FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One) Quarterly Report Pursuant to Section 13 or 15 (d) of
[ X ] The Securities Exchange Act of 1934
For The Quarterly Period Ended June 30, 2000
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 1-13648
BALCHEM CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 13-2578432
------------------------------------ -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
P.O. Box 175 Slate Hill, New York 10973
------------------------------------ --------
(Address of principal executive offices) (Zip Code)
845-355-5300
------------
Registrant's telephone number, including area code:
Indicate by a 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
filing requirements for the past 90 days.
Yes [X] No [_]
As of July 27, 2000 the registrant had 4,665,254 shares of its Common Stock,
$.06 2/3 par value, outstanding.
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
BALCHEM CORPORATION
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Unaudited
-------------
June 30, 2000 December 31, 1999
----------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents 1,290 1,699
Trade accounts receivable 4,024 3,981
Inventories 2,372 2,748
Prepaid expenses 452 501
Deferred income taxes 188 188
--------------- ----------------
Total current assets 8,326 9,117
--------------- ----------------
Property, plant and equipment, net of accumulated depreciation 7,876 7,786
Intangible assets, net of accumulated amortization 4,614 5,127
--------------- ----------------
Total assets 20,816 22,030
=============== ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
<PAGE>
BALCHEM CORPORATION
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Unaudited
----------
Liabilities and Stockholders' Equity June 30, 2000 December 31, 1999
------------------------------------ ----------------- ---------------------
<S> <C> <C>
Current liabilities:
Trade accounts payable 929 565
Accrued compensation and other benefits 428 829
Other accrued expenses 387 429
Dividends payable -- 245
Income taxes payable 100 131
Current portion of long-term debt -- 600
Current portion of other long-term obligations 36 36
---------------- ---------------
Total current liabilities 1,880 2,835
---------------- ---------------
Long-term debt -- 650
Deferred income taxes 294 381
Deferred compensation 100 108
Other long-term obligations 81 117
---------------- ---------------
Total liabilities 2,355 4,091
---------------- ---------------
Stockholders' equity:
Preferred stock, $25 par value. Authorized 2,000,000
shares; none issued and outstanding
Common stock, $.06 2/3 par value. Authorized 10,000,000
shares; 4,903,238 shares issued and 4,673,254 shares outstanding at June 30, 2000
and 4,903,238 shares issued and 4,781,358 shares outstanding at December 31, 1999 327 327
Additional paid-in capital 3,009 2,994
Retained earnings 17,172 15,516
Treasury stock, at cost: 229,984 and 121,880 shares, respectively (2,047) (898)
---------------- ---------------
Total stockholders' equity 18,461 17,939
---------------- ---------------
Total liabilities and stockholders' equity 20,816 22,030
================ ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
BALCHEM CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Unaudited Unaudited
--------- ---------
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 7,849 $ 7,270 $ 15,600 $ 14,316
Cost of sales 4,592 4,330 9,230 8,536
-------- -------- -------- --------
Gross margin 3,257 2,940 6,370 5,780
Operating expenses:
Selling expenses 883 650 1,762 1,291
Research and development expenses 262 360 500 649
General and administrative expenses 747 728 1,449 1,432
-------- -------- -------- --------
Total operating expenses 1,892 1,738 3,711 3,372
-------- -------- -------- --------
Income from operations 1,365 1,202 2,659 2,408
Interest (income) expense - net (11) 27 (13) 70
-------- -------- -------- --------
Earnings before income taxes 1,376 1,175 2,672 2,338
Income taxes 529 420 1,016 833
-------- -------- -------- --------
Net earnings $ 847 $ 755 $ 1,656 $ 1,505
======== ======== ======== ========
Basic net earnings per common share (note 3) $ 0.18 $ 0.15 $ 0.35 $ 0.31
======== ======== ======== ========
Diluted net earnings per common share (note 3) $ 0.18 $ 0.15 $ 0.34 $ 0.31
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
BALCHEM CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Unaudited
---------
Six Months Ended
June 30,
2000 1999
------------------ -----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,656 $ 1,505
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,015 1,021
Non-employee stock compensation -- 38
Shares issued under employee benefit plans 101 89
Deferred income tax benefit (55) (71)
Changes in assets and liabilities:
Accounts receivable (43) 85
Inventories 376 223
Prepaid expenses 49 132
Accounts payable and accrued expenses (79) (559)
Income taxes payable (31) 74
Deferred compensation payable (8) (19)
------- -------
Net cash flows provided by operating activities 2,981 2,518
------- -------
Cash flows from investing activities:
Capital expenditures (548) (249)
Investments in intangibles and other assets (44) (37)
------- -------
Net cash flows used in investing activities (592) (286)
------- -------
Cash flows from financing activities:
Principal payments on long-term debt (1,250) (2,000)
Proceeds from stock options and warrants exercised 108 7
Dividends paid (245) (160)
Purchase of treasury stock (1,375) --
Other financing activities (36) (35)
------- -------
Net cash flows used in financing activities (2,798) (2,188)
------- -------
Increase in cash and cash equivalents (409) 44
Cash and cash equivalents beginning of year 1,699 1,348
------- -------
Cash and cash equivalents end of period $ 1,290 $ 1,392
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
The condensed consolidated financial statements presented herein have been
prepared by the Company in accordance with the accounting policies described in
its December 31, 1999 Annual Report on Form 10-K and should be read in
conjunction with the notes to consolidated financial statements, which appear in
that report.
