-----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, JQtE3OXGG+YEN+0YoEpTNqnIS/XlPDzZgoO1UqjskDCjq04o7YJAi0aFemJ4Q5Ki lhSYsNEqbkq6GuP8uhGuOQ== 0000893220-99-001206.txt : 19991027 0000893220-99-001206.hdr.sgml : 19991027 ACCESSION NUMBER: 0000893220-99-001206 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991002 FILED AS OF DATE: 19991026 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: 99734002 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 October 2, 1999 ----------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission file number 0-9576 ------ K-TRON INTERNATIONAL, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) New Jersey 22-1759452 - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification #) or Organization)
Routes 55 & 553, P.O. Box 888, Pitman, New Jersey 08071-0888 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (856) 589-0500 ----------------------------- Not Applicable - -------------------------------------------------------------------------------- (Former Name, Former Address and Formal Fiscal Year, if Changed Since Last Report) Indicate by check X whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ---- The Registrant had 2,965,578 shares of Common Stock outstanding as of October 2, 1999. 2 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES INDEX
Page No. -------- PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements Consolidated Balance Sheets 1 October 2, 1999 and January 2, 1999 Consolidated Statements of Income 2 & Retained Earnings for the Three and Nine Months Ended October 2, 1999 and October 3, 1998 Consolidated Statements of Cash Flows 3 for the Nine Months Ended October 2, 1999 and October 3, 1998 Notes to Consolidated Financial Statements 4 - 7 Item 2. Management's Discussion and Analysis 8 - 12 of Financial Condition and Results of Operations PART II. OTHER INFORMATION ----------------- Item 6. Exhibits and Reports on Form 8-K 13
3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. K-TRON INTERNATIONAL, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands except Share Data)
October 2, January 2, 1999 1999 (Unaudited) (Audited) ----------- --------- ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 1,750 $ 3,220 Accounts receivable (less allowance for doubtful accounts of $1,219 and $1,286) 20,325 19,034 Inventories 11,575 10,743 Deferred income taxes 819 819 Prepaid expenses and other current assets 1,597 1,177 -------- -------- Total current assets 36,066 34,993 PROPERTY, PLANT AND EQUIPMENT, net 15,567 16,215 PATENTS, net 793 751 GOODWILL, net 3,801 4,454 OTHER ASSETS -- 204 -------- -------- Total assets $ 56,227 $ 56,617 ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY ---------------------------------- CURRENT LIABILITIES: Notes payable to banks $ 678 $ 254 Current portion of long-term debt 887 1,280 Accounts payable 6,890 6,965 Accrued expenses & other current liabilities 3,898 4,034 Accrued payroll 3,324 4,307 Accrued commissions 2,095 2,609 Customer advances 1,807 1,810 Accrued warranty 874 1,055 Income taxes payable 1,351 1,233 -------- -------- Total current liabilities 21,804 23,547 LONG-TERM DEBT, net of current portion 8,920 9,638 DEFERRED INCOME TAXES 423 423 OTHER NONCURRENT LIABILITIES 401 735 COMMITMENTS AND CONTINGENCIES SERIES A JUNIOR PARTICIPATING PREFERRED SHARES, $.01 par value - authorized 50,000 shares; none issued -- -- SHAREHOLDERS' EQUITY: Preferred stock, $.01 par value - authorized 950,000 shares; none issued -- -- Common stock, $.01 par value - authorized 50,000,000 shares; issued 4,362,928 shares and 4,328,555 shares 44 43 Paid-in capital 15,918 15,505 Retained earnings 26,688 21,839 Cumulative translation adjustments (1,107) (192) -------- -------- 41,543 37,195 -------- -------- Treasury stock, 1,397,350 and 1,295,450 shares - at cost (16,864) (14,921) -------- -------- Total shareholders' equity 24,679 22,274 -------- -------- Total liabilities and shareholders' equity $ 56,227 $ 56,617 ======== ========
