FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1995 COMMSSION FILE NO. 1-13648
BALCHEM CORPORATION
MARYLAND 13-2578432
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(STATE OF OTHER JURISDICTION OF (I.R.S EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
PO BOX 175 SLATE HILL, NY 10973
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 355-5300
-------------------------
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 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 THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT.
3,121,395 SHARES COMMON STOCK
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<TABLE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET (UNAUDITED)
ASSETS
------
9/30/95 09/30/94
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<S> <C> <C>
CURRENT ASSETS
CASH & INVESTMENTS ......................... 45,993 46,903
ACCOUNTS RECEIVABLE ....................... 3,168,684 2,888,556
INVENTORIES ............................... 1,626,569 1,167,155
PREPAID EXPENSES .......................... 240,405 256,200
DEFERRED INCOME TAXES ..................... 104,575 58,824
TOTAL CURRENT ASSETS .................... 5,186,226 4,417,638
PROPERTY,PLANT & EQUIPMENT
LAND ...................................... 53,648 53,648
BUILDING .................................. 3,949,582 3,294,439
EQUIPMENT ................................. 9,504,611 9,032,252
TOTAL .................................... 13,507,841 12,380,339
LESS:ACCUMULATED DEPRECIATION .................. 5,989,511 5,250,908
NET PROPERTY, PLANT,EQUIPMENT ........... 7,518,330 7,129,431
OTHER ASSETS
LICENSE ................................... 12,656 14,531
FINANCING COSTS .......................... 17,660 10,575
GOODWILL .................................. 7,558 7,858
CUSTOMER LISTS ............................ 321,494
PATENTS,TRADEMARKS®ISTRATIONS .......... 190,685 235,740
OTHER ..................................... 47,671 35,562
TOTAL OTHER ASSETS ..................... 597,724 304,266
TOTAL ASSETS ................................... 13,302,280 11,851,335
<PAGE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET (UNAUDITED)
LIABILITIES & STOCKHOLDER EQUITY
--------------------------------
9/30/95 09/30/94
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<S> <C> <C>
CURRENT LIABILITIES
PAYABLES (TRADE& ACCRUALS) ................ 2,119,850 1,678,061
NOTES PAYABLE ............................. 24,735 91,289
DIVIDEND PAYABLE
LINE OF CREDIT ............................ 110,000 1,210,000
BRIDGE LOAN .............................. 214,000
CURRENT DEBT .............................. 510,336 365,000
CURRENT INCOME TAX ........................ 5,112 44,207
TOTAL CURRENT LIABILITIES ............... 2,770,033 3,602,557
NOTES PAYABLE LONG TERM ................... 38,343
BRIDGE LOAN ............................... 1,286,000
LONG TERM DEBT ............................ 2,696,000 754,167
DEFERRED INCOME TAX ....................... 657,199 529,471
DEFERRED COMPENSATION .................... 89,806 81,964
TOTAL LIABILITIES .............................. 6,251,381 6,254,159
STOCKHOLDERS EQUITY
COMMON STOCK ............................... 208,085 137,351
PAID IN CAPITAL ............................ 1,716,364 1,735,401
RETAINED EARNINGS .......................... 5,126,450 3,724,424
TOTAL STOCKHOLDERS' EQUITY .............. 7,050,899 5,597,176
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ....... 13,302,280 11,851,335
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE PERIOD ENDING SEPTEMBER 30, 1995 AND 1994
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS .................................. 1,125,659 483,333
ADJUSTMENT TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
DEFERRED TAXES ................................ 52,909 65,886
DEPRECIATION & AMORTIZATION ................... 602,526 489,637
CHANGES IN ASSETS & LIABILITIES
ACCOUNTS RECEIVABLE ........................... (580,407) (735,729)