In the opinion of management, the unaudited condensed consolidated financial
statements furnished in this Form 10-Q include all adjustments necessary for a
fair presentation of the financial position, results of operations and cash
flows for the interim periods presented. All such adjustments are of a normal
recurring nature. The condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include some information and notes necessary to conform with annual reporting
requirements. The results of operations for the three and six months ended June
30, 2000 are not necessarily indicative of the operating results expected for
the full year.
NOTE 2 - INVENTORIES
---------------------
Inventories at June 30, 2000 and December 31, 1999 consist of the following:
---------------------------------------------------------------------
June 30, 2000 December 31, 1999
---------------------------------------------------------------------
Raw materials $ 1,104 $ 1,340
Finished goods 1,268 1,408
---------------------------------------------------------------------
Total inventories $ 2,372 $ 2,748
---------------------------------------------------------------------
NOTE 3 - NET EARNINGS PER SHARE
-------------------------------
Net earnings per share are calculated in accordance with Statement of Financial
Accounting Standards No.128, "Earnings Per Share." The following presents a
reconciliation of the numerator and denominator used in calculating basic and
diluted net earnings per share:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Number of
Income Shares Per Share
Three months ended June 30, 2000 (Numerator) (Denominator) Amount
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS - Net earnings and weighted
average common shares outstanding $847 4,728,097 $.18
Effect of dilutive securities - stock options 76,406
--------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $847 4,804,503 $.18
----------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Number of
Income Shares Per Share
Three months ended June 30, 1999 (Numerator) (Denominator) Amount
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS - Net earnings and weighted
average common shares outstanding $755 4,890,556 $.15
Effect of dilutive securities - stock options 17,154
-------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $755 4,907,710 $.15
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Number of
Income Shares Per Share
Six months ended June 30, 2000 (Numerator) (Denominator) Amount
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS - Net earnings and weighted
average common shares outstanding $1,656 4,747,842 $.35
Effect of dilutive securities - stock options 69,047
-------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $1,656 4,816,889 $.34
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Number of
Income Shares Per Share
Six months ended June 30, 1999 (Numerator) (Denominator) Amount
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS - Net earnings and weighted
average common shares outstanding $1,505 4,885,724 $.31
Effect of dilutive securities - stock options 21,343
--------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options
$1,505 4,907,067 $.31
----------------------------------------------------------------------------------------------------
</TABLE>
NOTE 4 - SEGMENT INFORMATION
----------------------------
The Company's reportable segments are strategic businesses that offer different
products and services. Presently, the Company has two reportable segments,
specialty products and encapsulated products.
7
<PAGE>
Business Segment Net Revenues:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Specialty Products $ 5,098 $ 5,003 $ 10,180 $ 9,839
Encapsulated Products 2,751 2,267 5,420 4,477
------------------------------------------------------------------------------------------------------------------
Total $ 7,849 $ 7,270 $ 15,600 $ 14,316
------------------------------------------------------------------------------------------------------------------
</TABLE>
Business Segment Profit (Loss):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Specialty Products $ 1,527 $ 1,436 $ 2,937 $ 2,734
Encapsulated Products (162) (234) (278) (326)
Interest expense and other
(income) expense (11) 27 (13) 70
------------------------------------------------------------------------------------------------------------------
Earnings before income
taxes $ 1,376 $ 1,175 $ 2,672 $ 2,338
------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
-------------------------------------------
Cash paid during the six months ended June 30, 2000 and 1999 for income taxes
and interest is as follows:
--------------------------------------------------------
Six Months Ended
June 30,
2000 1999
--------------------------------------------------------
Income taxes $ 1,101 $ 811
Interest $ 17 $ 102
--------------------------------------------------------
NOTE 6 - COMMON STOCK
---------------------
In June 1999, the board of directors authorized the repurchase of up to
1,000,000 shares of the Company's outstanding common stock over a two-year
period commencing July 2, 1999. Since inception of its repurchase authorization,
through June 30, 2000, the Company has repurchased 296,516 shares at an average
cost of $8.60 per share.
