##### 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
 June 30, 2007
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 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)
  
   
   þ o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
  o þ




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##### 



INDEX
 Page No.PART I.
    
    FINANCIAL INFORMATIONItem
1.
    
    Financial Statements.Consolidated Balance Sheets as of
June 30, 2007 (Unaudited) and December 30, 2006
    
    
    1Consolidated Statements of Income and Retained
Earnings (Unaudited) for the Three and Six Months Ended
June 30, 2007 and July 1, 2006
    
    
    2Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended June 30, 2007 and
July 1, 2006
    
    
    3Notes to Consolidated Financial Statements (Unaudited)
    
    
    4 - 13Item
2.
    
    Managements Discussion and Analysis
of Financial Condition and Results of Operations.
    
    
    14 - 21Item
3.
    
    Quantitative and Qualitative Disclosures About
Market Risk.
    
    
    21-22Item
4.
    
    Controls and Procedures.
    
    
    22-23PART II.
    
    OTHER INFORMATIONItem
4.
    
    Submission of Matters to a Vote of Security Holders.
    
    
    24Item
6.
    
    Exhibits.
    
    
    24SIGNATURES
    
    
    
    
    25K-Tron International, Inc. 2006 Equity Compensation PlanCertificationCertificationCertification 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)June 30,
    
    
    December 30,2007
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    16,678
    
    
    $
    14,038Restricted cash
    
    
    45
    
    
    
    420Accounts receivable, net of allowance for
doubtful accounts of $799 and $852
    
    
    29,217
    
    
    
    23,364Inventories, net
    
    
    24,685
    
    
    
    23,467Deferred income taxes
    
    
    1,617
    
    
    
    1,617Prepaid expenses and other current assets
    
    
    3,212
    
    
    
    3,649Total current assets
    
    
    75,454
    
    
    
    66,555PROPERTY, PLANT AND EQUIPMENT, net
    
    
    27,722
    
    
    
    29,316PATENTS, net
    
    
    1,402
    
    
    
    1,457GOODWILL
    
    
    25,046
    
    
    
    24,094OTHER INTANGIBLES, net
    
    
    17,454
    
    
    
    17,762NOTES RECEIVABLE AND OTHER ASSETS
    
    
    1,494
    
    
    
    1,665DEFERRED INCOME TAXES
    
    
    113
    
    
    
    147Total assets
    
    $
    148,685
    
    
    $
    140,996LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    1,416
    
    
    $
    404Accounts payable
    
    
    10,958
    
    
    
    8,397Accrued expenses and other current liabilities
    
    
    9,590
    
    
    
    11,618Accrued commissions
    
    
    3,486
    
    
    
    3,009Customer advances
    
    
    7,629
    
    
    
    8,233Income taxes payable
    
    
    4,775
    
    
    
    4,270Deferred income taxes
    
    
    1,662
    
    
    
    1,662Total current liabilities
    
    
    39,516
    
    
    
    37,593LONG-TERM DEBT, net of current portion
    
    
    26,565
    
    
    
    34,364DEFERRED INCOME TAXES
    
    
    3,583
    
    
    
    3,583OTHER NON-CURRENT LIABILITIES
    
    
    
    
    
    
    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 4,697,333 shares and 4,615,623 shares
    
    
    47
    
    
    
    46Paid-in capital
    
    
    23,741
    
    
    
    20,319Retained earnings
    
    
    79,387
    
    
    
    69,255Accumulated other comprehensive income
    
    
    3,360
    
    
    
    3,275106,535
    
    
    
    92,895Treasury stock, 2,002,574 shares  at cost
    
    
    (27,514
    )
    
    
    (27,514
    )Total shareholders equity
    
    
    79,021
    
    
    
    65,381Total liabilities and shareholders equity
    
    $
    148,685
    
    
    $
    140,996
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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUES:Equipment and parts
    
    $
    44,077
    
    
    $
    34,436
    
    
    $
    88,416
    
    
    $
    64,614Services and freight
    
    
    3,397
    
    
    
    2,325
    
    
    
    5,942
    
    
    
    4,261Other
    
    
    92
    
    
    
    
    
    
    
    92
    
    
    
    Total revenues
    
    
    47,566
    
    
    
    36,761
    
    
    
    94,450
    
    
    
    68,875COST OF REVENUES:Equipment and parts
    
    
    24,317
    
    
    
    18,375
    
    
    
    49,080
    
    
    
