<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  ------------

                                    FORM 10-K

                    FOR ANNUAL REPORT AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X]     Annual report pursuant to section 13 or 15(d) of the Securities Exchange
        Act of 1934 For the fiscal year ended December 28, 2002

                                       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     (I.R.S. Employer Identification No.)
        incorporation or organization)

                   Routes 55 and 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

           Securities registered pursuant to Section 12(b) of the Act:

        Title of each class            Name of each exchange on which registered
               None                                       None

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of class)

<PAGE>

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Act") 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 [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this annual report on Form 10-K or any
amendment to this annual report on Form 10-K. [X]

         Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).
Yes [ ]  No [X]

         As of June 28, 2002, which was the last business day of the
Registrant's most recently completed second fiscal quarter, the aggregate market
value of the Common Stock held by non-affiliates of the Registrant was
$34,623,757. Such aggregate market value was computed by reference to the
closing sale price of the Registrant's Common Stock as quoted on the Nasdaq
National Market on such date. For purposes of making this calculation only, the
Registrant has defined affiliates as including all directors and executive
officers, but excluding any institutional shareholders owning more than ten
percent of the Registrant's Common Stock.

         As of February 28, 2003, there were 2,432,666 shares of the
Registrant's Common Stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

         As stated in Part III of this annual report on Form 10-K, portions of
the Registrant's definitive proxy statement to be filed within 120 days after
the end of the fiscal year covered by this annual report on Form 10-K are
incorporated herein by reference.

         Unless the context indicates otherwise, the terms "K-Tron," "the
Company," "we," "our" and "us" refer to K-Tron International, Inc. and, where
appropriate, one or more of its subsidiaries.

                                      -2-

<PAGE>

                                     PART I

ITEM 1.      BUSINESS.

GENERAL

         K-Tron is a global leader in the design, production, marketing and
servicing of gravimetric and volumetric feeders and related equipment for the
handling of bulk solids in a wide variety of manufacturing processes. Our
feeders control the flow of materials into a process that then transforms those
materials into an end product. We also design, produce, market and service
pneumatic conveying systems and related equipment, some of which may be used in
conjunction with our feeders, as well as ancillary equipment used primarily by
plastics molding and extrusion companies. The plastics, food, chemical,
detergent and pharmaceutical industries are among those served by our feeders
and pneumatic conveying equipment. Through our K-Tron Electronics unit, we
design and produce electronic assemblies for our own use and also for sale to
others, and we make controller hardware for our own business.

         We have manufacturing facilities in the United States, Switzerland, the
United Kingdom and Canada, and our equipment is sold throughout the world. We
provide service and spare parts for our feeding and pneumatic conveying
equipment on a worldwide basis, and offer customer and employee training through
our K-Tron Institute in the United States, Switzerland and elsewhere.

         K-Tron International, Inc. was incorporated in New Jersey in 1964. We
operate in one principal business segment, material handling equipment and
systems, and our operations are conducted largely through subsidiary companies.

RECENT DEVELOPMENTS

         On January 2, 2003, we purchased all of the outstanding capital stock
of Pennsylvania Crusher Corporation ("Penn Crusher"). This transaction and the
business of Penn Crusher and its subsidiary are described in more detail at the
end of this Item 1 under the heading, "Business of Penn Crusher."

BUSINESS UNITS AND BRAND NAMES

         Without regard to Penn Crusher, we have two main business units, a
Feeder Group and a Pneumatic Conveying Group, and we market and sell our
equipment under three brand names: K-Tron Soder (feeders), PCS (pneumatic
conveying equipment) and Colormax (ancillary equipment for the plastics
industry, including pneumatic conveying equipment). We market these brands on
both an equipment and total systems basis.

FEEDING EQUIPMENT

         Our Feeder Group produces feeders that control the flow of materials
into a manufacturing process by mass or weight (gravimetric feeding) or by
volume (volumetric feeding). Feeding equipment manufactured by us is used in
many different industries.

                                      -3-

<PAGE>

         K-Tron Soder Brand. The K-Tron Soder brand offers feeding equipment and
systems that provide precise control of the flow of ingredients in the
manufacture of many different kinds of products. The plastics, food, chemical,
detergent and pharmaceutical industries are among those served by K-Tron Soder
feeders. K-Tron Soder feeders, including loss-in-weight feeders, weigh belt
feeders, volumetric feeders, flow meters and related controls, are assembled at
our facilities in Pitman, New Jersey and Niederlenz, Switzerland in a complete
range of feeding equipment types and sizes for these and other industries.

         Loss-in-Weight Feeders. The loss-in-weight principle involves weighing
the entire feeding system, both equipment and material, which may be either dry
or liquid. The feeding mechanism controls the rate at which material is
discharged into the manufacturing process based upon a change in the total
weight of the system as material flows from the feeder. Electronic controllers
determine the feed rate and are capable of instantly altering feed rates to
maintain an accurate flow of materials. In dry material applications,
loss-in-weight feeders usually utilize an auger (single or twin screw) or
vibratory feeding mechanism, and the outflow is adjusted continuously to
maintain the desired feed rate. In liquid applications, the flow rate is
maintained by a pump or valve. Loss-in-weight feeders are especially suitable
for applications requiring a very high degree of accuracy, as in adding minor
ingredients to food processes or colorants to plastics, or applications
requiring a closed system, as in feeding dusty materials. Loss-in-weight feeders
rarely need recalibration and may also be used as batchers, to feed bulk
material into bags and other containers.

         Weigh Belt Feeders. Weigh belt feeders move dry bulk material along a
belt, continuously weighing the material and adjusting the belt speed in order
to control precisely the flow rate of the material being fed into the
manufacturing process. The feeder regulates the flow rate according to the set
points in its electronic controller. A typical application would incorporate
several feeders, each supplying an ingredient of the final product, and
electronic controllers that determine the feed rate of each ingredient and which
are capable of instantly altering individual feed rates to maintain the desired
proportion of each ingredient.

         Weigh belt feeders may also be used as batchers or as meters, to
measure accurately the amount of material flowing into or out of a container.

         Volumetric Feeders. Volumetric feeders utilize single or twin screw
feeding mechanisms or other systems to regulate flow by volume instead of
weight, thereby offering an economical method of feeding bulk solids where
demands for accuracy are less stringent. They also can be used to make batches
by feeding sequentially into a hopper that is weighed and using the weight
signal to start and stop each feeder.

PNEUMATIC CONVEYING AND ANCILLARY EQUIPMENT

         Our Pneumatic Conveying Group ("PCG") integrates two brands, PCS and
Colormax, and the manufacturing of our Hurricane product line into one business
group capable of addressing a broad range of pneumatic conveying problems. PCG's
products are distributed through the Feeder Group's distribution channels under
the Hurricane product name and through PCG's distribution channels under the PCS
and Colormax brand names.

                                      -4-

<PAGE>

         Hurricane. The Hurricane product name is used with any pneumatic
conveying equipment sold through the Feeder Group into any market. Hurricane
products are assembled at K-Tron's Canadian subsidiary, Pneumatic Conveying
Systems Inc., in Brantford, Ontario, and this equipment is shipped either to an
end user site or a K-Tron assembly operation. Hurricane loaders, available as
both self-contained and central vacuum systems, may be used on their own or in
conjunction with K-Tron Soder feeders for the conveying of pellets and powders.
In addition, any PCS or Colormax equipment sold by the Feeder Group is also sold
under the Hurricane product name.

         Colormax. The Colormax brand name is used with any pneumatic conveying
equipment or material handling system, including Hurricane and PCS equipment,
sold through the Pneumatic Conveying Group into the plastics extrusion and
molding industries. Colormax products are assembled at our Colormax Limited
subsidiary in Telford, England and marketed directly to end users and also
through distributors. The Colormax product line includes self-contained and
central vacuum systems, dryers, volumetric and gravimetric blenders, material
storage bins and feeders for handling various resin materials in the molding or
extrusion of consumer plastic products, such as automotive components and
plastic food containers.

         To differentiate itself from the competition, Colormax has introduced
the first posimetric(R) feeder, the Posimax, for the industries that it serves.
The Posimax is based on a patented technology for which K-Tron has obtained a
worldwide exclusive license in the relevant fields of use. Posimetric is a
registered trademark of Stamet, Incorporated, the licensor. The Posimax feeds
material based on the principle of lockup and eliminates material flow
pulsation, which is typical for screw feeders operating at low mass flow rates.
The Posimax is available both as a volumetric and gravimetric feeder for free
flowing materials. Our testing has shown that feeders based on the posimetric
principle have the most linear performance of any feeder type when measured over
a turn down range of 100:1.

         PCS. The PCS brand name is used with any pneumatic conveying equipment
or material handling system, including Hurricane and Colormax equipment, sold
through the Pneumatic Conveying Group into the food, pharmaceutical and chemical
industries. PCS products and material handling systems are engineered and
assembled at our Pneumatic Conveying Systems Limited subsidiary in Stockport,
England. The PCS product line includes standard vacuum conveyors for
hard-to-handle materials, an all stainless steel pharmaceutical line of
equipment and a variety of ancillary equipment. PCS's capabilities include
expertise in conveying fragile products without degradation and designing dense
phase vacuum conveying systems for the transport of products without
segregation.

K-TRON ELECTRONICS

         K-Tron Electronics designs, produces and tests electronic assemblies
for outside customers, as well as for use by us in our products, and also
produces controller hardware for us. Its facilities, which are located in
Blackwood, New Jersey, provide both automated surface mount and through-hole
assembly capabilities, as well as testing equipment.

                                      -5-

<PAGE>

CUSTOMERS

         We sell our equipment throughout the world to a wide variety of
customers in our addressed markets, ranging from large, global companies to
regional and local businesses. No single customer accounted for more than 10% of
our total revenues in fiscal 2002.

MANUFACTURING AND SUPPLIERS

         Our primary manufacturing activities consist of the assembly,
calibration and testing of equipment and the production of electronic assemblies
and controllers. We also manufacture the weight sensors that are used in most of
our gravimetric feeders. We assemble a number of components used in our products
that are manufactured by others to our specifications. These components include
sheet metal parts, screws, castings, integrated circuits, printed circuit boards
and enclosures.

         We produce a number of basic feeder and pneumatic conveying equipment
models. Feeder units are completed to specific customer orders, and
customization is generally limited to combining existing mechanical and
electronic modules to meet a customer's application requirements.

         Although certain components of our products are currently purchased
from sole sources, we believe that comparable components can be obtained readily
from alternative suppliers at prices competitive with those of our current
sources. We never have had a significant production delay that was primarily
attributable to an outside supplier.

PATENTS

         Our technology is protected by numerous patents in the United States
and in other major countries that offer patent protection. Certain of our
patents have expired and others will expire at various future dates. The loss of
such patent protection is not expected to have a significant adverse effect on
our business.

RESEARCH AND DEVELOPMENT

         We invest in research and development ("R&D") to maintain a
technological leadership position in the feeding and pneumatic conveying
equipment industries. R&D focuses on new products as well as on improvements to
existing products, with particular emphasis on the application of weighing and
control technologies and mechanical design improvements. Current efforts are
aimed at developing new products (including a new family of feeders, expected to
be introduced by the Feeder Group late in 2003, based on the posimetric
principle previously described in the above discussion of Colormax equipment),
shortening the time spent in the development of such products, modifying
existing product designs to provide lower cost products and analyzing the
price/performance relationship for both new and existing products. A centralized
R&D approach facilitates the development of common or compatible products.

         Our research and development expenses were $2,429,000, $2,644,000 and
$3,182,000 in fiscal 2002, 2001 and 2000, respectively.

                                      -6-

<PAGE>

COMPETITION

         We are a leading worldwide producer of feeders and related equipment
for the handling of bulk solids in manufacturing processes. We believe we have
reached this position primarily because of our use of electronic and digital
control technology, our use of digital weighing technology, our development of
mechanical design improvements to our products and our knowledge of material
handling. We also rely on our reputation and experience in serving the needs of
our large customer base to maintain a competitive advantage.

         We also design systems and assemble equipment for the pneumatic
conveying market using our Hurricane, Colormax and PCS brands and products. The
addressable market is very large, and our strategy is to target specific
geographic and product markets. Our Colormax brand offers loaders, feeders and
ancillary equipment to handle granular materials, which are primarily used by
plastics molding and extrusion companies. Our PCS brand includes a standard and
a pharmaceutical line of loaders and ancillary equipment to transport
hard-to-handle powdery material, and this equipment is primarily used by
pharmaceutical, food and chemical companies. Our Hurricane product line includes
a line of filterless, dual cyclone loaders best suited to work as an integrated
solution with K-Tron Soder feeders handling powdery and pelletized materials,
and this equipment is primarily used by K-Tron Soder customers in the plastics
compounding, food and pharmaceutical markets.

         K-Tron Electronics was established to design and manufacture electronic
assemblies and controller hardware for use by us and also to sell such
assemblies to third parties, generally focusing on small production runs for
customers in New Jersey, eastern Pennsylvania and Delaware. The market for
electronic assemblies is very large, and K-Tron Electronics is one of many
suppliers to this market in the region identified.

         Strong competition exists in every major market that we serve.
Competitors range in size from large corporations (or subsidiaries or divisions
thereof) with a broad line of products to regional firms that may specialize in
a limited range of products.

BACKLOG

         At the end of fiscal 2002, our backlog of unfilled orders was
approximately $8,589,000, compared to a backlog of approximately $12,138,000 at
the end of fiscal 2001, a decrease of 29.2% (a decrease of 36.2% at constant
foreign exchange rates). The backlog of orders at the end of fiscal 2002 was
lower than the 2001 year-end backlog primarily due to the very weak capital
equipment spending environment that existed during all of fiscal 2002, and it
reflected fewer orders received at our Feeder Group facilities in Switzerland
and the United States.

         The bulk of our backlog represents orders that will be ready for
delivery in less than 120 days. Thus, except for shipments to be made later in
the year in accordance with customer requests, it is expected that most of the
backlog as of the end of fiscal 2002 will be shipped prior to April 30, 2003.

                                      -7-

<PAGE>

EMPLOYEES

         At the end of fiscal 2002, we had 361 employees, of which 202 were
located in Europe, 140 in the United States, 11 in Singapore, 4 in Canada, 3 in
China and 1 in Mexico.

         None of our employees are represented by labor unions. We consider
relations with our employees to be good.

BUSINESS OF PENN CRUSHER

         On January 2, 2003, we purchased all of the outstanding stock of Penn
Crusher. Penn Crusher manufactures size reduction and related equipment that is
sold to electric utility companies to crush coal for use in coal-fired power
generation plants and also to companies in other industries such as quarries
where the crushing of material is required.

         As a result of this purchase, we now also own Jeffrey Specialty
Equipment Corporation ("Jeffrey"), which is a wholly-owned subsidiary of Penn
Crusher. Jeffrey manufactures chip sizer mills, industrial hammermills and other
size reduction equipment for use in the paper and pulp industries to crush wood
in the production of paper and in other industries for various crushing
applications. Jeffrey also makes large-scale vibratory feeders for coal,
minerals, chemicals and other bulk materials.

         A significant portion of the revenues of both Penn Crusher and Jeffrey
comes from the sale of spare parts since each company has a large installed base
of equipment. No single customer accounted for more than 10% of either Penn
Crusher's or Jeffrey's total revenues in fiscal 2002.

         Penn Crusher has its headquarters in a 24,000 square foot leased
facility in Broomall, Pennsylvania and conducts manufacturing operations from a
70,000 square foot leased building in Cuyahoga Falls, Ohio. Jeffrey is located
in a 145,000 square foot owned manufacturing and office facility in Woodruff,
South Carolina.

         As of February 28, 2003, Penn Crusher had 90 employees and Jeffrey had
76 employees, all of whom were located in the United States. None of either
company's employees are represented by labor unions, and each company considers
relations with its employees to be good.

ITEM 2.      PROPERTIES.

         In North America, we own a 92,000 square foot building located on a
17-acre tract in Pitman, New Jersey where we have Feeder Group manufacturing
facilities, administrative offices, our corporate headquarters, research and
development offices and a technical center for product demonstrations and
training. A portion (approximately 10,000 square feet) of our Pitman facility is
leased to a sheet metal business that is a major supplier to us. We also have
leased facilities in Blackwood, New Jersey, where K-Tron Electronics produces
electronic assemblies and controller hardware, and in Brantford, Ontario, where
we assemble pneumatic conveying equipment for the Hurricane product line.

