12, 2006. The Plan as amended herein is effective on May 11, 2007.

     Section 19. Miscellaneous

          (a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained in the Plan shall be construed to (i) limit the right of the Committee to make Grants under the Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Grants to employees thereof who become Employees, or (ii) limit the right of the Company to grant stock options or make other awards outside of the Plan. The Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company, in substitution for a stock option or stock awards grant made by such corporation. Notwithstanding anything in the Plan to the contrary, the Committee may establish such terms and conditions of the new Grants as it deems appropriate, including setting the Exercise Price of Options or the base price of SARs at a price necessary to retain for the Grantee the same economic value as the prior options or rights.

          (b) Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

          (c) Funding of the Plan. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under the Plan.

          (d) Rights of Grantees. Nothing in the Plan shall entitle any Employee, Non-Employee Director or other person to any claim or right to be granted a Grant under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ of the Employer or any other employment rights.

          (e) No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Grant. Except as otherwise provided under the Plan, the Committee shall determine whether cash, other awards or other property shall be issued

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or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

          (f) Compliance with Law. The Plan, the exercise of Options and SARs and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and regulations, and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of section 422 of the Code, that Grants of “qualified performance-based compensation” comply with the applicable provisions of section 162(m) of the Code and that, to the extent applicable, Grants comply with the requirements of section 409A of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 422, 162(m) or 409A of the Code as set forth in the Plan ceases to be required under section 16 of the Exchange Act or section 422, 162(m) or 409A of the Code, that Plan provision shall cease to apply. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation.

          (g) Employees Subject to Taxation Outside the United States. With respect to Grantees who are believed by the Committee to be subject to taxation in countries other than the United States, the Committee may make Grants on such terms and conditions, consistent with the Plan, as the Committee deems appropriate to comply with the laws of the applicable countries, and the Committee may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws.

          (h) Governing Law. The validity, construction, interpretation and effect of the Plan and Grant Instruments issued under the Plan shall be governed and construed by and determined in accordance with the laws of New Jersey, without giving effect to the conflict of laws provisions thereof.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Edward B. Cloues, II, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2007 of K-Tron International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2007	EDWARD B. CLOUES, II
	Edward B. Cloues, II
	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ronald R. Remick, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2007 of K-Tron International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2007	RONALD R. REMICK
	Ronald R. Remick
	Senior Vice President, Chief Financial Officer And Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of K-Tron International, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward B. Cloues, II, Chairman of the Board of Directors and Chief Executive Officer of the Company, and I, Ronald R. Remick, Senior Vice President, Chief Financial Officer and Treasurer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

EDWARD B. CLOUES, II	RONALD R. REMICK
Edward B. Cloues, II	Ronald R. Remick
Chairman and Chief Executive Officer	Senior Vice President, Chief Financial Officer and Treasurer
Date: August 7, 2007	Date: August 7, 2007