UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15[d] OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended: December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15[d] OF THE SECURITIES EXCHANGE ACT
OF 1934
For transition period from __________ to ___________
Commission file number 1-13648
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Balchem Corporation 401(k)/Profit Sharing Plan
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Balchem Corporation
PO Box 175
Slate Hill, NY 10973
REQUIRED INFORMATION
Financial Statements:
4. In lieu of requirements of Items 1-3, audited statements and schedules
prepared in accordance with the requirements of ERISA for the plan's fiscal year
ended December 31, 1999 are presented herein.
Exhibits:
23. Consent of KPMG LLP, independent auditors
Balchem Corporation
401(k) / Profit Sharing Plan
Financial Statements
and Supplemental Schedules
Year ended December 31, 1999
CONTENTS
Independent Auditors Report 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1999 and 1998. 2
Statements of Changes in Net Assets Available for Plan
Benefits for the years ended December 31, 1999 and 1998. 3
Notes to Financial Statements 4
Supplemental Schedule:
Line 4(I) / Schedule H Part IV - Schedule of Assets Held for
Investment Purposes. 9
Signatures 10
Independent Auditors' Report
Plan Administrator
Balchem Corporation 401(k)/Profit Sharing Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Balchem Corporation 401(k)/Profit Sharing Plan (the Plan) as of
December 31, 1999 and 1998, and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 1999 and 1998, and the changes in net assets available for plan benefits for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 1999 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ KPMG LLP
June 19, 2000
Short Hills, New Jersey
1
Balchem Corporation
401(k)/Profit Sharing Plan
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
1999 1998
--------------- ---------------
ASSETS
Investments $ 4,665,661 $ 3,896,155
Receivables:
Employer's contribution 195,084 187,653
Participants' contributions 31,167 31,691
Interest 904 627
--------------- ---------------
TOTAL ASSETS $ 4,892,816 $ 4,116,126
=============== ===============
See accompanying notes to financial statements
2
Balchem Corporation
401(k)/Profit Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits
Year Ended Year Ended
December 31, 1999 December 31, 1998
----------------- -----------------
Additions:
Investment income:
Interest $ 37,755 $ 34,041
Dividends 58,592 179,645
Net appreciation
in fair value of investments 293,362 143,537
Transfers in from former money
purchase plan -- 1,045,199
----------------- -----------------
389,709 1,402,422
----------------- -----------------
Contributions:
Participants 494,672 546,676
Employer 292,982 350,060
----------------- -----------------
787,654 896,736
----------------- -----------------
Total additions 1,177,362 2,299,158
Deductions:
Benefits paid to participants (399,337) (611,022)
Fees (1,335) (900)
----------------- -----------------
Total Deductions (400,672) (611,922)
----------------- -----------------
Net increase in net
assets available for plan benefits 776,690 1,687,236
Net assets available for plan
benefits at beginning of year 4,116,126 2,428,890
Net assets available for plan ----------------- -----------------
benefits at end of year $ 4,892,816 $ 4,116,126
================= =================
See accompanying notes to financial statements.
3
Balchem Corporation
401(k)/Profit Sharing Plan
Notes to Financial Statements
December 31, 1999
NOTE 1 - DESCRIPTION OF THE PLAN
- --------------------------------
The following description of the Balchem Corporation 401(k)/Profit Sharing Plan
(the "Plan") provides only general information. Participants should refer to the
plan agreement for a more complete description of the Plan's provisions.
Effective January 1, 1998, Balchem Corporation (the "Company") amended and
restated its Employees 401(k) Savings Plan, to provide supplemental retirement
benefits exclusively for employees of the Company. The Balchem Corporation
Employees Money Purchase Pension Plan and the 401 (k) Savings Plan were combined
into a single plan named Balchem Corporation 401(k)/Profit Sharing Plan. Assets
of the Employees Money Purchase Pension Plan were merged into the new enhanced
401(k)/profit sharing plan.
General
- -------
The Plan is a participant directed, defined contribution plan covering all
active employees of Balchem Corporation (the "Company") who have sixty days of
service and are 18 years of age or older. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
The Company pays administrative and record-keeping fees for the Plan. Plan
participants are required to pay fees for participant loans and certain
brokerage fees for transactions pertaining to investments in Balchem Corporation
Common Stock.
