-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LXhCdF9xDWJAyy45aRdYz2HjjGKZ3dabDPH2aTSV9eAjDrCWMczwr6Lftjplo0ME YmHB5V1qodAyLNmLj1Jqgg== 0000893220-95-000710.txt : 19951106 0000893220-95-000710.hdr.sgml : 19951106 ACCESSION NUMBER: 0000893220-95-000710 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951103 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: K TRON INTERNATIONAL INC CENTRAL INDEX KEY: 0000000020 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 221759452 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09576 FILM NUMBER: 95587133 BUSINESS ADDRESS: STREET 1: 1810 CHAPEL AVENUE WEST STREET 2: SUITE 130 CITY: CHERRY HILL STATE: NJ ZIP: 08002-4607 BUSINESS PHONE: 6096616240 MAIL ADDRESS: STREET 1: 1810 CHAPEL AVENUE WEST STREET 2: SUITE 130 CITY: CHERRY HILL STATE: NJ ZIP: 08002 10-Q 1 FORM 10-Q K-TRON INTERNATIONAL INC 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) /X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1995 ------------------ OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period _______ to _______ Commission File Number 0-9576 ---------- K-TRON INTERNATIONAL, INC. ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-1759452 - ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer ID #) incorporation of organization)
Routes 55 & 553 P.O. Box 888 Pitman, New Jersey 08071-0888 --------------------------------------- (Address of Principal Executive Offices) (Zip Code) (609) 589-0500 -------------------------------------------------- (Registrant's Telephone Number Including Area Code) Not Applicable --------------------------------------------------- (Former name, former address and formal fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- The number of shares of Common Stock outstanding as of September 30, 1995 was ------------------ 3,103,573 Shares --------- 2 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES INDEX
Page No. -------- PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements -------------------- Consolidated Balance Sheets 1 September 30, 1995 and December 31, 1994 Consolidated Statements of Operations 2 and Retained Earnings Three Months and Nine Months Ended September 30, 1995 and October 1, 1994 Consolidated Statements of Cash Flows 3-4 Nine Months Ended September 30, 1995 and October 1, 1994 Notes to Consolidated Financial 5 Statements Item 2. Management's Discussion and Analysis 6-11 of Financial Condition and Results of Operations PART II. OTHER INFORMATION ----------------- Item 3. Defaults upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12-13 Item 6. Exhibits and Reports on Form 8-K 13
3 ITEM 1. Financial Statements PART I. FINANCIAL INFORMATION K-TRON INTERNATIONAL, INC. & SUBSIDIARIES ----------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars in Thousands except Share Data)
Sept. 30, December 31, 1995 1994 ASSETS (Unaudited) (Audited) ------ ----------- --------- CURRENT ASSETS: Cash and cash equivalents $ 2,507 $ 1,086 Accounts receivable (less allowance for doubtful accts. of $959 & $1,523) 22,259 29,214 Inventories 20,633 25,458 Deferred income taxes 753 328 Income Tax Receivable 400 442 Prepaid expenses & other current assets 1,912 1,145 ------- -------- TOTAL CURRENT ASSETS 48,464 57,673 PROPERTY, PLANT AND EQUIPMENT (Net) 19,033 31,673 PATENTS AND LICENSES (Net of accumulated amortization of $4,690 and $7,657) 567 908 EXCESS OF COST OVER NET ASSETS ACQUIRED (Net of accumulated amortization of $2,889 & $4,888) 5,925 18,661 OTHER ASSETS 333 650 DEFERRED INCOME TAXES, Net 810 385 ------- -------- TOTAL ASSETS $75,132 $109,950 ======= ======== LIABILITIES & SHAREHOLDERS' EQUITY ---------------------------------- CURRENT LIABILITIES: Notes payable to banks $40,969 $ 31,175 Current portion of long-term debt 145 1,337 Accounts payable 8,645 12,251 Accrued expenses & other current liabilities 4,115 2,469 Accrued payroll 2,445 2,211 Accrued commissions 1,930 3,039 Customer advances 2,931 2,720 Accrued warranty 1,357 930 Income taxes payable 996 1,241 Deferred income taxes 336 849 ------- -------- TOTAL CURRENT LIABILITIES 63,869 58,222 LONG-TERM DEBT 189 27,413 DEFERRED GAIN ON SALE/LEASEBACK 2,436 2,456 DEFERRED INCOME TAXES 199 399 NONCURRENT PENSION LIABILITY -- 2,939 COMMITMENTS AND CONTINGENCIES SERIES A JUNIOR PARTICIPATING PREFERRED SHARES, $.01 par value - authorized 50,000 shares; none issued -- -- SHAREHOLDERS' EQUITY: Preferred stock, $.01 par value - authorized, 950,000 shares; none issued -- -- Common stock, $.01 par value - authorized, 15,000,000 shares; issued 4,166,523 shares and 4,150,887 shares 42 41 Paid-in capital 13,938 13,865 Retained earnings 5,215 15,070 Cumulative translation adjustments (192) 109 ------- -------- 19,003 29,085 Treasury stock, 1,062,950 shares - at cost (10,564) (10,564) ------- -------- TOTAL SHAREHOLDERS' EQUITY 8,439 18,521 ------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $75,132 $109,950 ======= ========
