##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 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.
  New Jersey
    
    22-1759452(State or Other Jurisdiction of Incorporation
    
    (I.R.S. Employer Identification No.)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
  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
  þ o
  o þ o
  o þ




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##### 



INDEX
 Page No.PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements.Consolidated Balance Sheets March 31, 2007 (Unaudited) and December 30, 2006
    
    
    1Consolidated Statements of Income and Retained Earnings (Unaudited) for the Three Months Ended March 31, 2007 and April 1, 2006
    
    
    2Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2007 and April 1, 2006
    
    
    3Notes to Consolidated Financial Statements (Unaudited)
    
    
    4  11Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    12 - 19Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
    
    
    19 - 20Item 4.
    
    Controls and Procedures.
    
    
    20PART II.
    
    OTHER INFORMATIONItem 6.
    
    Exhibits.
    
    
    21SIGNATURES
    
    
    
    
    22CertificationCertificationCertification pursuant to 18 U.S.C. Section 1350




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1 . Financial Statements .
 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  (Unaudited)March 31,
    
    
    December 30,2007
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    11,166
    
    
    $
    14,038Restricted cash
    
    
    109
    
    
    
    420Accounts receivable, net of allowance for
doubtful accounts of $839 and $852
    
    
    26,456
    
    
    
    23,364Inventories, net
    
    
    23,871
    
    
    
    23,467Deferred income taxes
    
    
    1,617
    
    
    
    1,617Prepaid expenses and other current assets
    
    
    3,523
    
    
    
    3,649Total current assets
    
    
    66,742
    
    
    
    66,555PROPERTY, PLANT AND EQUIPMENT, net
    
    
    28,823
    
    
    
    29,316PATENTS, net
    
    
    1,424
    
    
    
    1,457GOODWILL
    
    
    25,008
    
    
    
    24,094OTHER INTANGIBLES, net
    
    
    17,608
    
    
    
    17,762NOTES RECEIVABLE AND OTHER ASSETS
    
    
    1,100
    
    
    
    1,665DEFERRED INCOME TAXES
    
    
    161
    
    
    
    147Total assets
    
    $
    140,866
    
    
    $
    140,996LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    1,408
    
    
    $
    404Accounts payable
    
    
    10,089
    
    
    
    8,397Accrued expenses and other current liabilities
    
    
    7,831
    
    
    
    11,618Accrued commissions
    
    
    3,140
    
    
    
    3,009Customer advances
    
    
    5,742
    
    
    
    8,233Income taxes payable
    
    
    3,169
    
    
    
    4,270Deferred income taxes
    
    
    1,662
    
    
    
    1,662Total current liabilities
    
    
    33,041
    
    
    
    37,593LONG-TERM DEBT, net of current portion
    
    
    31,650
    
    
    
    34,364DEFERRED INCOME TAXES
    
    
    3,583
    
    
    
    3,583OTHER NON-CURRENT LIABILITIES
    
    
    110
    
    
    
    75SERIES 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 4,676,833 shares and 4,615,623 shares
    
    
    47
    
    
    
    46Paid-in capital
    
    
    22,422
    
    
    
    20,319Retained earnings
    
    
    74,134
    
    
    
    69,255Accumulated other comprehensive income
    
    
    3,393
    
    
    
    3,27599,996
    
    
    
    92,895Treasury stock, 2,002,574 shares  at cost
    
    
    (27,514
    )
    
    
    (27,514
    )Total shareholders equity
    
    
    72,482
    
    
    
    65,381Total liabilities and shareholders equity
    
    $
    140,866
    
    
    $
    140,996
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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
   Three Months EndedMarch 31,
    
    
    April 1,2007
    
    
    2006REVENUES:Equipment and parts
    
    $
    44,339
    
    
    $
    30,178Services and freight
    
    
    2,545
    
    
    
    1,936Total revenues
    
    
    46,884
    
    
    
    32,114COST OF REVENUES:Equipment and parts
    
    
    24,763
    
    
    
    17,037Services and freight
    
    
    2,482
    
    
    
    1,926Total cost of revenues
    
    
    27,245
    
    
    
    18,963Gross profit
    
    
    19,639
    
    
    
    13,151OPERATING EXPENSES:Selling, general and administrative
    
    
    11,606
    
    
    
    8,870Research and development
    
    
    591
    
    
    
