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, 2005
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 Number)
incorporation or organization)
P.O. Box 600 New Hampton, New York 10958
- ---------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
845-326-5600
-------------------------------------------
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
----- ---------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
----- ---------
As of August 5, 2005 the registrant had 7,726,550 shares of its Common Stock,
$.06 2/3 par value, outstanding.
Part 1 - Financial Information
Item 1. Financial Statements
BALCHEM CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
June 30, December 31,
Assets 2005 2004
------ ------------ ------------
Current assets:
Cash and cash equivalents $ 17,762 $ 12,734
Accounts receivable 10,162 7,996
Inventories 7,088 6,319
Prepaid income taxes 153 315
Prepaid expenses 1,002 1,527
Deferred income taxes 324 321
------------ ------------
Total current assets 36,491 29,212
Property, plant and equipment, net 25,122 24,188
Goodwill 13,319 6,368
Intangible assets with finite lives, net 2,144 637
------------ ------------
Total assets $ 77,076 $ 60,405
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Trade accounts payable $ 1,735 $ 1,466
Accrued expenses 1,540 1,212
Accrued compensation and other benefits 1,447 1,492
Customer deposits 415 852
Short-term obligation 10,399 --
Dividends payable -- 685
------------ ------------
Total current liabilities 15,536 5,707
Deferred income taxes 3,574 3,461
Other long-term obligations 1,026 1,003
------------ ------------
Total liabilities 20,136 10,171
------------ ------------
Stockholders' equity:
Preferred stock, $25 par value. Authorized 2,000,000
shares; none issued and outstanding -- --
Common stock, $.0667 par value. Authorized 25,000,000 shares; 7,725,562
shares issued and outstanding at June 30, 2005 and 7,621,158 shares
issued and outstanding at December 31, 2004 515 508
Additional paid-in capital 7,730 6,329
Retained earnings 48,695 43,397
------------ ------------
Total stockholders' equity 56,940 50,234
------------ ------------
------------ ------------
Total liabilities and stockholders' equity $ 77,076 $ 60,405
============ ============
See accompanying notes to condensed consolidated financial statements.
2
BALCHEM CORPORATION
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $ 19,484 $ 16,449 $ 38,824 $ 32,093
Cost of sales 12,372 10,426 24,530 20,457
-------- -------- -------- --------
Gross profit 7,112 6,023 14,294 11,636
Operating expenses:
Selling expenses 1,082 1,178 2,311 2,360
Research and development expenses 560 447 1,045 869
General and administrative expenses 1,191 1,209 2,628 2,290
-------- -------- -------- --------
2,833 2,834 5,984 5,519
-------- -------- -------- --------
Earnings from operations 4,279 3,189 8,310 6,117
Other expenses (income):
Interest (income) (69) (33) (109) (52)
Interest expense 2 55 4 113
Other, net -- -- -- (12)
-------- -------- -------- --------
Earnings before income tax expense 4,346 3,167 8,415 6,068
Income tax expense 1,616 1,166 3,117 2,251
-------- -------- -------- --------
Net earnings $ 2,730 $ 2,001 $ 5,298 $ 3,817
======== ======== ======== ========
Net earnings per common share - basic $ 0.35 $ 0.27 $ 0.69 $ 0.51
======== ======== ======== ========
Net earnings per common share - diluted $ 0.34 $ 0.26 $ 0.66 $ 0.49
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
3
BALCHEM CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended
June 30,
2005 2004
-------- --------
Unaudited
---------
Cash flows from operating activities:
Net earnings $ 5,298 $ 3,817
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 1,340 1,817
Shares issued under employee benefit plans 148 142
Deferred income taxes 110 29
Provision for doubtful accounts (32) --
Provision for income tax benefit of stock options 17 --
Gain on sale of equipment -- (12)
Changes in assets and liabilities net of effects of
acquisition of assets:
Accounts receivable (1,325) (284)
Inventories (44) (1,032)
Prepaid expenses and other current assets 525 (312)
Prepaid income taxes 162 --
Customer deposits (437) --
Accounts payable and accrued expenses 552 269
Other long-term obligations 30 30
-------- --------
Net cash provided by operating activities 6,344 4,464
-------- --------
Cash flows from investing activities:
Capital expenditures (817) (547)
Proceeds from sale of property, plant & equipment 4 90
Cash paid for intangibles assets acquired (42) (46)
Acquisition of assets (11,411) --
-------- --------
Net cash used in investing activities (12,266) (503)
-------- --------
Cash flows from financing activities:
Short-term obligation 10,399 --
Principal payments on long-term debt -- (871)
Proceeds from stock options and warrants exercised 1,243 1,631
Dividends paid (685) (389)
Other financing activities (7) (8)
-------- --------
Net cash provided by financing activities 10,950 363
-------- --------
Increase in cash and cash equivalents 5,028 4,324
Cash and cash equivalents beginning of period 12,734 9,239
-------- --------
Cash and cash equivalents end of period $ 17,762 $ 13,563
======== ========
See accompanying notes to condensed consolidated financial statements.