See Notes to Consolidated Financial Statements -1- 4 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES ----------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS --------------------------------------------------------- (Dollars in Thousands except Share Data) (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- Sept. 30, Oct.1, Sept. 30, Oct.1, 1995 1994 1995 1994 ---- ---- ---- ---- REVENUE: $22,297 $26,336 $85,782 $73,062 ------- ------- ------- ------- COSTS AND EXPENSES: Cost of sales 13,180 15,627 53,346 43,438 Selling, general & administrative 7,460 8,274 27,395 23,760 Research & development 535 1,197 2,515 3,302 Interest 747 1,177 3,402 3,127 ------- ------- ------- ------- Total costs & expenses 21,922 26,275 86,658 73,627 ------- ------- ------- ------- (LOSS) ON DISPOSITION OF BUSINESS -- -- (10,529) -- ------- ------- ------- ------- INCOME (LOSS) BEFORE INCOME TAXES 375 61 (11,405) (565) INCOME TAXES (Benefit) -- -- (1,550) -- ------- ------- ------- ------- NET INCOME (LOSS) 375 61 (9,855) (565) RETAINED EARNINGS Beginning of Period 4,840 21,270 15,070 21,896 ------- ------- ------- ------- End of Period $ 5,215 $ 21,331 $ 5,215 $21,331 ======= ======= ======= ======= EARNINGS (LOSS) PER SHARE $ .12 $ .02 $( 3.19) $ (.18) ======= ======= ======= ======= WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 3,104,000 3,081,000 3,093,000 3,071,000 ========= ========= ========= =========
See Notes to Consolidated Financial Statements -2- 5 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES ----------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Dollars in Thousands) (Unaudited)
Nine Months Ended ------------------- Sept. 30, Oct. 1, 1995 1994 ---- ---- OPERATING ACTIVITIES: Net (loss) $(9,855) $(565) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Loss on disposition of business 10,529 -- Depreciation and amortization 3,985 4,759 Amortization of deferred gain on sale/leaseback transaction (351) (289) Deferred income taxes (1,474) (167) Changes in assets and liabilities which provided (used) cash: Accounts receivable, net 521 68 Inventories (75) (5,609) Prepaid expenses and other current assets (929) (632) Other assets 658 (513) Accounts payable (1,008) 1,925 Accrued expenses and other current liabilities 150 (109) Accrued warranty 606 20 Income taxes payable (274) (513) -------- ------- Net cash provided by (used in) operating activities 2,483 (1,625) -------- ------- INVESTING ACTIVITIES: Proceeds from disposition of business 9,000 -- Capital expenditures (356) (1,414) Investment in patents and licenses (27) (131) -------- ------- Net cash provided by (used in) investing activities 8,617 (1,545) -------- ------- FINANCING ACTIVITIES: Net (payments) borrowings under notes payable to banks (9,222) 13,901 Net (payments) under long-term lines of credit -- (9,550) Principal payments on long-term debt (376) (1,642) Proceeds from issuance of common stock 74 129 -------- ------- Net cash (used in) provided by financing activities (9,524) 2,838 -------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (155) (98) -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,421 (430) -------- ------- CASH AND CASH EQUIVALENTS Beginning of Period 1,086 1,643 -------- ------- End of Period $ 2,507 $1,213 ======== =======
See Notes to Consolidated Financial Statements -3- 6 Consolidated Statements of Cash Flows (continued): (Unaudited)
Nine Months Ended -------------------- Sept. 30, Oct. 1, 1995 1994 ---- ---- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $2,903 $2,957 Income taxes 585 416
Disclosure of Accounting Policy: For purposes of the statement of cash flows, the Company considers all highly liquid short-term investments purchased with a maturity of three months or less to be cash equivalents. See Notes to Consolidated Financial Statements -4- 7 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of K-Tron International, Inc. ("K-Tron" or the "Company") and its subsidiaries. All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for a fair presentation of results for interim periods have been made. The results for the interim periods are not necessarily indicative of the results for a full year. The unaudited financial statements herein should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1994 which was previously filed with the Securities and Exchange Commission. 