UNITED STATES
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 April 4, 2009
 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 
or Organization)
    
    (I.R.S. Employer Identification No.)Routes 55 & 553, P.O. Box 888, Pitman, New Jersey
    
    08071-0888(Address of Principal Executive Offices)
    
    (Zip Code)
  Registrants Telephone Number, Including Area Code
  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 Yes þ No o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial StatementsConsolidated Balance Sheets as of April 4, 2009 (Unaudited) and January 3, 2009
    
    
    1Consolidated Statements of Income and Retained Earnings (Unaudited) for the Three Months Ended April 4, 2009 and March 29, 2008
    
    
    2Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended April 4, 2009 and March 29, 2008
    
    
    3Notes to Consolidated Financial Statements (Unaudited)
    
    
    4-11Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11-18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18-19Item 4. Controls and Procedures
    
    
    19PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    20SIGNATURES
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### 



PART I. FINANCIAL INFORMATION
 
 Item 1 . Consolidated Financial Statements .
 K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)April 4,
    
    
    January 3,2009
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    42,628
    
    
    $
    41,623Restricted cash
    
    
    485
    
    
    
    530Accounts receivable, net of allowance for
doubtful accounts of $1,181and $1,214
    
    
    32,647
    
    
    
    36,625Inventories, net
    
    
    27,428
    
    
    
    28,776Deferred income taxes
    
    
    2,371
    
    
    
    2,371Prepaid expenses and other current assets
    
    
    4,088
    
    
    
    4,498Total current assets
    
    
    109,647
    
    
    
    114,423Property, plant and equipment, net
    
    
    25,395
    
    
    
    26,701Patents, net
    
    
    1,353
    
    
    
    1,381Goodwill
    
    
    29,279
    
    
    
    29,059Other intangibles, net
    
    
    21,133
    
    
    
    21,366Other assets
    
    
    6,244
    
    
    
    6,438Deferred income taxes
    
    
    10
    
    
    
    76Total assets
    
    $
    193,061
    
    
    $
    199,444LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    1,602
    
    
    $
    1,662Accounts payable
    
    
    9,193
    
    
    
    13,156Accrued expenses and other current liabilities
    
    
    6,916
    
    
    
    11,198Accrued commissions
    
    
    4,869
    
    
    
    5,285Customer advances
    
    
    9,835
    
    
    
    7,828Income taxes payable
    
    
    2,629
    
    
    
    4,170Deferred income taxes
    
    
    3,430
    
    
    
    3,430Total current liabilities
    
    
    38,474
    
    
    
    46,729Long-term debt, net of current portion
    
    
    21,000
    
    
    
    22,000Deferred income taxes
    
    
    3,771
    
    
    
    3,771Other non-current liabilities
    
    
    729
    
    
    
    892Series B Junior Participating Preferred Shares,
$.01 par value. Authorized 50,000 shares; issued none
    
    
    
    
    
    
    Shareholders equity:Preferred stock, $.01 par value. Authorized 950,000 shares; issued none
    
    
    
    
    
    
    Common stock, $.01 par value. Authorized 50,000,000 shares;
issued 4,817,004 shares and 4,800,139 shares, respectively
    
    
    48
    
    
    
    48Paid-in capital
    
    
    29,158
    
    
    
    28,455Retained earnings
    
    
    120,796
    
    
    
    116,349Accumulated other comprehensive income
    
    
    7,368
    
    
    
    9,483157,370
    
    
    
    154,335Treasury stock, 2,008,192 shares, at cost
    
    
    (28,283
    )
    
    
    (28,283
    )Total shareholders equity
    
    
    129,087
    
    
    
    126,052Total liabilities and shareholders equity
    
    $
    193,061
    
    
    $
    199,444
   -1-




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##### 



CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
 Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008Revenues:Equipment and parts
    
    $
    47,850
    
    
    $
    54,476Services and freight
    
    
    1,836
    
    
    