                                      -8-

<PAGE>

         In Niederlenz, Switzerland, we own a 65,000 square foot building, where
we have Feeder Group manufacturing facilities and a technical center for product
demonstrations, and an adjacent five-floor, 40,000 square foot office building
that houses administrative offices, training facilities and research and
development offices. In 2002, approximately one-half of one floor of the office
building was leased to a third party.

         In Lengerich, Germany, we own an 8,000 square foot building that has
been leased to a third party since July 31, 2001.

         Certain Feeder Group sales and service activities are conducted at a
K-Tron-owned facility in the United Kingdom (20% leased to a third party) and in
leased office space in Germany, France, Singapore and China. We lease a facility
in Telford, England, where we assemble Colormax products and have office space
for that brand. We also lease a facility in Stockport, England, where we design
customized solutions for a broad range of pneumatic conveying problems, assemble
PCS products and have office space for that brand.

         We believe that our present facilities, including those of Penn Crusher
and Jeffrey described in Item 1 above, will be sufficient to meet our needs for
the foreseeable future.

ITEM 3.      LEGAL PROCEEDINGS.

         There are no material pending legal proceedings to which we or any of
our subsidiaries is a party or of which any of our property is the subject.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         There were no matters submitted to a vote of security holders during
the fourth quarter of 2002.

                                      -9-

<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

          Our current executive officers are as follows:

<TABLE>
<CAPTION>
          Name              Age                        Position
          ----              ---                        --------
<S>                         <C>          <C>
Edward B. Cloues, II        55           Chairman of the Board of Directors
                                         and Chief Executive Officer

Kevin C. Bowen              51           Senior Vice President, Feeder Group
                                         and President and Chief Executive
                                         Officer of K-Tron America, Inc.

Lukas Guenthardt            44           Senior Vice President,
                                         Pneumatic Conveying Group
                                         and Chief Strategy Officer

Ronald R. Remick            56           Senior Vice President,
                                         Chief Financial Officer and Treasurer

John D. Whalen              64           Chairman and Chief Executive Officer
                                         of Pennsylvania Crusher Corporation

Donald W. Melchiorre        54           President and Chief Operating Officer
                                         of Pennsylvania Crusher Corporation
</TABLE>

         Edward B. Cloues, II has been a director since July 1985 and was most
recently reelected at the 2001 annual meeting of shareholders. He became
Chairman of the Board of Directors and Chief Executive Officer of the Company on
January 5, 1998. Prior to joining the Company in 1998, Mr. Cloues was a partner
in the law firm of Morgan, Lewis & Bockius LLP, which is the Company's principal
outside counsel. He is also a director and non-executive Chairman of the Board
of AMREP Corporation and a director of Penn Virginia Corporation and Penn
Virginia Resource GP, LLC, the general partner of Penn Virginia Resource
Partners, L.P.

         Kevin C. Bowen has been Senior Vice President, Feeder Group of the
Company since June 2000 and President and Chief Executive Officer of K-Tron
America, Inc. since March 1995. From March 1994 to March 1995, Mr. Bowen was
President of K-Tron North America, the North American sales division of K-Tron
America. Mr. Bowen served as President of K-Tron America from May 1990 to March
1994 and has been with the Company in various other capacities since 1979.

                                      -10-

<PAGE>

         Lukas Guenthardt has been Senior Vice President, Pneumatic Conveying
Group and Chief Strategy Officer of the Company since February 2002. Prior to
that, he was Senior Vice President, New Businesses and Chief Strategy Officer
from June 2000 to February 2002 and Senior Vice President - Strategic Planning,
Product Development and Marketing from June 1998 to June 2000. Mr. Guenthardt
was Managing Director of K-Tron (Schweiz) AG ("K-Tron Switzerland") from July
1995 to June 1, 1998, Managing Director of the Soder Division of K-Tron
Switzerland from March 1994 to July 1995, and Director of International Research
and Development of the Company from July 1992, when he joined K-Tron, until
March 1994.

         Ronald R. Remick has been Senior Vice President, Chief Financial
Officer and Treasurer of the Company since May 10, 1999. Prior to joining
K-Tron, Mr. Remick was Vice President of Planning and Treasury of ARCO Chemical
Company from 1995 to 1998 and Vice President of Planning and Control of ARCO
Chemical Company from 1993 to 1995.

         John D. Whalen has been Chairman and Chief Executive Officer of Penn
Crusher since December 30, 1996. From April 1984 until December 30, 1996, Mr.
Whalen was President of Penn Crusher, and he had been with that company in
various other capacities from 1967 to April 1984. In 1986, Mr. Whalen, along
with several other Penn Crusher executives, purchased Penn Crusher. His
ownership continued until the K-Tron acquisition of Penn Crusher on January 2,
2003. Mr. Whalen also has been Chairman and Chief Executive Officer of Jeffrey
Specialty Equipment Corporation since its purchase by Penn Crusher in October
1999.

         Donald W. Melchiorre has been President and Chief Operating Officer of
Penn Crusher since December 30, 1996 and President and Chief Operating Officer
of Jeffrey Specialty Equipment Corporation since August 2002. From 1982 to 1987,
he worked at Penn Crusher as a Regional Sales Manager and left the company in
1987 to become Regional Sales Manager, and subsequently North American Sales and
Marketing Manager and then Director for Sales and Marketing-European Operations,
for K-Tron's U.S. and Swiss manufacturing subsidiaries. In 1992, he left the
K-Tron organization to establish EPI Technical Sales, Inc., a manufacturers'
representative organization selling bulk material handling equipment, which
included the K-Tron Soder and Penn Crusher lines of equipment. He returned to
Penn Crusher in 1996.

         The executive officers are elected or appointed by the Board of
Directors of the Company or its appropriate subsidiary to serve until the
appointment or election and qualification of their successors or their earlier
death, resignation or removal.

                                      -11-

<PAGE>

                                     PART II

ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
             MATTERS.

         Our Common Stock trades on the Nasdaq National Market under the symbol
"KTII." The following table sets forth the high and low sales prices for each
quarter in fiscal 2001 and 2002 as quoted on the Nasdaq National Market.

<TABLE>
<CAPTION>
Fiscal Year 2001                                        High                   Low
----------------                                        ----                   ---
<S>                                                    <C>                   <C>
First Quarter .................................        $18.750               $13.750
Second Quarter ................................        $15.120               $12.250
Third Quarter .................................        $13.250               $ 9.000
Fourth Quarter ................................        $11.750               $ 9.510
</TABLE>

<TABLE>
<CAPTION>
Fiscal Year 2002
----------------
<S>                                                    <C>                   <C>
First Quarter .................................        $15.450               $10.450
Second Quarter ................................        $18.000               $12.000
Third Quarter .................................        $15.780               $12.067
Fourth Quarter ................................        $13.700               $12.330
</TABLE>

         On February 28, 2003, the closing price of a share of K-Tron Common
Stock as quoted on the Nasdaq National Market was $14.60.

         There were 232 record holders of our Common Stock on February 28, 2003.

DIVIDEND POLICY

         We have never paid a cash dividend on our Common Stock, and we
currently intend to retain all future earnings for use in our business. The
declaration and payment of dividends in the future will be determined by the
Board of Directors in light of conditions then existing, including our earnings,
financial condition, capital requirements and other factors. In addition, one of
our credit facilities contains certain restrictions on the transfer of funds
that may limit our ability to declare and pay dividends.

ITEM 6.      SELECTED FINANCIAL DATA.

         The selected consolidated financial data presented below for, and as of
the end of, each of our last five fiscal years have been derived from and are
qualified by reference to our consolidated financial statements. Our
consolidated financial statements for the fiscal year ended December 28, 2002
have been audited by KPMG LLP, independent auditors, and our consolidated
financial statements for the fiscal years ended December 29, 2001, December 30,
2000, January 1, 2000 and January 2, 1999 have been audited by Arthur Andersen
LLP, independent public accountants.

                                      -12-

<PAGE>

         This information should be read in conjunction with our consolidated
financial statements and the related notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere herein.

         We have not paid any cash dividends on our shares of Common Stock
during the periods presented.

<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED
----------------------------------------------------------------------------------------------------------
                                                DEC. 28     DEC. 29      DEC. 30      JAN. 1       JAN. 2
                                                2002(1)      2001         2000         2000         1999
<S>                                            <C>          <C>          <C>          <C>          <C>
FINANCIAL SUMMARY ($000):
  Revenues                                     $68,231      $71,819      $84,912      $87,887      $89,142
  Income before taxes                            4,396        1,279        8,008        8,644        8,718
  Net income                                     3,284        1,048        5,838        6,759        6,593
  Total assets                                  50,459       47,644       54,421       54,770       56,617
  Working capital                               14,106       15,565       13,770       14,057       11,446
  Additions to property, plant and equipment     2,967        2,144        3,699        2,605        2,713
  Depreciation and amortization                  2,499        2,921        3,138        3,362        3,158

PER SHARE ($):
  Basic net earnings                           $  1.35      $  0.43      $  2.30      $  2.28      $  2.10
  Diluted net earnings                            1.33         0.43         2.25         2.23         2.03
  Book value                                     11.69         8.87         8.75         8.61         7.34

CAPITALIZATION ($000):
  Shareholders' equity                         $28,419      $21,561      $21,311      $25,210      $22,274
  Long-term debt                                 6,499       12,499       12,390        7,252        9,638
  Short-term debt (2)                            2,005        2,186        3,595        4,627        1,534
  Total debt                                     8,504       14,685       15,985       11,879       11,172

RATIOS:
  Return on average shareholders' equity (%)      13.1          4.9         25.1         28.4         32.0
  Return on revenues (%)                           4.8          1.5          6.9          7.7          7.4
  Long-term debt to shareholders' equity (%)      22.9         58.0         58.1         28.8         43.3
  Current assets to current liabilities            1.9          2.2          1.7          1.6          1.5
  Average inventory turnover                       4.0          3.8          4.2          4.7          4.7
  Average accounts receivable turnover             4.6          4.2          4.3          4.4          5.2

OTHER DATA:
  Shares outstanding (000) (3)                   2,431        2,431        2,436        2,927        3,033
  Shareholders of record                           235          251          258          287          304
  Number of employees                              361          379          522          475          496
</TABLE>

(1)      On December 30, 2001, we adopted Statement of Financial Accounting
         Standards No. 142 and ceased to amortize goodwill at the end of fiscal
         year 2001.

(2)      Including current portion of long-term debt.

(3)      Net of treasury stock of 1,295 for fiscal year 1998, 1,447 for fiscal
         year 1999, 1,968 for fiscal year 2000, 2,001 for fiscal year 2001 and
         2,003 for fiscal year 2002.

                                      -13-

<PAGE>

ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS.

         The following provides information that management believes is relevant
to an assessment and understanding of our consolidated results of operations and
financial condition. The discussion should be read in conjunction with our
consolidated financial statements and accompanying notes. All references to
2002, 2001 and 2000 mean the fiscal years ended December 28, 2002, December 29,
2001 and December 30, 2000, respectively.

RECENT DEVELOPMENTS

         On January 2, 2003, we acquired all of the outstanding capital stock of
privately-held Pennsylvania Crusher Corporation ("Penn Crusher"). As a result of
this purchase, we also acquired Jeffrey Specialty Equipment Corporation
("Jeffrey"), a wholly-owned subsidiary of Penn Crusher. The purchase price
consisted of a combination of $19,500,000 in cash, $4,000,000 in unsecured
promissory notes and a post-closing cash payment of $205,000 based on Penn
Crusher's consolidated shareholders' equity at December 31, 2002. With respect
to the payment of the cash portion of the purchase price and related acquisition
costs, we financed $15,000,000 through a $17,000,000 secured credit facility
with Penn Crusher as the borrower (the additional $2,000,000 is available for
working capital and general corporate purposes, subject to certain limitations).
This facility is directly with Penn Crusher, and the lender has no recourse
against K-Tron with respect to any amounts borrowed thereunder. Additionally, we
borrowed $5,000,000 from a U.S. bank through a K-Tron wholly-owned subsidiary
and used these funds to pay part of the purchase price. This obligation was
guaranteed by K-Tron, and K-Tron also issued the $4,000,000 of unsecured
promissory notes.

         Penn Crusher and Jeffrey had consolidated 2002 revenues of $35,178,000,
which were more than fifty percent of K-Tron's total revenues in 2002. With
regard to the operation of Penn Crusher and Jeffrey, we expect that they will be
operated on a stand-alone basis, with no significant financial or operational
synergies between them and K-Tron.

         As noted above, K-Tron and Penn Crusher incurred substantial debt as a
result of the Penn Crusher acquisition, which debt is described in more detail
in the Liquidity and Capital Resources section below; however, K-Tron and Penn
Crusher expect to have sufficient cash flow to cover all required principal and
interest payments and, in particular, Penn Crusher's cash flow should be
adequate to cover required principal and interest payments on its secured credit
facility.

RESULTS OF OPERATIONS

         In 2002, 2001 and 2000, K-Tron reported net income of $3,284,000,
$1,048,000 and $5,838,000, respectively.

         Revenues for 2002 declined from 2001 and 2000 levels (even after
excluding the July 31, 2001 sale of our Hasler heavy feeder business, which is
described below, and the November 30, 2001 acquisition of Pneumatic Conveying
Systems Limited ("PCS")), reflecting a weaker global economy and a steep decline
in capital equipment spending in the process industries we serve.

                                      -14-

<PAGE>

         The improvement in net income in 2002 versus 2001 was largely the
result of two factors: (i) the sale of our Hasler heavy feeder business in the
third quarter of 2001 and (ii) the benefits of a lower cost structure resulting
from the globalization and cost reduction initiatives that we implemented in the
second half of 2001.

         We are an international company, and we derived approximately 58%, 58%
and 53% of our 2002, 2001 and 2000 revenues, respectively, from products
manufactured in, and services performed from, our facilities located outside the
United States, primarily in Europe. Since we operate globally, we are 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
as well as transactions where the revenues and related expenses may initially be
accounted for in different currencies, such as sales made from our Swiss
manufacturing facility in currencies other than the Swiss franc.

         On July 31, 2001, we sold our Hasler heavy feeder business to our
largest distributor of Hasler equipment and recorded a pretax loss of $620,000.
The assets sold were primarily inventory and fixed assets. The buyer took over
operation of our Hasler leased sales office in Neuchatel, Switzerland and leased
from us a Company-owned facility in Lengerich, Germany. The purchase price
consisted of a combination of 1,000,000 Swiss francs cash ($594,000), promissory
notes in the principal amount of 3,017,000 Swiss francs ($1,792,000), which bear
interest and amortize over seven years, and a less than 20% equity position in
the buyer. We retained all of the Hasler receivables and payables at the time of
the sale as well as the building in Lengerich, Germany, which, as noted above,
is being leased to the buyer. The buyer has made all required payments on the
promissory notes, and the principal amount was reduced to 2,640,000 Swiss francs
at the end of 2002 ($1,900,000). The U.S. dollar numbers mentioned in this
paragraph reflect the Swiss franc/U.S. dollar exchange rate at the dates
referred to, which were July 31, 2001 and December 28, 2002.

         In December 2001, we sold our Swiss machine and welding shops to an
independent Swiss machine shop company and recorded a pretax gain of $242,000.
The purchase price consisted of a combination of 300,000 Swiss francs cash
($182,000) and a 700,000 Swiss franc obligation ($420,000), which is supported
by a bank guaranty.

                                      -15-

<PAGE>

         The following table sets forth our results of operations expressed as a
percentage of total revenues for the periods indicated.

<TABLE>
<CAPTION>
                                                                              Fiscal Year
                                                                  ----------------------------------
                                                                    2002         2001        2000
                                                                  --------    ---------    ---------
<S>                                                               <C>         <C>          <C>
Total revenues                                                       100.0%       100.0%       100.0%

Cost of revenues                                                      57.7         59.9         55.4
                                                                  --------    ---------    ---------
Gross profit                                                          42.3         40.1         44.6

Selling, general and administrative                                   31.6         33.2         30.2

Research and development                                               3.6          3.7          3.7
                                                                  --------    ---------    ---------

Operating income                                                       7.1          3.2         10.7

Interest                                                               0.7          1.4          1.3
                                                                  --------    ---------    ---------

Income before income taxes                                             6.4%         1.8%         9.4%
                                                                  ========    =========    =========

Year-end backlog (at year-end 2002 foreign exchange rates, in
thousands)

Backlog including Hasler business                                 $  8,589    $  13,466    $  20,813
                                                                  ========    =========    =========

Backlog excluding Hasler business (sold July 31, 2001)            $  8,589    $  13,466    $  17,755
                                                                  ========    =========    =========
</TABLE>

         As previously noted, more than half of our revenues in recent years has
been derived from activities in foreign jurisdictions. Consequently, our results
can be significantly affected by changes in foreign exchange rates, particularly
in U.S. dollar exchange rates with respect to the Swiss franc, euro and British
pound sterling and, to a lesser degree, the Singapore dollar 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 non-U.S. dollar-based
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, since we typically receive a majority of our revenues in
currencies other than the U.S. dollar, we generally benefit from a weaker dollar
and are adversely affected by a stronger dollar relative to major currencies
worldwide, especially those identified above. In particular, a general weakening
of the U.S. dollar against other currencies would positively affect our
revenues, gross profit and operating income as expressed in U.S. dollars
(provided that the gross profit and operating income numbers from foreign
operations are not losses, since in the case of a loss, the effect would be to
increase the loss), whereas a general strengthening of the U.S. dollar against
such currencies would have the opposite effect.