8
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Report contains forward-looking statements, within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, which reflect
the Company's expectation or belief concerning future events that involve risks
and uncertainties. The actions and performance of the Company could differ
materially from what is contemplated by the forward-looking statements contained
in this Report. Factors that might cause differences from the forward-looking
statements include those referred to or identified in Item 1 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 and other
factors that may be identified elsewhere in this Report. Reference should be
made to such factors and all forward-looking statements are qualified in their
entirety by the above cautionary statements.
Balchem Corporation is engaged in the development, manufacture and
marketing of specialty performance ingredients and products for the food, feed
and medical sterilization industries. The Company operates in two business
segments, the micro-encapsulation of performance ingredients (the "encapsulated
products" segment) and the repackaging and marketing of high quality specialty
gases (the "specialty products" segment).
(All dollar amounts in thousands)
Results of Operations:
Three months ended June 30, 2000 as compared with three months ended June 30,
----------------------------------------------------------------------------
1999
----
Net sales for the three months ended June 30, 2000 were $7,849 as
compared with $7,270 for the three months ended June 30, 1999, an increase of
$579 or 8%. Net sales for the specialty products segment were $5,098 for the
three months ended June 30, 2000 as compared with $5,003 for the three months
ended June 30, 1999, an increase of $95 or 2%. This increase was attributable
primarily to increased volumes sold of the Company's ethylene oxide blends and
propylene oxide product. Net sales for the encapsulated products segment were
$2,751 for the three months ended June 30, 2000 as compared with $2,267 for the
three months ended June 30, 1999 an increase of $484 or 21%. This increase was
due principally to increased sales to the animal nutrition, specialty industrial
and domestic food markets. These increases were partially offset by a decline in
sales to the international food market. In late 1999, the Company's animal
nutrition staff launched Reashure(TM), its encapsulated choline for ruminant
animals having successfully completed university and field trials. Commercial
sales are currently targeted to the dairy industry where Reashure(TM), in a
cost-efficient manner, allows nutrient supplements to pass through the rumen and
deliver required levels to dairy cows during the weeks preceding and following
calving, commonly referred to as the "transition period" of the animal. During
the first and second quarters of 2000, sales of Reashure(TM) grew and are
beginning to favorably impact overall sales of the encapsulated products
segment. Additional sales personnel have been added to support this market.
Cost of sales as a percent of sales for the three months ended June 30,
2000 as compared to the three months ended June 30, 1999 improved by
approximately 1%. Margins for the specialty products segment were favorably
9
<PAGE>
affected primarily by increased volumes sold and improved production
efficiencies of blended ethylene oxide products, a result of the Company's
decision to sell additional blended products for non-medical sterilization.
Margins improved in the encapsulated products division, a result of the mix of
products sold during the three months ended June 30, 2000.
Operating expenses for the three months ended June 30, 2000 increased
to $1,892 from $1,738 for the three months ended June 30, 1999, an increase of
$154 or 9%. The increase in operating expenses was primarily the result of
increased payroll expense in the area of sales and marketing for the
encapsulated products segment. In particular, additional sales personnel have
been added to support the animal nutrition business. During the three months
ended June 30, 2000 and the three months ended June 30, 1999, the Company spent
$262 and $360, respectively, on Company-sponsored research and development
programs, substantially all of which pertained to the Company's encapsulated
products segment for both food and animal feed applications. The decline in
research and development expense is a result of the Company having completed in
1999 the gathering of data for Reashure(TM) from university studies, commercial
field trials and veterinarians.