    58512,197
    
    
    
    9,455Operating income
    
    
    7,442
    
    
    
    3,696INTEREST EXPENSE, net of interest income
    
    
    (467
    )
    
    
    (156
    )Income before income taxes
    
    
    6,975
    
    
    
    3,540INCOME TAX PROVISION
    
    
    2,096
    
    
    
    1,223NET INCOME
    
    
    4,879
    
    
    
    2,317RETAINED EARNINGS:Beginning of period
    
    
    69,255
    
    
    
    56,383End of period
    
    $
    74,134
    
    
    $
    58,700EARNINGS PER SHARE:Basic
    
    $
    1.83
    
    
    $
    0.90Diluted
    
    $
    1.72
    
    
    $
    0.84Weighted average common shares outstanding (basic)
    
    
    2,663,000
    
    
    
    2,578,000Weighted average common and common equivalent
shares outstanding (diluted)
    
    
    2,841,000
    
    
    
    2,771,000
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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
   Three Months EndedMarch 31,
    
    
    April 1,2007
    
    
    2006OPERATING ACTIVITIES:Net income
    
    $
    4,879
    
    
    $
    2,317Adjustments to reconcile net income to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    1,337
    
    
    
    1,045Non-cash compensation
    
    
    80
    
    
    
    49Deferred income taxes
    
    
    (14
    )
    
    
    (87
    )Changes in assets and liabilities, net of business acquired:Accounts receivable, net
    
    
    (2,724
    )
    
    
    (671
    )Inventories, net
    
    
    (252
    )
    
    
    (935
    )Prepaid expenses and other current assets
    
    
    131
    
    
    
    (218
    )Other assets
    
    
    93
    
    
    
    230Accounts payable
    
    
    1,669
    
    
    
    627Accrued expenses and other current liabilities
    
    
    (6,312
    )
    
    
    (1,354
    )Net cash (used in) provided by operating activities
    
    
    (1,113
    )
    
    
    1,003INVESTING ACTIVITIES:Businesses acquired, net of cash received
    
    
    (1,975
    )
    
    
    (7,116
    )Capital expenditures
    
    
    (513
    )
    
    
    (229
    )Restricted cash
    
    
    311
    
    
    
    Other
    
    
    (8
    )
    
    
    Net cash used in investing activities
    
    
    (2,185
    )
    
    
    (7,345
    )FINANCING ACTIVITIES:Net repayments under notes payable to banks
    
    
    
    
    
    
    (355
    )Proceeds from issuance of long-term debt
    
    
    2,710
    
    
    
    Principal payments on long-term debt
    
    
    (4,422
    )
    
    
    (2,707
    )Tax benefit from stock option exercises
    
    
    1,212
    
    
    
    Proceeds from issuance of common stock
    
    
    892
    
    
    
    92Net cash provided by (used in) financing activities
    
    
    392
    
    
    
    (2,970
    )EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS
    
    
    34
    
    
    
    29NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (2,872
    )
    
    
    (9,283
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    14,038
    
    
    
    15,051End of period
    
    $
    11,166
    
    
    $
    5,768SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for:Interest
    
    $
    807
    
    
    $
    213Income taxes
    
    $
    2,027
    
    
    $
    1,346Seller financing for businesses acquired
    
    $
    626
    
    
    $
    3,000
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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2007
 1.
    
    Basis of PresentationThe 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 first quarter or
first three months of 2007 or 2006 mean the fiscal quarter or 13-week period ended
March 31, 2007 or April 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.
    
    AcquisitionOn 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 will conduct
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 PronouncementsIn 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. On initial
application, Interpretation 48 was applied to all tax positions for which the statute
of limitations remains open. Only tax positions that meet the more-likely-than-not
recognition threshold at the adoption date were recognized or will continue to be
recognized.
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Interpretation 48 was effective for fiscal years beginning after December 15, 2006,
and was adopted by the Company effective December 31, 2006. The Company is subject to
income taxes in the U.S. federal jurisdiction, and various states and foreign
jurisdictions. Tax regulations within each jurisdiction are subject to the
interpretation of the related tax laws and regulations and require significant
judgment to apply. With few exceptions, the Company is no longer subject to U.S.
federal, state and local, or non-U.S. income tax examinations by tax authorities for
years before 2003. The Company recognizes interest accrued related to unrecognized
tax benefits 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, 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 and liabilities differently. SFAS No. 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different
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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.
    