                                      -16-

<PAGE>

         In addition, our revenues and income 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 (for inter-company transactions) and the Swiss franc/euro and
Swiss franc/British pound sterling (for sales from the Company's Swiss
manufacturing facility) exchange rates. For 2002, 2001 and 2000, the changes in
certain key exchange rates were as follows:

<TABLE>
<CAPTION>
                                                      Fiscal Year
                                          -----------------------------------
                                          2002           2001           2000
                                          -----          -----          -----
<S>                                       <C>     <C>    <C>    <C>     <C>
Average U.S. dollar equivalent of
 one Swiss franc                          0.645          0.594          0.593
% change vs. prior year                           8.6%           0.2%

Average U.S. dollar equivalent of
 one euro                                 0.946          0.896          0.924
% change vs. prior year                           5.6%          -3.0%

Average U.S. dollar equivalent of
 one British pound sterling               1.504          1.441          1.515
% change vs. prior year                           4.4%          -4.9%

Average Swiss franc equivalent of
 one euro                                 1.467          1.508          1.558
% change vs. prior year                          -2.7%          -3.2%

Average Swiss franc equivalent of
 one British pound sterling               2.332          2.426          2.554
% change vs. prior year                          -3.9%          -5.0%
</TABLE>

         With the acquisition of Penn Crusher and Jeffrey, we will be less
affected in the future by foreign exchange rates since most of their sales are
in U.S. dollars. Nevertheless, between 35% and 40% of our 2003 revenues will
likely be from products manufactured in, and services performed from, our
facilities outside the United States, so that we will continue to have
significant sensitivity to foreign exchange rate changes.

         Total revenues decreased by $3,588,000 or 5.0% (increased by $1,037,000
or 1.5 % without Hasler) in 2002 compared to 2001. The increase in revenues
without Hasler was driven by twelve full months of revenues in 2002 from the
November 30, 2001 acquisition of PCS versus one month in 2001 and the positive
effect of a weaker U.S. dollar when translating the revenues of foreign
operations into U.S. dollars, partially offset by lower revenues in EMEA/Asia
and the Americas due to a weaker global economy with reduced capital equipment
spending in the process industries we serve. If the average foreign exchange
rates for 2001 were applied to 2002, total revenues for 2002 would have
decreased by $6,559,000 or 9.1% (decreased by $1,934,000 or 2.9% without
Hasler).

                                      -17-

<PAGE>

         Total revenues decreased by $13,093,000 or 15.4% ($8,077,000 or 10.7%
without Hasler) in 2001 compared to 2000. Most of the 2001 revenue decrease was
attributable to North America, reflecting the weak economy and a steep decline
in capital equipment spending in the plastics and chemical industries, with a
small portion of the decrease resulting from a reduction in Hasler revenues in
Western Europe. The effect of foreign exchange translation was minimal when
comparing 2001 with 2000.

         Gross profit as a percent of total revenues increased to 42.3% in 2002
as compared to 40.1% in 2001. The improvement in gross profit was primarily due
to the improved sales mix as a result of the July 31, 2001 sale of the Hasler
business and to reductions in fixed costs, including the cost reductions made in
the second half of 2001 and the elimination of goodwill expense as we adopted
SFAS No. 142 on December 30, 2001. Goodwill amortization for 2001 was $345,000.

         Gross profit as a percent of total revenues decreased to 40.1% in 2001
as compared to 44.6% in 2000. The decrease in gross profit was primarily due to
geographic and product sales mix. Another factor was the deterioration in
economic conditions discussed above, which led to fixed costs being absorbed
over a smaller revenue base.

         Selling, general and administrative (SG&A) expenses decreased by
$2,313,000 or 9.7% in 2002 compared to 2001 (a decrease of approximately
$425,000 or 1.9% after excluding Hasler SG&A, the loss on sale of the Hasler
business and the gain on sale of the Swiss machine and welding shops discussed
above). The decrease in SG&A was primarily due to the elimination of Hasler SG&A
after the sale of Hasler on July 31, 2001, fewer employees and the benefits
realized from one-time costs associated with cost reductions implemented in the
second half of 2001, offset in part by the effect of higher foreign exchange
rates (a weaker U.S. dollar).

         Selling, general and administrative (SG&A) expense decreased by
$1,785,000 or 7.0% in 2001 compared to 2000 ($2,163,000 or 8.4% after excluding
the loss on sale of the Hasler business and gain on sale of the Swiss machine
and welding shops discussed above). The decrease in 2001 SG&A was primarily due
to lower commissions on reduced revenues, fewer employees and the elimination of
Hasler SG&A after July 31, 2001, offset in part by a $378,000 net loss on the
assets sold. As a percent of total revenues, SG&A was 31.6% in 2002, 33.2% in
2001 and 30.2% in 2000.

         Research and development (R&D) expenditures decreased by $215,000 or
8.1% in 2002 compared to 2001 and by $538,000 or 16.9% in 2001 compared to 2000.
R&D decreased in 2002 and 2001 as compared to 2001 and 2000, respectively, due
to lower staff costs, partly resulting from the sale of the Hasler business. The
2002 decrease was partially offset by an increase in tooling costs and by the
effect of higher foreign exchange rates (a weaker U.S. dollar). R&D expense as a
percent of total revenues was 3.6% in 2002 and 3.7% in 2001 and 2000.

         Interest expense decreased by $528,000 or 51.4% in 2002 versus 2001 and
by $53,000 or 4.9% in 2001 as compared to 2000. The 2002 decrease was due to
lower interest rates and debt reductions of $3,427,000 in Switzerland
($4,284,000 at constant foreign exchange rates) and $2,754,000 in the United
States, partially offset by higher foreign exchange rates (a weaker U.S.
dollar). The 2001 decrease was due to lower interest rates and debt reductions.
Interest expense as a percent of total revenues was 0.7% in 2002, 1.4% in 2001
and 1.3% in 2000.

                                      -18-

<PAGE>

         Income before income taxes was $4,396,000 in 2002, $1,279,000 in 2001
and $8,008,000 in 2000. The changes during the periods were the result of the
items discussed above, with the 2002 income before income taxes improving versus
2001, despite lower revenues in 2002, primarily as a result of the Hasler sale
and the benefits of the globalization and cost reductions initiatives which we
implemented during the latter half of 2001.

         The 2002, 2001 and 2000 provisions for income tax of $1,112,000,
$231,000 and $2,170,000 respectively, related primarily to our results in the
United States and Switzerland in 2002 and the United States and Germany in 2001
and 2000. The effective tax rates were 25.3% in 2002, 18.1% in 2001 and 27.1% in
2000. The higher effective tax rate in 2002 was primarily due to an increase in
foreign taxable income in 2002 as compared to 2001, which included a loss in
both Switzerland and Germany on the sale of the Hasler business. On July 1,
2002, New Jersey approved legislation for corporation income tax reform. The
changes made to the law accounted for an increase in the tax provision for 2002
of approximately $50,000 after the related federal income tax benefit. The lower
effective tax rate in 2001 versus 2000 was primarily due to a one-time benefit
from a German tax law change. We have foreign and U.S. state tax loss
carryforwards that total $366,000 and $4,900,000, respectively, which, if
realized, would have an estimated future net income benefit of $106,000 and
$367,000, respectively.

         We do not believe that inflation has had a material impact on the
results of operations during the last three years.

         Our backlog at constant foreign exchange rates decreased by 36.2% at
the end of 2002 compared to 2001 due to the very weak capital equipment spending
environment that existed during all of 2002, and it reflected fewer orders
received at our Feeder Group facilities in Switzerland and the United States.
The bulk of the year-end 2002 backlog consisted of orders that should be ready
for delivery in less than 120 days. Our backlog at constant foreign exchange
rates decreased by 35.3% (24.2% without the Hasler business) at the end of 2001
compared to 2000, primarily due to reduced orders from customers in the United
States.

LIQUIDITY AND CAPITAL RESOURCES

RECENT DEVELOPMENTS

         To finance the Penn Crusher acquisition described earlier, we borrowed
$20,000,000 from two U.S. banks, and we also issued $4,000,000 in unsecured
promissory notes to the Penn Crusher stockholders.

         We borrowed $5,000,000 from a bank through K-Tron's U.S. manufacturing
subsidiary, which loan was combined with an outstanding term loan (see "Existing
Debt" below) from that bank to that subsidiary. Monthly principal payments of
$83,000 plus interest at a fixed rate of 5.625% on approximately half the loan
and at a variable rate of one month LIBOR plus 1.85% on the other half (3.23% at
December 28, 2002) began February 2003, with the final principal payment of
approximately $2,416,000 plus interest being due in January 2008. This loan is
secured by substantially all of the assets of the U.S. manufacturing subsidiary
and is guaranteed by K-Tron International, Inc.

                                      -19-

<PAGE>

         Penn Crusher borrowed $15,000,000 from another U.S. bank consisting of
an aggregate of $13,500,000 term debt ($10,000,000 with a five-year term and
$3,500,000 with a six-year term) and $1,500,000 under a five-year revolving
credit facility. Subject to certain conditions, the revolving credit facility
provides for up to an additional $2,000,000 of availability. Quarterly term debt
principal payments of $400,000 begin March 31, 2003 and increase each year by
$62,500 per quarter (or $250,000 per year in the aggregate) through December 31,
2007, with final quarterly payments of $750,000 in 2008. Interest is from one to
six month LIBOR plus 3% to 3.5%, and the 3% to 3.5% can be reduced to 2% to 2.5%
upon meeting certain financial ratios. In January 2003, Penn Crusher entered
into an interest rate swap related to the entire $10,000,000 five-year term loan
where interest will not exceed 6.11% for the full term of the loan and can be
reduced to 5.11% upon meeting certain financial ratios. The interest rates on
the $3,500,000 million term loan and $1,500,000 revolving credit facility were
4.91% and 4.38%, respectively, as of January 8, 2003. The Penn Crusher debt is
guaranteed by Jeffrey and secured by substantially all of the assets of Penn
Crusher and Jeffrey, but it is not guaranteed by any other K-Tron company.

         In addition, K-Tron issued $4,000,000 of unsecured promissory notes to
the Penn Crusher stockholders as part of the Penn Crusher purchase price, which
notes are payable in three equal, annual installments on the second, third and
fourth anniversaries of the closing date. Interest at 6% per annum is payable
quarterly.

         As stated previously, K-Tron and Penn Crusher are expected to have
sufficient cash flow to cover all required principal and interest payments on
the foregoing debt.

OTHER DEBT

         On March 20, 2000, our U.S. manufacturing subsidiary borrowed
$7,000,000 under a term loan facility with a U.S. bank, and we used these funds,
together with $1,194,000 of available cash and a borrowing of $950,000 on a
$5,000,000 revolving credit facility with the same bank, to repurchase 508,000
shares of our Common Stock. The $7,000,000 term loan was originally payable in
equal monthly installments of principal plus accrued interest over a four-year
period and was secured by liens on the same collateral which secures the
revolving credit loan and also a separate mortgage loan from the same U.S. bank.
One-half of the term loan bore interest at the fixed rate of 8.23% for the first
two years and from February 4, 2002 until the refinancing of this loan on
December 30, 2002 was subject to a variable rate of interest equal to one month
LIBOR plus 1.85 percent (3.23% at December 28, 2002), and the other half was
subject to the same variable rate basis of interest equal to one month LIBOR
plus 1.85 percent (3.23% at December 28, 2002). At December 28, 2002, there was
$2,188,000 outstanding under this term loan. On December 30, 2002, we refinanced
the outstanding balance of this loan and borrowed an additional $5,000,000 to
finance the January 2, 2003 acquisition of Penn Crusher, which refinancing was
described above under "Recent Developments." Both the original term loan
facility and the refinanced facility require that we maintain certain specific
ratios of consolidated debt to net worth and minimum annual debt coverage, and a
minimum level of net worth, calculated at the end of each fiscal year. In 2002
and 2001, we were in compliance with these covenants.

                                      -20-

<PAGE>

         At December 28, 2002, our Swiss subsidiary had separate credit
facilities totaling 17 million Swiss francs ($12.2 million) with three Swiss
banks. The Company's real property in Switzerland is pledged as collateral. As
of December 28, 2002, there were long-term borrowings outstanding of 3.8 million
Swiss francs ($2.7 million), with 9.2 million Swiss francs ($6.7 million)
available for short-term borrowings and 4 million Swiss francs ($2.8 million)
available for letters of credit and customer guarantees. The annual interest
rates on the long-term borrowings range from 2.0% to 3.5%.

         In June 1998, our U.S. manufacturing subsidiary refinanced its 20-year
mortgage debt with a U.S. bank for $2,700,000 at an annual interest rate of
7.625%. In July 2002, the annual interest rate was reduced to 6.45%. Beginning
August 1, 2002, the loan is repayable in eighty-three monthly principal and
interest payments of $23,784 with a final payment of $1,042,000 plus interest on
August 1, 2009. At December 28, 2002, the remaining amount owed under this
borrowing was $2,197,000.

         Also in June 1998, our U.S. manufacturing subsidiary entered into a
two-year secured revolving credit facility with a U.S. bank that provided for a
maximum borrowing of $5,000,000, since reduced to $4,000,000. This facility has
been extended through July 2004. At December 28, 2002, there were no outstanding
borrowings under this line, and $4,000,000 was available for future borrowings.
The annual interest rate as of December 28, 2002 was 4.0%.

                                      -21-

<PAGE>

         We are obligated to make future payments under various contracts such
as debt and lease agreements. The table set forth below summarizes the
significant contractual cash obligations as of December 28, 2002:

Contractual Obligations
(in thousands)

<TABLE>
<CAPTION>
                                                                     Total
                  Long-term Debt Maturities      Operating        Contractual
                  including Capital Leases        Leases          Obligations
                  ------------------------       ---------        -----------
<S>                        <C>                    <C>               <C>
2003                       $ 2,005                $   922           $ 2,927
2004                         4,346                    494             4,840
2005                           438                    166               604
2006                           180                     71               251
2007                           191                     14               205
Thereafter                   1,344                     --             1,344
                           -------                -------           -------
Total                      $ 8,504                $ 1,667           $10,171
                           =======                =======           =======
</TABLE>

         As a result of the January 2, 2003 Penn Crusher acquisition, our
obligation to make future payments under debt and lease agreements is as
follows:

<TABLE>
<CAPTION>
                                                                     Total
                   Long-term Debt Maturities     Operating        Contractual
                   including Capital Leases       Leases          Obligations
                   ------------------------      ---------        -----------
<S>                        <C>                    <C>               <C>
2003                       $ 3,605                $ 1,299           $ 4,904
2004                         6,196                    871             7,067
2005                         4,455                    198             4,653
2006                         4,276                     71             4,347
2007                         3,728                     14             3,742
Thereafter                   8,744                     --             8,744
                            ------                -------           -------
Total                      $31,004                $ 2,453           $33,457
                           =======                =======           =======
</TABLE>

                                      -22-

<PAGE>

         Our capitalization at the end of 2002, 2001 and 2000 is set forth
below:

(Dollars in thousands)

<TABLE>
<CAPTION>
                                                              Fiscal Year
                                                 -------------------------------------
                                                   2002           2001          2000
                                                 -------        -------        -------
<S>                                              <C>            <C>            <C>
Short-term debt, including current
 portion of long-term debt                       $ 2,005        $ 2,186        $ 3,595
Long-term debt                                     6,499         12,499         12,390
                                                 -------        -------        -------
Total debt                                         8,504         14,685         15,985
Shareholders' equity                              28,419         21,561         21,311
                                                 -------        -------        -------

Total debt and shareholders' equity              $36,923        $36,246        $37,296
                                                 =======        =======        =======
  (total capitalization)

Percent total debt to total capitalization            23%            41%            43%

Percent long-term debt to equity                      23%            58%            58%

Percent total debt to equity                          30%            68%            75%
</TABLE>

         As indicated by the long-term debt numbers in the Contractual
Obligations tables on the immediately preceding page, the numbers and ratios in
the above capitalization table will change significantly in 2003 as a result of
the substantial debt incurred in connection with the Penn Crusher acquisition.

