FORM 10-Q SB
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, 1996 Commission File No. 1-13648
BALCHEM CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Maryland 13-2578432
- ------------------------------- -------------------------------
(State of Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
P.O. Box 175, Slate Hill, NY 10973
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's 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.
3,143,828 Shares Common Stock
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<TABLE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET
ASSETS
9/30/96 09/30/95
---------- ----------
<S> <C> <C>
CURRENT ASSETS
CASH & INVESTMENTS ............................... 221,287 45,993
ACCOUNTS RECEIVABLE ............................. 3,236,721 3,168,684
INVENTORIES ..................................... 1,944,322 1,626,569
PREPAID EXPENSES ................................ 179,572 240,405
CURRENT INCOME TAX
DEFERRED INCOME TAXES ........................... 148,678 104,575
TOTAL CURRENT ASSETS .......................... 5,730,580 5,186,226
---------- ----------
PROPERTY,PLANT & EQUIPMENT
LAND ............................................ 84,710 53,648
BUILDING ........................................ 4,146,623 3,949,582
EQUIPMENT ....................................... 10,065,955 9,504,611
TOTAL .......................................... 14,297,288 13,507,841
LESS:ACCUMULATED DEPRECIATION ........................ 6,935,755 5,989,511
NET PROPERTY, PLANT,EQUIPMENT ................. 7,361,533 7,518,330
---------- ----------
OTHER ASSETS
LICENSE ......................................... 10,781 12,656
FINANCING COSTS ................................ 13,024 17,660
GOODWILL ........................................ 7,258 7,558
CUSTOMER LISTS .................................. 744,593 321,494
PATENTS,TRADEMARKS®ISTRATIONS ................ 333,694 190,685
OTHER ........................................... 60,153 47,671
TOTAL OTHER ASSETS ........................... 1,169,503 597,724
---------- ----------
TOTAL ASSETS ......................................... 14,261,616 13,302,280
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<PAGE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET
(continued)
LIABILITIES & STOCKHOLDER EQUITY
9/30/96 09/30/95
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES
PAYABLES (TRADE& ACCRUALS) ...................... 2,348,268 2,119,850
NOTES PAYABLE ................................... 24,735
DIVIDEND PAYABLE
SHORT TERM REVOLVER .................................. 110,000
CURRENT DEBT .................................... 467,474 510,336
CURRENT INCOME TAX .............................. 32,688 5,112
TOTAL CURRENT LIABILITIES ..................... 2,848,430 2,770,033
---------- ----------
NOTES PAYABLE LONG TERM ......................... 26,027 38,343
LONG TERM DEBT .................................. 1,684,000 2,696,000
DEFERRED INCOME TAX ............................. 698,273 657,199
DEFERRED COMPENSATION .......................... 123,193 89,806
TOTAL LIABILITIES .................................... 5,379,923 6,251,381
---------- ----------
STOCKHOLDERS EQUITY
COMMON STOCK ..................................... 209,589 208,085
PAID IN CAPITAL .................................. 1,768,887 1,716,364
RETAINED EARNINGS ................................ 6,903,217 5,126,450
TOTAL STOCKHOLDERS' EQUITY .................... 8,881,693 7,050,899
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ............. 14,261,616 13,302,280
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDING SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS ................................ 1,427,099 1,125,659
ADJUSTMENT TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
DEFERRED TAXES .............................. (6,034) 52,909
DEPRECIATION & AMORTIZATION ................. 812,140 602,526
CHANGES IN ASSETS & LIABILITIES
ACCOUNTS RECEIVABLE ......................... (91,229) (580,407)
INVENTORIES ................................. (71,484) (324,695)
PREPAID EXPENSES ............................ 366,020 199,521
ACCOUNTS PAYABLE ............................ (146,850) 46,623
INCOME TAX PAYABLE ......................... 25,015 (85,108)
DEFERRED COMPENSATION ....................... 17,531 6,002