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 Nine Months Ended ------------------ ----------------- Oct. 2, Oct.3, Oct. 2, Oct. 3, 1999 1998 1999 1998 ---- ---- ---- ---- REVENUES $21,688 $21,244 $64,145 $65,065 COST OF REVENUES 11,763 11,751 35,072 35,559 ------- ------- ------- ------- Gross profit 9,925 9,493 29,073 29,506 OPERATING EXPENSES Selling, general and administrative 6,689 6,456 20,003 20,512 Research and development 843 661 2,569 2,080 ------- ------- ------- ------- 7,532 7,117 22,572 22,592 ------- ------- ------- ------- Operating income 2,393 2,376 6,501 6,914 INTEREST EXPENSE 124 166 380 522 ------- ------- ------- ------- Income before income taxes 2,269 2,210 6,121 6,392 INCOME TAX PROVISION 599 632 1,272 1,692 ------- ------- ------- ------- Net income 1,670 1,578 4,849 4,700 RETAINED EARNINGS Beginning of period 25,018 18,368 21,839 15,246 ------- ------- ------- ------- End of period $26,688 $19,946 $26,688 $19,946 ======= ======= ======= ======= EARNINGS PER SHARE Basic $ .56 $ .52 $ 1.64 $ 1.48 ======= ======= ======= ======= Diluted $ .55 $ .51 $ 1.60 $ 1.44 ======= ======= ======= =======
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 ----------------- Oct. 2, Oct. 3, 1999 1998 ---- ---- OPERATING ACTIVITIES: Net income $ 4,849 $ 4,700 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,418 2,270 Amortization of deferred gain on sale/leaseback transaction (278) (281) Changes in assets and liabilities: Accounts receivable, net (2,396) (2,691) Inventories (1,295) (832) Prepaid expenses and other current assets (480) (300) Other assets 206 218 Accounts payable 298 169 Accrued expenses and other current liabilities (872) 2,528 Accrued warranty (130) 95 Income taxes 137 73 ------- ------- Net cash provided by operating activities 2,457 5,949 ------- ------- INVESTING ACTIVITIES: Capital expenditures (2,134) (1,870) Investment in patents (105) (94) ------- ------- Net cash used in investing activities (2,239) (1,964) ------- ------- FINANCING ACTIVITIES: Net borrowings (repayments) under notes payable to banks 462 (1,393) Principal payments on long-term debt (561) (1,075) Proceeds from issuance of long-term debt -- 1,005 Purchase of treasury stock (2,110) (4,531) Proceeds from issuance of common stock 581 517 ------- ------- Net cash used in financing activities (1,628) (5,477) ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (60) 176 ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (1,470) (1,316) ------- ------- CASH AND CASH EQUIVALENTS Beginning of period 3,220 5,154 ------- ------- End of period $ 1,750 $ 3,838 ======= =======
See Notes to Consolidated Financial Statements -3- 6 K-TRON INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS October 2, 1999 (Unaudited) 1. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of K-Tron International, Inc. and its subsidiaries ("K-Tron" or the "Company"). All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for a fair presentation of results for interim periods have been made. The results for the interim periods are not necessarily indicative of the results for a full year. The unaudited financial statements herein should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended January 2, 1999 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 nine months of 1999 and 1998 for interest was $.4 million and $.5 million, respectively, and for income taxes was $1.2 million and $1.7 million, respectively. 3. Earnings per Share The Company previously adopted Statement of Financial Accounting Standards ("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 October 2, 1999 ------------------------------------------ (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Per Share Shareholders Shares Amount -------------- ------ --------- Basic Net Income $1,670 2,965 $ .56 Common Share Equivalent -- 64 (.01) of Outstanding Options ------ -------- ------- Diluted $1,670 3,029 $ .55 ====== ======== =======
-4- 7
For the Three Months Ended October 3, 1998 ------------------------------------------ (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Per Share Shareholders Shares Amount -------------- ------- -------- Basic Net Income $1,578 3,019 $ .52 Common Share Equivalent -- 97 (.01) of Outstanding Options ------ -------- ------- Diluted $1,578 3,116 $ .51 ====== ======== =======
For the Nine Months Ended October 2, 1999 ----------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Per Share Shareholders Shares Amount ------------ ------ -------- Basic Net Income $4,849 2,965 $ 1.64 Common Share Equivalent -- 64 (.04) of Outstanding Options ------ -------- -------- Diluted $4,849 3,029 $ 1.60 ====== ======== ========