Contributions
- -------------
Each year, participants may contribute up to 15 percent of pretax annual
compensation, as defined. Such amounts may be limited by the maximum amounts
allowed under Internal Revenue Service regulations. Participants may also
contribute amounts representing distributions from other qualified defined
benefit or defined contribution plans. The employer matching contributions equal
35 percent of each participant's elected contribution up to $3,500, and the
Company may make discretionary Company profit sharing contributions. Matching
contributions are made in Company stock on a monthly basis based upon the
closing price of the stock on the last trading day of each month and are subject
to the vesting schedule described below. There were discretionary Company profit
sharing contributions made in January, 2000 and 1999 for the 1999 and 1998 plan
years totaling $185,649 and $177,926, included in employers' contribution
receivable as of December 31, 1999 and 1998, respectively.
4
Participant Accounts
- --------------------
Each participant's account is credited with the participant's contribution and
allocations of the Company's matching contributions and plan earnings or losses.
Allocations are based on participant account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting
- -------
Participants are 100% vested in their contributions plus actual earnings or
losses thereon. Vesting in the Company contribution portion of their accounts
plus actual earnings or losses thereon is based on years of continuous service
as defined. A participant becomes 100 percent vested after two years of credited
service.
Investment Options
- ------------------
Upon enrollment in the Plan, participants may direct employee contributions to
any of the following options:
Chase Vista U.S. Treasury Securities Money Market Fund - Funds are invested
------------------------------------------------------
solely in direct debt securities of the U.S. Treasury, including Treasury
bills, bonds and notes. The fund aims to provide the highest possible level
of current income while still maintaining liquidity and providing maximum
safety of principal.
Fidelity Advisor Growth Opportunities Fund - Seeks long-term growth through
------------------------------------------
a core investment in traditional growth stocks - companies with above
average growth in sales or earnings - plus other opportunities such as
special situations, debt securities and cyclicals.
Fidelity Advisor Balanced Fund - Seeks income and capital growth utilizing
------------------------------
a balanced approach to provide the best possible total return from
income-producing securities. Investments include U.S. Treasury issues,
corporate bonds, foreign investments, convertible securities and stocks.
Fidelity Advisor High Yield Fund - Seeks a combination of a high level of
--------------------------------
income and the potential for gains. Investments focus on mature companies
that are poised for dramatic growth and "turnaround" companies that are
expected to return to favor in the marketplace. Bonds are evaluated on the
basis of their potential for total return, including high interest and
growth of capital investment.
Fidelity Advisor Overseas Fund - Seeks growth of capital primarily through
------------------------------
investments in foreign securities. The fund normally diversifies its
investments across equity securities of issuers located in different
countries and regions. The fund may also invest up to 35% of its assets in
any type of debt securities.
5
Balchem Corporation Common Stock - Contributions may be invested in
--------------------------------
common stock of Balchem Corporation. Investments in this fund are limited
to 10% of a participant's contribution.
Participants may change their investment options quarterly.
Participant Loans
- -----------------
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50 percent of their vested account
balances. Loan terms extend up to five years or in excess of five years for the
purchase of a primary residence. The loans are secured by the balance in the
participants' accounts and bear interest at the prime rate plus 2%.
Payment of Benefits
- -------------------
On termination of service, a participant may receive a lump-sum amount equal to
the vested value of his or her account, or upon death, disability, or
retirement, the participant may elect to receive annual installments over a
period not to exceed the participant's lifetime, or the joint lifetime of the
participant and the participant's spouse, or an annuity contract.
Forfeited Accounts
- ------------------
Forfeited balances of terminated participants' nonvested accounts are allocated
to all active participant accounts as of the last day of the plan year.
Forfeited nonvested accounts totaled $1,712 and $1,294 at December 31, 1999 and
1998, respectively.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
- ---------------------------------------
Basis of Accounting
- -------------------
The financial statements of the Plan are presented on the accrual basis of
accounting.
Risks and Uncertainties
- -----------------------
The assets of the Plan at December 31, 1999 and 1998 are primarily financial
instruments which are monetary in nature. Accordingly, interest rates and market
fluctuations have a more significant impact on the Plan's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or in the same magnitude as the prices of goods and
services as measured by the consumer price index.