TOTAL ADJUSTMENTS ................................ 905,109 (82,629)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES ............................. 2,332,208 1,043,030
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES ........................ (353,909) (630,476)
INVESTMENTS IN OTHER ASSETS ................ (500,157) (191,559)
NET CASH USED IN INVESTING ACTIVITIES ............ (854,066) (822,035)
CASH FLOWS FROM FINANCING ACTIVITIES
NET BORROWINGS UNDER SHORT TERM REVOLVER .... 0 (405,000)
NOTES PAYABLE ............................... (353,768) (201,920)
NOTE PAYABLE LONG TERM ...................... (8,492) (7,650)
PROCEEDS FROM LONG TERM BORROWINGS .......... 3,500,000
PRINCIPAL PAYMENT ON SHORT TERM DEBT ........ (447,167)
PRINCIPAL PAYMENT ON LONG TERM DEBT ........ (942,000) (2,573,500)
STOCK OPTIONS ............................... 6,702 5,592
DIVIDENDS PAYABLE ........................... (109,976) (85,802)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ............................. (1,407,534) (215,447)
INCREASE( DECREASE) IN CASH ...................... 70,608 5,548
CASH BEGINNING .................................. 150,679 40,445
CASH ENDING ..................................... 221,287 45,993
</TABLE>
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<TABLE>
<CAPTION>
BALCHEM CORPORATION
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
INCOME STATEMENT
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------- -------------------------
9/30/96 9/30/95 % CHANGE 9/30/96 9/30/95 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
SALES & OTHER REVENUES 6,654,300 6,499,397 2.4% 19,736,497 18,263,213 8.1%
COST OF SALES 3,380,967 3,558,186 10,091,307 9,879,366
% OF SALES 50.81% 54.75% -3.94% 51.13% 54.09% -2.96%
INTEREST EXPENSE 61,742 84,200 205,062 262,191
% OF SALES 0.93% 1.30% -0.37% 1.04% 1.44% -0.40%
OTHER EXPENSES 2,443,379 2,226,583 7,268,845 6,375,353
% OF SALES 36.72% 34.26% 2.46% 36.83% 34.91% 1.92%
OPERATING COSTS AND EXPENSES 5,886,089 5,868,970 17,565,215 16,516,911
PRE - TAX OPERATING EARNINGS 768,211 630,427 2,171,282 1,746,302
% OF SALES 11.54% 9.70% 1.84% 11.00% 9.56% 1.44%
INCOME TAXES 247,798 235,617 744,184 620,644
NET INCOME 520,413 394,810 1,427,098 1,125,658
% OF SALES 7.82% 6.07% 1.75% 7.23% 6.16% 1.07%
NUMBER OF OUTSTANDING SHARES 3,143,828 3,121,395 3,143,828 3,121,395
EARNINGS PER SHARE 0.166 0.126 0.454 0.361
<PAGE>
<CAPTION>
BALCHEM CORPORATION
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
INCOME STATEMENT
(continued)
FOR THE THREE MONTHS ENDED
--------------------------
9/30/96 6/30/96 % CHANGE
------- ------- --------
<S> <C> <C> <C>
SALES & OTHER REVENUES 6,654,300 6,740,326 -1.3%
COST OF SALES 3,380,967 3,503,206
% OF SALES 50.81% 51.97% -1.17%
INTEREST EXPENSE 61,742 69,127
% OF SALES 0.93% 1.03% -0.10%
OTHER EXPENSES 2,443,379 2,432,805
% OF SALES 36.72% 36.09% 0.63%
OPERATING COSTS AND EXPENSES 5,886,089 6,005,139
PRE - TAX OPERATING EARNINGS 768,211 735,187
% OF SALES 11.54% 10.91% 0.64%
INCOME TAXES 247,798 263,109
NET INCOME 520,413 472,078
% OF SALES 7.82% 7.00% 0.82%
NUMBER OF OUTSTANDING SHARES 3,143,828 3,143,828
EARNINGS PER SHARE 0.166 0.150
</TABLE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
REVENUES
REVENUES INCREASED 2.4% FOR THE QUARTER ENDED 9/30/96 COMPARED TO THE QUARTER
ENDED 9/30/95 AND 8.1% FOR THE THE NINE MONTHS ENDED 9/30/96 COMPARED TO 9/30/95
WHICH IS ATTRIBUTED TO INCREASED PURCHASES FROM ESTABLISHED CUSTOMER BASE.
REVENUES DECREASED 1.3% FOR THE QUARTER ENDED 9/30/96 COMPARED TO THE QUARTER
ENDED 6/30/96 DUE TO THE TIMING OF SHIPMENTS IN THE ENCAPSULATED BUSINESS.
OPERATIONAL COSTS AND EXPENSES
COST OF SALES DECREASED 3.94% ,AS A PERCENTAGE OF SALES, FOR THE QUARTER ENDED
9/30/96 AS COMPARED TO THE QUARTER ENDED ENDED 9/30/95 AND 1.17% ,AS A
PERCENTAGE OF SALES, FOR THE QUARTER ENDED 9/30/96 COMPARING THE QUARTER ENDED
6/30/96.
THE DOLLAR DECREASE IN THE COST OF SALES DURING THESE TIME FRAMES IS A RESULT OF
SOME RAW MATERIAL PRICE DELINES AND IT ALSO REFLECTS THE ELIMINATION IN COSTS OF
THE CONTRACT MANUFACTURING BUSINESS THAT CEASED ON JANUARY 1, 1996.
COMPARING SEPTEMBER YTD 1996 VS. 1995,COST OF SALES INCREASED 2.1% BUT DECREASED
2.96% , AS A PERCENTAGE AS SALES, THE COST INCREASE IS ATTRIBUTED TO INCREASED
DEPRECIATION EXPENSES ASSOCIATED WITH THE ELIMINATION OF THE CONTRACT
MANUFACTURING BUSINESS AT THE GREEN POND, S,C, FACILITY.