4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in thousands, except 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, 2004 consolidated financial statements, and should be read in
conjunction with the consolidated financial statements and notes, which appear
in our Annual Report on Form 10-K. References in this report to "the Company"
mean Balchem and/or its subsidiary BCP Ingredients, Inc., as the context
requires.
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 U.S. generally accepted accounting principles
governing interim financial statements and the instructions to Form 10-Q and
Article 10 of Regulation S-X and therefore do not include some information and
notes necessary to conform to annual reporting requirements. The results of
operations for the three and six months ended June 30, 2005 are not necessarily
indicative of the operating results expected for the full year.
NOTE 2 - ACQUISITION OF ASSETS
- ------------------------------
Effective June 30, 2005, pursuant to an asset purchase agreement of same date
(the "Asset Purchase Agreement"), the Company acquired certain assets of Loders
Croklaan USA, LLC ("Seller") relating to the encapsulation, agglomeration and
granulation business for a purchase price including acquisition costs of $9,877
plus $725 for certain product inventories and $809 for certain accounts
receivable. With the exception of $985, which was paid during the quarter ended
June 30, 2005, all of such payment was made on July 1, 2005 from the Company's
cash reserves.
The Asset Purchase Agreement also provides for the contingent payment by the
Company of additional consideration to Seller based upon the volume of sales
associated with one particular product acquired by the Company during the three
year period following the acquisition. Such contingent consideration will be
recorded as an additional cost of the acquired product lines.
The preliminary allocation of the purchase price of the acquisition has been
assigned to the long term net assets acquired as follows:
==================================================================
Fair Value Recorded
in Purchase Accounting
- -----------------------------------------------------------------
Equipment $ 1,436
Customer List 1,350
Patent 140
Goodwill 6,951
- ------------------------------------------------------------------
Total $ 9,877
====================================================================
The purchase price allocations have been made on the basis of estimates made by
the Company. The financial statement items and amounts are subject to subsequent
revision to give effect to reclassifications related to the allocation between
identifiable assets, intangible assets and goodwill and for other
pre-acquisition contingencies that may become resolved during subsequent
periods.
5
The above acquisition has been accounted for using the purchase method of
accounting and the purchase price of the acquisition has been assigned to the
net assets acquired based on the fair value of such assets and liabilities at
the date of acquisition. The consolidated financial statements include the
results of operations of the acquired product lines from the date of purchase.
Pro Forma Summary of Operations
The following unaudited pro forma information has been prepared as if the
aforementioned acquisition had occurred on January 1, 2004 and does not include
cost savings expected from the transaction. In addition to including the results
of operations, the pro forma information gives effect primarily to changes in
depreciation and amortization of tangible and intangible assets resulting from
the acquisition.
The pro forma information presented does not purport to be indicative of the
results that actually would have been attained if the aforementioned acquisition
had occurred at the beginning of the periods presented and is not intended to be
a projection of future results.
====================================================================
Pro-Forma
Three Months Ended
June 30,
2005 2004
- --------------------------------------------------------------------
Net sales $ 21,112 $ 17,774
Net earnings 2,942 2,296
Basic EPS .38 .31
Diluted EPS .37 .30
====================================================================
====================================================================
Pro-Forma
Six Months Ended
June 30,
2005 2004
- --------------------------------------------------------------------
Net sales $ 42,111 $ 34,603
Net earnings 5,870 4,416
Basic EPS .76 .59
Diluted EPS .73 .57
====================================================================
NOTE 3 - STOCK OPTION PLAN
- --------------------------
At June 30, 2005, the Company has stock based employee compensation plans. The
Company accounts for its stock option plans in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees" and related interpretations. As such, compensation expense is
recorded on the date of grant only if the current market price of the underlying
stock exceeds the exercise price. No stock based employee compensation cost is
reflected in net earnings, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant. The Company has adopted the disclosure standards of Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation" and SFAS 148, "Accounting for Stock-
6
Based Compensation - Transition and Disclosure an amendment of FASB Statement
123," which require the Company to provide pro forma net earnings and pro forma
earnings per share disclosures for employee and director stock option grants
made as if the fair-value based method of accounting for stock options as
defined in SFAS No. 123 has been applied. The following table illustrates the
effect on net earnings and per share amounts if the Company had applied the fair