Income from operations for the three months ended June 30, 2000 was
$1,365 as compared with $1,202 for the three months ended June 30, 1999. Income
from operations for the specialty products segment for the three months ended
June 30, 2000 was $1,527 as compared with $1,436 for the three months ended June
30, 1999. Loss from operations for the encapsulated products segment declined to
$162 for the three months ended June 30, 2000 as compared with a loss of $234
for the three months ended June 30, 1999 primarily a result of increased sales
partially offset by increased selling and marketing costs as described above.
Interest (income) expense - net for the three months ended June 30,
2000 totaled income of $11 as compared to expense of $27 for the three months
ended June 30, 1999. Long-term debt, including the current portion, was
eliminated during the quarter ended June 30, 2000 from $1,750 at June 30, 1999,
resulting in lower interest expense in the three months ended June 30, 2000.
The Company's effective income tax rate was 38% for the three months
ended June 30, 2000 as compared with 36% for the three months ended June 30,
1999 due principally to the effects of the Company's utilization of net
operating loss carry-forwards for state income tax purposes in the second
quarter of 1999.
Net earnings were $847 for the three months ended June 30, 2000 as
compared with $755 for the three months ended June 30, 1999.
Six months ended June 30, 2000 as compared with six months ended June 30, 1999
------------------------------------------------------------------------------
Net sales for the six months ended June 30, 2000 were $15,600 as
compared with $14,316 for the six months ended June 30, 1999, an increase of
$1,284 or 9%. Net sales for the specialty products segment were $10,180 for the
six months ended June 30, 2000 as compared with $9,839 for the six months ended
June 30, 1999, an increase of $341 or 3%. This increase was attributable
primarily to increased volumes sold of the Company's ethylene oxide product and
10
<PAGE>
ethylene oxide blends. Net sales for the encapsulated products segment were
$5,420 for the six months ended June 30, 2000 as compared with $4,477 for the
six months ended June 30, 1999 an increase of $943 or 21%. This increase was due
principally to increased sales to the animal nutrition, specialty industrial and
domestic food markets. In late 1999, the Company's animal nutrition staff
launched Reashure(TM), its encapsulated choline for ruminant animals having
successfully completed university and field trials. Commercial sales are
currently targeted to the dairy industry where Reashure(TM), in a cost-efficient
manner, allows nutrient supplements to pass through the rumen and deliver
required levels to dairy cows during the weeks preceding and following calving,
commonly referred to as the "transition period" of the animal. During the first
and second quarters of 2000, sales of Reashure(TM) have grown and are beginning
to favorably impact overall sales of the encapsulated products segment.
Additional sales personnel have been added to support this market.
Cost of sales as a percent of sales for the six months ended June 30,
2000 improved slightly as compared with the six months ended June 30, 1999.
Margins for the specialty products segment were favorably affected primarily by
increased volumes sold and improved production efficiencies of blended ethylene
oxide products, a result of the Company's decision to sell additional blended
products for non-medical sterilization. Margins declined slightly in the
encapsulated products division, a result of the mix of products sold in the
international food market and the specialty industrial market during the six
months ended June 30, 2000.
Operating expenses for the six months ended June 30, 2000 increased to
$3,711 from $3,372 for the six months ended June 30, 1999, an increase of $339
or 10%. The increase in operating expenses was primarily the result of increased
payroll expense in the area of sales and marketing for the encapsulated products
segment. In particular, additional sales personnel have been added to support
the animal nutrition business. During the six months ended June 30, 2000 and the
six months ended June 30, 1999, the Company expended $500 and $649,
respectively, on Company-sponsored research and development programs,
substantially all of which pertained to the Company's encapsulated products
segment for both food and animal feed applications. The decline in research and
development expense is a result of the Company having completed in 1999 the
gathering of data for Reashure(TM) from university studies, commercial field
trials and veterinarians.
Income from operations for the six months ended June 30, 2000 was
$2,659 as compared with $2,408 for the six months ended June 30, 1999. Income
from operations for the specialty products segment for the six months ended June
30, 2000 was $2,937 as compared with $2,734 for the six months ended June 30,
1999. Loss from operations for the encapsulated products segment declined to
$278 for the six months ended June 30, 2000 as compared with a loss of $326 for
the six months ended June 30, 1999 primarily a result of increased sales
partially offset by increased selling and marketing costs as described above.
Interest (income) expense - net for the six months ended June 30, 2000
totaled income of $13 as compared to expense of $70 for the six months ended
June 30, 1999. Long-term debt, including the current portion, was eliminated
11
<PAGE>
during the quarter ended June 30, 2000 from $1,750 at June 30, 1999, resulting
in lower interest expense in the six months ended June 30, 2000.