INVENTORIES ................................... (324,695) (166,948)
PREPAID EXPENSES .............................. 199,521 20,220
ACCOUNTS PAYABLE .............................. 46,623 677,554
INCOME TAX PAYABLE ........................... (85,108) (54,930)
DEFERRED COMPENSATION ......................... 6,002 5,177
TOTAL ADJUSTMENTS .................................. (82,629) 300,867
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES ............................... 1,043,030 784,200
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES .......................... (630,476) (2,287,103)
INVESTMENTS IN OTHER ASSETS .................. (191,559) (19,717)
NET CASH USED IN INVESTING ACTIVITIES .............. (822,035) (2,306,820)
CASH FLOWS FROM FINANCING ACTIVITIES
NET BORROWINGS UNDER LINE OF CREDIT ........... (405,000) 350,000
NOTES PAYABLE ................................. (201,920) 91,289
BRIDGE LOAN ................................... 1,500,000
NOTE PAYABLE LONG TERM ........................ (7,650)
PROCEEDS FROM LONG TERM BORROWINGS ............ 3,500,000
PRINCIPAL PAYMENT ON SHORT TERM BORROWINGS ... (447,167) (160,000)
PRINCIPAL PAYMENT ON LONG TERM DEBT .......... (2,573,500) (268,751)
STOCK OPTIONS ................................. 5,592 5,145
DIVIDENDS PAYABLE ............................. (85,802) (68,929)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ............................... (215,447) 1,448,754
INCREASE (DECREASE) IN CASH ........................ 5,548 (73,866)
CASH BEGINNING .................................... 40,445 120,769
CASH ENDING ....................................... 45,993 46,903
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
INCOME STATEMENT
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
---------------------------- ------------------------------- ------------------------------
09/30/95 9/30/94 % 9/30/95 9/3094 % 9/30/95 6/30/95 %
--------- --------- ---- ---------- ---------- ---- --------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES & OTHER REVENUES.. 6,499,397 5,517,287 17.8% 18,263,213 13,147,929 38.9% 6,499,397 5,826,793 11.5%
COST OF SALES .......... 3,558,186 3,092,826 15.0% 9,879,366 7,502,969 31.7% 3,558,186 3,073,256 15.8%
INTEREST EXPENSE ....... 84,200 82,289 2.3% 262,191 178,912 46.5% 84,200 90,517 -7.0%
OTHER EXPENSES ......... 2,226,583 1,873,830 18.8% 6,375,353 4,687,201 36.0% 2,226,583 2,086,673 6.7%
---------------------------- ------------------------------- ------------------------------
OPERATING COSTS
AND EXPENSES ......... 5,868,969 5,048,945 16.2% 16,516,910 12,369,082 33.5% 5,868,969 5,250,446 11.8%
PRE-TAX OPERATING
EARNINGS ............. 630,428 468,342 34.6% 1,746,303 778,847 >100.0% 630,428 576,347 9.4%
INCOME TAXES ........... 235,617 174,123 620,644 295,514 235,617 197,532
NET INCOME ............. 394,811 294,219 34.2% 1,125,659 483,333 >100.0% 394,811 378,815 4.2%
NUMBER OF OUTSTANDING
SHARES(*) ............ 3,121,395 3,090,395 3,121,395 3,090,395 3,121,395 3,121,155
EARNINGS PER SHARE
BEFORE TAXES ...... 0.202 0.152 0.559 0.252 0.202 0.185
AFTER TAXES ....... 0.126 0.095 0.361 0.156 0.126 0.121
</TABLE>
(*) 1994 SHARES ADJUSTED FOR 3 FOR 2 STOCK SPLIT IN OCTOBER 1994
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
REVENUES
REVENUES INCREASED 17.8% FOR THE QUARTER ENDING 9/30/95 VS. THE QUARTER ENDING
9/30/94, 38.9% COMPARING THE NINE MONTHS ENDED 9/30/95 AND 9/30/94, AND 11.5%
COMPARING THE QUARTER ENDED 9/30/95 AND 6/30/95, ALL OF WHICH IS ATTRIBUTED TO
INCREASED PURCHASES BY THE ESTABLISHED CUSTOMER BASE AND THE COMMERCIALIZATION
OF PROSPECTS.
OPERATIONAL COSTS AND EXPENSES
COST OF SALES INCREASED 15% FOR THE QUARTER ENDED 9/30/95 VS THE QUARTER ENDING
9/30/94, 31.7% FOR THE NINE MONTHS ENDED 9/30/95 AND 9/30/94 AND 15.8% FROM 2Q
'95 TO 3Q '95, AS A RESULT OF DEPRECIATION EXPENSE ASSOCIATED WITH NEW DRUMMING
STATION AT THE GREEN POND,SOUTH CAROLINA FACILITY AND DIRECT CORRELATION OF
INCREASED EXPENSES ASSOCIATED WITH BUSINESS CONDITIONS.