For the Nine Months Ended October 3, 1998 ----------------------------------------- (Dollars and Shares in Thousands except Per Share Data) Income Available To Common Per Share Shareholders Shares Amount ---------------- ------ --------- Basic Net Income $4,700 3,169 $ 1.48 Common Share Equivalent -- 97 (.04) of Outstanding Options ------ -------- ------- Diluted $4,700 3,266 $ 1.44 ====== ======== =======
Diluted earnings per common share are based on the weighted average number of common and common equivalent shares outstanding. Such average shares include the weighted average number of common shares outstanding plus the shares issuable upon exercise of stock options after the assumed repurchase of common shares with the related proceeds. -5- 8 4. Impact of New Accounting Pronouncements The Company previously adopted SFAS No. 130, "Reporting Comprehensive Income". SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components. Comprehensive income is the total of net income and the current year change in cumulative translation adjustments which is the only nonowner change in equity. For the three and nine months in the periods ended October 2, 1999 and October 3, 1998, the following table sets forth the Company's comprehensive income:
Three Months Ended Nine Months Ended ------------------ ----------------- Oct. 2, Oct. 3, Oct. 2, Oct. 3, 1999 1998 1999 1998 ---- ----- ----- ---- (Dollars in Thousands) Net Income $1,670 $ 1,578 $4,849 $4,700 Cumulative Translation Adjustments 708 1,311 (915) 780 ------ ------- ------ ------ Comprehensive Income $2,378 $ 2,889 $3,934 $5,480 ====== ======= ====== ======
The Company previously adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 131 introduces a new model for segment reporting called the management approach. The management approach is based on the way that the chief operating decision maker organizes segments within a company for making operating decisions and assessing performance. The Company is engaged in one business segment, the development, manufacturing and marketing of gravimetric and volumetric feeders, pneumatic conveying systems and related equipment. The Company operates in two primary geographic locations, North America and Western Europe. For the three and nine months in the periods ended October 2, 1999 and October 3, 1998, the following tables set forth the Company's segment information:
North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- (in thousands) THREE MONTHS ENDED October 2, 1999: Revenues- Sales to unaffiliated customers $8,300 $13,388 $ -- $21,688 Sales to affiliates 893 674 (1,567) -- ------ ------- -------- -------- Total sales $9,193 $14,062 $(1,567) $21,688 ====== ======= ======== ======= Operating income $1,473 $ 852 $ 68 $ 2,393 ====== ======= ======== Interest expense (124) ------- Income before income taxes $ 2,269 =======
-6- 9
North Western Elimi- Consoli- America Europe nations dated ------- ------ ------- ----- (in thousands) THREE MONTHS ENDED October 3, 1998: Revenues- Sales to unaffiliated customers $ 9,568 $11,676 $ -- $ 21,244 Sales to affiliates 1,012 503 (1,515) -- ------- ------- --------- -------- Total sales $ 10,580 $12,179 $ (1,515) $ 21,244 ======= ======= ========= ======== Operating income $ 1,939 $ 436 $ 1 $ 2,376 ======== ======= ========= Interest expense (166) -------- Income before income taxes $ 2,210 ======== NINE MONTHS ENDED October 2, 1999: Revenues- Sales to unaffiliated customers $24,849 $39,296 $ $64,145 Sales to affiliates 2,733 1,784 (4,517) -- ------- ------- -------- ------- Total sales $27,582 $41,080 $(4,517) $64,145 ======= ======= ======== ======= Operating income $ 3,628 $ 2,822 $ 51 $ 6,501 ======= ======= ========= Interest expense (380) ------- Income before income taxes $ 6,121 ======= NINE MONTHS ENDED October 3, 1998: Revenues- Sales to unaffiliated customers $28,239 $36,826 $ -- $65,065 Sales to affiliates 2,420 1,452 (3,872) -- -------- ------- -------- ------- Total sales $30,659 $38,278 $(3,872) $65,065 ======== ======= ======== ======= Operating income $ 4,158 $ 2,627 $ 129 $ 6,914 ======== ======= ======== Interest expense (522) -------- Income before income taxes $ 6,392 ========
