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 MARCH 31, 1997 COMMSSION FILE NO. 1-13648
BALCHEM CORPORATION
MARYLAND 13-2578432
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(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.
3,153,352 SHARES COMMON STOCK
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET
ASSETS
3/31/97 3/31/96
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash & Investments .................................... 31,444 119,384
Accounts Receivable ................................... 3,500,786 3,252,475
Inventories ........................................... 2,043,717 2,228,280
Prepaid Expenses ...................................... 318,694 526,882
Deferred Income Taxes ................................. 152,075 152,495
---------- ----------
Total Current Assets ............................... 6,046,716 6,279,516
---------- ----------
PROPERTY,PLANT & EQUIPMENT
Land ................................................. 89,709 84,710
Building ............................................. 4,312,558 4,117,916
Equipment ............................................ 10,637,187 9,853,472
---------- ----------
Total ............................................... 15,039,454 14,056,098
Less:Accumulated Depreciation ............................. 7,389,510 6,333,337
---------- ----------
Net Property, Plant,Equipment ...................... 7,649,944 7,722,761
---------- ----------
OTHER ASSETS
License .............................................. 9,844 11,719
Financing Costs ..................................... 11,131 14,917
Goodwill ............................................. 7,108 7,408
Customer Lists ....................................... 1,635,010 501,566
Patents,Trademarks&Registrations ..................... 517,666 252,789
Other ................................................ 64,281 53,792
---------- ----------
Total Other Assets ................................ 2,245,040 842,191
---------- ----------
TOTAL ASSETS .............................................. 15,941,700 14,844,468
========== ==========
<PAGE>
<CAPTION>
BALCHEM CORPORATION
BALANCE SHEET
(continued)
LIABILITIES & STOCKHOLDER EQUITY
3/31/97 3/31/96
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES
Payables (Trade& Accruals) ........................... 2,401,010 2,702,972
Notes Payable ........................................ 34,050 221,105
Current Portion Of Long Term Debt .................... 712,737 467,474
Current Income Tax ................................... 437,595 208,761
---------- ----------
Total Current Liabilities .......................... 3,585,392 3,600,312
---------- ----------
Notes Payable Long Term .............................. 18,722 31,763
Long Term Debt ....................................... 1,400,000 2,512,000
Deferred Income Tax .................................. 491,571 692,812
Deferred Compensation ............................... 174,344 120,189
Other Long Term Obligations .......................... 165,950
---------- ----------
TOTAL LIABILITIES ......................................... 5,835,979 6,957,076
---------- ----------
STOCKHOLDERS EQUITY
Common Stock .......................................... 210,223 209,559
Paid In Capital ....................................... 1,917,353 1,767,108
Retained Earnings ..................................... 7,978,145 5,910,725
---------- ----------
Total Stockholders' Equity ......................... 10,105,721 7,887,392
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .................. 15,941,700 14,844,468
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
INCOME STATEMENT
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
--------------------------------------- --------------------------------------
3/31/97 3/31/96 % CHANGE 3/31/97 12/31/96 % CHANGE
------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales & Other Revenues 6,835,143 6,257,871 9.2% 6,835,143 6,876,424 -0.6%
Cost Of Sales 3,764,905 3,582,133 3,764,905 3,884,913
% Of Sales 55.08% 57.24% -2.16% 55.08% 56.50% -1.41%
Interest Expense 42,713 74,193 42,713 49,388
% Of Sales 0.62% 1.19% -0.56% 0.62% 0.72% -0.09%
Other Expenses 1,898,590 1,933,662 1,898,590 2,196,267
% Of Sales 27.78% 30.90% -3.12% 27.78% 31.94% -4.16%
Operating Costs And Expenses 5,706,208 5,589,988 5,706,208 6,130,567
Pre - Tax Operating Earnings 1,128,935 667,883 1,128,935 745,856
% Of Sales 16.52% 10.67% 5.84% 16.52% 10.85% 5.67%
Income Taxes 411,824 233,277 411,824 246,151
Net Income 717,111 434,606 717,111 499,705
% Of Sales 10.49% 6.94% 3.55% 10.49% 7.27% 3.22%
Weighted Average Number Of
Outstanding Shares 3,153,137 3,143,691 3,153,137 3,153,030
Earnings Per Share 0.227 0.138 0.227 0.158
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALCHEM CORPORATION
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDING MARCH 31, 1997 AND MARCH 31, 1996
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings ................................ 717,111 434,606
Adjustment To Reconcile Net Income To
Net Cash Provided By Operating Activities
Deferred Taxes .............................. (43,150) (15,312)
Depreciation & Amortization ................. 303,775 206,741
Changes In Assets & Liabilities
Accounts Receivable ......................... (530,917) (106,983)
Inventories ................................. (181,617)
Prepaid Expenses ............................ 200,022 18,710
Accounts Payable ............................ (137,833) 207,855
Income Tax Payable ......................... 327,551 201,088
Deferred Compensation ....................... 81,102 14,527
-------- --------
Total Adjustments ................................ 18,933 526,626
Net Cash Provided By (Used In)
Operating Activities ............................. 736,044 961,232
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures ........................ (310,546) (112,719)
Investments In Other Assets ................ (339,475) (169,864)
-------- --------
Net Cash Used In Investing Activities ............ (650,021) (282,583)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes Payable ............................... (132,663)
Note Payable Long Term ...................... (3,060) (2,756)
Principal Payment On Long Term Debt ......... (114,000)
Stock Options ............................... 1,662 4,893
Dividends Payable ........................... (141,887) (109,976)
-------- --------
Net Cash Provided By (Used In)
Financing Activities ............................. (143,285) (354,502)
-------- --------
INCREASE( DECREASE) IN CASH ...................... (57,262) 324,147
CASH BEGINNING .................................. 88,706 150,679
CASH ENDING ..................................... 31,444 474,826
-------- --------
</TABLE>
<PAGE>
Management's Discussion and Analysis
Revenues
Total revenues for the quarter ended 3/31/97 were $6,835,143 as compared to
$6,257,871 for the quarter ended 3/31/96, an increase of $577,272 or 9.2 %. The
increase in revenue is primarily attributable to increased volumes in the
domestic food encapsulation business.