    2,922Total revenues
    
    
    49,686
    
    
    
    57,398Cost of revenues:Equipment and parts
    
    
    27,933
    
    
    
    30,788Services and freight
    
    
    1,595
    
    
    
    2,361Total cost of revenues
    
    
    29,528
    
    
    
    33,149Gross profit
    
    
    20,158
    
    
    
    24,249Operating expenses:Selling, general and administrative
    
    
    12,622
    
    
    
    15,061Research and development
    
    
    563
    
    
    
    653Total operating expenses
    
    
    13,185
    
    
    
    15,714Operating income
    
    
    6,973
    
    
    
    8,535Interest expense, net
    
    
    312
    
    
    
    379Income before income taxes
    
    
    6,661
    
    
    
    8,156Income tax provision
    
    
    2,214
    
    
    
    2,505Net income
    
    
    4,447
    
    
    
    5,651Retained earnings:Beginning of period
    
    
    116,349
    
    
    
    90,576End of period
    
    $
    120,796
    
    
    $
    96,227Earnings per share:Basic
    
    $
    1.59
    
    
    $
    2.08Diluted
    
    $
    1.54
    
    
    $
    1.96Weighted average common shares
outstanding (basic)
    
    
    2,800,000
    
    
    
    2,717,000Weighted average common and
common equivalent shares
outstanding (diluted)
    
    
    2,880,000
    
    
    
    2,882,000
   -2-




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##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008Operating activities:Net income
    
    $
    4,447
    
    
    $
    5,651Adjustments to reconcile net income to net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    1,570
    
    
    
    1,557Non-cash compensation
    
    
    190
    
    
    
    137Deferred income taxes
    
    
    66
    
    
    
    (202
    )Changes in assets and liabilities, net of business acquired:Accounts receivable, net
    
    
    3,094
    
    
    
    (3,820
    )Inventories, net
    
    
    865
    
    
    
    (448
    )Prepaid expenses and other current assets
    
    
    287
    
    
    
    530Other assets
    
    
    (143
    )
    
    
    (12
    )Accounts payable
    
    
    (3,578
    )
    
    
    1,441Accrued expenses and other current liabilities
    
    
    (3,468
    )
    
    
    (6,095
    )Net cash provided by (used in) operating activities
    
    
    3,330
    
    
    
    (1,261
    )Investing activities:Business acquired, net of cash received
    
    
    
    
    
    
    (400
    )Capital expenditures
    
    
    (372
    )
    
    
    (811
    )Restricted cash
    
    
    45
    
    
    
    394Other
    
    
    (14
    )
    
    
    (12
    )Net cash used in investing activities
    
    
    (341
    )
    
    
    (829
    )Financing activities:Proceeds from issuance of long-term debt
    
    
    
    
    
    
    2,025Principal payments on long-term debt
    
    
    (1,060
    )
    
    
    (5,488
    )Proceeds from issuance of common stock
    
    
    270
    
    
    
    52Tax benefit from stock option exercises
    
    
    233
    
    
    
    102Net cash used in financing activities
    
    
    (557
    )
    
    
    (3,309
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,427
    )
    
    
    2,905Net increase (decrease) in cash and cash equivalents
    
    
    1,005
    
    
    
    (2,494
    )Cash and cash equivalents:Beginning of period
    
    
    41,623
    
    
    
    30,853End of period
    
    $
    42,628
    
    
    $
    28,359Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    325
    
    
    $
    543Income taxes
    
    $
    2,045
    
    
    $
    2,074
   -3-




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##### 



K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  April 4, 2009
 1.
    
    Basis of Presentation
    2.
    
    Acquisitions
    -4-




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##### 



3.
    
    New Accounting Pronouncements
     -5-




---



##### 



4.
    
    Inventories
  April 4,
    
    
    January 3,2009
    
    
    2009(in thousands)Components
    
    $
    20,536
    
    
    $
    22,434Work-in-process
    
    
    7,293
    
    
    
    6,647Finished goods
    
    
    1,070
    
    
    
    1,085Inventory reserves
    
    
    (1,471
    )
    
    
    (1,390
    )$
    27,428
    
    
    $
    28,776
 5.
    