-7- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations For the third quarter and first nine months of 1999, the Company reported net income of $1,670,000 and $4,849,000, respectively, compared to $1,578,000 and $4,700,000 for the same periods in 1998. K-Tron is an international company which derived approximately 61% and 57% of its first nine months of 1999 and 1998 revenues, respectively, from products manufactured in, and services performed from, its facilities located outside the United States, primarily in Europe. As such, the financial position and performance of the Company is sensitive to changes in foreign currency exchange rates ("foreign exchange rates"), which can affect both the translation of financial statement items into U.S. dollars and the impact of transactions where the revenues and related expenses may initially be accounted for in different currencies, such as sales made from the Company's Swiss manufacturing facilities in currencies other than the Swiss franc. The following table sets forth the Company's results of operations expressed as a percentage of total revenues for the periods indicated:
Three Months Ended Nine Months Ended ------------------ ----------------- Oct. 2, Oct. 3, Oct. 2, Oct. 3, 1999 1998 1999 1998 ---- ---- ---- ----- Total revenues 100.0% 100.0% 100.0% 100.0% Cost of revenues 54.2 55.3 54.7 54.7 ---- ---- ---- ----- Gross profit 45.8 44.7 45.3 45.3 Selling, general & administrative 30.8 30.4 31.2 31.5 Research & development 3.9 3.1 4.0 3.2 ---- ----- --- ----- Operating income 11.1 11.2 10.1 10.6 Interest .6 .8 .6 .8 ---- ----- ----- ----- Income before income taxes 10.5% 10.4% 9.5% 9.8% ==== ======= ==== ====== Backlog at end of period (at October 2, 1999 January 2, 1999 October 3, 1998 --------------- --------------- --------------- October 2, 1999 foreign exchange $19,154 $21,352 $23,366 ======= ======= ======= rates, in thousands)
-8- 11 As noted above, more than half of the Company's revenues are normally derived from activities in foreign jurisdictions. Consequently, the Company's results can be significantly affected by changes in foreign exchange rates, particularly in U.S. dollar exchange rates with respect to the Swiss franc, German mark and euro and, to a lesser degree, the British pound sterling, French franc and other currencies. When the U.S. dollar strengthens against these currencies, the U.S. dollar value of non-U.S. dollar-based sales decreases. When the U.S. dollar weakens against these currencies, the U.S. dollar value of such sales increases. Correspondingly, the U.S. dollar value of non-U.S. dollar-based costs increases when the U.S. dollar weakens and decreases when the U.S. dollar strengthens. Overall, the Company typically receives a majority of its revenues in currencies other than the U.S. dollar and, as such, benefits from a weaker dollar and is adversely affected by a stronger dollar relative to major currencies worldwide, especially those identified above. Accordingly, changes in foreign exchange rates, and in particular a strengthening of the U.S. dollar, may adversely affect the Company's total revenues, gross profit and operating income as expressed in U.S. dollars. In addition, revenues and income of the Company with respect to particular transactions may be affected by changes in foreign exchange rates where sales are made in currencies other than the functional currency of the facility manufacturing the product subject to the sale, including in particular the U.S. dollar/Swiss franc exchange rate (for inter-company transactions) and the euro/Swiss franc and German mark/Swiss franc exchange rates (for sales from the Company's Swiss manufacturing facilities which are made in euros or German marks). For the first nine months of 1999 as well as the same period in 1998, the changes in these and the U.S. dollar/euro and U.S. dollar/German mark exchange rates were as follows:
Three Months Ended Nine Months Ended ------------------ ----------------- Oct. 2, Oct. 3, Oct. 2 Oct. 3, 1999 1998 1999 1998 ---- ---- ---- ---- Average U.S. dollar equivalent of .656 .688 .671 .678 one Swiss franc % change vs. prior year -4.7% -1.0% Average U.S. dollar equivalent of 1.051 N/A 1.074 N/A one euro Average U.S. dollar equivalent of .537 .572 .549 .560 one German mark % change vs. prior year -6.1% -2.0% Average Swiss franc equivalent of .819 .831 .818 .826 one German mark % change vs. prior year -1.4% -1.0% Average Swiss franc equivalent of 1.602 N/A 1.601 N/A one euro