INTEREST EXPENSE DECREASED 26.7% OR .37%, AS A PERCENTAGE OF SALES, FOR THE
QUARTER ENDED 9/30/96 AS COMPARED TO THE QUARTER ENDED 9/30/95; DECREASED 21.8%
OR .40%, AS A PERCENTAGE OF SALES, FOR THE NINE MONTHS ENDED 9/30/96 AS COMPARED
TO 9/30/95 AND DECREASED 12% OR .10% AS A PERCENTAGE OF SALES, FOR THE QUARTER
ENDED 9/30/96 COMPARED TO THE QUARTER ENDED 6/30/96.
THE REDUCTION IN INTEREST EXPENSE FOR THE AFOREMENTIONED PERIODS WAS THE RESULT
OF ADDITIONAL PRINCIPAL PAYMENTS MADE AGAINST THE LONG-TERM DEBT OBLIGATION
DURING THE SECOND AND THIRD QUARTERS OF 1996 AND THE RATE REDUCTION OBTAINED
FROM AFFILIATED BANK IN 2Q '96.
OTHER EXPENSES INCREASED 9.7% OR 2.46% , AS A PERCENTAGE OF SALES,FOR THE
QUARTER ENDED 9/30/96 AS COMPARED TO THE QUARTER ENDED 9/30/95 INCREASED 14.0%
OR 1.92%, AS A PERCENTAGE OF SALES, FOR THE NINE MONTHS ENDED 9/30/96 COMPARED
TO 9/30/95 AND .43% OR .63% AS A PERCENTAGE OF SALES FOR THE QUARTER ENDED
9/30/96 AS COMPARED TO THE QUARTER ENDED 6/30/96.
THE INCREASED EXPENSES COMPARING 1996 TO 1995 ARE A RESULT OF INCREASED STAFFING
OF SENIOR MANAGEMENT AND SALES PROFESSIONALS, RECRUITING AND RELOCATION EXPENSES
ASSOCIATED WITH SAME AND INCREASED SALES EXPENSES INCURRED FOR TRAVEL IN
DOMESTIC AND INTERNATIONAL MARKETS.
PRE-TAX EARNINGS
AS A RESULT OF THE BUSINESS CONDITIONS PREVIOUSLY DESCRIBED, PRE-TAX EARNINGS
INCREASED 21.9% OR 1.84%, AS A PERCENTAGE OF SALES, FOR THE QUARTER ENDED
9/30/96 COMPARED TO THE QUARTER ENDED 9/30/95; INCREASED 24.3% OR 1.44%, AS A
PERCENTAGE OF SALES, FOR THE NINE MONTHS ENDED 9/30/96 COMPARED TO 9/30/95 AND
INCREASED 4.5% OR .64%, AS A PERCENTAGE OF SALES, FOR THE QUARTER ENDED 9/30/96
AS COMPARED TO THE QUARTER ENDED 6/30/96.
<PAGE>
INVENTORIES
INVENTORIES AS STATED FOR THE PERIOD 9/30/96 AND 9/30/95 WERE $1,944,322 AND
$1,626,569, RESPECTIVELY,INCLUSIVE OF THE FOLLOWING BREAKDOWN:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
RAW MATERIALS 1,154,658 810,179
FINISHED PRODUCT 789,664 816,390
WORK IN PROCESS 0 0
TOTAL INVENTORY 1,944,322 1,626,569
</TABLE>
ADJUSTMENTS
IN THE OPINION OF MANAGEMENT, THE ACCOMPANYING STATEMENTS ARE REPRESENTATIVE
OF ALL THE ADJUSTMENTS TO FAIRLY PRESENT THE CONSOLIDATED POSITION
AS OF SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995.
<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)
DATED: NOVEMBER 11, 1996 BY: /s/Dino A. Rossi
----------------
DINO A. ROSSI
VICE-PRESIDENT/
CHIEF FINANCIAL OFFICER
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 221,287
<SECURITIES> 0
<RECEIVABLES> 3,236,721
<ALLOWANCES> 0
<INVENTORY> 1,944,322
<CURRENT-ASSETS> 5,730,580
<PP&E> 14,297,288
<DEPRECIATION> 6,935,755
<TOTAL-ASSETS> 14,261,616
<CURRENT-LIABILITIES> 2,848,430
<BONDS> 0
0
0
<COMMON> 209,589
<OTHER-SE> 8,672,104
<TOTAL-LIABILITY-AND-EQUITY> 8,881,693
<SALES> 6,654,300
<TOTAL-REVENUES> 6,654,300
<CGS> 3,380,967
<TOTAL-COSTS> 5,886,089
<OTHER-EXPENSES> 2,443,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,742
<INCOME-PRETAX> 768,211
<INCOME-TAX> 247,798
<INCOME-CONTINUING> 520,413
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 520,413
<EPS-PRIMARY> .163
<EPS-DILUTED> .162
</TABLE>