    35,412Services and freight
    
    
    2,692
    
    
    
    2,121
    
    
    
    5,174
    
    
    
    4,047Total cost of revenues
    
    
    27,009
    
    
    
    20,496
    
    
    
    54,254
    
    
    
    39,459Gross profit
    
    
    20,557
    
    
    
    16,265
    
    
    
    40,196
    
    
    
    29,416OPERATING EXPENSES:Selling, general and administrative
    
    
    12,320
    
    
    
    10,321
    
    
    
    23,926
    
    
    
    19,191Research and development
    
    
    611
    
    
    
    588
    
    
    
    1,202
    
    
    
    1,17312,931
    
    
    
    10,909
    
    
    
    25,128
    
    
    
    20,364Operating income
    
    
    7,626
    
    
    
    5,356
    
    
    
    15,068
    
    
    
    9,052INTEREST (EXPENSE), net
    
    
    (433
    )
    
    
    (210
    )
    
    
    (900
    )
    
    
    (366
    )Income before income taxes
    
    
    7,193
    
    
    
    5,146
    
    
    
    14,168
    
    
    
    8,686INCOME TAX PROVISION
    
    
    1,940
    
    
    
    1,790
    
    
    
    4,036
    
    
    
    3,013NET INCOME
    
    
    5,253
    
    
    
    3,356
    
    
    
    10,132
    
    
    
    5,673RETAINED EARNINGS:Beginning of period
    
    
    74,134
    
    
    
    58,700
    
    
    
    69,255
    
    
    
    56,383End of period
    
    $
    79,387
    
    
    $
    62,056
    
    
    $
    79,387
    
    
    $
    62,056EARNINGS PER SHARE:Basic
    
    $
    1.96
    
    
    $
    1.29
    
    
    $
    3.79
    
    
    $
    2.19Diluted
    
    $
    1.84
    
    
    $
    1.20
    
    
    $
    3.56
    
    
    $
    2.04Weighted average common shares
outstanding (basic)
    
    
    2,684,000
    
    
    
    2,597,000
    
    
    
    2,674,000
    
    
    
    2,587,000Weighted average common and
common equivalent
shares outstanding (diluted)
    
    
    2,859,000
    
    
    
    2,796,000
    
    
    
    2,846,000
    
    
    
    2,777,000
  -2-




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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,
    
    
    July 1,2007
    
    
    2006OPERATING ACTIVITIES:Net income
    
    $
    10,132
    
    
    $
    5,673Adjustments to reconcile net income to net cash provided by operating activities:Gain on disposition of asset
    
    
    (92
    )
    
    
    Depreciation and amortization
    
    
    2,677
    
    
    
    2,238Non-cash compensation
    
    
    192
    
    
    
    118Deferred income taxes
    
    
    34
    
    
    
    (36
    )Changes in assets and liabilities, net of business acquired:Accounts receivable, net
    
    
    (5,642
    )
    
    
    (1,069
    )Inventories, net
    
    
    (1,083
    )
    
    
    (2,001
    )Prepaid expenses and other current assets
    
    
    616
    
    
    
    (140
    )Other assets
    
    
    241
    
    
    
    297Accounts payable
    
    
    2,509
    
    
    
    1,460Accrued expenses and other current liabilities
    
    
    (722
    )
    
    
    149Net cash provided by operating activities
    
    
    8,862
    
    
    
    6,689INVESTING ACTIVITIES:Proceeds from disposition of asset
    
    
    406
    
    
    
    Businesses acquired, net of cash received
    
    
    (1,854
    )
    
    
    (7,116
    )Capital expenditures
    
    
    (903
    )
    
    
    (1,615
    )Restricted cash
    
    
    375
    
    
    
    (221
    )Other
    
    
    (26
    )
    
    
    (35
    )Net cash used in investing activities
    
    
    (2,002
    )
    
    
    (8,987
    )FINANCING ACTIVITIES:Net repayments under notes payable to banks
    
    
    
    
    
    
    (804
    )Proceeds from issuance of long-term debt
    
    
    4,010
    
    
    
    Principal payments on long-term debt
    
    
    (10,803
    )
    
    
    (3,713
    )Tax benefit from stock option exercises
    
    
    1,518
    
    
    
    Proceeds from issuance of common stock
    
    
    1,064
    
    
    
    460Net cash used in financing activities
    
    
    (4,211
    )
    
    
    (4,057
    )EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS
    
    
    (9
    )
    
    
    412NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    2,640
    
    
    
    (5,943
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    14,038
    
    
    
    15,051End of period
    
    $
    16,678
    
    
    $
    9,108SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for:Interest
    
    $
    1,223
    
    
    $
    455Income taxes
    
    $
    2,108
    
    
    $
    3,814Seller financing for businesses acquired
    
    $
    635
    
    
    $
    3,000
  -3-




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K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  June 30, 2007
 1.
    