value recognition provisions of SFAS No. 123 to stock based employee
compensation:
==================================================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
- ------------------------------------------------------------------------------------------------------------------
Net Earnings
Net earnings, as reported $ 2,730 $ 2,001 $ 5,298 $ 3,817
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method, net
of related tax effects (154) (191) (308) (386)
------------------------------------------------------------------
Net earnings as adjusted $ 2,576 $ 1,810 $ 4,990 $ 3,431
==================================================================
Earnings per share:
Basic EPS as reported $ .35 $ .27 $ .69 $ .51
Basic EPS as adjusted $ .33 $ .24 $ .65 $ .46
Diluted EPS as reported $ .34 $ .26 $ .66 $ .49
Diluted EPS as adjusted $ .32 $ .23 $ .62 $ .45
- ------------------------------------------------==================================================================
The fair value of each stock option granted during the six months ended June 30,
2005 and 2004 is estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions:
==============================================================================
2005 2004
- ------------------------------------------------------------------------------
Expected life (years) 4 3
Expected volatility 27% 27%
Expected dividend yield .39% .34%
Risk-free interest rate 3.56% 2.88%
Weighted average fair value of options
granted $6.94 $4.49
==============================================================================
NOTE 4 - INVENTORIES
- --------------------
Inventories at June 30, 2005 and December 31, 2004 consist of the following:
==============================================================================
June 30, December 31,
2005 2004
- ------------------------------------------------------------------------------
Raw materials $ 2,872 $ 2,305
Finished goods 4,216 4,014
- ------------------------------------------------------------------------------
Total inventories $ 7,088 $ 6,319
==============================================================================
The June 30, 2005 balance reflects inventory acquired as part of the Loders
Croklaan USA, LLC encapsulation, agglomeration and granulation business
described in note 2, above.
7
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------
Property, plant and equipment at June 30, 2005 and December 31, 2004 are
summarized as follows:
======================================================================
June 30, December 31,
2005 2004
- ----------------------------------------------------------------------
Land $ 290 $ 290
Building 10,249 10,241
Equipment 30,254 28,619
Construction in Progress 977 387
- ----------------------------------------------------------------------
41,770 39,537
Less: Accumulated depreciation 16,648 15,349
- ----------------------------------------------------------------------
Net property, plant and equipment $ 25,122 $ 24,188
======================================================================
The June 30, 2005 balance reflects equipment acquired as part of the Loders
Croklaan USA, LLC encapsulation, agglomeration and granulation business
described in note 2, above.
NOTE 6 - INTANGIBLE ASSETS
- --------------------------
Goodwill represents the excess of costs over fair value of assets of businesses
acquired. The Company adopted the provisions of SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, as of
January 1, 2002. These standards require the use of the purchase method of
business combination and define an intangible asset. Goodwill and intangible
assets acquired in a purchase business combination and determined to have an
indefinite useful life are not amortized, but instead tested for impairment at
least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142
also requires that intangible assets with estimable useful lives be amortized
over their respective estimated useful lives to their estimated residual values,
and reviewed for impairment in accordance with SFAS No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets.
As of December 31, 2004, the Company performed an impairment test of its
goodwill balance. As of such date, the Company's reporting units' fair values
exceeded their carrying amounts, and therefore there was no indication that
goodwill was impaired. Accordingly, the Company was not required to perform any
further impairment tests. The Company performs its impairment test each December
31.
The Company has goodwill in the amount of $13,319 and $6,368 at June 30, 2005
and December 31, 2004, respectively, subject to the provisions of SFAS Nos. 141
and 142. At June 30, 2005, the balance of goodwill includes the cost in excess
of net assets acquired of the acquired assets of the Loders Croklaan USA, LLC
encapsulation, agglomeration and granulation business, described in note 2,
above, of $6,951.
As of June 30, 2005 and December 31, 2004, the Company had identifiable
intangible assets with finite lives with a gross carrying value of approximately
$2,331 and $7,915, respectively, less accumulated amortization of $187 and
$7,278, respectively. At June 30, 2005, the gross carrying amount included a
customer list and patent acquired as part of the acquisition of certain assets
of the Loders Croklaan USA, LLC encapsulation, agglomeration and granulation
business, described in note 2, above. At December 31, 2004, the gross carrying
amount and accumulated amortization included other customer lists and
re-registration costs that were fully amortized during 2004. These fully
8
amortized customer lists and re-registration costs were written-off on March 31,
2005 and, therefore, were not included in the gross carrying amount and
accumulated amortization at June 30, 2005.