INTEREST EXPENSE INCREASED 2.3% FOR THE QUARTER ENDING 9/30/95 VS 9/30/94 AND
46.5% FOR THE NINE MONTHS ENDED 9/30/95 VS 9/30/94, AS A RESULT OF INCREASED
CREDIT LINE BALANCES DURING THIS PERIOD, IN ADDITION TO INTEREST EXPENSE
ASSOCIATED WITH THE FINANCING OF THE DRUMMING STATION AT THE SOUTH CAROLINA
FACILITY.
INTEREST EXPENSE DECREASED 7 % FROM 2Q '95 TO3Q '95 AS A RESULT OF DECREASED
CREDIT LINE BORROWINGS DURING THIS PERIOD.
OTHER EXPENSES INCREASED 18.8% FOR THE QUARTER ENDED 9/30/95 VS 9/30/94, 36%
COMPARING NINE MONTHS ENDED 9/30/95 AND 9/30/94 AND BY 6.7% FROM 2Q '95 TO 3Q
'95, AS A RESULT OF THE ACCUMULATION OF EXPENSES FOR THE ALLIEDSIGNAL ABSORPTION
FROM THE 3Q '94 THROUGH THE PRESENT QUARTER. EXPENSES INCREASED IN AREAS OF
RECRUITING AND MOVING AND CORRESPONDING SALARY AND BENEFITS RELATIVE TO THE
HIRING OF PROFESSIONALS DURING THIS TIME FRAME, AS WELL AS INCREASED TRAVEL BY
THE PROFESSIONALS RESPONSIBLE FOR EXPANSION IN THE INTERNATIONAL MARKETS.
PRE TAX EARNINGS
PRE TAX EARNINGS INCREASED $162,086 OR 34.6% FOR THE QUARTER ENDED 9/30/95 VS
9/30/94, $967,456 OR >100% FOR THE NINE MONTHS ENDED 9/30/95 AND 9/30/94 AND
$54,081 OR 9.4% FROM 2Q '95 TO 3Q '95, AS A RESULT OF THE BUSINESS CONDITIONS
DESCRIBED.
<PAGE>
INVENTORIES
INVENTORIES AS STATED FOR THE PERIOD ENDED 9/30/95 AND 9/30/94 WERE $1,626,569
AND $1,167,155 INCLUSIVE OF THE FOLLOWING BREAKDOWN.
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
RAW MATERIALS .......................... 810,179 644,777
FINISHED PRODUCT ....................... 816,390 522,378
WORK IN PROCESS ........................ -- --
TOTAL INVENTORY ........................ 1,626,569 1,167,155
</TABLE>
ADJUSTMENTS
IN THE OPINION OF MANAGEMENT, ACCOMPANYING FINANCIAL STATMENTS ARE
REPRESENTATIVE OF ALL ADJUSTMENTS NECESSARY TO FAIRLY PRESENT THE CONSOLIDATED
FINANCIAL POSITION AS OF SEPTEMBER 30, 1995 AND 1994.
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENT OF THE SECURITIES EXCHANGE ACT OF 1934 THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREWITH DULY AUTHORIZED.
BALCHEM CORPORATION
(REGISTRANT)
BY /S/ HERB WEISS
-----------------------
HERB WEISS
PRESIDENT,TREASURER AND
CHIEF FINANCIAL OFFICER
DATED: NOVEMBER 2, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 45,993
<SECURITIES> 0
<RECEIVABLES> 3,168,684
<ALLOWANCES> 0
<INVENTORY> 1,626,569
<CURRENT-ASSETS> 5,186,226
<PP&E> 13,507,841
<DEPRECIATION> 5,989,511
<TOTAL-ASSETS> 13,302,280
<CURRENT-LIABILITIES> 2,770,033
<BONDS> 0
<COMMON> 208,085
0
0
<OTHER-SE> 6,842,814
<TOTAL-LIABILITY-AND-EQUITY> 13,302,280
<SALES> 6,499,397
<TOTAL-REVENUES> 6,499,397
<CGS> 3,558,186
<TOTAL-COSTS> 5,868,969
<OTHER-EXPENSES> 2,226,583
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,200
<INCOME-PRETAX> 630,428
<INCOME-TAX> 235,617
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 394,811
<EPS-PRIMARY> .202
<EPS-DILUTED> .126
</TABLE>