    InventoriesInventories consist of the following:
 March 31,
    
    
    December 30,2007
    
    
    2006(in thousands)Components
    
    $
    18,641
    
    
    $
    18,697Work-in-process
    
    
    6,448
    
    
    
    5,580Finished goods
    
    
    558
    
    
    
    739Inventory reserves
    
    
    (1,776
    )
    
    
    (1,549
    )$
    23,871
    
    
    $
    23,467
 5.
    
    Intangible AssetsIntangible assets consist of the following:
 March 31, 2007
    
    
    December 30, 2006Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(in thousands)Amortized intangible assetsPatents
    
    $
    2,862
    
    
    $
    1,438
    
    
    $
    2,855
    
    
    $
    1,398Drawings
    
    
    4,980
    
    
    
    594
    
    
    
    4,980
    
    
    
    545Customer relationships
    
    
    8,598
    
    
    
    586
    
    
    
    8,598
    
    
    
    481$
    16,440
    
    
    $
    2,618
    
    
    $
    16,433
    
    
    $
    2,424Unamortized intangible assetsTrademarks 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 three-month periods ended March 31, 2007 and April 1, 2006
was $194,000 and $119,000.6.
    
    Accrued WarrantyThe 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
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and is included in accrued expenses and other current liabilities. The following is
an analysis of accrued warranty for the three-month periods ended March 31, 2007 and
April 1, 2006:
 Three Months EndedMarch 31,
    
    
    April 1,2007
    
    
    2006(in thousands)Beginning balance
    
    $
    1,538
    
    
    $
    989Accrued warranty of acquired business
    
    
    50
    
    
    
    150Accrual of warranty expense
    
    
    482
    
    
    
    276Warranty costs incurred
    
    
    (275
    )
    
    
    (223
    )Foreign exchange adjustment
    
    
    1
    
    
    
    3Ending balance
    
    $
    1,796
    
    
    $
    1,195
 7.
    
    Long-Term DebtLong-term debt consists of the following, with the annual interest rates shown being
those in effect on March 31, 2007:
 March 31,
    
    
    December 30,2007
    
    
    2006(in thousands)U.S. revolving line of credit
    
    $
    28,335
    
    
    $
    30,000U.S. mortgage, interest at 6.45%
    
    
    1,507
    
    
    
    1,553U.S. term note, interest at 5.00%
    
    
    3,000
    
    
    
    3,000Other
    
    
    216
    
    
    
    21533,058
    
    
    
    34,768Less current portion
    
    
    (1,408
    )
    
    
    (404
    )$
    31,650
    
    
    $
    34,364
 As of March 31, 2007, interest on the $28,335,000 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 ofInterest RateAmount
    
    
    Period
    
    
    Per Annum RatePrime rate loan
    
    $
    1,835,000
    
    
    
    
    
    
    
    7.250
    %One month LIBOR loan
    
    
    6,500,000
    
    
    
    4/30/2007
    
    
    
    6.445
    %Two month LIBOR loan
    
    
    5,000,000
    
    
    
    5/30/2007
    
    
    
    6.465
    %Three month LIBOR loan
    
    
    5,000,000
    
    
    
    6/29/2007
    
    
    
    6.475
    %Three-year interest rate swap
    
    
    5,000,000
    
    
    
    10/13/2009
    
    
    
    6.335
    %Four-year interest rate swap
    
    
    5,000,000
    
    
    
    10/13/2010
    
    
    
    6.345
    %$
    28,335,000
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8.
    
    Earnings Per ShareThe 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 March 31, 2007Net Income Available(Dollars and Shares in Thousands
    
    To Common
    
    
    
    
    
    
    Earningsexcept Per Share Data)
    
    Shareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    4,879
    
    
    
    2,663
    
    
    $
    1.83Common share equivalent
of outstanding options
    
    
    
    
    
    
    178
    
    
    
    (0.11
    )Diluted
    
    $
    4,879
    
    
    
    2,841
    
    
    $
    1.72
 For the Three Months Ended April 1, 2006Net Income Available(Dollars and Shares in Thousands
    
    To Common
    
    
    
    
    
    
    Earningsexcept Per Share Data)
    
    Shareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    2,317
    
    
    
    2,578
    
    
    $
    0.90Common share equivalent
of outstanding options
    
    
    
    
    
    
    193
    
    
    
    (0.06
    )Diluted
    
    $
    2,317
    
    
    
    2,771
    
    
    $
    0.84
 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 CompensationThe 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 new stock option awards and to stock option awards 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 three months of 2007.
The pre-tax cost for stock option compensation was approximately $31,000 ($19,000
after tax) for the first three months of 2006.As of March 31, 2007, the Company did not have any prospective cost of stock option
compensation to be expensed.There were no stock options granted in the first three months of 2007 or 2006.10.
    