         Total debt decreased by $6,181,000 in 2002 compared to the end of 2001
and by $1,300,000 in 2001 versus the end of 2000. Total debt without the effect
of foreign currency translation decreased by $7,038,000 in 2002 and by
$1,257,000 in 2001.

         At the end of 2002 and 2001, working capital was $14,106,000 and
$15,565,000, respectively, and the ratio of current assets to current
liabilities was 1.93 and 2.18, respectively.

         In 2002 and 2001, we utilized internally generated funds to meet our
working capital needs, while in 2001 we also utilized lines of credit.

         Net cash provided by operating activities was $9,949,000 in 2002,
$5,253,000 in 2001 and $7,107,000 in 2000. The increase in operating cash flow
in 2002 versus 2001 was primarily due to higher net income, a reduction in
inventory and an increase in accounts payable and accrued expenses partially
offset by an increase in prepaid expenses and a decrease in depreciation and
amortization. The decrease in operating cash flow in 2001 compared to 2000 was
primarily due to lower net income. Net income and depreciation and amortization
were the principal components of cash provided by operating activities in all
three years.

         The average number of days to convert accounts receivable to cash was
80 days in 2002 compared to 86 days in 2001 and 85 days in 2000. The average
number of days to convert inventory into accounts receivable was 91 days in 2002
compared to 96 days in 2001 and 88 days in 2000.

                                      -23-

<PAGE>

         Net cash used in investing activities was $2,829,000, $2,057,000 and
$4,267,000 in 2002, 2001 and 2000, respectively. Capital expenditures were
$2,967,000, $2,144,000 and $3,699,000 in 2002, 2001 and 2000, respectively.
Funds used in 2001 to acquire PCS were $621,000 while funds received from the
sale of the assets of the Hasler business and the Swiss machine and welding
shops described above were $776,000. Funds used in 2000 to acquire Colormax
Limited were $491,000.

         Cash used in financing activities in 2002 was for debt reduction, while
in 2001 and 2000, cash was used primarily for the purchase of 43,700 shares of
our Common Stock in 2001 and 520,200 shares in 2000, as well as for debt
reduction in 2001. In 2002, 2001 and 2000, cash was obtained from operations,
and cash was also obtained from long-term borrowings in 2000. Cash and
short-term investments increased to $2,694,000 at the end of 2002 versus
$2,214,000 at the end of 2001. Cash decreased to $553,000 at the end of 2000
from $3,093,000 a year earlier.

         Of the total increase in shareholders' equity of $6,858,000 for 2002,
$3,587,000 was attributable to changes in foreign exchange rates, particularly
with respect to the Swiss franc and euro, while foreign exchange rates caused a
translation decrease in shareholders' equity of $620,000 in 2001 and $601,000 in
2000.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The Company prepares its financial statements in conformity with
accounting principles generally accepted in the United States of America. The
preparation of such financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of those financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

         The Company discloses its significant accounting policies in the notes
to its audited consolidated financial statements.

         Judgments and estimates of uncertainties are required in applying the
Company's accounting policies in certain areas. Following are some of the areas
requiring significant judgments and estimates: determination of an asset's
useful life, estimates of allowances for bad debts, cash flow and valuation
assumptions in performing asset impairment tests of long-lived assets, estimates
of realizability of deferred tax assets, warranty cost, and legal contingencies.

         There are numerous critical assumptions that may influence accounting
estimates in these and other areas. We base our critical assumptions on
historical experience, third-party data and various other estimates which we
believe to be reasonable. Certain of the more critical assumptions include:

Depreciable Lives of Plant and Equipment

-        Changes in technology

-        Wear and tear

-        Changes in market demand

                                      -24-

<PAGE>

Bad Debt Risk

-        Credit worthiness of specific customers and aging of customer balances

-        Contractual rights and obligations

-        General and specific economic conditions

Asset Impairment Determinations

-        Intended use of assets and expected future cash flows

-        Industry specific trends and economic conditions

-        Customer preferences and behavior patterns

-        Impact of regulatory initiatives

Deferred Taxes

-        Expected future profitability and cash flows

-        Impact of regulatory initiatives

-        Timing of reversals of existing temporary differences between book and
         taxable income

Warranty Cost

-        New product introduction

-        Past experience

Legal Contingencies

         We are currently involved in certain legal proceedings. We have accrued
our estimate of the probable costs for the resolution of these claims. This
estimate has been developed in consultation with outside counsel handling our
defense in these matters and is based upon an analysis of potential results,
assuming a combination of litigation and settlement strategies. We do not
believe these proceedings will have a material adverse effect on our
consolidated financial position. It is possible, however, that future results of
operations for any particular quarterly or annual period could be materially
affected by changes in our assumptions, or the effectiveness of our strategies,
related to these proceedings.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

         The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a safe harbor for forward-looking statements made by us or on our
behalf. We and our representatives may from time to time make written or oral
statements that are "forward-looking," including statements contained in this
report and other filings with the Securities and Exchange Commission, reports to
our shareholders and news releases. All statements that express expectations,
estimates, forecasts or projections are forward-looking statements within the
meaning of the Act. In addition, other written or oral statements which
constitute forward-looking statements may be made by us or on our behalf. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," "projects," "forecasts," "may," "should," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions which are difficult to
predict.

                                      -25-

<PAGE>

Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in or suggested by such forward-looking statements. The
forward-looking statements contained in this report include but are not limited
to statements regarding the effect of the acquisition of Penn Crusher and
Jeffrey, our ability to repay debt, our ability to find alternative suppliers
for certain components, the effect of the expiration of our patents on our
business, the expected time for shipments of our products to customers and the
resulting effect on our backlog, the expected time for the introduction of new
products by our Feeder Group, the sufficiency of our facilities, the retention
of all of our future earnings for use in our business, the effect of changes in
foreign exchange rates on our business, the effect of recent New Jersey tax
legislation and the effect on our business of legal proceedings in which we are
involved. We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.

         A wide range of factors could materially affect our future performance
and financial and competitive position, including the following: (i) increasing
price and product/service competition by domestic and foreign competitors,
including new entrants; (ii) the mix of products/services sold by us; (iii)
rapid technological changes and developments and our ability to continue to
introduce competitive new products on a timely and cost-effective basis; (iv)
changes in U.S. and global financial and currency markets, including significant
interest rate and foreign currency exchange rate fluctuations; (v) protection
and validity of patent and other intellectual property rights held by us and our
competitors; (vi) the cyclical nature of our business as a capital goods
supplier; (vii) possible future litigation and governmental proceedings; (viii)
the availability of financing and financial resources in the amounts, at the
times and on the terms required to support our future business, including
capacity expansions and possible acquisitions; (ix) the loss of key customers,
employees or suppliers; (x) the failure to carry out marketing and sales plans;
(xi) the failure to integrate acquired businesses without substantial costs,
delays or other operational or financial problems; (xii) economic, business and
regulatory conditions and changes which may affect the level of new investments
and purchases made by customers, including general economic and business
conditions that are less favorable than expected; (xiii) domestic and
international political and economic conditions; and (xiv) the outcome of any
legal proceedings in which we are involved.

         This list of factors that may affect our future performance and
financial and competitive position and also the accuracy of forward-looking
statements is illustrative, but it is by no means exhaustive. Accordingly, all
forward-looking statements should be evaluated with the understanding of their
inherent uncertainty.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not Applicable.

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The consolidated financial statements of the Company and its
subsidiaries and supplementary data required by this item are attached to this
annual report on Form 10-K beginning on page F-1.

                                      -26-

<PAGE>

ITEM 9.      CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURES.

         On June 22, 2002, the Board of Directors, following a recommendation by
our Audit Committee, decided to no longer engage Arthur Andersen LLP
("Andersen") as our independent public accountants and auditors and engaged KPMG
LLP ("KPMG") to serve as our independent public accountants and auditors for the
fiscal year ending December 28, 2002. Andersen audited the Company's financial
statements for fiscal years 2001 and 2000 and had been the Company's independent
public accountants and auditors since 1994.

         For the fiscal years ended December 30, 2001 and December 29, 2000,
Andersen's reports on our consolidated financial statements did not contain an
adverse opinion or a disclaimer of opinion, and they were not qualified or
modified as to uncertainty, audit scope or accounting principles.

         During these same two fiscal years and through June 22, 2002, there
were no disagreements with Andersen on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to Andersen's satisfaction, would have caused
Andersen to make reference to the subject matter of the disagreements in
connection with any of its reports on our consolidated financial statements for
such years.

         We disclosed the foregoing information on a current report on Form 8-K
dated June 22, 2002 (the "Form 8-K"). We provided Andersen with a copy of the
foregoing disclosure and requested Andersen to furnish us with a letter
addressed to the Securities and Exchange Commission stating whether Andersen
agreed with the statements by us in the foregoing disclosure and, if not,
stating the respects in which it did not agree. Andersen's letter stated that it
had read the pertinent paragraphs of the Form 8-K and was in agreement with the
statements contained therein. Andersen's letter was filed as an exhibit to the
Form 8-K.

         During the fiscal years ended December 29, 2001 and December 30, 2000
and through June 22, 2002, we did not consult with KPMG LLP with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or any other matters or
reportable events set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

                                      -27-

<PAGE>

                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information concerning directors and compliance with Section 16(a)
of the Securities Exchange Act of 1934 called for by Item 10 of Form 10-K will
be set forth under the captions "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in our definitive proxy statement, to
be filed within 120 days after the end of the fiscal year covered by this annual
report on Form 10-K, and is incorporated herein by reference.

         The required information as to executive officers is set forth in Part
I hereof and is incorporated herein by reference.

ITEM 11.     EXECUTIVE COMPENSATION.

         The information called for by Item 11 of Form 10-K will be set forth
under the caption "Executive Compensation" in our definitive proxy statement, to
be filed within 120 days after the end of the fiscal year covered by this annual
report on Form 10-K, and is incorporated herein by reference.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
             RELATED SHAREHOLDER MATTERS.

         The information called for by Item 12 of Form 10-K will be set forth
under the caption "Security Ownership of Certain Beneficial Owners and
Management and Related Shareholder Matters" in our definitive proxy statement,
to be filed within 120 days after the end of the fiscal year covered by this
annual report on Form 10-K, and is incorporated herein by reference.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         None.

ITEM 14.     CONTROLS AND PROCEDURES.

         An evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of March 25, 2003 was carried out by us
under the supervision and with the participation of the Company's management,
including the Chief Executive Officer and Chief Financial Officer. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures have been designed and are
functioning effectively to provide reasonable assurance that the information
required to be disclosed by us in reports filed under the Securities and
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms. A controls system, no matter how well designed and operated, cannot
provide absolute assurance that the objectives of the controls system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been detected.
Subsequent to the date of the most recent evaluation of our internal controls,
there were no significant changes in our internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

                                      -28-

<PAGE>

ITEM 15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.

       (a)   1.       Financial Statements. Financial Statements listed in the
accompanying Index to Financial Statements and the Financial Statement Schedule
are filed as part of this annual report on Form 10-K.

             2.       Financial Statement Schedule. The Financial Statement
Schedule listed in the accompanying Index to Financial Statements and the
Financial Statement Schedule appearing on page F-1 are filed as part of this
annual report on Form 10-K.

             3.       Exhibits. (See (c) below.)

       (b)   Reports on Form 8-K.

             1.       Current Report on Form 8-K dated January 2, 2003 ("January
2003 Form 8-K") and filed with the Securities and Exchange Commission on January
15, 2003 reporting our acquisition of all of the outstanding capital stock of
Penn Crusher.

             2.       Current Report on Form 8-K/A dated January 2, 2003 and
filed with the Securities and Exchange Commission on March 17, 2003, amending
the January 2003 Form 8-K to include the audited financial statements of Penn
Crusher and certain unaudited K-Tron pro forma condensed consolidated financial
statements.

       (c)   Exhibits.

             The following is a list of exhibits filed as part of this annual
report on Form 10-K. Where so indicated, exhibits which were previously filed
are incorporated by reference. For exhibits incorporated by reference, the
location of the exhibit in the previous filing is indicated in parentheses.

2.1          Basic Agreement regarding the Assignment of Assets of the Hasler
             Division between K-Tron (Suisse) SA and MJ Enterprises SA dated
             July 31, 2001 (Filed as Exhibit 2.1 to our report on Form 10-Q for
             the quarterly period ended September 29, 2001 and incorporated
             herein by reference)

2.2          Stock Purchase Agreement dated January 2, 2003 by and among John D.
             Whalen, Donald J. Carrozzino, Frank Wallitsch, Jr. and Nancy S.
             Hansen and PCC Acquisition Co. (Filed as Exhibit 2.1 to the January
             2003 Form 8-K and incorporated herein by reference)

3.1          Restated Certificate of Incorporation, as amended (Filed as Exhibit
             3.1 to our annual report on Form 10-K for the year ended January 2,
             1999 ("1998 Form 10-K") and incorporated herein by reference)

3.2          By-laws, as amended (Filed as Exhibit 3.2 to our annual report on
             Form 10-K for the year ended December 29, 2001("2001 Form 10-K")
             and incorporated herein by reference)

                                      -29-

<PAGE>

4.1          Form of Certificate for Shares of Common Stock (Filed as Exhibit
             4.1 1998 Form 10-K and incorporated herein by reference)

4.2          Rights Agreement dated as of October 16, 2001 with American Stock
             Transfer & Trust Company, as Rights Agent (Filed as Exhibit 4.1 to
             our report on Form 8-K dated October 16, 2001 and incorporated
             herein by reference)

10.1         1986 Stock Option Plan, as amended and restated (Filed as Exhibit
             10.2.1 to our annual report on Form 10-K for the year ended January
             4, 1992 ("1991 Form 10-K") and incorporated herein by reference)**

10.2         1988 Stock Option Plan for Non-Employee Directors (Filed as Exhibit
             10.2.4 to our annual report on Form 10-K for the year ended
             December 31, 1988 and incorporated herein by reference)**

10.3         K-Tron International, Inc. 1996 Equity Compensation Plan, as
             amended (Filed as Exhibit 10.3 to the 1998 Form 10-K and
             incorporated herein by reference)**

10.4         Amendment 2001-1 to the Amended and Restated K-Tron International,
             Inc. 1996 Equity Compensation Plan (Filed as Exhibit 10.4 to the
             2001 Form 10-K and incorporated herein by reference)**

10.5         K-Tron International, Inc. and Affiliated Companies Profit-Sharing
             and Thrift Plan, as amended and restated (Filed as Exhibit 10.5 to
             the 2001 Form 10-K and incorporated herein by reference)**

10.6         K-Tron International, Inc. Supplemental Executive Retirement Plan
             (Filed as Exhibit 10.2.7 to the 1991 Form 10-K and incorporated
             herein by reference)**

10.7         Employment Agreement dated as of October 6, 1997 by and between
             K-Tron International, Inc. and Edward B. Cloues, II (Filed as
             Exhibit 10.1 to our report on Form 10-Q for the quarterly period
             ended September 27, 1997 and incorporated herein by reference)**

10.8         Amendment No. 1 to Employment Agreement dated October 5, 1998 by
             and between K-Tron International, Inc. and Edward B. Cloues, II
             (Filed as Exhibit 10.1 to our report on Form 10-Q for the quarterly
             period ended October 3, 1998 and incorporated herein by
             reference)**

10.9         Employment Agreement dated as of May 7, 1999 by and between K-Tron
             International, Inc. and Ronald R. Remick (Filed as Exhibit 10.9 to
             our annual report on Form 10-K for the year ended January 1, 2000
             ("1999 10-K") and incorporated herein by reference)**

10.10        Form of Employment Agreement with certain of our employees, which
             are identical in all material respects except for the employee,
             amount of salary to be paid and date of execution (Filed as Exhibit
             10.12 to our annual report on Form 10-K for the year ended January
             3, 1998 and incorporated herein by reference)**

                                      -30-

<PAGE>

10.11        Form of Indemnification Agreement with certain of our directors and
             officers listed on Schedule 10.11, which are identical in all
             material respects except for the director or officer who is a party
             thereto and the date of execution (Filed as Exhibit 10.11 to the
             1999 Form 10-K and incorporated herein by reference)**