    Intangible Assets
  April 4, 2009
    
    
    January 3, 2009Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(in thousands)Amortized intangible assets:Patents
    
    $
    3,068
    
    
    $
    1,715
    
    
    $
    3,054
    
    
    $
    1,673Drawings
    
    
    6,140
    
    
    
    1,067
    
    
    
    6,140
    
    
    
    1,005Customer relationships
    
    
    11,299
    
    
    
    1,849
    
    
    
    11,299
    
    
    
    1,678$
    20,507
    
    
    $
    4,631
    
    
    $
    20,493
    
    
    $
    4,356Unamortized intangible assets:Trademarks and tradenames
    
    $
    6,610
    
    
    
    
    
    
    $
    6,610
   Amount(in thousands)Last three quarters fiscal 2009
    
    $
    840Fiscal year 2010
    
    
    1,106Fiscal year 2011
    
    
    1,106Fiscal year 2012
    
    
    1,106Fiscal year 2013
    
    
    1,105Fiscal year 2014
    
    
    1,023Thereafter
    
    
    9,590$
    15,876
  -6-




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##### 



6.
    
    Accrued Warranty
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Beginning balance
    
    $
    2,231
    
    
    $
    2,194Accrual of warranty expense
    
    
    484
    
    
    
    707Warranty costs incurred
    
    
    (455
    )
    
    
    (558
    )Foreign exchange adjustment
    
    
    (44
    )
    
    
    119Ending balance
    
    $
    2,216
    
    
    $
    2,462
 7.
    
    Long-Term Debt
  April 4,
    
    
    January 3,2009
    
    
    2009(in thousands)U.S. revolving line of credit
    
    $
    21,000
    
    
    $
    21,000U.S. mortgage, interest at 6.45%
    
    
    602
    
    
    
    662U.S. term note, interest at 5.00%
    
    
    1,000
    
    
    
    2,00022,602
    
    
    
    23,662Less current portion
    
    
    (1,602
    )
    
    
    (1,662
    )$
    21,000
    
    
    $
    22,000
  -7-




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##### 



Amount
    
    

Expiration of 
 Interest Rate Period
    
    
    Per Annum RateEighteen-month interest rate swap
    
    $
    2,000,000
    
    
    
    05/31/2009
    
    
    
    4.985
    %Two-year interest rate swap
    
    
    2,000,000
    
    
    
    09/24/2009
    
    
    
    5.605
    %Three-year interest rate swap
    
    
    5,000,000
    
    
    
    10/13/2009
    
    
    
    6.085
    %Two-year interest rate swap
    
    
    3,000,000
    
    
    
    10/31/2009
    
    
    
    5.385
    %Two-year interest rate swap
    
    
    2,000,000
    
    
    
    11/30/2009
    
    
    
    4.925
    %Three-year interest rate swap
    
    
    2,000,000
    
    
    
    09/24/2010
    
    
    
    5.665
    %Four-year interest rate swap
    
    
    5,000,000
    
    
    
    10/13/2010
    
    
    
    6.095
    %$
    21,000,000
 8.
    
    Earnings Per Share
  For the Three Months Ended April 4, 2009Net Income Available(Dollars and Shares in Thousands
    
    To Common
    
    
    
    
    
    
    Earningsexcept Per Share Data)
    
    Shareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    4,447
    
    
    
    2,800
    
    
    $
    1.59Common share equivalent
of options outstanding
    
    
    
    
    
    
    80
    
    
    
    (0.05
    )Diluted
    
    $
    4,447
    
    
    
    2,880
    
    
    $
    1.54
 For the Three Months Ended March 29, 2008Net Income Available(Dollars and Shares in Thousands
    
    To Common
    
    
    
    
    
    
    Earningsexcept Per Share Data)
    
    Shareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    5,651
    
    
    
    2,717
    
    
    $
    2.08Common share equivalent
of options outstanding
    
    
    
    
    
    
    165
    
    
    
    (0.12
    )Diluted
    
    $
    5,651
    
    
    
    2,882
    
    
    $
    1.96
 9.
    