    Comprehensive IncomeComprehensive income is the total of net income plus the change (net of tax) in the
unrealized gain or loss on interest rate swaps and the change in foreign currency
translation adjustments, which were the Companys only two non-owner changes in
equity in the first three months of 2007 and 2006. For the three-month periods
ended March 31, 2007 and April 1, 2006, the following table sets forth the
Companys comprehensive income:
 Three Months EndedMarch 31,
    
    
    April 1,2007
    
    
    2006(in thousands)Net income
    
    $
    4,879
    
    
    $
    2,317Unrealized loss on interest rate swaps,
net of tax
    
    
    (21
    )
    
    
    Foreign currency translation gain
    
    
    139
    
    
    
    233Comprehensive income
    
    $
    4,997
    
    
    $
    2,550
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11.
    
    Management Geographic InformationThe 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-month periods ended March 31, 2007 and April 1, 2006, the following table
sets forth the Companys geographic information:
 EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)THREE MONTHS ENDED
March 31, 2007RevenuesSales to unaffiliated customers
    
    $
    28,341
    
    
    $
    18,543
    
    
    $
    
    
    
    $
    46,884Sales to affiliates
    
    
    1,036
    
    
    
    1,013
    
    
    
    (2,049
    )
    
    
    Total sales
    
    $
    29,377
    
    
    $
    19,556
    
    
    $
    (2,049
    )
    
    $
    46,884Operating income
    
    $
    3,231
    
    
    $
    4,198
    
    
    $
    13
    
    
    $
    7,442Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (467
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,975
 EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)THREE MONTHS ENDED
April 1, 2006RevenuesSales to unaffiliated customers
    
    $
    20,889
    
    
    $
    11,225
    
    
    $
    
    
    
    $
    32,114Sales to affiliates
    
    
    678
    
    
    
    730
    
    
    
    (1,408
    )
    
    
    Total sales
    
    $
    21,567
    
    
    $
    11,955
    
    
    $
    (1,408
    )
    
    $
    32,114Operating income
    
    $
    2,886
    
    
    $
    840
    
    
    $
    (30
    )
    
    $
    3,696Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (156
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,540
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For the three-month periods ended March 31, 2007 and April 1, 2006, the following
table sets forth revenues from external customers:
 Three Months EndedMarch 31,
    
    
    April 1,2007
    
    
    2006(in thousands)AmericasU.S.
    
    $
    22,434
    
    
    $
    17,712All others
    
    
    5,907
    
    
    
    3,177Total
    
    
    28,341
    
    
    
    20,889EMEA/AsiaChina
    
    
    2,004
    
    
    
    1,228Germany
    
    
    2,630
    
    
    
    2,425Netherlands
    
    
    5,113
    
    
    
    354United Kingdom
    
    
    1,417
    
    
    
    2,226All others
    
    
    7,379
    
    
    
    4,992Total
    
    
    18,543
    
    
    
    11,225$
    46,884
    
    
    $
    32,114
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Item 2 . Managements Discussion and Analysis of Financial Condition and
Results of Operations .
 Introduction
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Critical Accounting Assumptions, Estimates and Policies; Recent Accounting Prouncements
    Results of Operations
 Overview
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Foreign Exchange Rates
    Three Months EndedMarch 31,
    
    
    
    
    
    April 1,2007
    
    
    
    
    
    2006Average U.S. dollar equivalent of
one Swiss franc
    
    
    0.810
    
    
    
    
    
    
    
    0.771% change vs. prior year
    
    
    
    
    
    
    +5.1
    %Average U.S. dollar equivalent of
one euro
    
    
    1.309
    
    
    
    
    
    
    