2. Disposition of Business ----------------------- On June 23, 1995, subsidiaries of the Company sold Colortronic GmbH and rights to several related patents and patent applications to an investment group for $9 million. The Swiss banks have not yet allocated $5,150,000 of the proceeds to specific debt outstanding, but are expected to do so in the near future. Accordingly, this amount has been reflected as a reduction to notes payable to banks in the accompanying balance sheet as of September 30, 1995. The Company recorded a pre-tax loss of $10,529,000 on the disposition. The Company has generated a significant tax loss carry forward due to the sale of Colortronic GmbH. In the second quarter the Company recorded a $1,550,000 tax benefit relating to this loss based upon the existence of deferred tax liabilities which no longer will be required and estimates of future income. The Company has set up a valuation allowance of approximately half of the tax benefit associated with the sale. -5- 8 ITEM 2. K-TRON INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1995 Financial Condition - ------------------- As reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, the Company and its U.S. manufacturing subsidiary are in default under several financial covenants contained in their loan agreement with three U.S. banks. These defaults are continuing and have not been waived. However, on April 28, 1995, the Company and its U.S. subsidiaries entered into a forbearance agreement with the U.S. banks in which such banks agreed to forbear in the exercise of their rights and remedies under the loan documents. On June 22, 1995 this agreement was amended and extended through the earlier of February 28, 1996 or the occurrence of a new event of default thereunder. See subsequent discussion of the effect of a default under Swiss loan agreements. The forbearance agreement also modified the existing loan documents in certain aspects, including the granting of additional collateral. At September 30, 1995, the principal amount outstanding under the Company's U.S. loan agreement was $9.4 million. On June 23, 1995, subsidiaries of K-Tron sold Colortronic GmbH and rights to several related patents and patent applications to an investment group for $9 million. The group included two K-Tron executives, including its president and CEO. Both subsequently resigned their K-Tron positions, and Leo C. Beebe, K-Tron's chairman, assumed the duties of chief executive officer. The pro forma results of K-Tron without Colortronic are shown below: K-Tron International, Inc. (Unaudited) (in thousands)
Less Pro Forma As Reported Colortronic Consolidated from Operations Related Without Colortronic --------------- ------- ------------------- Revenue 1994 $104,772 $(35,234) $69,538 ======== ========= ======= 1995: 1st Qtr. $ 30,503 $(11,179) $19,324 2nd Qtr. 32,982 (8,824) 24,158 3rd Qtr. 22,297 -- 22,297 -------- --------- ------- Nine Months $ 85,782 $ (20,003) $65,779 ======== ========= =======
-6- 9 (Loss) Earnings from Operations - -------------------------------
Less Pro Forma As Reported Colortronic Consolidated from Operations Related Without Colortronic --------------- ------- ------------------- 1994 $(7,052) $(5,576) $(1,476) ======== ======== ======== 1995: 1st Qtr. $(1,280) $(1,314) $ 34 2nd Qtr.* 29 ( 410) 439 3rd Qtr. 375 -- 375 ------- ------- ------- Nine Months* $ (876) $(1,724) $ 848 ======== ======== =======
*Excluding the after-tax loss on sale of Colortronic of $8.979 million. The Colortronic divestiture generated a pre-tax loss of $10.529 million. This loss was primarily a non-cash write-off of goodwill. The tax loss carry forward generated by the sale can be used to offset future cash tax payments. As a result of the sale of Colortronic GmbH, K-Tron's debt decreased by $24.2 million as of July 1, 1995. The loss on the sale of Colortronic caused K-Tron's Swiss subsidiary's equity to fall below the equity guarantees in its loan agreements with Swiss banks. As a result, the subsidiary is in default and these loans have been reclassified as short-term. The subsidiary is currently negotiating a revised financing agreement with the Swiss banks, but there can be no assurance that a new agreement will be entered into or that the Swiss banks will not demand payment of their loans. Furthermore, such equity violation is a new event of default under the Company's U.S. loan agreement described above. At September 30, 1995, the principal amount outstanding under the Swiss loan agreements was $31.0 million. The Company is seeking alternative debt or equity financing. At this time, the Company has not obtained