    Basis of Presentation
    2.
    
    Acquisition
  3.
    
    New Accounting Pronouncements
  -4-




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-5-




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4.
    
    Inventories
  June 30,
    
    
    December 30,2007
    
    
    2006(in thousands)Components
    
    $
    17,961
    
    
    $
    18,697Work-in-process
    
    
    7,930
    
    
    
    5,580Finished goods
    
    
    643
    
    
    
    739Inventory reserves
    
    
    (1,849
    )
    
    
    (1,549
    )$
    24,685
    
    
    $
    23,467
 5.
    
    Intangible Assets
  June 30, 2007
    
    
    December 30, 2006Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(in thousands)Amortized intangible assetsPatents
    
    $
    2,881
    
    
    $
    1,479
    
    
    $
    2,855
    
    
    $
    1,398Drawings
    
    
    4,980
    
    
    
    644
    
    
    
    4,980
    
    
    
    545Customer relationships
    
    
    8,598
    
    
    
    690
    
    
    
    8,598
    
    
    
    481$
    16,459
    
    
    $
    2,813
    
    
    $
    16,433
    
    
    $
    2,424Unamortized intangible assetsTrademarks and tradenames
    
    $
    5,210
    
    
    
    
    
    
    $
    5,210
  -6-




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6.
    
    Accrued Warranty
  Six Months EndedJune 30,
    
    
    July 1,2007
    
    
    2006(in thousands)Beginning balance
    
    $
    1,538
    
    
    $
    989Accrued warranty of acquired business
    
    
    50
    
    
    
    150Accrual of warranty expense
    
    
    970
    
    
    
    613Warranty costs incurred
    
    
    (636
    )
    
    
    (444
    )Foreign exchange adjustment
    
    
    (1
    )
    
    
    30Ending balance
    
    $
    1,921
    
    
    $
    1,338
 7.
    
    Long-Term Debt
  June 30,
    
    
    December 30,2007
    
    
    2006(in thousands)U.S. revolving line of credit
    
    $
    23,300
    
    
    $
    30,000U.S. mortgage, interest at 6.45%
    
    
    1,460
    
    
    
    1,553U.S. term note, interest at 5.00%
    
    
    3,000
    
    
    
    3,000Other
    
    
    221
    
    
    
    21527,981
    
    
    
    34,768Less current portion
    
    
    (1,416
    )
    
    
    (404
    )$
    26,565
    
    
    $
    34,364
 -7-




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##### Table of Contents



Expiration ofInterest RateAmount
    
    
    Period
    
    
    Per Annum RatePrime rate loan
    
    $
    550,000
    
    
    
    
    
    
    
    7.250
    %Three-month LIBOR loan
    
    
    6,000,000
    
    
    
    7/31/2007
    
    
    
    6.230
    %Two-month LIBOR loan
    
    
    2,500,000
    
    
    
    8/29/2007
    
    
    
    6.215
    %Six-month LIBOR loan
    
    
    4,250,000
    
    
    
    11/30/2007
    
    
    
    6.255
    %Three-year interest rate swap
    
    
    5,000,000
    
    
    
    10/13/2009
    
    
    
    6.085
    %Four-year interest rate swap
    
    
    5,000,000
    
    
    
    10/13/2010
    
    
    
    6.095
    %$
    23,300,000
  8.
    