-9- 12 Total revenues increased $.4 million or 2.1% in the third quarter of 1999 and decreased by $.9 million or 1.4% in the first nine months of 1999 compared to the same periods in 1998. Western European revenues increased and North American revenues decreased in the third quarter and first nine months of 1999 compared to the same periods in 1998. As reflected in the preceding chart, revenues for the third quarter and first nine months of 1999 would have been somewhat higher than the same period in 1998 if translated at prior year rates. Gross profit as a percent of revenues increased to 45.8% for the third quarter of 1999 compared to 44.7% for the same period in 1998. The improvement in gross margin in 1999 was primarily due to sales mix. Gross margin for the first nine months of 1999 and 1998 remained constant at 45.3%. Selling, general and administrative (SG&A) expense increased by $.2 million or 3.6 % for the third quarter of 1999 and decreased by $.5 million or 2.5% for the first nine months of 1999 compared to the same periods in 1998. This increase in SG&A in the third quarter was due to higher selling expenses, partly offset by lower foreign exchange translation rates. The decrease for the first nine months was due to lower selling expenses and lower foreign exchange translation rates. As a percent of total revenues, SG&A for the third quarter and first nine months of 1999 was 30.8% and 31.2%, respectively, compared to 30.4% and 31.5% for the same periods in 1998. Research and development (R&D) expenditures increased by $.2 million or 27.5% for the third quarter of 1999 and by $.5 million or 23.5% for the first nine months of 1999 compared to the same periods in 1998. R&D expenses increased due to greater emphasis on the development of new products and enhancements to existing products, offset in part by lower foreign exchange translation rates. R&D expense as a percent of total revenues was 3.9% for the third quarter and 4.0% for the first nine months of 1999 compared to 3.1% and 3.2%, respectively, for the same periods in 1998. Interest expense decreased by $.1 million or 27.2% for the first nine months of 1999 compared to the same period in 1998, primarily due to weighted average lower debt levels and lower rates on some loans. The effective tax rate for the third quarter and first nine months of 1999 were 26.4% and 20.8%, respectively, compared to 28.6% and 26.5% for the same periods in 1998. These lower rates in 1999 were due in part to reduced taxable income in the United States. The effective tax rates for both 1999 and 1998 were also reduced by the utilization of foreign net operating loss carryforwards with full valuation allowances. The backlog decreased by 10.3% at the end of the third quarter compared to the end of 1998 and by 18.0% compared to the same periods in 1998, in each case at constant foreign exchange rates. The decrease was primarily from orders received at the manufacturing facilities in Europe. -10- 13 Liquidity and Capital Resources The Company's capitalization as of the end of the third quarter of 1999 and as of the end of fiscal years 1998 and 1997 is set forth below:
Oct. 2, Jan. 2, Jan. 3, (Dollars in Thousands) 1999 1999 1998 ---------- ---------- --------- Short-term debt, including current portion of long-term debt $1,565 $ 1,534 $ 3,148 Long-term debt 8,920 9,638 10,619 ----- ----- ------ Total debt 10,485 11,172 13,767 Shareholders' equity 24,679 22,274 18,892 ------ ------ ------ Total debt and shareholders' equity $35,164 $33,446 $32,659 (total capitalization) ======= ======= ====== Percent total debt to total capitalization 30% 33% 42% Percent long-term debt to equity 36% 43% 56% Percent total debt to equity 42% 50% 73%
Total debt decreased by $.7 million in the first nine months of 1999 ($.1 million using a constant foreign exchange rate). U.S. debt decreased by $.2 million while European debt decreased by $.5 million. At October 2, 1999, the Company had $5.0 million of borrowing availability under its U.S. loan agreements and $3.4 million of borrowing availability under its Swiss loan agreements. At October 2, 1999, there was working capital of $14.3 million compared to $11.4 million at January 2, 1999, and the ratio of current assets to current liabilities at those dates was 1.65 and 1.49, respectively. In the first nine months of 1999 and 1998, the Company utilized internally-generated funds to meet its working capital needs. Net cash provided by operating activities was $2.5 million in the first nine months of 1999 compared to $5.9 