commitments, and its ability to continue as a going concern depends on the future availability of its existing credit facilities or replacement lines of credit, or the raising of cash through the sale of assets or additional equity. If the Company is unsuccessful in these efforts, it may be unable to meet its obligations in a timely manner, making it necessary to undertake such other actions as may be appropriate to preserve asset values. Results of Operations - --------------------- K-Tron is an international company with two-thirds of its business arising from sources outside the United States, primarily Europe. As such, the financial position and performance of the Company is sensitive to both -7- 10 translation and transaction fluctuations in foreign currency exchange rates. The following table sets forth the Company's results of operations expressed as a percentage of total revenues for the periods indicated:
Three Months Ended Nine Months Ended ------------------ ----------------- Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1995 1994 1995 1994 ---- ---- ---- ---- Revenues 100.0% 100.0% 100.0% 100.0% Cost of Sales 59.1 59.4 62.2 59.5 ---- ----- ----- ----- Gross Margin 40.9 40.6 37.8 40.5 Selling, General & Administrative 33.5 31.4 31.9 32.5 Research & Development 2.4 4.6 2.9 4.5 Interest 3.3 4.4 4.0 4.3 --- --- --- --- (Loss) Earnings before income taxes and dis- position of business 1.7% .2% (1.0)% (.8)% ==== === ====== ===== Quarter-end backlog (in thousands) $28,532 $24,649 (1)
======= ======= (1)At September 30, 1995 foreign exchange translation rates and excluding the backlog of Colortronic GmbH. Translation of the Company's foreign revenues and results of operations into U.S. dollars is affected by changes in foreign exchange rates, particularly with respect to the Swiss franc and the Deutsche mark. Revenues and earnings for the first nine months of 1995 were affected by changes in the average U.S. dollar/Swiss franc and average U.S. dollar/Deutsche mark exchange rates, as follows:
Nine Months Ended ----------------- Sept. 30, Oct. 1, 1995 1994 ---- ---- Swiss franc rate $.84 $.72 % appreciation vs. prior year +17% Deutsche mark rate $.70 $.61 % appreciation vs. prior year +15%
-8- 11 Without Colortronic revenues in 1994, total revenues for the third quarter of 1995 increased by $4.8 million or 27.1% ($3.3 million or 17.5% when using constant foreign exchange rates) and $15.6 million or 31.2% for the first nine months of 1995 ($8.7 million or 15.3% when using constant foreign exchange rates) versus the same periods in 1994. Total revenues increased due to the strong European and United States backlog at the end of the 1995 second quarter, continued strong 1995 new order inflow and the effect of a weaker U.S. dollar relative to the Swiss franc and Deutsche mark. Gross margin as a percent of revenues improved to 40.9% in the third quarter of 1995 as compared to 40.6% for the same period in 1994. Gross margin declined to 37.8% for the first nine months of 1995 as compared to 40.5% for the same period in 1994. The improvement in the margin in the third quarter of 1995 was due to margin improvement in the United States and the sale of the Colortronic business which had low margins, offset in part by an increase in warranty costs and the inability to pass on increased costs caused by the appreciation of the Swiss franc to customers in certain European countries. The decline in the margin for the first nine months of 1995 was primarily due to heavily discounted orders booked in 1994, as well as the inability to pass on increased costs caused by the appreciation of the Swiss franc to customers in certain European countries. Selling, general and administrative (SG&A) expense decreased by $.8 million or 9.8% in the third quarter of 1995 while increasing by $3.6 million or 15.3% for the first nine months of 1995 as compared to the same periods in 1994. The decrease in SG&A in the third quarter is due to the elimination of Colortronic expenses in the third quarter of 1995 offset by higher foreign exchange translation rates. The increase for the nine months was primarily due to higher foreign exchange translation rates as well as to higher commissions and selling expenses related to the increased sales volume. In addition, the Company incurred costs related to the forbearance agreement and costs related to the Company's efforts to arrange new financing or sell assets. As a percent of revenues, SG&A was 33.5% in the third quarter of 1995 and 31.9% for the first nine months of 1995 as compared to 31.4% and 32.5%,respectively, for the same periods in 1994. The change in SG&A as a percent