    Earnings Per Share
   For the Three Months Ended June 30, 2007(Dollars and Shares in Thousandsexcept Per Share Data)
    
    Net Income AvailableTo Common
    
    
    
    
    
    
    EarningsShareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    5,253
    
    
    
    2,684
    
    
    $
    1.96Common share equivalent
of outstanding options
    
    
    
    
    
    
    175
    
    
    
    (0.12
    )Diluted
    
    $
    5,253
    
    
    
    2,859
    
    
    $
    1.84
 -8-




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For the Three Months Ended July 1, 2006(Dollars and Shares in Thousandsexcept Per Share Data)
    
    Net Income AvailableTo Common
    
    
    
    
    
    
    EarningsShareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    3,356
    
    
    
    2,597
    
    
    $
    1.29Common share equivalent
of outstanding options
    
    
    
    
    
    
    199
    
    
    
    (0.09
    )Diluted
    
    $
    3,356
    
    
    
    2,796
    
    
    $
    1.20
 For the Six Months Ended June 30, 2007(Dollars and Shares in Thousandsexcept Per Share Data)
    
    Net Income AvailableTo Common
    
    
    
    
    
    
    EarningsShareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    10,132
    
    
    
    2,674
    
    
    $
    3.79Common share equivalent
of outstanding options
    
    
    
    
    
    
    172
    
    
    
    (0.23
    )Diluted
    
    $
    10,132
    
    
    
    2,846
    
    
    $
    3.56
 For the Six Months Ended July 1, 2006(Dollars and Shares in Thousandsexcept Per Share Data)
    
    Net Income AvailableTo Common
    
    
    
    
    
    
    EarningsShareholders
    
    
    Shares
    
    
    Per ShareBasic
    
    $
    5,673
    
    
    
    2,587
    
    
    $
    2.19Common share equivalent
of outstanding options
    
    
    
    
    
    
    190
    
    
    
    (0.15
    )Diluted
    
    $
    5,673
    
    
    
    2,777
    
    
    $
    2.04
  9.
    
    Share-Based Compensation
  -9-




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10.
    
    Comprehensive Income
  -10-




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)Net income
    
    $
    5,253
    
    
    $
    3,356
    
    
    $
    10,132
    
    
    $
    5,673Unrealized gain (loss) on foreign exchange
hedge, net of tax
    
    
    
    
    
    
    (114
    )
    
    
    
    
    
    
    (114
    )Unrealized gain (loss) on interest rate
swaps, net of tax
    
    
    71
    
    
    
    (6
    )
    
    
    50
    
    
    
    (6
    )Foreign currency translation gain (loss)
    
    
    (104
    )
    
    
    1,455
    
    
    
    35
    
    
    
    1,688Comprehensive income
    
    $
    5,220
    
    
    $
    4,691
    
    
    $
    10,217
    
    
    $
    7,241
 11.
    
    Management Geographic Information
   EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)THREE MONTHS ENDED
June 30, 2007RevenuesSales to unaffiliated customers
    
    $
    31,756
    
    
    $
    15,810
    
    
    $
    
    
    
    $
    47,566Sales to affiliates
    
    
    1,269
    
    
    
    1,515
    
    
    
    (2,784
    )
    
    
    Total sales
    
    $
    33,025
    
    
    $
    17,325
    
    
    $
    (2,784
    )
    
    $
    47,566Operating income (loss)
    
    $
    4,861
    
    
    $
    2,800
    
    
    $
    (35
    )
    
    $
    7,626Interest (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (433
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,193
 -11-




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EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)THREE MONTHS ENDED
July 1, 2006RevenuesSales to unaffiliated customers
    
    $
    24,557
    
    
    $
    12,204
    
    
    $
    
    
    
    $
    36,761Sales to affiliates
    
    
    794
    
    
    
    906
    
    
    
    (1,700
    )
    
    
    Total sales
    
    $
    25,351
    
    
    $
    13,110
    
    
    $
    (1,700
    )
    
    $
    36,761Operating income (loss)
    
    $
    4,342
    
    
    $
    1,024
    
    
    $
    (10
    )
    
    $
    5,356Interest (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,146
 EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)SIX MONTHS ENDED
June 30, 2007RevenuesSales to unaffiliated customers
    
    $
    60,097
    
    
    $
    34,353
    
    
    $
    
    
    
    $
    94,450Sales to affiliates
    
    
    2,305
    
    
    
    2,528
    
    
    
    (4,833
    )
    
    
    Total sales
    
    $
    62,402
    
    
    $
    36,881
    
    
    $
    (4,833
    )
    
    $
    94,450Operating income (loss)
    
    $
    8,092
    
    
    $
    6,998
    
    
    $
    (22
    )
    
    $
    15,068Interest (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (900
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    14,168
 EMEA/
    
    
    Elimi-
    
    
    Consoli-Americas
    
    
    Asia
    
    
    nations
    
    
    dated(in thousands)SIX MONTHS ENDED
July 1, 2006RevenuesSales to unaffiliated customers
    
    $
    45,446
    
    
    $
    23,429
    
    
    $
    
    
    
    $
    68,875Sales to affiliates
    
    
    1,472
    
    
    
    1,636
    
    
    
    (3,108
    )
    
    
    Total sales
    
    $
    46,918
    
    
    $
    25,065
    
    
    $
    (3,108
    )
    
    $
    68,875Operating income (loss)
    
    $
    7,228
    
    
    $
    1,864
    
    
    $
    (40
    )
    
    $
    9,052Interest (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (366
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,686
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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)AmericasU.S.
    