10.11A       Supplement to Schedule 10.11, listing additional directors and
             officers who are parties to an Indemnification Agreement referenced
             in Exhibit 10.11. (Filed as Exhibit 10.11A to the 2001 Form 10-K
             and incorporated herein by reference)

10.12        Mortgage Note dated June 11, 1996 from K-Tron America, Inc. in
             favor of The Bank of Gloucester County (Filed as Exhibit 10.15 to
             the 1999 Form 10-K and incorporated herein by reference)

10.13        Loan Modification Agreement dated June 24, 1998 between K-Tron
             America, Inc. and The Bank of Gloucester County (Filed as Exhibit
             10.16 to the 1999 Form 10-K and incorporated herein by reference)

10.14        Loan Modification Agreement dated July 9, 2002 between K-Tron
             America, Inc. and The Bank (formerly The Bank of Gloucester
             County)*

10.15        Note dated June 24, 1998 from K-Tron America, Inc. in favor of The
             Bank of Gloucester County (Filed as Exhibit 10.17 to the 1999 Form
             10-K and incorporated herein by reference)

10.16        Note dated December 20, 2002 from K-Tron America, Inc. in favor of
             The Bank (Filed as Exhibit 10.3 to the January 2003 Form 8-K and
             incorporated herein by reference)

10.17        Loan Modification Agreement dated December 20, 2002 between K-Tron
             America, Inc. and The Bank (Filed as Exhibit 10.4 to the January
             2003 Form 8-K and incorporated herein by reference)

10.18        Credit Agreement dated January 3, 2003 among Pennsylvania Crusher
             Corporation, the Lenders party to that Credit Agreement and
             National City Bank, as Agent (Filed as Exhibit 10.1 to the January
             2003 Form 8-K and incorporated herein by reference)

10.19        Form of the Stockholder Note issued to each of the individuals
             listed on Schedule 10.2, which notes are identical in all material
             respects except for the payee, the principal amount of the note and
             the amount of installments to be made thereunder (Filed as Exhibit
             10.2 to the January 2003 Form 8-K and incorporated herein by
             reference)

21.1         Subsidiaries*

23.1         Consent of KPMG LLP*

24.1         Power of Attorney (Included on Signature Page)*

                                      -31-

<PAGE>

99.1         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

99.2         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

*            Filed herewith

**           Management contract or compensatory plan or arrangement required to
             be filed or incorporated as an exhibit

             COPIES OF THE EXHIBITS ARE AVAILABLE TO SHAREHOLDERS (UPON PAYMENT
             OF A $.20 PER PAGE FEE TO COVER OUR EXPENSES IN FURNISHING THE
             EXHIBITS) FROM RONALD R. REMICK, SENIOR VICE PRESIDENT AND CHIEF
             FINANCIAL OFFICER, K-TRON INTERNATIONAL, INC., ROUTES 55 AND 553,
             P.O. BOX 888, PITMAN, NEW JERSEY 08071-0888.

                                      -32-

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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: March 27, 2003                               By /s/ Edward B. Cloues, II
                                                     -------------------------
                                                        Edward B. Cloues, II
                                                        Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

         Each person in so signing also makes, constitutes and appoints Edward
B. Cloues, II, Chairman and Chief Executive Officer of K-Tron International,
Inc., and Ronald R. Remick, Senior Vice President, Chief Financial Officer and
Treasurer of K-Tron International, Inc., and each of them acting alone, as his
true and lawful attorneys-in-fact, in his name, place and stead, to execute and
cause to be filed with the Securities and Exchange Commission any or all
amendments to this report.

        Signature                  Date                     Capacity
        ---------                  ----                     --------

 /s/ Edward B. Cloues, II     March 27, 2003      Chief Executive Officer
--------------------------                        (principal executive officer)
     Edward B. Cloues, II                         and Chairman of the Board of
                                                  Directors

 /s/ Ronald R. Remick         March 27, 2003      Senior Vice President,
--------------------------                        Chief Financial Officer and
     Ronald R. Remick                             Treasurer (principal financial
                                                  officer)

 /s/ Alan R. Sukoneck         March 27, 2003      Vice President, Chief
--------------------------                        Accounting and Tax Officer
     Alan R. Sukoneck                            (principal accounting officer)


                                      -33-

<PAGE>


         Signature                     Date                    Capacity
         ---------                     ----                    --------

 /s/ Norman Cohen                 March 27, 2003               Director
--------------------------
     Norman Cohen

 /s/ Robert A. Engel              March 27, 2003               Director
--------------------------
     Robert A. Engel

 /s/ Edward T. Hurd               March 27, 2003               Director
--------------------------
     Edward T. Hurd

 /s/ Richard J. Pinola            March 27, 2003               Director
--------------------------
     Richard J. Pinola


                                      -34-

<PAGE>

                                  CERTIFICATION

         I, Edward B. Cloues, II, Chairman and Chief Executive Officer of K-Tron
International, Inc., certify that:

1.       I have reviewed this annual report on Form 10-K of K-Tron
International, Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.       The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)       Designed such disclosure controls and procedures to ensure
         that material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
         controls and procedures as of a date within 90 days prior to the filing
         date of this annual report (the "Evaluation Date"); and

         c)       Presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

         a)       All significant deficiencies in the design or operation of
         internal controls which could adversely affect the registrant's ability
         to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b)       Any fraud, whether or not material, that involves management
         or other employees who have a significant role in the registrant's
         internal controls; and

                                      -35-

<PAGE>

6.       The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 27, 2003                /s/ Edward B. Cloues, II
                                    ------------------------
                                        Edward B. Cloues, II
                                        Chairman and Chief Executive Officer

                                      -36-

<PAGE>

                                  CERTIFICATION

         I, Ronald R. Remick, Senior Vice President, Chief Financial Officer and
Treasurer of K-Tron International, Inc., certify that:

1.       I have reviewed this annual report on Form 10-K of K-Tron
International, Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.       The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)       Designed such disclosure controls and procedures to ensure
         that material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
         controls and procedures as of a date within 90 days prior to the filing
         date of this annual report (the "Evaluation Date"); and

         c)       Presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

         a)       All significant deficiencies in the design or operation of
         internal controls which could adversely affect the registrant's ability
         to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b)       Any fraud, whether or not material, that involves management
         or other employees who have a significant role in the registrant's
         internal controls; and

                                      -37-

<PAGE>

6.       The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 27, 2003                /s/ Ronald R. Remick
                                    --------------------
                                        Ronald R. Remick
                                        Senior Vice President, Chief Financial
                                        Officer and Treasurer

                                       38

<PAGE>

                  K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                       Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

                   (With Independent Auditors' Report Thereon)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE



                                                                           PAGE

Independent Auditors' Report                                                F-1

Previously Issued Report of Independent Public Accountants                  F-2

Consolidated Balance Sheets as of December 28, 2002 and
     December 29, 2001                                                      F-3

Consolidated Statements of Income for the Fiscal Years Ended
     December 28, 2002, December 29, 2001, and December 30, 2000            F-4

Consolidated Statements of Changes in Shareholders' Equity for the
     Fiscal Years Ended December 28, 2002, December 29, 2001, and
     December 30, 2000                                                      F-5

Consolidated Statements of Cash Flows for the Fiscal Years Ended
     December 28, 2002, December 29, 2001, and December 30, 2000            F-6

Notes to Consolidated Financial Statements                                  F-7

SCHEDULE:

Schedule II - Valuation and Qualifying Accounts for the Fiscal Years
     Ended December 28, 2002, December 29, 2001, and December 30, 2000      S-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

         The Board of Directors and Shareholders
         K-Tron International, Inc.:

         We have audited the accompanying consolidated balance sheet of K-Tron
         International, Inc. and subsidiaries as of December 28, 2002, and the
         related consolidated statements of income, changes in shareholders'
         equity, and cash flows for the year then ended, as listed in the
         accompanying index. In connection with our audit of the fiscal 2002
         consolidated financial statements, we also have audited the fiscal 2002
         financial statement schedule as listed in the accompanying index. These
         consolidated financial statements and financial statement schedule are
         the responsibility of the Company's management. Our responsibility is
         to express an opinion on these consolidated financial statements and
         financial statement schedule based on our audit. The fiscal 2001 and
         fiscal 2000 consolidated financial statements and financial statement
         schedule of K-Tron International, Inc. and subsidiaries as listed in
         the accompanying index were audited by other auditors who have ceased
         operations. Those auditors expressed an unqualified opinion on those
         consolidated financial statements and financial statement schedule,
         before the revision described in Note 7 to the consolidated financial
         statements, in their report dated February 6, 2002.

         We conducted our audit in accordance with auditing standards generally
         accepted in the United States of America. Those standards require that
         we plan and perform the audit to obtain reasonable assurance about
         whether the financial statements are free of material misstatement. An
         audit includes examining, on a test basis, evidence supporting the
         amounts and disclosures in the financial statements. An audit also
         includes assessing the accounting principles used and significant
         estimates made by management, as well as evaluating the overall
         financial statement presentation. We believe that out audit provides a
         reasonable basis for our opinion.

         In our opinion, the fiscal 2002 consolidated financial statements
         referred to above present fairly, in all material respects, the
         consolidated financial position of K-Tron International, Inc. and
         subsidiaries as of December 28, 2002, and the results of their
         operations and their cash flows for the fiscal year then ended in
         conformity with accounting principles generally accepted in the United
         States of America. Also, in our opinion, the related fiscal 2002
         financial statement schedule, when considered in relation to the basic
         consolidated financial statements taken as a whole, presents fairly, in
         all material respects, the information set forth therein.

         As discussed above, the fiscal 2001 and fiscal 2000 consolidated
         financial statements and financial statement schedule of K-Tron
         International, Inc. and subsidiaries were audited by other auditors who
         have ceased operations. As described in Note 7, these consolidated
         financial statements have been revised to include the transitional
         disclosures required by Statement of Financial Accounting Standards No.
         142, "Goodwill and Other Intangible Assets," which was adopted by the
         Company as of December 30, 2001. In our opinion, such disclosures for
         fiscal 2001 and fiscal 2000 in Note 7 are appropriate. However, we were
         not engaged to audit, review, or apply any procedures to the fiscal
         2001 and fiscal 2000 consolidated financial statements and financial
         statement schedule of K-Tron International, Inc. and subsidiaries other
         than with respect to such disclosures, and, accordingly, we do not
         express an opinion or any other form of assurance on the fiscal 2001
         and fiscal 2000 consolidated financial statements taken as a whole.

                                 /s/ KPMG LLP

         Philadelphia, Pennsylvania
         February 10, 2003

                                       F-1

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

         To K-Tron International, Inc.:

         We have audited the accompanying consolidated balance sheets of K-Tron
         International, Inc. (a New Jersey corporation) and subsidiaries as of
         December 29, 2001 and December 30, 2000, and the related consolidated
         statements of income, changes in shareholders' equity, and cash flows
         for each of the three fiscal years in the period ended December 29,
         2001. These financial statements and the schedule referred to below are
         the responsibility of the Company's management. Our responsibility is
         to express an opinion on these financial statements and this schedule
         based on our audits.

         We conducted our audits in accordance with auditing standards generally
         accepted in the United States. Those standards require that we plan and
         perform the audit to obtain reasonable assurance about whether the
         financial statements are free of material misstatement. An audit
         includes examining, on a test basis, evidence supporting the amounts
         and disclosures in the financial statements. An audit also includes
         assessing the accounting principles used and significant estimates made
         by management, as well as evaluating the overall financial statement
         presentation. We believe that our audits provide a reasonable basis for
         our opinion.

         In our opinion, the consolidated financial statements referred to above
         present fairly, in all material respects, the financial position of
         K-Tron International, Inc. and subsidiaries as of December 29, 2001 and
         December 30, 2000, and the results of their operations and their cash
         flows for each of the three fiscal years in the period ended December
         29, 2001, in conformity with accounting principles generally accepted
         in the United States.

         Our audits were made for the purpose of forming an opinion on the basic
         financial statements taken as a whole. The schedule listed in the index
         to financial statements as of December 29, 2001 and for each of the
         three fiscal years in the period ended December 29, 2001, is presented
         for purposes of complying with the Securities and Exchange Commission's
         rules and is not part of the basic financial statements. This schedule
         has been subjected to the auditing procedures applied in our audit of
         the basic financial statements and, in our opinion, fairly states in
         all material respects the financial data required to be set forth
         therein in relation to the basic financial statements taken as a whole.

                                                      /s/ Arthur Andersen LLP

         Philadelphia, Pennsylvania
         February 6, 2002

         NOTE: THE REPORT ABOVE IS A COPY OF A PREVIOUSLY ISSUED REPORT AND IT
         HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP (ANDERSEN). CERTAIN
         FINANCIAL INFORMATION FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED
         DECEMBER 29, 2001 WAS NOT REVIEWED BY ANDERSEN AND INCLUDES, AS
         DESCRIBED IN NOTE 7, THE TRANSITIONAL DISCLOSURES REQUIRED BY STATEMENT
         OF FINANCIAL ACCOUNTING STANDARDS NO. 142, "GOODWILL AND OTHER
         INTANGIBLE ASSETS," WHICH WAS ADOPTED BY THE COMPANY AS OF DECEMBER 30,
         2001.

                                       F-2

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                     December 28, 2002 and December 29, 2001

                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                   FISCAL
                                                                           ----------------------
                                ASSETS                                        2002         2001
                                                                           ----------    --------
<S>                                                                        <C>           <C>
Current assets:
    Cash and cash equivalents                                              $   2,694       2,214
    Accounts receivable, net of allowance for doubtful accounts
      of $716 and $687                                                        15,275      14,723
    Inventories                                                                9,318      10,212
    Deferred income taxes                                                        169         326
    Prepaid expenses and other current assets                                  1,775       1,293
                                                                           ---------      ------
               Total current assets                                           29,231      28,768

Property, plant, and equipment, net of accumulated depreciation
    of $27,803 and $25,830                                                    16,170      13,848
Patents, net of accumulated amortization of $719 and $649                        767         799
Goodwill                                                                       2,053       2,053
Notes receivable and other assets                                              2,238       2,176
                                                                           ---------      ------
Total assets                                                               $  50,459      47,644
                                                                           =========      ======

                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt                                      $   2,005       2,186
    Accounts payable                                                           4,934       4,218
    Accrued expenses and other current liabilities                             5,845       4,547
    Accrued commissions                                                        1,532       1,220
    Customer advances                                                            809       1,032
                                                                           ---------      ------
               Total current liabilities                                      15,125      13,203
                                                                           ---------      ------
Long-term debt, net of current portion                                         6,499      12,499
Deferred income taxes                                                            416         381

Commitments and contingencies (note 16)

Series A and B Junior Participating Preferred Shares $0.01 par value.
    Authorized 50,000 shares; issued none                                         --          --

Shareholders' equity:
    Preferred stock, $0.01 par value. Authorized 950,000 shares;
      issued none                                                                 --          --
    Common stock, $0.01 par value. Authorized 50,000,000 shares;
      issued 4,433,342 and 4,432,742 shares                                       44          44
    Paid-in capital                                                           16,701      16,697
    Retained earnings                                                         38,768      35,484
    Cumulative translation adjustment                                            420      (3,167)
                                                                           ---------      ------
                                                                              55,933      49,058
    Treasury stock, 2,002,574 and 2,001,250 shares, at cost                  (27,514)    (27,497)
                                                                           ---------      ------
               Total shareholders' equity                                     28,419      21,561
                                                                           ---------      ------
Total liabilities and shareholders' equity                                 $  50,459      47,644
                                                                           =========      ======
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-3

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                        Consolidated Statements of Income

     Years ended December 28, 2002, December 29, 2001, and December 30, 2000

                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                       FISCAL
                                                     -------------------------------------------
                                                         2002             2001           2000
                                                     ------------      ---------      ----------
<S>                                                  <C>               <C>            <C>
Revenues                                             $     68,231         71,819         84,912
Cost of revenues                                           39,373         43,022         47,010
                                                     ------------      ---------      ----------
           Gross profit                                    28,858         28,797         37,902
                                                     ------------      ---------      ----------
Operating expenses:
    Selling, general, and administrative                   21,533         23,846         25,631
    Research and development                                2,429          2,644          3,182
                                                     ------------      ---------      ----------
                                                           23,962         26,490         28,813
                                                     ------------      ---------      ----------
           Operating income                                 4,896          2,307          9,089

Interest expense                                              500          1,028          1,081
                                                     ------------      ---------      ----------
           Income before income taxes                       4,396          1,279          8,008