6
The investments are subject to risk conditions of the individual investments'
objectives, the stock market, interest rates, economic conditions and world
affairs.
Investment Valuation and Income Recognition
- -------------------------------------------
Investment securities held in the Plan's funds are stated at fair value
determined from publicly quoted market prices. Participant loans are valued at
cost, which approximates fair value. Purchases and sales of securities are
recorded on a trade-date basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date.
Use of Estimates
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make estimates
and assumptions that could affect the reported amounts of net assets at the date
of the financial statements and the reported amounts of changes in net assets
available for plan benefits during the reporting period. Actual results could
differ from those estimates.
NOTE 3 - INVESTMENTS
- --------------------
Investments at December 31, 1999 and 1998 consisted of:
- ----------------------------------------------------------
1999 1998
- ----------------------------------------------------------
Cash equivalents $ 672,854 $ 606,033
Mutual funds 3,486,279 3,070,663
Common stock 349,139 101,442
Participant loans 157,389 118,017
- ----------------------------------------------------------
$ 4,665,661 $ $3,896,155
==========================================================
The following represents investments that represent 5% or more of the Plan's net
assets:
================================================================================
1999 1998
- --------------------------------------------------------------------------------
Chase Vista U.S. Treasury Securities Money Market Fund $ 672,310 $ 604,963
Fidelity Advisor High Yield Fund 418,917 421,725
Fidelity Advisor Balanced Fund 459,243 435,281
Fidelity Advisor Growth Opportunities Fund 2,110,986 1,946,553
Fidelity Advisor Overseas Fund 497,133 267,104
Balchem Corporation Common Stock 349,139 102,512
================================================================================
7
During the years ended December 31, 1999 and 1998, the Plan's investments
(including gains and losses on investments bought and sold, as well as held
during the year) appreciated in value as follows:
======================================================
1999 1998
- ------------------------------------------------------
Mutual funds $ 199,118 $ 243,186
- ------------ ------------ ------------
Common stock 94,244 (99,649)
- ------------ ------ -------
$ 293,362 $ 143,537
------------ ------------
NOTE 4 - PLAN TERMINATION
- -------------------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100 percent vested in their accounts.
NOTE 5 - INCOME TAX STATUS
- --------------------------
The Plan has received a favorable determination letter dated March 26, 1999 from
the Internal Revenue Service ruling that it is a qualified plan pursuant to the
appropriate section of the Internal Revenue Code ("IRC") and, accordingly, the
earnings of the underlying trust of the Plan are not subject to tax under
present income tax law. Once qualified, the Plan is required to operate in
conformity with the IRC to maintain its qualification. The Plan's administrator
believes that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC.
NOTE 6 - WITHDRAWN PARTICIPANTS
- -------------------------------
Amounts allocated to participants who are no longer employed with the Company
but have not elected to withdraw from the Plan were $960,135 and $820,716 at
December 31, 1999 and 1998, respectively.
8
Balchem Corporation
401(k)/Profit Sharing Plan
December 31, 1999
Line 4(I)/ Schedule H Part IV - Schedule of Assets Held for Investment Purposes
Cost Market Value
------------------- ------------------
Chase Vista U.S. Treasury Securities Money Market Fund 672,310 672,310
Fidelity Advisor High Yield Fund 434,009 418,917
Fidelity Advisor Balanced Fund 490,519 459,243
Fidelity Advisor Growth Opportunities Fund 2,418,662 2,110,986
Fidelity Advisor Overseas Fund 424,850 497,133
Cash 544 544
Balchem Corporation Common Stock 296,581 349,139
Participant Loans - 157,389
------------------- ------------------
Total $ 4,737,475 $ 4,665,661
=================== ==================
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: June 28, 2000 BALCHEM CORPORATION
401(k)/Profit Sharing Plan
By: Balchem Corporation,
Plan Administrator
By: /s/ Dino A. Rossi
-----------------------------
Dino A. Rossi, President,
Chief Executive Officer
10
EXHIBIT INDEX
Exhibit No. Exhibit Description
- ----------- -------------------
23 Consent of KPMG LLP