FORM 10 QSB/A
Amendment No. 1
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, 1997 COMMSSION FILE NO. 1-13648
BALCHEM CORPORATION
MARYLAND 13-2578432
- --------------------------------------------------------------------------------
(STATE OF OTHER JURISDICTION OF (I.R.S EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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
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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.
3,158,067 SHARES COMMON STOCK
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET
ASSETS
9/30/97 12/31/96
--------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash & Investments ....................... 1,051,872 88,706
Accounts Receivable ...................... 3,028,262 2,969,869
Inventories .............................. 2,288,522 1,862,100
Prepaid Expenses ......................... 187,213 518,716
Deferred Income Taxes .................... 176,481 152,075
---------- ----------
Total Current Assets .................. 6,732,350 5,591,466
---------- ----------
PROPERTY, PLANT & EQUIPMENT
Land .................................... 59,690 89,709
Building ................................ 3,863,630 4,399,122
Equipment ............................... 8,454,236 10,240,077
---------- ----------
Total .................................. 12,377,556 14,728,908
Less: Accumulated Depreciation ............... 5,008,412 7,199,800
---------- ----------
Net Property, Plant, Equipment ........ 7,369,144 7,529,108
---------- ----------
OTHER ASSETS
Intangible Assets ....................... 2,642,928 1,956,095
Other ................................... 43,041 63,534
---------- ----------
Total Other Assets ................... 2,685,969 2,019,629
---------- ----------
TOTAL ASSETS ................................. 16,787,463 15,140,203
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET
LIABILITIES & STOCKHOLDER EQUITY
9/30/97 12/31/96
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES
Payables (Trade & Accruals) ........................ 2,646,991 2,538,842
Dividend Payable ................................... -- 141,887
Current Income Tax ................................. 27,988 110,044
Current Portion Of Long Term Debt .................. 613,775 712,737
Current Portion of Other Long Term Debt ............ 34,050 34,050
---------- ----------
Total Current Liabilities ........................ 3,322,804 3,537,560
---------- ----------
LONG TERM LIABILITIES:
Long Term Debt ..................................... 911,317 1,421,782
Deferred Income Tax ................................ 503,458 534,721
Deferred Compensation ............................. 155,701 93,242
Other Long Term Obligations ........................ 135,950 165,950
---------- ----------
TOTAL LIABILITIES ....................................... 5,029,230 5,753,255
---------- ----------
STOCKHOLDERS EQUITY
Preferred Stock, $25 Par Value, authorized 2,000,000
shares, -0- shares issued & outstanding
Common Stock, $.06-2/3 Par Value, authorized
10,000,000 shares, 3,158,067 shares issued and
outstanding 9/30/97, 3,153,030 shares issued and
outstanding 12/31/96 ............................ 210,538 210,202
Paid In Capital ..................................... 1,939,507 1,915,712
Retained Earnings ................................... 9,608,188 7,261,034
---------- ----------
Total Stockholders' Equity ....................... 11,758,233 9,386,948
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ................ 16,787,463 15,140,203
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
INCOME STATEMENT
FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
--------------------------------------- --------------------------------------
9/30/97 9/30/96 % CHANGE 9/30/97 9/30/96 % CHANGE
---------- ---------- --------- --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Sales & Other Revenues .... 21,312,847 19,501,289 9.3% 7,169,780 6,579,416 9.0%
Cost Of Sales .............. 11,879,371 11,187,500 4,053,254 3,734,205
% Of Sales ................ 55.74% 57.37% (1.63%) 56.53% 56.76% (0.22%)
Interest Expense ........... 114,162 205,062 29,869 61,742
% Of Sales ................ 0.54% 1.05% (0.52%) 0.42% 0.94% (0.52%)
Other Expenses ............. 5,743,292 5,937,444 1,891,522 2,015,257
% Of Sales ................ 26.95% 30.45% (3.50%) 26,38% 30.63% (4.25%)
Operating Costs And Expenses 17,736,825 17,330,006 5,974,645 5,811,204
Pre - Tax Operating Earnings 3,576,022 2,171,283 1,195,135 768,212
% Of Sales ................ 16,78% 11.13% 5.64% 16.67% 11.68% 4.99%
Income Taxes ............... 1,228,868 744,184 426,968 247,798
Net Income ................. 2,347,154 1,427,099 768,167 520,414
% Of Sales ................ 11.01% 7.32% 3.69% 10.71% 7.91% 2.80%
Weighted Average Number Of
Outstanding Shares ........ 3,154,829 3,143,828 3,156,582 3,143,828
Earnings Per Share 0.74 0.45 0.24 0.17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDING SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings .................................... 2,347,154 1,427,099
Adjustment To Reconcile Net Income To
Net Cash Provided By Operating Activities
Deferred Taxes .................................. (55,669) (6,034)
Depreciation & Amortization ..................... 985,674 812,140
Changes In Assets & Liabilities
Accounts Receivable ............................. (58,392) (91,229)
Inventories ..................................... (426,422) (71,484)
Prepaid Expenses ................................ 331,503 366,020
Accounts Payable ................................ 85,649 (146,850)
Income Tax Payable ............................. (82,056) 25,015
Deferred Compensation ........................... 62,459 17,531
Other Long Term Obligation ...................... (30,000)
---------- ----------
Total Adjustments .................................... 812,746 905,109
Net Cash Provided By (Used In)
Operating Activities ................................. 3,159,900 2,332,208
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures ............................ (932,236) (353,909)
Investments In Other Assets .................... (1,073,892) (500,157)
Proceeds From Sale of Property, Plant & Equipment 536,577
---------- ----------
Net Cash Used In Investing Activities ................ (1,469,551) (854,066)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDING SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
(continued)
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Notes Payable ................................... (353,768)
Note Payable Long Term .......................... (9,427) (8,492)
Principal Payment On Long Term Debt ............. (600,000) (942,000)
Stock Options ................................... 24,131 6,702
Dividends Paid................................... (141,887) (109,976)
---------- ----------
Net Cash Provided By (Used In)
Financing Activities ................................. (727,183) (1,407,534)
---------- ----------
INCREASE (DECREASE) IN CASH .......................... 963,166 70,608
CASH BEGINNING ...................................... 88,706 150,679
CASH ENDING ......................................... 1,051,872 221,287
---------- ----------
</TABLE>
<PAGE>
Management's Discussion and Analysis
Revenues
Total revenues for the nine months ended 9/30/97 were $21,312,847 as compared to
$19,501,289 for the nine months ended 9/30/96, an increase of $1,811,558 or
9.3%. The increase in revenue is attributable to increased volumes in the
domestic food encapsulation business and the specialty packaging business.