    $
    25,230
    
    
    $
    20,102
    
    
    $
    47,665
    
    
    $
    37,810All others
    
    
    6,526
    
    
    
    4,455
    
    
    
    12,432
    
    
    
    7,636Total
    
    
    31,756
    
    
    
    24,557
    
    
    
    60,097
    
    
    
    45,446EMEA/AsiaFrance
    
    
    937
    
    
    
    850
    
    
    
    1,639
    
    
    
    1,586Germany
    
    
    2,723
    
    
    
    1,887
    
    
    
    5,489
    
    
    
    4,312Netherlands
    
    
    1,463
    
    
    
    241
    
    
    
    6,576
    
    
    
    612United Kingdom
    
    
    2,445
    
    
    
    2,881
    
    
    
    3,935
    
    
    
    5,107All others
    
    
    8,242
    
    
    
    6,345
    
    
    
    16,714
    
    
    
    11,812Total
    
    
    15,810
    
    
    
    12,204
    
    
    
    34,353
    
    
    
    23,429$
    47,566
    
    
    $
    36,761
    
    
    $
    94,450
    
    
    $
    68,875
 -13-




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Introduction
       -14-




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Critical Accounting Assumptions, Estimates and Policies; Recent Accounting Pronouncements
    Results of Operations
 Overview
  -15-




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Foreign Exchange Rates
    Three Months Ended
    
    Six Months EndedJune 30,
    
    
    
    
    
    July 1,
    
    June 30,
    
    
    
    
    
    July 1,2007
    
    
    
    
    
    2006
    
    2007
    
    
    
    
    
    2006Average U.S. dollar equivalent of
one Swiss franc
    
    
    0.818
    
    
    
    
    
    
    
    0.807
    
    
    
    0.814
    
    
    
    
    
    
    
    0.789% change vs. prior year
    
    
    
    
    
    
    +1.4
    %
    
    
    
    
    
    
    
    
    
    
    +3.2
    %Average U.S. dollar equivalent of
one euro
    
    
    1.349
    
    
    
    
    
    
    
    1.260
    
    
    
    1.329
    
    
    
    
    
    
    
    1.232% change vs. prior year
    
    
    
    
    
    
    +7.1
    %
    
    
    
    
    
    
    
    
    
    
    +7.9
    %
 -16-




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Three Months Ended
    
    Six Months EndedJune 30,
    
    
    
    
    
    July 1,
    
    June 30,
    
    
    
    
    
    July 1,2007
    
    
    
    
    
    2006
    
    2007
    
    
    
    
    
    2006Average U.S. dollar equivalent of
one British pound sterling
    
    
    1.987
    
    
    
    
    
    
    
    1.833
    
    
    
    1.970
    
    
    
    
    
    
    
    1.793% change vs. prior year
    
    
    
    
    
    
    +8.4
    %
    
    
    
    
    
    
    
    
    
    
    +9.9
    %Average Swiss franc equivalent of
one euro
    
    
    1.649
    
    
    
    
    
    
    
    1.561
    
    
    
    1.633
    
    
    
    
    
    
    
    1.561% change vs. prior year
    
    
    
    
    
    
    +5.6
    %
    
    
    
    
    
    
    
    
    
    
    +4.6
    %Average Swiss franc equivalent of
one British pound sterling
    
    
    2.429
    
    
    
    
    
    
    
    2.271
    
    
    
    2.420
    
    
    
    
    
    
    
    2.272% change vs. prior year
    
    
    
    
    
    
    +7.0
    %
    
    
    
    
    
    
    
    
    
    
    +6.5
    %
 Presentation of Results and Analysis
  Three Months Ended
    
    Six Months EndedJune 30,
    
    July 1,
    
    June 30,
    
    July 12007
    
    2006
    
    2007
    
    2006Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    56.8
    
    
    
    55.8
    
    
    
    57.4
    
    
    