Income tax provision                                        1,112            231          2,170
                                                     ------------      ---------      ----------
Net income                                           $      3,284          1,048          5,838
                                                     ============      =========      ==========
Basic earnings per share                             $       1.35           0.43           2.30
Diluted earnings per share                                   1.33           0.43           2.25

Average common shares outstanding                       2,432,000      2,435,000      2,541,000
Average common and common equivalents shares
    outstanding                                         2,461,000      2,465,000      2,595,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-4

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

           Consolidated Statements of Changes in Shareholders' Equity

     Years ended December 28, 2002, December 29, 2001, and December 30, 2000

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                   COMMON STOCK                                  CUMULATIVE       TREASURY STOCK
                              ----------------------    PAID-IN      RETAINED    TRANSLATION  ----------------------
                               SHARES       AMOUNT      CAPITAL      EARNINGS    ADJUSTMENT    SHARES       AMOUNT         TOTAL
                              ---------   ----------    -------      --------    -----------  ---------   ----------       ------
<S>                           <C>         <C>           <C>          <C>         <C>          <C>         <C>              <C>
Balance,

  January 1, 2000             4,374,505   $       44     16,103       28,598       (1,946)    1,447,350   $  (17,589)      25,210

    Comprehensive income:
      Net income                     --           --         --        5,838           --            --           --        5,838
      Translation
        adjustments                  --           --         --           --         (601)           --           --         (601)
                                                                                                                           ------
      Total comprehensive
        income                                                                                                              5,237
                                                                                                                           ------
    Issuance of stock            29,366           --        334           --           --            --           --          334
    Purchase of treasury
      shares                         --           --         --           --           --       520,200       (9,470)      (9,470)
                              ---------   ----------     ------       ------       ------     ---------   ----------       ------
Balance,

  December 30, 2000           4,403,871           44     16,437       34,436       (2,547)    1,967,550      (27,059)      21,311

    Comprehensive income:
      Net income                     --           --         --        1,048           --            --           --        1,048
      Translation
        adjustments                  --           --         --           --         (620)           --           --         (620)
                                                                                                                           ------
      Total comprehensive
        income                                                                                                                 428
                                                                                                                           ------
    Issuance of stock            28,871           --        260           --           --       (10,000)         138          398
    Purchase of treasury
      shares                         --           --         --           --           --        43,700         (576)        (576)
                              ---------   ----------     ------       ------       ------     ---------   ----------       ------
Balance,

  December 29, 2001           4,432,742           44     16,697       35,484       (3,167)    2,001,250      (27,497)      21,561

    Comprehensive income:
      Net income                     --           --         --        3,284           --            --           --        3,284
      Translation
        adjustments                  --           --         --           --        3,587            --           --        3,587
                                                                                                                           ------
      Total comprehensive
        income                                                                                                              6,871
                                                                                                                           ------
    Issuance of stock               600           --          4           --           --            --           --            4
    Purchase of treasury
      shares                         --           --         --           --           --         1,324          (17)         (17)
                              ---------   ----------     ------       ------       ------     ---------   ----------       ------
Balance,
                                                                                                                           ------
  December 28, 2002           4,433,342   $       44     16,701       38,768          420     2,002,574   $  (27,514)      28,419
                              =========   ==========     ======       ======       ======     =========   ==========       ======
</TABLE>

  See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

     Years ended December 28, 2002, December 29, 2001, and December 30, 2000

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                               FISCAL
                                                                   ------------------------------
                                                                     2002        2001       2000
                                                                   --------     ------     ------
<S>                                                                <C>          <C>        <C>
Operating activities:
    Net income                                                     $  3,284      1,048      5,838
    Adjustments to reconcile net income to net
       cash provided by operating activities:
          Loss on disposition of assets                                  --        378         --
          Depreciation and amortization                               2,499      2,921      3,138
          Amortization of deferred gain on sale/leaseback
            transaction                                                  --         --       (271)
          Deferred income taxes                                         192         78        147
          Changes in assets and liabilities:
            Accounts receivable, net                                  1,179      5,269        878
            Inventories                                               1,765        876     (2,427)
            Prepaid expenses and other current assets                  (309)       406       (246)
            Other assets                                                  4        (24)       (43)
            Accounts payable                                            179     (4,811)     3,360
            Accrued expenses and other current liabilities            1,156       (888)    (3,267)
                                                                   --------     ------     ------
               Net cash provided by operating activities              9,949      5,253      7,107
                                                                   --------     ------     ------
Investing activities:
    Proceeds from disposition of assets                                  --        776         --
    Business acquired                                                    --       (621)      (491)
    Capital expenditures                                             (2,967)    (2,144)    (3,699)
    Other                                                               138        (68)       (77)
                                                                   --------     ------     ------
               Net cash used in investing activities                 (2,829)    (2,057)    (4,267)
                                                                   --------     ------     ------
Financing activities:
    Net (payments) borrowings under notes payable to banks               --        286     (2,528)
    Proceeds from issuance of long-term debt                            821        412      7,950
    Principal payments on long-term debt                             (7,859)    (1,955)    (1,634)
    Purchase of treasury stock                                          (17)      (576)    (9,470)
    Proceeds from issuance of common stock                                4        398        334
                                                                   --------     ------     ------
               Net cash used in financing activities                 (7,051)    (1,435)    (5,348)
                                                                   --------     ------     ------
Effect of exchange rate changes on cash and cash equivalents            411       (100)       (32)
                                                                   --------     ------     ------
               Net increase (decrease) in cash and cash
                  equivalents                                           480      1,661     (2,540)

Cash and cash equivalents:
    Beginning of year                                                 2,214        553      3,093
                                                                   --------     ------     ------
    End of year                                                    $  2,694      2,214        553
                                                                   ========     ======     ======
Supplemental disclosures of cash flow information:
    Cash paid during the year for:
       Interest                                                    $    575        944        945
       Income taxes (refund)                                            (84)       268      2,225
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

(1)      NATURE OF OPERATIONS

         K-Tron International, Inc. and its subsidiaries (the Company) design,
         produce, market and service material handling equipment and systems for
         a wide variety of industrial markets. The Company has manufacturing
         facilities in the United States, Switzerland, the United Kingdom and
         Canada, and its equipment is sold throughout the world.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a)      PRINCIPLES OF CONSOLIDATION

                  The consolidated financial statements include the accounts of
                  the Company and its subsidiaries, all of which are wholly
                  owned. All material intercompany accounts and transactions
                  have been eliminated.

         (b)      FISCAL YEAR

                  The Company's fiscal year is reported on a fifty-two/fifty-
                  three week period. Fiscal years ended December 28, 2002
                  (referred to herein as 2002), December 29, 2001 (referred to
                  herein as 2001), and January 1, 2001 (referred to herein as
                  2000) each include fifty-two weeks.

         (c)      CASH AND CASH EQUIVALENTS

                  Cash equivalents represent all highly liquid, interest-bearing
                  investments purchased with original maturities of three months
                  or less.

         (d)      INVENTORIES

                  Inventories are stated at the lower of cost (first-in,
                  first-out method) or market.

         (e)      PROPERTY, PLANT, AND EQUIPMENT

                  Property, plant, and equipment is carried at cost and is
                  depreciated on a straight-line basis over the following
                  estimated useful lives: buildings and improvements, 30 to 50
                  years; automotive equipment, 3 years; machinery and equipment,
                  3 to 10 years; and furniture and fixtures, including computer
                  equipment, 5 to 7 years. Leasehold improvements are generally
                  amortized over the shorter of the estimated useful lives of
                  such assets or the remaining term of the applicable lease.

         (f)      PATENTS

                  Patents are stated at cost less accumulated amortization. The
                  costs of patents are generally amortized on a straight-line
                  basis over the remaining economic life of the respective
                  asset, but in no event longer than the remaining legal life.

         (g)      GOODWILL

                  When a company is acquired, the difference between the fair
                  value of its net assets, including intangibles, and the
                  purchase price is goodwill. Goodwill is recorded as an asset
                  on the balance sheet.

                                      F-7                            (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

                  In June 2001, the Financial Accounting Standards Board (FASB)
                  issued Statement of Financial Accounting Standards (SFAS) No.
                  142, "Goodwill and Other Intangible Assets." SFAS No. 142
                  addresses financial accounting and reporting for acquired
                  goodwill and other intangible assets. The Statement provides
                  that goodwill and intangible assets with indefinite lives are
                  no longer amortized on a recurring basis but instead are
                  subject to impairment testing at least annually. The Company
                  adopted SFAS No. 142 on December 30, 2001. Accordingly, the
                  Company no longer amortizes goodwill. In accordance with the
                  provisions of SFAS No. 142, the Company performed impairment
                  tests on goodwill, which indicated no impairment. Disclosures
                  required by SFAS No. 142 are presented in Note 7.

                  Prior to December 30, 2001, the Company amortized goodwill on
                  a straight-line basis over 15 to 30 years.

         (h)      INCOME TAXES

                  Income taxes are accounted for in accordance with SFAS No.
                  109, "Accounting for Income Taxes." Deferred income taxes are
                  provided for differences between amounts shown for financial
                  reporting purposes and those included with tax return filings
                  that will reverse in future periods. Additionally, the effects
                  of income taxes are measured based upon enacted tax laws and
                  rates.

         (i)      REVENUE RECOGNITION

                  Revenue is recognized when risk of ownership and title to the
                  product transfers to the customer, which usually occurs at the
                  time goods are shipped.

         (j)      RESEARCH AND DEVELOPMENT

                  Expenditures for research, development and engineering of
                  products are expensed as incurred.

         (k)      FOREIGN CURRENCY

                  Assets and liabilities denominated in foreign currencies are
                  translated to U.S. dollars at current rates of exchange at
                  year-end. Revenues and expenses are translated at average
                  rates prevailing during the year. The Company incurred foreign
                  currency transaction losses of approximately $604,000,
                  $160,000, and $80,000 for 2002, 2001, and 2000, respectively.
                  Translation gains and losses are recorded as a separate
                  component of shareholders' equity.

         (l)      STOCK OPTION ACCOUNTING

                  The Company applies the intrinsic-value-based method of
                  accounting prescribed by Accounting Principles Board (APB)
                  Opinion No. 25, "Accounting for Stock Issued to Employees,"
                  and related interpretations including FASB Interpretation No.
                  44, "Accounting for Certain Transactions involving Stock
                  Compensation, an interpretation of APB Opinion No. 25," issued
                  in March 2000, to account for its stock options. Reference
                  should be made to Footnote 11 for additional information
                  regarding the Company's equity compensation plans.

         (m)      FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The carrying value of financial instruments such as cash,
                  accounts receivable and payable, and other current assets and
                  liabilities approximates their fair value, based on the
                  short-term nature of these

                                      F-8                            (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

                  instruments. The carrying amount of the Company's long-term
                  debt and notes payable approximates their fair value. Their
                  fair value is estimated based on the current rates offered to
                  the Company for debt and notes payable of the same remaining
                  maturities.

         (n)      USE OF ESTIMATES

                  The preparation of consolidated financial statements in
                  conformity with accounting principles generally accepted in
                  the United States requires management to make estimates and
                  assumptions that affect the reported amounts of assets and
                  liabilities and disclosure of contingent assets and
                  liabilities at the date of the consolidated financial
                  statements and the reported amounts of revenues and expenses
                  during the reporting period. Actual results could differ from
                  these estimates. Judgments and estimates of uncertainties are
                  required in applying the Company's accounting policies in
                  certain areas. Following are some of the areas requiring
                  significant judgments and estimates: determination of an
                  asset's useful life, estimates of allowances for bad debts,
                  cash flow and valuation assumptions in performing asset
                  impairment tests of long-lived assets, estimate of
                  realizability of deferred tax assets, warranty cost, and legal
                  contingencies.

         (o)      RECENTLY ISSUED ACCOUNTING STANDARDS

                  In June 2001, the FASB issued SFAS No. 143, "Accounting for
                  Asset Retirement Obligations." SFAS No. 143 addresses
                  financial accounting and reporting for obligations associated
                  with the retirement of tangible long-lived assets and the
                  associated asset retirement costs. The Company is required to
                  adopt the provisions of this pronouncement no later than the
                  beginning of fiscal 2003. The Company does not believe this
                  Statement will have an effect on the Company's financial
                  statements.

                  In August 2001, the FASB issued SFAS No. 144, "Accounting for
                  the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
                  addresses financial accounting and reporting for the
                  impairment or disposal of long-lived assets. The Company was
                  required to adopt the provisions of this pronouncement at the
                  beginning of fiscal 2002. The adoption had no effect on the
                  Company's financial statements.

(3)      SUBSEQUENT EVENT

         On January 2, 2003, the Company acquired all of the stock of
         privately-held Pennsylvania Crusher Corporation. The purchase price
         paid for the Pennsylvania Crusher Corporation stock was $23.5 million,
         plus a post-closing adjustment of $205,000 based on Pennsylvania
         Crusher Corporation's consolidated shareholders' equity at December 31,
         2002. Of this amount, $19.7 million was paid in cash and $4.0 million
         was in unsecured, promissory notes which are payable in equal, annual
         installments on January 2 in each of 2005, 2006 and 2007. The excess of
         the purchase price over the carrying value of the net assets acquired
         was allocated as follows (in millions): Inventory - $0.3, PP&E - $4.7,
         Patents - $1.3, Trademarks and tradenames - $1.9, and Other identified
         intangibles - $7.1.

(4)      DISPOSITION OF ASSETS

         On July 31, 2001, the Company sold its Hasler heavy feeder business to
         its largest distributor of Hasler equipment and recorded a pretax loss
         of $620,000. The assets sold were primarily inventory and fixed

                                      F-9                            (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         assets. The buyer took over operation of the Hasler leased sales office
         in Neuchatel, Switzerland, and entered into an agreement to lease a
         Company-owned facility in Lengerich, Germany.

         The purchase price consisted of a combination of one million Swiss
         francs cash (approximately $594,000), promissory notes in the principal
         amount of three million seventeen thousand three hundred twenty seven
         Swiss francs (approximately $1,792,000) which bear interest and
         amortize over seven years, and a less than 20% equity position in the
         buyer, which notes and equity interest are included in other assets.
         The Company retained all of the Hasler accounts receivable and payable
         at the time of the sale as well as a building in Lengerich, Germany
         which is being leased to the buyer. The buyer has made all required
         payments on the promissory notes, and the principal amount had been
         reduced to 2,640,000 Swiss francs at the end of 2002 ($1,900,000). The
         U.S. dollar numbers mentioned in this paragraph reflect the Swiss
         franc/U.S. dollar exchange rate at the dates referred to, which were
         July 31, 2001 and December 28, 2002.

         In December 2001, the Company sold its Swiss machine and welding shops
         and recorded a pretax gain of $242,000. The purchase price consisted of
         a combination of three hundred thousand Swiss francs cash
         (approximately $182,000) and a seven hundred thousand Swiss franc
         obligation (approximately $420,000), which is supported by a bank
         guaranty.

         Both the loss on the sale of Hasler and the gain on the Swiss machine
         and welding shops are included in selling, general, and administrative
         expenses on the consolidated statements of income.

(5)      INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                        2002           2001
                      -------         ------
                          (In thousands)
<S>                   <C>             <C>
Components            $ 8,064          8,416
Work-in-process         1,151          1,692
Finished goods            103            104
                      -------         ------
                      $ 9,318         10,212
                      =======         ======
</TABLE>

                                      F-10                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

(6)      PROPERTY, PLANT, AND EQUIPMENT

         Property, plant, and equipment consists of the following:

<TABLE>
<CAPTION>
                                                             2002           2001
                                                          ----------      --------
                                                               (In thousands)
<S>                                                       <C>             <C>
Land                                                      $    1,198        1,015
Buildings and improvements                                    18,349       16,256
Automotive equipment                                             479          760
Machinery and equipment                                        8,596        9,801
Furniture and fixtures, including computer equipment          15,351       11,846
                                                          ----------      -------
                                                              43,973       39,678

Less accumulated depreciation and amortization               (27,803)     (25,830)
                                                          ----------      -------
                                                          $   16,170       13,848
                                                          ----------      -------
</TABLE>

         Depreciation of property, plant, and equipment for 2002, 2001, and 2000
         was $2,282,000, $2,496,000, and $2,576,000, respectively.

(7)      GOODWILL

         The following table presents the adjusted net income and adjusted per
         share amounts for the years ended December 29, 2001 and December 30,
         2000, as if goodwill had not been amortized. The total goodwill
         amortization is shown after-tax in the following table.