million in the same period of 1998, with such lower flow being due to a reduction in accrued expenses. Net cash used in investing activities in the first nine months of 1999 and 1998 was for capital additions. Net cash used in financing activities in the first nine months of 1999 was primarily for the purchase of 116,400 shares of common stock from two shareholders, partly offset by cash received from the issuance of common stock. Changes in foreign exchange rates, particularly with respect to the Swiss franc and German mark, caused a translation adjustment decrease in shareholders' equity of $.9 million in the first nine months of 1999. -11- 14 Readiness for Year 2000 The Company has completed an evaluation of its information technology infrastructure for Year 2000 compliance and has substantially completed its Year 2000 compliance activities. The cost to modify its information technology infrastructure to be Year 2000 compliant has not been material to its financial condition or results of operations. The Company does not anticipate any material disruptions in its business as a result of any failure by the Company to be Year 2000 compliant. The Company is continually obtaining information concerning the Year 2000 compliance status of its significant suppliers, customers and business partners to determine the extent to which the Company is vulnerable to these third parties' failure to remedy their Year 2000 problems. There can be no assurance that such suppliers, customers and business partners are or will be Year 2000 compliant. The risk to the Company resulting from the failure of third parties in the public and private sector to attain Year 2000 readiness is the same as for other firms in the Company's industry or other business enterprises generally and could involve many different types of disruption to the Company's business. The costs to complete the Company's Year 2000 evaluation and to secure Year 2000 compliance are based on management's best estimates. These estimates were derived using numerous assumptions, including continued availability of resources, third party contingency plans and other factors. However, there can be no assurance that these estimates will be achieved and actual results could differ materially from those anticipated. The following are representative of the types of risks that could result in the event a critical component of the Company's information systems, factories or facilities fails to be Year 2000 ready, or there is a similar failure by one or more major third party suppliers to the Company: (i) information systems--could include interruptions or disruptions of business and transaction processing such as customer billing, payroll, accounts payable and other operating and information processes, until systems can be remedied or replaced; (ii) factories and facilities--could include interruptions or disruptions of manufacturing processes and facilities with delays in delivery of products, until non-compliant conditions or components can be remedied or replaced; and (iii) major suppliers to the Company--could include interruptions or disruptions of the supply of materials and supplies which could cause interruptions or disruptions of manufacturing and delays in delivery of products, until the third party supplier can remedy the problem or contingency measures can be implemented. -12- 15 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 quarter ended October 2, 1999. -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 its behalf by the undersigned thereunto duly authorized. K-TRON INTERNATIONAL, INC. Date: October 26, 1999 By: /s/ Ronald R. Remick ----------------------- Ronald R. Remick Senior Vice President & Chief Financial Officer (Duly authorized officer and principal financial officer of the registrant) By: /s/ Alan R. Sukoneck ----------------------- Vice President, Chief Accounting & Tax Officer (Duly authorized officer and principal accounting officer of the registrant) -14- 17 EXHIBIT INDEX
Exhibit Number Description -------------- ----------- 27.1 Financial Data Schedule
EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JAN-01-2000 OCT-02-1999 1,750 0 21,544 1,219 11,575 36,066 43,358 27,791 56,227 21,804 8,920 0 0 44 24,635 56,227 64,145 64,145 35,072 35,072 22,572 0 380 6,121 1,272 4,849 0 0 0 4,849 1.64 1.60
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