Revenues for the quarter ended 3/31/97 decreased .6% or $41,280 as compared to
the quarter ended 12/31/96. The decrease in revenue is primarily attributable to
decreased revenues generated by the specialty packaging business.
Operational Costs and Expenses
Cost of sales decreased 2.16 % as a percentage of sales for the quarter ended
3/31/97 as compared to the quarter ended 3/31/96. The decrease in cost of sales
is primarily attributable to volume efficiencies and cost savings on raw
materials. These decreases 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 decreased 1.41 % as a percentage of sales for the quarter ended
3/31/97 as compared to the quarter ended 12/31/96. The decrease in cost of sales
is primarily attributable to volume efficiencies and cost savings on raw
materials. These decreases 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 42% for the quarter ended 3/31/97 as compared to the
quarter ended 3/31/96. The reduction in interest expense is a result of
additional principal payments made against the long term debt obligation during
the second and third quarters of 1996 and a rate reduction obtained during the
forth quarter of 1996.
Other expenses decreased 1.8% or 3.12% as a percentage of sales for the quarter
ended 3/31/97 as compared to the quarter ended 3/31/96. The decrease is
partially the result of the reclassification of certain employee benefit costs
previously classified as general and administrative to various production
departments. The decrease can also be attributed to reductions in consulting
fees, professional fees as well as recruiting and relocation expense.
Other expenses decreased 13.6% or 4.16% as a percentage of sales for the quarter
ended 3/31/97 as compared to the quarter ended 12/31/96. The decrease is
partially the result of the reclassification of certain employee benefit costs
previously classified as general and administrative to various production
departments. The decrease can also be attributed to a decrease in office and
consulting expenses associated with the development of a local area network.
Pre-Tax Earnings
Pre-tax earnings increased 69% or 5.84% as a percentage of sales for the quarter
ended 3/31/97 as compared to the quarter ended 3/31/96 and increased 51.4% or
5.67% as a percentage of sales for the quarter ended 3/31/97 as compared to the
quarter ended 12/31/96. The increases are a direct result of the business
conditions previously described.
<PAGE>
Inventories
Inventories as stated for the period 3/31/97 and 3/31/96 were $2,043,717 and
$2,228,280 respectively, inclusive of the following breakdown:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Raw Materials $1,355,351 $1,061,834
Finished Goods 688,366 1,166,446
---------- ----------
Total Inventory $2,043,717 $2,228,280
</TABLE>
Adjustments
In the opinion of management, the accompanying statements are representative of
all the adjustments to fairly present the consolidated position as of March 31,
1997 and March 31, 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
VICE-PRESIDENT/
CHIEF FINANCIAL OFFICER
DATED: APRIL 29, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 31,444
<SECURITIES> 0
<RECEIVABLES> 3,500,786
<ALLOWANCES> 0
<INVENTORY> 2,043,717
<CURRENT-ASSETS> 6,046,716
<PP&E> 15,039,454
<DEPRECIATION> 7,389,510
<TOTAL-ASSETS> 15,941,700
<CURRENT-LIABILITIES> 3,585,392
<BONDS> 0
0
0
<COMMON> 210,223
<OTHER-SE> 9,895,498
<TOTAL-LIABILITY-AND-EQUITY> 15,941,700
<SALES> 6,835,143
<TOTAL-REVENUES> 6,835,143
<CGS> 3,764,905
<TOTAL-COSTS> 5,706,208
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,713
<INCOME-PRETAX> 1,128,935
<INCOME-TAX> 411,824
<INCOME-CONTINUING> 717,111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 717,111
<EPS-PRIMARY> .227
<EPS-DILUTED> .227
</TABLE>