    Share-Based Compensation
   -8-




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##### 



Weightedaverage
    
    
    
    
    
    Weighted averageoption
    
    
    Aggregate
    
    
    remaining optionShares
    
    

exercise
    
    

Intrinsic
    
    
    term (in years)under
    
    
    price per
    
    
    Value
    
    
    Options
    
    
    Optionsoption
    
    

share
    
    

($000)
    
    
    outstanding
    
    
    exercisableBalance, January 3, 2009
    
    
    117,000
    
    
    $
    13.72
    
    
    
    
    
    
    
    2.48
    
    
    
    2.48Exercised
    
    
    (17,000
    )
    
    
    15.90Balance, April 4, 2009
    
    
    100,000
    
    
    $
    13.35
    
    
    $
    5,519
    
    
    
    2.47
    
    
    
    2.47
   10.
    
    Comprehensive IncomeFor the three-month periods ended April 4, 2009 and March 29, 2008, the following table sets forth the Companys
comprehensive income:
 Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Net income
    
    $
    4,447
    
    
    $
    5,651Unrealized gain (loss) on interest rate swaps, net of tax
    
    
    98
    
    
    
    (304
    )Foreign currency translation (loss) gain
    
    
    (2,213
    )
    
    
    5,241Comprehensive income
    
    $
    2,332
    
    
    $
    10,588
  -9-




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##### 



11.
    
    Management Geographic Information
  EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)THREE MONTHS ENDEDApril 4, 2009Revenues:Sales to unaffiliated customers
    
    $
    35,839
    
    
    $
    13,847
    
    
    $
    
    
    
    $
    49,686Sales to affiliates
    
    
    1,272
    
    
    
    929
    
    
    
    (2,201
    )
    
    
    Total sales
    
    $
    37,111
    
    
    $
    14,776
    
    
    $
    (2,201
    )
    
    $
    49,686Operating income
    
    $
    5,585
    
    
    $
    1,394
    
    
    $
    (6
    )
    
    $
    6,973Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,661
 EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)THREE MONTHS ENDEDMarch 29, 2008Revenues:Sales to unaffiliated customers
    
    $
    37,299
    
    
    $
    20,099
    
    
    $
    
    
    
    $
    57,398Sales to affiliates
    
    
    1,717
    
    
    
    1,013
    
    
    
    (2,730
    )
    
    
    Total sales
    
    $
    39,016
    
    
    $
    21,112
    
    
    $
    (2,730
    )
    
    $
    57,398Operating income
    
    $
    5,152
    
    
    $
    3,449
    
    
    $
    (66
    )
    
    $
    8,535Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    379Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,156
  -10-




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##### 



Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Americas:U.S.
    
    $
    27,983
    
    
    $
    24,742Canada
    
    
    2,245
    
    
    
    5,775All others
    
    
    5,611
    
    
    
    6,782Total
    
    
    35,839
    
    
    
    37,299EMEA/Asia:Germany
    
    
    1,586
    
    
    
    3,091Great Britain
    
    
    1,888
    
    
    
    2,214India
    
    
    110
    
    
    
    2,057Italy
    
    
    1,907
    
    
    
    1,820All others
    
    
    8,356
    
    
    
    10,917Total
    
    
    13,847
    
    
    
    20,099$
    49,686
    
    
    $
    57,398
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Introduction
     -11-




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##### 



Critical Accounting Assumptions, Estimates and Policies; Recent Pronouncements
     -12-




---



##### 



Results of Operations
 Overview
  Foreign Exchange Rates
    -13-




---



##### 



Three Months EndedApril 4,
    
    
    
    
    