    57.3Gross profit
    
    
    43.2
    
    
    
    44.2
    
    
    
    42.6
    
    
    
    42.7Selling, general and administrative
    
    
    25.9
    
    
    
    28.0
    
    
    
    25.3
    
    
    
    27.9Research and development
    
    
    1.3
    
    
    
    1.6
    
    
    
    1.3
    
    
    
    1.7Operating income
    
    
    16.0
    
    
    
    14.6
    
    
    
    16.0
    
    
    
    13.1Interest expense, net
    
    
    0.9
    
    
    
    0.6
    
    
    
    1.0
    
    
    
    0.5Income before income taxes
    
    
    15.1
    
    
    
    14.0
    
    
    
    15.0
    
    
    
    12.6Income tax provision
    
    
    4.1
    
    
    
    4.9
    
    
    
    4.3
    
    
    
    4.4Net income
    
    
    11.0
    %
    
    
    9.1
    %
    
    
    10.7
    %
    
    
    8.2
    %
  June 30, 2007
    
    
    Dec. 30, 2006
    
    
    July 1, 2006Backlog (at June 30, 2007
foreign exchange rates, in
thousands of dollars)
    
    $
    54,412
    
    
    $
    49,893
    
    
    $
    40,944
  -17-




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-18-




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##### Table of Contents



Liquidity and Capital Resources
 Capitalization
  June 30,
    
    
    December 30,
    
    
    December 31,(Dollars in Thousands)
    
    2007
    
    
    2006
    
    
    2005Short-term debt, including current
portion of long-term debt
    
    $
    1,416
    
    
    $
    404
    
    
    $
    4,316Long-term debt
    
    
    26,565
    
    
    
    34,364
    
    
    
    12,675Total debt
    
    
    27,981
    
    
    
    34,768
    
    
    
    16,991Shareholders equity
    
    
    79,021
    
    
    
    65,381
    
    
    
    49,520Total debt and shareholders equity
    
    $
    107,002
    
    
    $
    100,149
    
    
    $
    66,511(total capitalization)Percent total debt to total capitalization
    
    
    26
    %
    
    
    35
    %
    
    
    26
    %Percent long-term debt to equity
    
    
    34
    %
    
    
    53
    %
    
    
    26
    %Percent total debt to equity
    
    
    35
    %
    
    
    53
    %
    
    
    34
    %
   Other Items
  -19-




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Future Payments Under Contractual Obligations
  Risk Factors
  -20-




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##### Table of Contents



Forward-Looking Statements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  Foreign Exchange Rate Risk
    -21-




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##### Table of Contents



Interest Rate Risk
  
 Item 4.Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  -22-




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Change in Internal Control over Financial Reporting
  -23-




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PART II. OTHER INFORMATION
 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
 (a)
    
    The Annual Meeting of Shareholders of the Company was held on May 11,
2007.(b)
    
    Not applicable(c)
    
    Shareholders of the Company were asked to vote on a proposal to elect
one Class II director. The Board of Directors nominated Robert A. Engel as the
Class II director. There were no other nominations. Mr. Engel was elected as
the Class II director, with the result of the vote being as follows:
 Number of VotesFor
    
    WithheldRobert A. Engel
    
    
    2,409,286
    
    
    
    82,578
 Directors are elected by a plurality of the votes cast; therefore, votes cast in
the election were not recorded against or as an abstention, nor were broker
non-votes recorded.(d)
    
    Not applicable
 
 Item 6.
    
    Exhibits.
 10.1
    
    K-Tron International, Inc. 2006 Equity Compensation Plan, as
amended on May 11, 2007**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**
    
    Management contract or compensatory plan or arrangement required to be
filed or incorporated as an exhibit
 -24-




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##### Table of Contents



K-TRON INTERNATIONAL, INC.Date:  August 7, 2007
    By:
    RONALD R. REMICKRonald R. RemickSenior Vice President, Chief
Financial Officer and Treasurer
(Duly authorized officer and principal
financial officer of the Registrant)By:
    ALAN R. SUKONECKAlan R. SukoneckVice President, Chief Accounting
and Tax Officer
(Duly authorized officer and principal
accounting officer of the Registrant) -25-




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    Description10.1
    
    
    K-Tron International, Inc. 2006 Equity Compensation Plan, as amended on May 11, 2007**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
 **
    
    Management contract or compensatory plan or arrangement required to be filed or incorporated as an exhibit