-----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, U7SYKkFABBuslRnmr9qnxeXUE7ZGp6Z/yHphxbwxGjUGbBvXue4QKeNDimwmsfbl gSwu/m8kBqsXZrwg0w22mg== 0000893220-98-000857.txt : 19980505 0000893220-98-000857.hdr.sgml : 19980505 ACCESSION NUMBER: 0000893220-98-000857 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980404 FILED AS OF DATE: 19980504 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: SEC FILE NUMBER: 000-09576 FILM NUMBER: 98609243 BUSINESS ADDRESS: STREET 1: ROUTE 55 & 553 STREET 2: BOX 888 CITY: PITMAN STATE: NJ ZIP: 08071-0888 BUSINESS PHONE: 6096616240 MAIL ADDRESS: STREET 1: ROUTE 55 & 553 STREET 2: P O BOX 888 CITY: PITMAN STATE: NJ ZIP: 08071-0888 10-Q 1 K-TRON INTERNATIONAL INC. FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 4, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ______ Commission File Number 0-9576 K-TRON INTERNATIONAL, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) New Jersey 22-1759452 ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer ID #) incorporation or 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 April 4, 1998 was: 3,245,814 Shares 2 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES INDEX
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets April 4, 1998 and January 3, 1998 1 Consolidated Statements of Income and Retained Earnings for the Three Months Ended April 4, 1998 and March 29, 1997 2 Consolidated Statements of Cash Flows for the Three Months Ended April 4, 1998 and March 29, 1997 3 Notes to Consolidated Financial Statements 4 - 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10
3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands except Share Data)
April 4, January 3, 1998 1998 (Unaudited) (Audited) ----------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,995 $ 5,154 Accounts receivable (less allowance for doubtful accounts of $1,087 and $1,119) 16,333 15,336 Inventories 9,918 10,010 Deferred income taxes 950 950 Prepaid expenses and other current assets 1,074 1,196 -------- -------- Total Current Assets 32,270 32,646 PROPERTY, PLANT AND EQUIPMENT, net 15,104 15,437 PATENTS, net 707 694 GOODWILL, net 4,506 4,844 OTHER ASSETS 215 628 -------- -------- Total Assets $ 52,802 $ 54,249 ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable to banks $ 1,310 $ 2,088 Current portion of long-term debt 1,103 1,060 Accounts payable 5,535 5,426 Accrued expenses & other current liabilities 4,192 4,270 Accrued payroll 2,744 3,869 Accrued commissions 2,428 2,463 Customer advances 1,657 1,627 Accrued warranty 945 912 Income taxes payable 1,648 1,508 -------- -------- Total Current Liabilities 21,562 23,223 LONG-TERM DEBT, net of current portion 9,896 10,619 DEFERRED INCOME TAXES 431 431 OTHER NONCURRENT LIABILITIES 932 1,084 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 4,298,764 shares and 4,271,300 shares 43 43 Paid-in capital 15,114 14,833 Retained earnings 16,553 15,246 Cumulative translation adjustments (1,265) (766) -------- -------- 30,445 29,356 -------- -------- Treasury stock, 1,052,950 shares - at cost (10,464) (10,464) -------- -------- Total Shareholders' Equity 19,981 18,892 -------- -------- Total Liabilities and Shareholders' Equity $ 52,802 $ 54,249 ======== ========
See Notes to Consolidated Financial Statements -1- 4 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME & RETAINED EARNINGS (Dollars in Thousands except Share Data) (Unaudited)
Three Months Ended ------------------- April 4, March 29, 1998 1997 ---- ---- REVENUES $21,455 $21,344 COST OF REVENUES 11,815 11,981 ------- ------- Gross profit 9,640 9,363 OPERATING EXPENSES Selling, general and administrative 6,855 6,962 Research and development 735 722 ------- ------- 7,590 7,684 ------- ------- Operating profit 2,050 1,679 INTEREST EXPENSE 208 314 ------- ------- Income before income taxes 1,842 1,365 INCOME TAX PROVISION 535 315 ------- ------- Net income 1,307 1,050 RETAINED EARNINGS Beginning of period 15,246 9,802 ------- ------- End of period $16,553 $10,852 ======= ======= EARNINGS PER SHARE Basic $ .40 $ .33 ======= ======= Diluted $ .39 $ .33 ======= =======
See Notes to Consolidated Financial Statements -2- 5 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three Months Ended April 4, March 29, 1998 1997 ---- ---- OPERATING ACTIVITIES: Net Income $ 1,307 $ 1,050 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 734 770 Amortization of deferred gain on sale/leaseback transaction (93) (96) Changes in assets and liabilities: Accounts receivable, net (1,486) (499) Inventories (187) 800 Prepaid expenses and other current assets 88 454 Other assets 396 (108) Accounts payable 305 37 Accrued expenses and other current liabilities (941) 1,442 Accrued warranty 64 76 Income taxes 157 (431) ------- ------- Net cash provided by operating activities 344 3,495 ------- ------- INVESTING ACTIVITIES: Capital expenditures (756) (184) Investment in patents (25) (40) ------- ------- Net cash used in investing activities (781) (224) ------- ------- FINANCING ACTIVITIES: Net repayments under notes payable to banks (696) (1,400) Principal payments on long-term debt (601) (282) Proceeds from issuance of long-term debt 405 -- Proceeds from issuance of Common stock 281 50 ------- ------- Net cash used in financing activities (611) (1,632) ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (111) (292) ------- ------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,159) 1,347 CASH AND CASH EQUIVALENTS Beginning of period 5,154 3,079 ------- ------- End of period $ 3,995 $ 4,426 ======= =======