    1.204% change vs. prior year
    
    
    
    
    
    
    +8.7
    %
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##### Table of Contents



Three Months EndedMarch 31,
    
    
    
    
    
    April 1,2007
    
    
    
    
    
    2006Average U.S. dollar equivalent of
one British pound sterling
    
    
    1.953
    
    
    
    
    
    
    
    1.754% change vs. prior year
    
    
    
    
    
    
    +11.3
    %Average Swiss franc equivalent of
one euro
    
    
    1.616
    
    
    
    
    
    
    
    1.561% change vs. prior year
    
    
    
    
    
    
    +3.5
    %Average Swiss franc equivalent of
one British pound sterling
    
    
    2.411
    
    
    
    
    
    
    
    2.275% change vs. prior year
    
    
    
    
    
    
    +6.0
    %
 Presentation of Results and Analysis
  Three Months EndedMarch 31,
    
    April 1,2007
    
    2006Total revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    58.1
    
    
    
    59.1Gross profit
    
    
    41.9
    
    
    
    40.9Selling, general and administrative
    
    
    24.7
    
    
    
    27.6Research and development
    
    
    1.3
    
    
    
    1.8Operating income
    
    
    15.9
    
    
    
    11.5Interest expense, net
    
    
    (1.0
    )
    
    
    (0.5
    )Income before income taxes
    
    
    14.9
    
    
    
    11.0Income tax provision
    
    
    4.5
    
    
    
    3.8Net income
    
    
    10.4
    %
    
    
    7.2
    %
  March 31, 2007
    
    
    Dec. 30, 2006
    
    
    April 1, 2006Backlog (at March 31, 2007
foreign exchange rates, in
thousands of dollars)
    
    $
    51,159
    
    
    $
    49,961
    
    
    $
    41,512
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Liquidity and Capital Resources
 Capitalization
  March 31,
    
    
    December 30,
    
    
    December 31,(Dollars in Thousands)
    
    2007
    
    
    2006
    
    
    2005Short-term debt, including current
portion of long-term debt
    
    $
    1,408
    
    
    $
    404
    
    
    $
    4,316Long-term debt
    
    
    31,650
    
    
    
    34,364
    
    
    
    12,675Total debt
    
    
    33,058
    
    
    
    34,768
    
    
    
    16,991Shareholders equity
    
    
    72,482
    
    
    
    65,381
    
    
    
    49,520Total debt and shareholders equity
(total capitalization)
    
    $
    105,540
    
    
    $
    100,149
    
    
    $
    66,511Percent total debt to total capitalization
    
    
    31
    %
    
    
    35
    %
    
    
    26
    %Percent long-term debt to equity
    
    
    44
    %
    
    
    53
    %
    
    
    26
    %Percent total debt to equity
    
    
    46
    %
    
    
    53
    %
    
    
    34
    %
   Other Items
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Future Payments Under Contractual Obligations
  Risk Factors
  Forward-Looking Statements
  - 18 -




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Item 3 . Quantitative and Qualitative Disclosures About Market Risk .
  Foreign Exchange Rate Risk
    - 19 -




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Interest Rate Risk
  
 Item 4 . Controls and Procedures .
 Evaluation of Disclosure Controls and Procedures
  Change in Internal Control over Financial Reporting
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PART II. OTHER INFORMATION
 
 Item 6 . Exhibits .
 31.1
    
    Chief Executive Officer Certification pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange Act of 193431.2
    
    Chief Financial Officer Certification pursuant to Rule 13a-14(a)
or 15d-14(a) of the Securities Exchange Act of 193432.1
    
    Chief Executive Officer and Chief Financial Officer Certification
pursuant to 18 U.S.C. Section 1350
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K-TRON INTERNATIONAL, INC.Date: May 7, 2007
    
    By:
    
    RONALD R. REMICKRonald R. RemickSenior Vice President, ChiefFinancial Officer and Treasurer(Duly authorized officer and principalfinancial officer of the Registrant)By:
    
    ALAN R. SUKONECKAlan R. SukoneckVice President, Chief Accountingand Tax Officer(Duly authorized officer and principalaccounting officer of the Registrant)
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EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    Chief Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 193431.2
    
    Chief Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 193432.1
    
    Chief Executive Officer and Chief Financial Officer Certification pursuant to 18
U.S.C. Section 1350