of revenues in 1995 was primarily due to the change in revenues. Research and development (R&D) expenditures in the third quarter and first nine months of 1995 decreased $.7 million and $.8 million as compared to the same periods in 1994 due to the elimination of Colortronic brand expenses in the third quarter of 1995, offset in part by redirection of existing resources to the remaining brands and higher foreign exchange translation rates. R&D expense as a percent of revenues was 2.4% in third -9- 12 quarter 1995 and 2.9% for the first nine months of 1995 as compared to 4.6% and 4.5% respectively in 1994. The decrease in R&D as a percent of revenues in 1995 was due to the reductions noted above and to the change in revenues. Interest expense decreased in the third quarter of 1995 by $.4 million as compared to the same period in 1994 due to lower debt levels following the sale of Colortronic, offset in part by higher effective interest rates in the United States and higher foreign exchange translation rates. Interest expense increased for the first nine months of 1995 as compared to the same period in 1994 due to increased debt levels in Europe prior to the sale of Colortronic, higher effective interest rates in the United States and higher foreign exchange translation rates. The Company has generated a significant tax loss carry forward due to the sale of Colortronic GmbH. In the second quarter of 1995 the Company recorded a $1,550,000 tax benefit relating to this loss based upon the existence of deferred tax liabilities which no longer will be required and estimates of future income. The Company has set up a valuation allowance of approximately half of the tax benefit associated with the sale. The backlog of orders excluding Colortronic GmbH increased at the end of the third quarter of 1995 by 15.8% as compared to the same period in 1994 (using September 30, 1995 foreign exchange translation rates for both calculations), primarily due to the European recovery from recession and continued good bookings in the United States. Liquidity and Capital Resources - ------------------------------- The Company's capitalization as of the end of the first, second and third quarters of 1995 and fiscal year 1994 is set forth below:
Sept. 30, July 1, Apr. 1, Dec. 31, (Dollars in Thousands) 1995 1995 1995 1994 ---- ---- ---- ---- Short-term debt including current portion of long-term debt $41,114 $42,890 $36,780 $32,512 Long-term debt 189 225 31,428 27,413 ------- ------- ------- ------- Total debt 41,303 43,115 68,208 59,925 Shareholders' equity 8,439 8,152 18,310 18,521 ------- ------- ------- ------- Total debt and share- holders' equity $49,742 $51,267 $86,518 $78,446 ======= ======= ======= ======= Percent debt to total capitalization 83% 84% 79% 76% Percent debt to equity 489% 529% 373% 324%
-10- 13 Total debt decreased since year end 1994 by $18.6 million despite a $5.9 million increase due to the effect of foreign exchange translation. Total debt without the effect of the foreign exchange translation decreased by $24.6 million. The debt reduction associated with the sale of Colortronic was $24.2 million. The Company had used all of its available borrowing facilities as of September 30, 1995. At the end of the third quarter of 1995 the Company had a deficit in working capital of $15.4 million and the ratio of current assets to current liabilities was .76. As explained earlier, the change in working capital was heavily affected by reclassifying $24.3 million of Swiss bank debt from long term to short term debt. Operating activities provided $2.5 million in positive cash flow for the first nine months of 1995 as compared to using $1.6 million in the same period of 1994. In the third quarter of 1995, $2.6 million of cash was provided from operations primarily from profits generated in the quarter and improved asset management. Cash provided by investing activities for the first nine months of 1995 was primarily due to the funds received from the sale of Colortronic GmbH and rights to several related patents and patent applications. Cash used in finance activities for the first nine months of 1995 was primarily the result of using the proceeds from the sale of Colortronic GmbH and the cash provided by operating activities to reduce bank debt. Changes in foreign exchange rates, particularly with respect to the Swiss franc and Deutsche mark, caused a translation adjustment decrease (after the elimination of the cumulative translation adjustments associated with the Colortronic sale) in shareholders' equity of $.3 million in the first nine months of 1995. -11- 14 PART II. OTHER INFORMATION Item 3. Defaults