See Notes to Consolidated Financial Statements -3- 6 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APRIL 4, 1998 (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 January 3, 1998 which was previously filed with the Securities and Exchange Commission. 2. Supplemental Disclosures of Cash Flow Information The Company considers all highly liquid short-term investments purchased with a maturity of three months or less to be cash equivalents. Cash paid in the first three months of 1998 and 1997 for interest was $.2 million and $.2 million, respectively, and for income taxes was $.3 million and $.7 million, respectively. 3. Earnings per Share In 1997, the Company adopted SFAS No. 128, "Earnings per Share." SFAS No. 128 requires that the Company report Basic and Diluted Earnings Per Share. Basic Earnings Per Share represents net income less preferred dividends divided by the weighted average common shares outstanding. Diluted Earnings Per Share is calculated similarly, except that the denominator includes weighted average common shares outstanding plus the dilutive effect of options, warrants, convertible securities and other instruments with dilutive effects if exercised. The Company's Basic and Diluted Earnings Per Share are calculated as follows:
For the Three Months Ended April 4, 1998 (Dollars in Thousands except Share Data) Income Available To Common Per Share Shareholders Shares Amount ------------ ------ ------ Basic Net Income $1,307 3,236,000 $ .40 Common Share Equivalent of Options Issued -- 95,000 (.01) ------ --------- ----- Diluted $1,307 3,331,000 $ .39 ====== ========= =====
-4- 7
For the Three Months Ended March 29, 1997 (Dollars in Thousands except Share Data) Income Available To Common Per Share Shareholders Shares Amount ------------ ------ ------ Basic Net Income $1,050 3,140,000 $.33 Common Share Equivalent of Options Issued -- 42,000 -- ------ --------- ---- Diluted $1,050 3,182,000 $.33 ====== ========= ====
Earnings per common share are based on the weighted average number of common and common equivalent shares outstanding during each year. Such average shares include the weighted average number of common shares outstanding plus the shares issuable upon exercise of stock options after the assumed repurchase of common shares with the related proceeds. 4. Impact of New Accounting Pronouncement In the first quarter, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which establishes standards for the reporting and display of comprehensive income and its components. Comprehensive income is the total of net income and all other non-owner changes in equity. For the 3 months in the period ended April 4, 1998 and March 29, 1997, the following table sets forth the Company=s comprehensive income as follows:
($000) April 4, March 29, 1998 1997 ---- ---- Net Income $1,307 $1,050 Cumulative Translation Adjustments (499) (524) ------ ------ Comprehensive Income $ 808 $ 526 ====== ======
-5- 8 ITEM 2. K-TRON INTERNATIONAL, INC. & SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED APRIL 4, 1998 Results of Operations For the first three months of 1998 and 1997, the Company reported net income of $1,307,000 and $1,050,000, respectively. K-Tron is an international company with approximately 59% of its revenues derived from products manufactured and services performed from its facilities outside the United States, primarily in Europe. As such, the financial position and performance of the Company is sensitive to both translation and transaction fluctuations in foreign currency exchange rates ("foreign 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 April 4, 1998 March 29, 1997 ------------- -------------- Total Revenues 100.0% 100.0 Cost of Revenues 55.1 56.1 ----- ----- Gross Profit 44.9 43.9 Selling, General & Administrative 31.9 32.6 Research & Development 3.4 3.4 ----- ----- Operating Income 9.6 7.9 Interest 1.0 1.5 ----- ----- Income before income taxes 8.6% 6.4% ===== ===== Backlog at end of period (at April 4, 1998 constant foreign exchange rates, in millions): March 1998 Dec. 1997 March 1997 ---------- --------- ---------- $21,646 $17,730 $21,565 ======= ======= ======= 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. In addition, revenues and income of the Company with respect to particular transactions may be affected by changes in foreign exchange rates where sales are made in other currencies, including in particular the average U.S. -6- 9 dollar/ Swiss franc, U.S. dollar/Deutsche mark and Deutsche mark/Swiss franc exchange rates. For the first three months of 1998 as well as the same period in 1997, the changes in these exchange rates were as follows: Three Months Ended April 4, March 29, 1998 1997 ---- ---- Average U.S. dollar equivalent of one Swiss franc $.677 $.697 % change vs. prior year -2.9% Average U.S. dollar equivalent of one Deutsche mark $.549 $.604 % change vs. prior year -9.1% Average Swiss franc equivalent of one Deutsche mark .811 .867 % change vs. prior year -6.5% Total revenues increased by $.1 million or less than 1% in the first three months of 1998 when compared to the same period in 1997. The increase in revenues would have been greater except for the lower exchange translation rates of certain currencies into U.S. dollars. If the average foreign exchange translation rates for the first three months of 1998 were