    
    March 29,2009
    
    
    
    
    
    
    2008Average U.S. dollar equivalent of
one Swiss franc
    
    
    0.870
    
    
    
    
    
    
    
    0.940% change vs. prior year
    
    
    
    
    
    
    -7.4
    %Average U.S. dollar equivalent of
one euro
    
    
    1.306
    
    
    
    
    
    
    
    1.500% change vs. prior year
    
    
    
    
    
    
    -12.9
    %Average U.S. dollar equivalent of
one British pound sterling
    
    
    1.448
    
    
    
    
    
    
    
    1.978% change vs. prior year
    
    
    
    
    
    
    -26.8
    %Average U.S. dollar equivalent of
one Canadian dollar
    
    
    0.806
    
    
    
    
    
    
    
    0.995% change vs. prior year
    
    
    
    
    
    
    -19.0
    %Average U.S. dollar equivalent of
one Swedish krona
    
    
    0.119
    
    
    
    
    
    
    
    0.160% change vs. prior year
    
    
    
    
    
    
    -25.6
    %Average Swiss franc equivalent of
one euro
    
    
    1.501
    
    
    
    
    
    
    
    1.596% change vs. prior year
    
    
    
    
    
    
    -6.0
    %Average Swiss franc equivalent of
one British pound sterling
    
    
    1.664
    
    
    
    
    
    
    
    2.104% change vs. prior year
    
    
    
    
    
    
    -20.9
    %
  -14-




---



##### 



Presentation of Results and Analysis
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008Total revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    59.4
    
    
    
    57.8Gross profit
    
    
    40.6
    
    
    
    42.2Selling, general and administrative
    
    
    25.4
    
    
    
    26.2Research and development
    
    
    1.1
    
    
    
    1.1Operating income
    
    
    14.1
    
    
    
    14.9Interest expense, net
    
    
    0.6
    
    
    
    0.7Income before income taxes
    
    
    13.5
    
    
    
    14.2Income tax provision
    
    
    4.5
    
    
    
    4.4Net income
    
    
    9.0
    %
    
    
    9.8
    %
     -15-




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##### 



April 4, 2009
    
    
    January 3, 2009
    
    
    March 29, 2008Order backlog (at April 4, 2009
foreign exchange rates, in
thousands of dollars)
    
    $
    59,429
    
    
    $
    66,903
    
    
    $
    70,941
  Liquidity and Capital Resources
 Capitalization
  April 4,
    
    
    January 3,(Dollars in Thousands)
    
    2009
    
    
    2009Short-term debt, including currentportion of long-term debt
    
    $
    1,602
    
    
    $
    1,662Long-term debt
    
    
    21,000
    
    
    
    22,000Total debt
    
    
    22,602
    
    
    
    23,662Shareholders equity
    
    
    129,087
    
    
    
    126,052Total debt and shareholders equity
(total capitalization)
    
    $
    151,689
    
    
    $
    149,714Percent total debt to total capitalization
    
    
    15
    %
    
    
    16
    %Percent long-term debt to equity
    
    
    16
    %
    
    
    17
    %Percent total debt to equity
    
    
    18
    %
    
    
    19
    %
  -16-




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Other Items
      Future Payments Under Contractual Obligations
   -17-




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Risk Factors
  Forward-Looking Statements
  
 Item 3 . Quantitative and Qualitative Disclosures About Market Risk .
  Foreign Exchange Rate Risk
   -18-




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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
   -19-




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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
 
   K-TRON INTERNATIONAL, INC.Date:  May 12, 2009
    By:
    RONALD R. REMICKRonald R. RemickSenior Vice President,
Chief Financial Officer and Treasurer
(Duly authorized officer and principal
financial officer of the Registrant)Date:  May 12, 2009
    By:
    ANDREW T. BOYDAndrew T. BoydDirector of Corporate Accounting and Tax
(Duly authorized officer and principal
accounting officer of the Registrant)  -20-