Upon Senior Securities ------------------------------- As reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, the Company and its U.S. manufacturing subsidiary are in default under several financial covenants contained in their loan agreement with three U.S. banks. These defaults are continuing and have not been waived. However, on April 28, 1995, the Company and its U.S. subsidiaries entered into a forbearance agreement with the U.S. banks in which such banks agreed to forbear in the exercise of their rights and remedies under the loan documents. On June 22, 1995 this agreement was amended and extended through the earlier of February 28, 1996 or the occurrence of a new event of default thereunder. The forbearance agreement also modified the existing loan documents in certain aspects, including the granting of additional collateral. At September 30, 1995, the principal amount outstanding under the Company's U.S. loan agreement was $9.4 million. The loss on the sale of Colortronic caused K-Tron's Swiss subsidiary's equity to fall below the equity guarantees in its loan agreements with Swiss banks. As a result, the subsidiary is in default and these loans have been reclassified as short-term. The subsidiary is currently negotiating a revised financing agreement with the Swiss banks, but there can be no assurance that a new agreement will be entered into or that the Swiss banks will not demand payment of their loans. Furthermore, such equity violation is a new event of default under the Company's U.S. loan agreement described above. At September 30, 1995, the principal amount outstanding under the Swiss loan agreements was $31.0 million. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- (a) The Annual Meeting of Shareholders of the Company was held on October 6, 1995. (b) Not applicable. (c)) Shareholders of the Company were asked to vote on the election of one Class II director. The Board of Directors, acting on the recommendation of the Chairman of its -12- 15 Nominating Committee, nominated Johannes Wirth for election as the Class II director. The results of the votes taken at the Annual Meeting were as follows:
Number of Votes FOR WITHHELD Johannes Wirth 2,547,378 20,053
Since directors are elected by a plurality of the votes cast, a withheld vote had no effect. In addition, votes cast in the election could not be recorded against or as an abstention, nor could a broker non-vote be recorded. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 11.1 Computation of Earnings (Loss) Per Share 27 Financial Data Schedule (b) Reports on Form 8-K On July 10, 1995 the Company filed a Current Report on Form 8-K in connection with the sale of Colortronic GmbH and rights to several related patents and patent applications. -13- 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on his behalf by the undersigned thereunto duly authorized. K-TRON INTERNATIONAL, INC. Date: November 3, 1995 ---------------- By: /s/ Robert L. Weinberg ----------------------- Robert L. Weinberg Senior Vice President & Chief Financial Officer (Duly authorized officer and principal financial officer of the registrant) By: /s/ Alan R. Sukoneck ------------------------- Alan R. Sukoneck Vice President & Controller (Duly authorized officer and principal accounting officer of the registrant) -14- 17 EXHIBIT INDEX Exhibit 11.1 Computation of Earnings (Loss) Per Share 27 Financial Data Schedule EX-11.1 2 COMPUTATION OF EARNINGS (LOSS) PER SHARE 1 Exhibit 11.1 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES COMPUTATION OF EARNINGS (LOSS) PER SHARE (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1995 1994 1995 1994 ---- ---- ---- ---- AVERAGE COMMON AND COMMON-EQUIVALENT SHARES: Weighted Average Common Shares Outstanding per Period 3,104,000 3,071,700 3,093,000 3,061,700 Stock Options and Warrants -- 9,300 -- 9,300 --------- --------- --------- --------- ADJUSTED AVERAGE COMMON AND COMMON-EQUIVALENT SHARES COMPUTATION 3,104,000 3,081,000 3,093,000 3,071,000 ========= ========= ========= ========= EARNINGS FOR COMMON AND COMMON-EQUIVALENT SHARES COMPUTATION: Net income (loss) applicable to Common Stock $ 375,000 $ 61,000 $(9,855,000) $(565,000) ========= ========= ========= ========== EARNINGS (loss) PER SHARE: Earnings (loss) per Share $ .12 $ .02 $ (3.19) $ (.18) ========= ========= ========= ==========
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-30-1995 SEP-30-1995 2,507 0 23,218 959 20,633 48,464 46,051 27,018 75,132 63,869 189 42 0 0 8,397 75,132 85,782 85,782 53,346 53,346 40,439 0 3,402 (11,405) (1,550) (9,855) 0 0 0 (9,855) (3.19) (3.19)
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