<TABLE>
<CAPTION>
                                                       2002            2001           2000
                                                     -------          -----          -----
                                                        (In thousands, except per share)
<S>                                                  <C>              <C>            <C>
NET INCOME
As reported                                          $ 3,284          1,048          5,838
Effect of goodwill amortization                           --            345            487
                                                     -------          -----          -----
As adjusted                                            3,284          1,393          6,325

BASIC EARNINGS PER SHARE
As reported                                             1.35           0.43           2.30
Effect of goodwill amortization                           --           0.14           0.19
                                                     -------          -----          -----
As adjusted                                             1.35           0.57           2.49

DILUTED EARNINGS PER SHARE
As reported                                             1.33           0.43           2.25
Effect of goodwill amortization                           --           0.14           0.19
                                                     -------          -----          -----
As adjusted                                             1.33           0.57           2.44
</TABLE>

                                      F-11                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

(8)      ACCRUED WARRANTY

         The Company offers a product warranty on a majority of its products.
         Warranty is accrued as a percentage of sales on a monthly basis and is
         included in accrued expenses and other current liabilities. The
         following is a rollforward of accrued warranty for 2002 and 2001.

<TABLE>
<CAPTION>
                                       2002             2001
                                     --------          ------
                                          (In thousands)
<S>                                  <C>               <C>
Beginning balance                    $    662             770
Accrual                                 1,151           1,583
Expense                                (1,216)         (1,669)
Foreign exchange adjustment                90             (22)
                                     --------          ------
Ending balance                       $    687             662
                                     ========          ======
</TABLE>

(9)      NOTES PAYABLE TO BANKS AND LONG-TERM DEBT

         The self-tender offer discussed in Note 11 was financed by using
         $1,194,000 of available cash, a $7 million term loan obtained from a
         U.S. bank on February 4, 2000 and $950,000 from an existing $5 million
         line of credit with the same bank. The $7 million term loan was
         originally payable in equal monthly installments of principal plus
         accrued interest over a period of four years which commenced May 1,
         2000 and was secured by liens on the same collateral securing other
         loans from the same U.S. bank. One-half of the outstanding term loan
         bore interest at the fixed rate of 8.23% for the first two years and
         from February 4, 2002 until the refinancing of this loan on December
         31, 2002 was subject to a variable rate of interest equal to one month
         LIBOR plus 1.85% (3.23% at December 28, 2002). The other half was
         subject to a variable rate of interest equal to one month LIBOR plus
         1.85% (3.23% at December 28, 2002). As of December 28, 2002, the
         Company had a total of $2,188,000 outstanding under the term loan
         facility. On December 30, 2002, the Company refinanced the outstanding
         balance and borrowed an additional $5,000,000 to finance the
         acquisition discussed in Note 3. Both the original term loan facility
         and the refinanced facility require that the Company maintain certain
         specified ratios of consolidated debt to net worth and minimum annual
         debt coverage, and a minimum level of net worth. At December 28, 2002,
         the Company was in compliance with these covenants.

         At December 28, 2002, the Company's Swiss subsidiary had separate
         credit facilities totaling 17 million Swiss francs (approximately $12.2
         million) with three Swiss banks. The Company's real property in
         Switzerland is pledged as collateral. As of December 28, 2002, there
         were long-term outstanding borrowings of 3.8 million Swiss francs
         (approximately $2.7 million) under these facilities, with 9.2 million
         Swiss francs (approximately $6.7 million) available for short-term
         borrowings and 4 million Swiss francs (approximately $2.8 million)
         available for letters of credit and customer guarantees. The annual
         interest rates on the long-term borrowings range from 2.0% to 3.5%.

         In June 1998, the Company's U.S. manufacturing subsidiary refinanced
         its 20-year mortgage with a U.S. lender for $2.7 million at an annual
         interest rate of 7.625%. In July 2002, the annual interest rate was
         reduced to 6.45%. Beginning August 1, 2002, the loan is repayable in
         eighty-three monthly principal and interest payments of $23,784 with a
         final payment of $1,042,000 plus interest due on August 1, 2009. As of
         December 28, 2002, the outstanding mortgage amount was $2,197,000.

                                      F-12                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         Also in June 1998, the U.S. manufacturing subsidiary entered into a
         two-year secured revolving credit facility with a U.S. lender that
         provides for a maximum borrowing of $5.0 million. This credit facility
         as of December 28, 2002 has a maximum borrowing of $4.0 million and has
         been extended through July 2004. As of December 28, 2002, there were no
         outstanding borrowings under this credit facility, and $4,000,000 was
         available for future borrowings. The annual interest rate as of
         December 28, 2002 was 4.0%.

         Under the terms of the various U.S. credit facilities, fixed assets
         with a book value of $2,484,000 and accounts receivable and inventory
         with a book value of $7,830,000 are pledged as collateral. In addition,
         fixed assets with a book value of $6,082,000 are pledged as collateral
         under the Swiss credit facilities.

         Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                             2002           2001
                                                          ----------       ------
                                                                (In thousands)
<S>                                                       <C>              <C>
U.S. mortgage, interest at 6.45%                          $    2,197        2,329
U.S. line of credit, interest at 4.0%                             --        1,125
U.S. term facility, interest at 3.23%                          2,188        4,083
Swiss facilities, interest at market rates 2.0% to 3.5%        2,697        6,124
Other                                                          1,422        1,024
                                                          ----------       ------
                                                               8,504       14,685
Less current portion                                          (2,005)      (2,186)
                                                          ----------       ------
                                                          $    6,499       12,499
                                                          ----------       ------
</TABLE>

         Future annual payments required on long-term debt are as follows:

<TABLE>
<CAPTION>
                                                 AMOUNT
                                             -------------
                                             (In thousands)
<S>                                          <C>
Fiscal year:
2003                                          $    2,005
2004                                               4,346
2005                                                 438
2006                                                 180
2007                                                 191
Thereafter                                         1,344
                                              ----------
                                              $    8,504
                                              ----------
</TABLE>

(10)     EMPLOYEE BENEFIT PLANS

         The Company has a profit-sharing and thrift plan (the Plan) for all
         U.S. employees who have worked for the Company for at least six months
         and who are employed at the end of the year. All Company contributions
         to the Plan are at the discretion of the board of directors. The
         Company's profit-sharing contribution, if any, vests over a five-year
         period. In addition, employees may voluntarily participate in the
         thrift plan and authorize payroll deductions ranging from 1% to 50% of
         their compensation. Related

                                      F-13                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         matching Company contributions are vested immediately. The board of
         directors authorized matching contributions of 100% of the first 6% of
         participants' compensation for 2002, 2001, and 2000. The board of
         directors did not authorize any 2002, 2001, or 2000 contribution to the
         profit-sharing portion of the Plan.

         Substantially all foreign employees participate in defined contribution
         group pension plans. Contributions are paid by the employee and
         employer at percentages that vary according to age and other factors.

         The Company expense associated with the thrift plan for 2002, 2001, and
         2000 was $375,000, $383,000, and $419,000, respectively. The foreign
         pension expense for 2002, 2001, and 2000 was $776,000, $979,000, and
         $769,000, respectively.

         In June 1981, the Company adopted an employee stock purchase plan under
         which eligible employees of the Company may elect to participate
         through payroll deductions for up to 10% of their gross compensation.
         Such deductions are used to purchase common stock of the Company at a
         price equal to 85% of the market value, not to exceed $25,000 of stock
         in any year. Under this plan, the Company issued 6,910 shares of common
         stock at an average price of $10.41 in 2001 and 16,250 shares of common
         stock at an average price of $12.38 in 2000. This plan expired at the
         end of June 2001.

(11)     SHAREHOLDERS' EQUITY

         In 2001, the board of directors determined the rights on 50,000 shares
         of the authorized preferred stock as the Series B Junior Participating
         Preferred Shares (the Series B Preferred Shares). Each one
         one-hundredth of a share of the Series B Preferred Shares carries
         voting and dividend rights that are equivalent to one share of the
         common stock. The voting and dividend rights are subject to adjustment
         in the event of a dividend on common stock which is payable in common
         stock or any subdivisions or combinations with respect to the
         outstanding shares of common stock. At the same time as the Series B
         Preferred Shares were established, the number of Series A Junior
         Participating Preferred Shares were reduced from 50,000 to 0 and
         returned to authorized but unissued shares of the Company's preferred
         stock. The board of directors has not determined the rights on the
         remaining 950,000 shares of the authorized preferred stock as of
         December 28, 2002.

         The Company had a stock option plan for nonemployee directors (the 1988
         plan) which expired in November 1998, but under which option grants
         remain outstanding. The plan provided that each eligible director was
         granted a single option to purchase 10,000 shares of the Company's
         common stock at a price equal to the fair market value at the date of
         grant. The aggregate number of shares which could be issued under the
         plan was 100,000. These options had a term of ten years and became
         exercisable in four equal annual installments beginning on the date of
         the grant.

         The Company's 1986 Stock Option Plan, as amended (the 1986 plan),
         expired in January 1996, but some option grants under the 1986 plan
         remain outstanding. Key employees of and consultants to the Company
         could be granted options to purchase shares of the Company's common
         stock. These options could be either incentive stock options or
         nonqualified stock options. The Stock Option Committee under the 1986
         plan determined the term of each option, but no option could be
         exercisable more than ten years from the date the option was granted.
         The Stock Option Committee also determined the option exercise price
         per share.

                                      F-14                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         In 1996, the Company adopted the 1996 Equity Compensation Plan (the
         1996 plan), with features similar to the 1986 plan, except that the
         maximum number of shares that may be issued is 450,000. The 1996 plan
         also permits the awarding of restricted stock grants. The 1996 plan was
         amended in 1998, increasing the maximum number of shares that may be
         issued to 600,000 and allowing nonemployee directors to receive grants
         thereunder at fair market value. The 1996 plan is administered by the
         Stock Option Committee selected by the board of directors.

         With respect to incentive stock options, the exercise price must at
         least equal the fair market value of a share of common stock as of the
         date the option was granted.

         A summary of the Company's stock option and restricted stock grant
         activity for the plans referred to above for the three fiscal years
         ended December 28, 2002 is as follows:

<TABLE>
<CAPTION>
                                                                        AVERAGE
                                                        OUTSTANDING      PRICE         AVAILABLE
                                                          SHARES       PER SHARE        SHARES
                                                        -----------    ---------       ---------
<S>                                                     <C>            <C>             <C>
Balance, January 1, 2000                                  357,667                       319,834
   Granted                                                 12,500      $   15.80        (12,500)
   Canceled                                                (3,834)         15.38          3,334
   Exercised                                              (13,116)          9.02             --
                                                          -------                      --------
Balance, December 30, 2000                                353,217                       310,668
   Granted                                                136,000          12.47       (136,000)
   Canceled                                               (18,867)         16.29         16,667
   Exercised                                              (24,149)          9.46             --
   Restricted stock granted                                10,000             --        (10,000)
   Restricted stock exercised                             (10,000)            --             --
                                                          -------                      --------
Balance, December 29, 2001                                446,201                       181,335
   Granted                                                  4,000          13.75         (4,000)
   Canceled                                               (23,834)         14.28         13,834
   Exercised                                                 (600)          6.25             --
                                                          -------                      --------
Balance, December 28, 2002                                425,767                       191,169
                                                          -------                      --------
</TABLE>

         As of December 28, 2002, thirteen employees held options under the 1986
         plan for an aggregate of 42,600 shares at exercise prices ranging from
         $6.25 to $12.50 with a weighted average price of $8.20. These options
         expire at varying times through 2005. As of December 28, 2002, thirty
         employees and four nonemployee directors held options under the 1996
         plan for an aggregate of 373,167 shares at exercise prices from $12.20
         to $19.00 with a weighted average price of $14.80. These options expire
         at varying times through 2012. As of December 28, 2002, one nonemployee
         director held an option under the 1988 plan for an aggregate of 10,000
         shares at an exercise price of $9.25. This option expires in 2004.

         On March 23, 2000, the Company completed a self-tender offer begun on
         February 16, 2000 and repurchased 508,000 shares of its common stock at
         $18.00 per share for a total cost of $9.249 million

                                      F-15                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         (including $105,000 of costs associated with the tender offer). The
         share purchase represented approximately 17.3% of the common stock then
         outstanding. In the fourth quarter of 2000, the Company also
         repurchased 12,200 shares of its common stock for a total purchase
         price of $221,000 or an average of $18.11 a share.

         PRO FORMA INFORMATION

         As permitted under SFAS No. 123, as amended by SFAS No. 148, the
         Company has elected to continue to account for compensation cost using
         the intrinsic value-based method of accounting as prescribed by
         Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
         Issued to Employees." SFAS No. 123 requires the Company to disclose pro
         forma net income and pro forma earnings per share amounts, as if
         compensation expense were recognized for options granted after fiscal
         year 1994. Using this approach, net income and earnings per share would
         have been reduced to the pro forma amounts indicated in the table:

<TABLE>
<CAPTION>
                                                       2002            2001          2000
                                                     -------          -----          -----
                                                       (In thousands, except per share)
<S>                                                  <C>              <C>            <C>
Net income - as reported                             $ 3,284          1,048          5,838
Net income - pro forma                                 2,941            702          5,454
Basic earnings per share - as reported                  1.35           0.43           2.30
Basic earnings per share - pro forma                    1.21           0.29           2.15
Diluted earnings per share - as reported                1.33           0.43           2.25
Diluted earnings per share - pro forma                  1.20           0.28           2.10
</TABLE>

         This pro forma impact may not be representative of the effects for
         future years, and could increase if additional options are granted and
         amortized over the vesting period. For disclosure purposes, the fair
         value of each stock option granted is estimated on the date of grant
         using the Black-Scholes option-pricing model with the following
         weighted average assumptions: no dividend yield; expected volatility of
         28.04%, 32.46%, and 29.76%; risk-free interest rate of 5.02%, 5.20%,
         and 5.59%; and expected life of 6.00 years, 7.47 years, and 6.00 years
         in 2002, 2001, and 2000, respectively.

         The Black-Scholes option-pricing model was developed for use in
         estimating the fair value of traded options that have no vesting
         restrictions and are fully transferable. In addition, option-pricing
         models require the input of subjective assumptions, including the
         expected stock price volatility.

(12)     SHAREHOLDER RIGHTS PLAN

         The Company has a Shareholder Rights Plan (the Rights Plan) which was
         adopted by the board of directors on October 16, 2001 and which
         replaced an earlier plan that was adopted on October 3, 1991 and
         expired on October 14, 2001. The new Rights Plan provides for the
         distribution as a dividend of one preferred stock purchase right (a
         Right) on each share of the Company's common stock outstanding as of
         the close of business on October 29, 2001, and thereafter each share of
         the Company's common stock will have a Right associated with it. The
         new Rights will expire on October 29, 2011, and each Right will entitle
         a shareholder to purchase one one-hundredth of a share of Series B
         Junior Participating Preferred Stock upon the terms specified in the
         Rights Plan. The Rights generally will be exercisable only if a person
         or group acquires beneficial ownership of 15% or more of the Company's
         common stock or commences a tender or

                                      F-16                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         exchange offer upon consummation of which such person or group would
         beneficially own 15% or more of the Company's common stock, in each
         case without the approval of the Company's board of directors.

(13)     INCOME TAXES

         Following are the domestic and foreign components of income before
         income taxes:

<TABLE>
<CAPTION>
                                                       2002            2001           2000
                                                     --------          -----          -----
                                                                  (In thousands)
<S>                                                  <C>               <C>            <C>
United States                                        $  1,143            774          6,051
Foreign                                                 3,253            505          1,957
                                                     --------          -----          -----
Income before income tax                             $  4,396          1,279          8,008
                                                     ========          =====          =====
</TABLE>

The income tax provision (benefit) consists of the following:

<TABLE>
<CAPTION>
                                                       2002            2001           2000
                                                     --------          -----          -----
                                                                  (In thousands)
<S>                                                  <C>               <C>            <C>
Current:
   Federal and state                                 $    204            101          2,001
   Foreign                                                716             52             22
                                                     --------          -----          -----
         Total current                                    920            153          2,023
                                                     --------          -----          -----
Deferred:
   Federal and state                                      192             71            169
   Foreign                                                 --              7            (22)
                                                     --------          -----          -----
         Total deferred                                   192             78            147
                                                     --------          -----          -----
Total income tax provision                           $  1,112            231          2,170
                                                     ========          =====          =====
</TABLE>

                                      F-17                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         Significant components of the deferred tax accounts at December 28,
         2002 and December 29, 2001 are as follows

<TABLE>
<CAPTION>
                                                             2002            2001
                                                          ----------        ------
                                                              (In thousands)
<S>                                                       <C>               <C>
Deferred tax assets:
   Depreciation                                           $       --           30
   Accrued liabilities                                           353          218
   Net operating loss carryforwards                              625          537
   Inventory basis differences                                   156           86
   Other                                                         246          403
                                                          ----------        -----
                                                               1,380        1,274
   Valuation allowance                                          (551)        (475)
                                                          ----------        -----
         Total assets                                            829          799
                                                          ----------        -----
Deferred tax liabilities
   Depreciation                                                 (878)        (519)
   Other                                                        (198)        (335)
                                                          ----------        -----
         Total liabilities                                    (1,076)        (854)
                                                          ----------        -----
Net deferred liability                                    $     (247)         (55)
                                                          ==========        =====
</TABLE>

         Foreign and U.S. state operating loss carryforwards as of December 28,
         2002 were $366,000 and $4.9 million, respectively. Foreign operating
         losses have an unlimited carryforward period. U.S. state operating
         losses are available through 2009.