The Company's effective income tax rate was 38% for the six months
ended June 30, 2000 as compared with 36% for the six months ended June 30, 1999
due principally to the effects of the Company's utilization of net operating
loss carry-forwards for state income tax purposes in the second quarter of 1999.
Net earnings were $1,656 for the six months ended June 30, 2000 as
compared with $1,505 for the six months ended June 30, 1999.
Liquidity and Capital Resources
-------------------------------
Cash flows from operating activities provided $2,981 for the six months
ended June 30, 2000 as compared with $2,518 for the six months ended June 30,
1999. The increase in cash flows from operating activities was due primarily to
increased earnings, reduced inventory levels and a lesser reduction in accounts
payable and other accrued expense balances in 2000, a result of timing of
payments made to vendors and other service providers.
Capital expenditures were $548 for the six months ended June 30, 2000.
Capital expenditures are budgeted to be approximately $840 for all of calendar
year 2000.
In June 1999, the board of directors authorized the repurchase of up to
1,000,000 shares of the Company's outstanding common stock over a two-year
period commencing July 2, 1999. As of June 30, 2000, 269,516 shares had been
repurchased under the program at a total cost of $2,318 of which 39,532 shares
have been issued by the Company under employee benefit plans and for the
exercise of stock options. The Company intends to acquire shares from time to
time at prevailing market prices if and to the extent it deems it advisable to
do so based among other matters on its assessment of corporate cash flow and
market conditions.
On June 16, 1994, the Company purchased certain tangible and intangible
assets for one of its packaged specialty products for $1,500 in cash. Under the
agreement, the Company was also required to pay contingent amounts to compensate
the seller for the purchase of the seller's customer list in accordance with a
formula based on profits derived from sales of the packaged specialty product.
On June 25, 1998, the Company elected to exercise the early payment option under
the agreement resulting in a final Company payment of $3,700 to the seller. The
Company has no further purchase price obligation under the agreement. In 1998,
the Company capitalized approximately $3,982 in connection with this
acquisition.
In connection with the exercise of the early payment option described
above, the Company borrowed an additional $3,000 during 1998. There was no
long-term debt outstanding at June 30, 2000.
The Company knows of no current or pending demands on or commitments
for its liquid assets that will materially affect its liquidity. The Company
12
<PAGE>
currently has approval for a $2,000 line of credit from its principal bank.
There were no outstanding borrowings under this line of credit on June 30, 2000.
Impact of Recent Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, as amended, "Accounting for Derivative Instruments and Hedging
Activities." It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 2000. Adoption of this statement is not
expected to have a material effect on the Company's financial position or
results of operations in the year of adoption.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation", an interpretation of APB Opinion No. 25. The Interpretation is
generally effective for new stock awards or transactions entered into on or
after July 1, 2000. The Company does not anticipate that the adoption of the new
Interpretation will have a significant effect on earnings or the financial
position of the Company.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
In the normal course of operations, the Company is exposed to market
risks arising from adverse changes in interest rates. Market risk is defined for
these purposes as the potential change in the fair value of debt instruments
resulting from an adverse movement in interest rates. The Company's short-term
working capital borrowings have historically borne interest based on the prime
rate. The Company believes that its exposure to market risk relating to interest
rate risk is not material.
The Company has no derivative financial instruments or derivative
commodity instruments, nor does the Company have any financial instruments
entered into for trading or hedging purposes. Foreign sales are generally billed
in U.S. dollars. The Company believes that its business operations are not
exposed in any material respect to market risk relating to foreign currency
exchange risk or commodity price risk.
13
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
An annual meeting of stockholders was held on June 23, 2000. The
following directors were re-elected to serve until the annual meeting of
stockholders in 2003 and until the election and qualification of their
respective successors:
-----------------------------------------------------
Director For Withheld
-----------------------------------------------------
Kenneth P. Mitchell 4,508,984 17,699
Israel Sheinberg 4,508,984 17,699
-----------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
27 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No Reports on Form 8-K were filed during the quarter ended
June 30, 2000.
14
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
BALCHEM CORPORATION
-------------------
By: /s/ Dino A. Rossi
---------------------
Dino A. Rossi, President,
Chief Executive Officer and
Principal Financial Officer
Date: August 11, 2000
15