applied to the same periods in 1997, revenues would have increased 3.0% for the first three months. Gross profit as a percent of revenues improved to 44.9% for the first three months of 1998, as compared to 43.9% for the same period in 1997. The change in gross margin in 1998 was primarily due to sales mix and increased volume in local currencies. Selling, general and administrative (SG&A) expense decreased by $.1 million or 1.5% for the first three months of 1998, as compared to the same period in 1997. The decrease in SG&A was due to the lower foreign exchange translation rates previously described offset in part by higher selling expenses. Research and development (R&D) expenditures increased slightly for the first three months of 1998, as compared to the same period in 1997. R&D expenses increased due to the development of new product enhancements, offset in part by lower foreign exchange translation rates. Interest expense decreased by $.1 million or 33.8% for the first three months of 1998, as compared to the same period in 1997, primarily due to lower debt levels and lower foreign exchange translation rates. The effective tax rate for the first three months of 1998 was 29.0%, compared to 23.1% for the same period in 1997. The effective tax rate in the first three months of 1998 was higher than the same period in 1997 due to an increase in income in the United States. -7- 10 The March 1998 backlog increased by 22.1%, primarily in Europe, when compared to December 1997 and increased slightly when compared to the same period in 1997 (at constant foreign exchange rates). Liquidity and Capital Resources The Company's capitalization as of the end of the first quarter of 1998 and fiscal years 1997 and 1996 is set forth below:
April 4, January 3, December 28, (Dollars in Thousands) 1998 1998 1996 -------- ---------- ------------ Short-term debt including current portion of long-term debt $ 2,413 $ 3,148 $ 861 Long-term debt 9,896 10,619 20,807 ------- ------- ------- Total debt 12,309 13,767 21,668 Shareholders' equity 19,981 18,892 13,194 ------- ------- ------- Total debt and shareholders= equity $32,290 $32,659 $34,862 ======= ======= ======= Percent total debt to total capitalization 38% 42% 62% Percent long-term debt to equity 50% 56% 158% Percent total debt to equity 62% 73% 164%
At January 3, 1998, the Company=s Swiss subsidiary achieved better than a 1.5 to 1.0 debt to equity ratio and, accordingly, on March 31, 1998 the 2% interest premium on borrowed funds terminated and certain other restrictions ended. Moreover, the Swiss subsidiary and the Swiss lenders terminated the forbearance agreement on March 31, 1998. New lines of credit arrangements have either been entered into or agreed to in principal with the Swiss lenders for 8.0 million Swiss francs ($5.2 million). As of April 4, 1998, 2.0 million Swiss francs ($1.3 million) was outstanding under these agreements at an interest rate of 3.75%. Total debt decreased by $1.5 million in the first three months of 1998, of which $.6 million was due to the effect of foreign exchange translation. Total debt without the effect of the foreign exchange translation decreased by $.9 million. European and U.S. debt decreased by $.7 million and $.2 million, respectively. At April 4, 1998, the Company had $5.7 million of availability under its U.S. revolving credit agreement and $3.9 million of availability under its new Swiss loan arrangements. At April 4, 1998, there was working capital of $10.7 million as compared to $9.4 million at January 3, 1998, and the ratio of current assets to current liabilities at those dates was 1.50 and 1.41, respectively. -8- 11 In the first three months of 1998 and 1997, the Company utilized earnings from operations and internally-generated funds to meet its working capital needs and reduce debt. Net cash provided by operating activities was $.3 million in the first three months of 1998 as compared to $3.5 million in the same period of 1997. The decrease in operating cash flow was primarily from an increase in accounts receivable and inventories and a decrease in the total amount of accounts payable and accrued expenses. Net cash used in investing activities in the first three months of 1998 and 1997 was for capital additions. Net cash used in financing activities in the first three months of 1998 and 1997 was for the reduction of debt and was obtained from the cash provided by operating activities. Changes in foreign exchange rates, particularly with respect to the Swiss franc and Deutsche mark, caused a translation adjustment decrease in shareholders' equity of $.5 million in the first three months of 1998. -9- 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K for the three months ended April 4, 1998. -10- 13 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: May 4, 1998 By: /s/ ROBERT L. WEINBERG ----------------------- Robert L. Weinberg Senior Executive 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, Chief Accounting & Tax Officer (Duly authorized officer and principal accounting officer of the registrant) -11- 14 EXHIBIT INDEX Exhibit Number Description -------------- ----------- 27.1 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JAN-2-1999 JAN-4-1998 APR-4-1998 3,995 0 17,420 1,087 9,918 32,270 39,540 24,436 52,802 21,562 9,896 0 0 43 19,938 52,802 21,455 21,455 11,815 11,815 7,590 0 208 1,842 535 1,307 0 0 0 1,307 .40 .39
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