         A valuation allowance is provided when it is more likely than not that
         some portion or all of the deferred tax assets will not be realized.
         The Company has established valuation allowances for all foreign and
         state net operating loss carryforwards and certain other deferred tax
         assets for which realization is dependent on future taxable earnings.

                                      F-18                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         A reconciliation of the provision for income taxes and the amounts that
         would be computed using the statutory federal income tax rates is set
         forth below:

<TABLE>
<CAPTION>
                                                       2002              2001          2000
                                                     --------           ------         -----
                                                                    (In thousands)
<S>                                                  <C>                <C>           <C>
Income tax provision on income before
   income tax at statutory federal
   income tax rates                                  $  1,496            435          2,723
Foreign tax rate differential                            (210)            --           (170)
State tax, net of federal benefit                          61              2             97
U.S. and foreign permanent tax differences                (44)           (80)            34
Changes in valuation allowance                           (206)          (139)          (473)
Other                                                      15             13            (41)
                                                     --------           ----          -----
Income tax provision                                 $  1,112            231          2,170
                                                     ========           ====          =====
</TABLE>

(14)     RELATED PARTY TRANSACTIONS

         During 2002, the Company sold equipment to an entity in which it has a
         cost based investment. Sales during 2002 were $512,000 with $190,000 in
         accounts receivable at December 28, 2002.

(15)     EARNINGS PER SHARE

         The 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.

                                      F-19                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         The Company's Basic and Diluted Earnings per Share are calculated as
         follows:

<TABLE>
<CAPTION>
                                                      NET INCOME
                                                       AVAILABLE
                                                       TO COMMON                        EARNINGS
                                                     SHAREHOLDERS        SHARES         PER SHARE
                                                     ------------        ------         ---------
<S>                                                  <C>               <C>              <C>
2002:
   Basic                                             $  3,284,000      2,432,000           1.35
   Common share equivalent
      of options issued                                        --         29,000          (0.02)
                                                     ------------      ---------          -----
   Diluted                                           $  3,284,000      2,461,000           1.33
                                                     ============      =========          =====

2001:
   Basic                                             $  1,048,000      2,435,000           0.43
   Common share equivalent
      of options issued                                        --         30,000             --
                                                     ------------      ---------          -----
   Diluted                                           $  1,048,000      2,465,000           0.43
                                                     ============      =========          =====

2000:
   Basic                                             $  5,838,000      2,541,000           2.30
   Common share equivalent
      of options issued                                        --         54,000          (0.05)
                                                     ------------      ---------          -----
   Diluted                                           $  5,838,000      2,595,000           2.25
                                                     ============      =========          =====
</TABLE>

         Diluted earnings per common share are based on the weighted average
         number of common and common equivalent shares outstanding during each
         year. Such average number includes 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.

(16)     COMMITMENTS AND CONTINGENCIES

         The Company leases certain office and plant facilities and equipment
         under noncancelable leases. These leases expire in periods ranging from
         one to five years and, in certain instances, provide for purchase
         options.

                                      F-20                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

         As of December 28, 2002, future minimum payments under operating leases
         having noncancelable terms in excess of one year are summarized below
         (in thousands):

<TABLE>
<CAPTION>
                                         OPERATING
                                          LEASES
                                         ---------
                              <S>        <C>
                              2003       $    922
                              2004            494
                              2005            166
                              2006             71
                              2007             14
                                         --------
                                         $  1,667
                                         ========
</TABLE>

         Rent expense for 2002, 2001, and 2000 was $427,000, $445,000, and
         $601,000, respectively.

         The Company has employment contracts with seven executives. Except in
         one case when two year's advance notice is required, these contracts
         may be terminated by the Company on one year's advance notice. Under
         the agreements, each individual is guaranteed minimum compensation over
         the contract period. As of December 28, 2002, the estimated future
         obligation under these contracts is $1,899,000.

         The Company in the normal course of business has commitments, lawsuits,
         contingent liabilities, and claims. However, the Company does not
         expect that any sum it may have to pay in connection with these matters
         will have a material adverse effect on its consolidated financial
         position or results of operations.

(17)     MANAGEMENT SEGMENT INFORMATION

         The 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 America and Western Europe.

                                      F-21                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 28, 2002 and December 29, 2001

<TABLE>
<CAPTION>
                                              NORTH        WESTERN
                                             AMERICA        EUROPE    ELIMINATIONS  CONSOLIDATED
                                           ----------      -------    ------------  ------------
                                                             (In thousands)
<S>                                        <C>             <C>        <C>           <C>
2002:
  Revenues:
  Sales to unaffiliated customers          $   28,727       39,504                       68,231
  Sales to affiliates                           3,374        2,061       (5,435)             --
                                           ----------       ------       ------      ----------
Total sales                                $   32,101       41,565       (5,435)         68,231
                                           ==========       ======       ======      ==========
Operating income                           $    1,926        2,906           64           4,896
Interest expense                                                                           (500)
                                                                                     ----------
Income before income taxes                                                           $    4,396
                                                                                     ==========
Capital expenditures                       $    1,995          972                        2,967
Depreciation and amortization expense           1,248        1,251                        2,499
Total assets                                   18,542       31,917                       50,459

2001:
  Revenues:
  Sales to unaffiliated customers          $   29,922       41,897           --          71,819
  Sales to affiliates                           4,443        1,865       (6,308)             --
                                           ----------       ------       ------      ----------
Total sales                                $   34,365       43,762       (6,308)         71,819
                                           ==========       ======       ======      ==========
Operating income                           $    1,537          706           64           2,307
Interest expense                                                                         (1,028)
                                                                                     ----------
Income before income taxes                                                           $    1,279
                                                                                     ==========
Capital expenditures                       $    1,409          735                        2,144
Depreciation and amortization expense           1,147        1,774                        2,921
Total assets                                   18,981       28,663                       47,644

2000:
  Revenues:
  Sales to unaffiliated customers          $   40,116       44,796           --          84,912
  Sales to affiliates                           4,007        3,014       (7,021)             --
                                           ----------       ------       ------      ----------
Total sales                                $   44,123       47,810       (7,021)         84,912
                                           ==========       ======       ======      ==========
Operating income                           $    6,774        2,186          129           9,089
Interest expense                                                                         (1,081)
                                                                                     ----------
Income before income taxes                                                           $    8,008
                                                                                     ==========
Capital expenditures                       $    1,016        2,683                        3,699
Depreciation and amortization expense           1,198        1,940                        3,138
Total assets                                   18,900       35,521                       54,421
</TABLE>

                                      F-22                           (Continued)

<PAGE>

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                     December 29, 2002 and December 29, 2001

(18)     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         The following table summarizes unaudited quarterly financial data for
         2002 and 2001 (in thousands, except share data):

<TABLE>
<CAPTION>
                                                              2002 BY QUARTER
                                           -------------------------------------------------
                                             FIRST          SECOND        THIRD       FOURTH
                                           ----------       ------       -------      ------
<S>                                        <C>              <C>          <C>          <C>
Revenues                                   $   16,778       16,877       16,905       17,671
Gross profit                                    7,136        7,194        6,936        7,592
Net income                                        751          814          836          883
Basic earnings
   per share                                     0.31         0.33         0.34         0.36
Diluted earnings
   per share                                     0.31         0.33         0.34         0.36
</TABLE>

<TABLE>
<CAPTION>
                                                              2001 BY QUARTER
                                           -------------------------------------------------
                                             FIRST          SECOND        THIRD       FOURTH
                                           ----------       ------       -------      ------
<S>                                        <C>              <C>          <C>          <C>
Revenues                                   $   21,558       19,318       16,081       14,862
Gross profit                                    8,900        7,683        6,365        5,849
Net income (loss)                                 975          610         (768)         231
Basic earnings (loss)
   per share                                     0.40         0.25        (0.32)        0.10
Diluted earnings (loss)
   per share                                     0.39         0.25        (0.32)        0.09
</TABLE>

                                      F-23

<PAGE>

                K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                          Financial Statement Schedule

<PAGE>

                                                                     SCHEDULE II

                   K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES

                        Valuation and Qualifying Accounts

     Years ended December 28, 2002, December 29, 2001, and December 30, 2000

<TABLE>
<CAPTION>
                                           BALANCE AT     ADDITIONS                    BALANCE
                                           BEGINNING       CHARGED                     AT END
                                           OF PERIOD      TO INCOME    DEDUCTIONS(1)  OF PERIOD
                                           ----------     ---------    -------------  ---------
<S>                                        <C>            <C>          <C>            <C>
Fiscal year ended
     December 28, 2002:
        Allowance for doubtful
           accounts                        $  687,000      137,000      108,000        716,000

Fiscal year ended
     December 29, 2001:
        Allowance for doubtful
           accounts                           778,000       53,000      144,000        687,000
        Provision for
           restructuring reserve              104,000           --      104,000             --

Fiscal year ended
     December 30, 2000:
        Allowance for doubtful
           accounts                           924,000       56,000      202,000        778,000
        Provision for
           restructuring reserve              450,000           --      346,000        104,000
</TABLE>

(1) Accounts written off less recoveries, net of foreign exchange translation
    adjustment.

See accompanying independent auditors' report.

                                      S-1
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number     Description
------     -----------
<S>        <C>
2.1        Basic Agreement regarding the Assignment of Assets of the Hasler
           Division between K-Tron (Suisse) SA and MJ Enterprises SA dated July
           31, 2001 (Filed as Exhibit 2.1 to our report on Form 10-Q for the
           quarterly period ended September 29, 2001 and incorporated herein by
           reference)

2.2        Stock Purchase Agreement dated January 2, 2003 by and among John D.
           Whalen, Donald J. Carrozzino, Frank Wallitsch, Jr. and Nancy S. Hansen
           and PCC Acquisition Co. (Filed as Exhibit 2.1 to our report on Form 8-K
           dated January 2, 2003 ("January 2003 Form 8-K") and incorporated herein
           by reference)

3.1        Restated Certificate of Incorporation, as amended (Filed as Exhibit 3.1
           to our annual report on Form 10-K for the year ended January 2, 1999
           ("1998 Form 10-K") and incorporated herein by reference)

3.2        By-laws, as amended (Filed as Exhibit 3.2 to our annual report of Form
           10-K for the year ended December 29, 2001("2001 Form 10-K") and
           incorporated herein by reference)

4.1        Form of Certificate for Shares of Common Stock (Filed as Exhibit 4.1 to
           the 1998 Form 10-K and incorporated herein by reference)

4.2        Rights Agreement dated as of October 16, 2001 with American Stock
           Transfer & Trust Company, as Rights Agent (Filed as Exhibit 4.1 to our
           report on Form 8-K dated October 16, 2001 and incorporated herein by
           reference)

10.1       1986 Stock Option Plan, as amended and restated (Filed as Exhibit
           10.2.1 to our annual report on Form 10-K for the year ended January 4,
           1992 ("1991 Form 10-K") and incorporated herein by reference)**

10.2       1988 Stock Option Plan for Non-Employee Directors (Filed as Exhibit
           10.2.4 to our annual report on Form 10-K for the year ended December
           31, 1988 and incorporated herein by reference)**

10.3       K-Tron International, Inc. 1996 Equity Compensation Plan, as amended
           (Filed as Exhibit 10.3 to the 1998 Form 10-K and incorporated herein by
           reference)**

10.4       Amendment 2001-1 to the Amended and Restated K-Tron International, Inc.
           1996 Equity Compensation Plan (Filed as Exhibit 10.4 to the 2001 Form
           10-K and incorporated herein by reference)**

10.5       K-Tron International, Inc. and Affiliated Companies Profit-Sharing and
           Thrift Plan, as amended and restated (Filed as Exhibit 10.5 to the 2001
           Form 10-K and incorporated herein by reference)**
</TABLE>



<PAGE>

<TABLE>
<S>        <C>
10.6       K-Tron International, Inc. Supplemental Executive Retirement Plan
           (Filed as Exhibit 10.2.7 to the 1991 Form 10-K and incorporated herein
           by reference)**

10.7       Employment Agreement dated as of October 6, 1997 by and between K-Tron
           International, Inc. and Edward B. Cloues, II (Filed as Exhibit 10.1 to
           our report on Form 10-Q for the quarterly period ended September 27,
           1997 and incorporated herein by reference)**

10.8       Amendment No. 1 to Employment Agreement dated October 5, 1998 by and
           between K-Tron International, Inc. and Edward B. Cloues, II (Filed as
           Exhibit 10.1 to our report on Form 10-Q for the quarterly period ended
           October 3, 1998 and incorporated herein by reference)**

10.9       Employment Agreement dated as of May 7, 1999 by and between K-Tron
           International, Inc. and Ronald R. Remick (Filed as Exhibit 10.9 to the
           annual report on Form 10-K for the year ended January 1, 2000 ("1999
           10-K") and incorporated herein by reference)**

10.10      Form of Employment Agreement with certain of our employees, which are
           identical in all material respects except for the employee, amount of
           salary to be paid and date of execution (Filed as Exhibit 10.12 to our
           annual report on Form 10-K for the year ended January 3, 1998 and
           incorporated herein by reference)**

10.11      Form of Indemnification Agreement with certain of our directors and
           officers listed on Schedule 10.11, which are identical in all material
           respects except for the director or officer who is a party thereto and
           the date of execution (Filed as Exhibit 10.11 to the 1999 Form 10-K and
           incorporated herein by reference)**

10.11A     Supplement to Schedule 10.11, listing additional directors and officers
           who are parties to an Indemnification Agreement referenced in Exhibit
           10.11. (Filed as Exhibit 10.11A to the 2001 Form 10-K and incorporated
           herein by reference)

10.12      Mortgage Note dated June 11, 1996 from K-Tron America, Inc. in favor of
           The Bank of Gloucester County (Filed as Exhibit 10.15 to the 1999 Form
           10-K and incorporated herein by reference)

10.13      Loan Modification Agreement dated June 24, 1998 between K-Tron America,
           Inc. and The Bank of Gloucester County (Filed as Exhibit 10.16 to the
           1999 Form 10-K and incorporated herein by reference)

10.14      Loan Modification Agreement dated July 9, 2002 between K-Tron America,
           Inc. and The Bank (formerly The Bank of Gloucester County)*

10.15      Note dated June 24, 1998 from K-Tron America, Inc. in favor of The Bank
           of Gloucester County (Filed as Exhibit 10.17 to the 1999 Form 10-K and
           incorporated herein by reference)
</TABLE>


<PAGE>

<TABLE>
<S>        <C>
10.16      Note dated December 20, 2002 from K-Tron America, Inc. in favor of The
           Bank (Filed as Exhibit 10.3 to the January 2003 Form 8-K and
           incorporated herein by reference)

10.17      Loan Modification Agreement dated December 20, 2002 between K-Tron
           America, Inc. and The Bank (Filed as Exhibit 10.4 to the January 2003
           Form 8-K and incorporated herein by reference)

10.18      Credit Agreement dated January 3, 2003 among Pennsylvania Crusher
           Corporation, the Lenders party to that Credit Agreement and National
           City Bank, as Agent (Filed as Exhibit 10.1 to the January 2003 Form 8-K
           and incorporated herein by reference)

10.19      Form of the Stockholder Note issued to each of the individuals listed
           on Schedule 10.2, which notes are identical in all material respects
           except for the payee, the principal amount of the note and the amount
           of installments to be made thereunder (Filed as Exhibit 10.2 to the
           January 2003 Form 8-K and incorporated herein by reference)

21.1       Subsidiaries*

23.1       Consent of KPMG LLP*

24.1       Power of Attorney (Included on Signature Page)*

99.1       Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002*

99.2       Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002*
</TABLE>

*   Filed herewith

**  Management contract or compensatory plan or arrangement required to be
    filed or incorporated as an exhibit