Revenues for the quarter ended 9/30/97 increased 9% or $590,364 as compared to
the quarter ended 9/30/96. The increase in revenue is primarily attributable to
increased revenues generated by the specialty packaging business.
Operational Costs and Expenses
Cost of sales as a percentage of sales decreased 1.63% for the nine months ended
9/30/97 as compared to the nine months ended 9/30/96. The decrease in cost of
sales as a percentage of sales is primarily the result of volume efficiencies
and a change in the mix of products sold during the nine month period. These
favorable factors were partially offset by the reclassification of certain
employees as well as employee benefit costs previously classified as general and
administrative to various production departments.
Cost of sales as a percentage of sales decreased .22% for the quarter ended
9/30/97 as compared to the quarter ended 9/30/96. The decrease in cost of sales
as a percentage of sales is primarily the result of volume efficiencies and a
change in the mix of products sold during the three month period. These
favorable factors were partially offset by the reclassification of certain
employees as well as employee benefit costs previously classified as general and
administrative to various production departments.
Interest expense decreased approximately $91,000 for the nine months ended
9/30/97 as compared to the nine months ended 9/30/96. The reduction in interest
expense is a result of additional principal payments made against the long term
debt obligation during the second quarter of 1997, the second and third quarters
of 1996 and a rate reduction obtained during the forth quarter of 1996.
Other expenses decreased 3.3% or 3.5% as a percentage of sales for the nine
months ended 9/30/97 as compared to the nine months ended 9/30/96. The decrease
is partially the result of the reclassification of certain employee benefit
costs previously classified as general and administrative to various production
departments, a decrease in recruiting and relocation expense and a decrease in
office and computer expenses associated with the development of a local area
network. These decreases were partially offset by an increase in professional
fees and an increase in the cost of health insurance and other employee benefit
expenses.
Other expenses decreased 6.1% or 4.25% as a percentage of sales for the quarter
ended 9/30/97 as compared to the quarter ended 9/30/96. The decrease is
partially the result of the reclassification of certain employee benefit costs
previously classified as general anad administrative to various production
departments. The decrease can also be attributed to a decrease in office and
consulting expenses associated with the development of a local area network.
These decreases were partially offset by an increase in professional fees and an
increase in the cost of health insurance and other employee benefit expenses.
<PAGE>
Pre-Tax Earnings
Pre-tax earnings increased approximately $1,405,000 or 64.7% for the nine months
ended 9/30/97 as compared to the nine months ended 9/30/96 and increased
approximately $427,000 or 55.6% for the quarter ended 9/30/97 as compared to the
quarter ended 9/30/96. The increases are a direct result of the business
conditions previously described.
Inventories
Inventories as stated for the period 9/30/97 and 9/30/96 were $2,288,522 and
$1,944,322 respectively, inclusive of the following breakdown:
1997 1996
---------- ----------
Raw Materials $1,052,867 $1,154,658
Finished Goods 1,235,655 789,664
---------- ----------
Total Inventory $2,288,522 $1,944,322
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, 1997 and September 30, 1996. Note that certain prior year balances have been
reclassified to conform with current year presentation.
<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/ DINO A. ROSSI
-----------------
DINO A. ROSSI
PRESIDENT/
CHIEF FINANCIAL OFFICER
DATED: November 18, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,051,872
<SECURITIES> 0
<RECEIVABLES> 3,028,262
<ALLOWANCES> 0
<INVENTORY> 2,288,522
<CURRENT-ASSETS> 6,732,350
<PP&E> 12,377,556
<DEPRECIATION> 5,008,412
<TOTAL-ASSETS> 16,787,463
<CURRENT-LIABILITIES> 3,322,804
<BONDS> 0
0
0
<COMMON> 210,538
<OTHER-SE> 11,547,695
<TOTAL-LIABILITY-AND-EQUITY> 16,787,463
<SALES> 21,312,847
<TOTAL-REVENUES> 21,312,847
<CGS> 11,879,371
<TOTAL-COSTS> 17,622,663
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,162
<INCOME-PRETAX> 3,576,022
<INCOME-TAX> 1,228,868
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,288,868
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