Identifiable intangible assets with finite lives at June 30, 2005 and December
31, 2004 are summarized as follows:
==============================================================================================================
Gross Gross
Amortization Carrying Accumulated Carrying Accumulated
Period Amount at Amortization Amount at Amortization
(In years) 6/30/05 at 6/30/05 12/31/04 at 12/31/04
- --------------------------------------------------------------------------------------------------------------
Customer lists 10 $ 1,350 -- $6,760 $6,760
Re-registration costs 10 -- -- 356 356
Patents 15-17 718 120 538 105
Trademarks 17 209 43 207 37
Other 5 54 24 54 20
- --------------------------------------------------------------------------------------------------------------
$ 2,331 $ 187 $ 7,915 $7,278
==============================================================================================================
Amortization of identifiable intangible assets was approximately $25 for the
first six months of 2005. Assuming no change in the gross carrying value of
identifiable intangible assets, the estimated amortization expense for the
remainder of 2005 is $105 and approximately $194 per annum for 2006 through
2009. At June 30, 2005, there were no identifiable intangible assets with
indefinite useful lives as defined by SFAS No. 142. Identifiable intangible
assets are reflected in "Intangible assets with finite lives, net" in the
Company's consolidated balance sheets. There were no changes to the useful lives
of intangible assets subject to amortization during the six months ended June
30, 2005.
NOTE 7 - NET EARNINGS PER SHARE
- -------------------------------
The following presents a reconciliation of the net earnings and shares used in
calculating basic and diluted net earnings per share:
============================================================================================
Net Number of
Earnings Shares Per Share
Three months ended June 30, 2005 (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------------------
Basic EPS - Net earnings and weighted
average common shares outstanding $2,730 7,709,474 $.35
Effect of dilutive securities - stock options 324,121
----------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $2,730 8,033,595 $.34
============================================================================================
9
============================================================================================
Net Number of
Earnings Shares Per Share
Three months ended June 30, 2004 (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------------------
Basic EPS - Net earnings and weighted
average common shares outstanding $ 2,001 7,479,039 $ .27
Effect of dilutive securities - stock options 252,974
---------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $ 2,001 7,732,013 $ .26
============================================================================================
============================================================================================
Net Number of
Earnings Shares Per Share
Six months ended June 30, 2005 (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------------------
Basic EPS - Net earnings and weighted
average common shares outstanding $ 5,298 7,685,093 $ .69
Effect of dilutive securities - stock options 306,628
---------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $ 5,298 7,991,721 $ .66
============================================================================================
============================================================================================
Net Number of
Earnings Shares Per Share
Six months ended June 30, 2004 (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------------------
Basic EPS - Net earnings and weighted
average common shares outstanding $ 3,817 7,456,607 $ .51
Effect of dilutive securities - stock options 244,621
---------
Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options $ 3,817 7,701,228 $ .49
============================================================================================
The Company had stock options covering 25,000 and 15,000 shares at June 30, 2005
and 2004, respectively, that could potentially dilute basic earnings per share
in future periods that were not included in diluted earnings per share because
their effect on the period presented was anti-dilutive.
10
NOTE 8 - SEGMENT INFORMATION
- ----------------------------
The Company's reportable segments are strategic businesses that offer products
and services to different markets. Presently, the Company has three segments:
specialty products, encapsulated / nutritional products and BCP Ingredients, its
unencapsulated feed supplements segment.
Business Segment Net Sales:
==========================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
- ------------------------------------------------------------------------------------------
Specialty Products $ 7,603 $ 7,116 $ 14,736 $ 14,144
Encapsulated/Nutritional
Products 6,787 6,377 14,628 12,023
BCP Ingredients 5,094 2,956 9,460 5,926
- ------------------------------------------------------------------------------------------
Total $ 19,484 $ 16,449 $ 38,824 $ 32,093
==========================================================================================
Business Segment Earnings (Loss):
==========================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
- ------------------------------------------------------------------------------------------
Specialty Products $ 2,926 $ 2,522 $ 5,531 $ 5,098
Encapsulated/Nutritional
Products 609 472 1,486 556
BCP Ingredients 744 195 1,293 463
Interest and other income
(expense) 67 (22) 105 (49)
- ------------------------------------------------------------------------------------------
Earnings before income
taxes $ 4,346 $ 3,167 $ 8,415 $ 6,068
==========================================================================================
NOTE 9- SUPPLEMENTAL CASH FLOW INFORMATION
- ------------------------------------------
Cash paid during the six months ended June 30, 2005 and 2004 for income taxes
and interest is as follows:
===============================================
Six Months Ended
June 30,
2005 2004
- -----------------------------------------------
Income taxes $ 2,828 $ 2,316
Interest $ 4 $ 113
===============================================
NOTE 10 - COMMON STOCK
- ----------------------
On December 16, 2004, the Board of Directors of the Company approved a
three-for-two split of the Company's common stock to be distributed in the form
of a stock dividend to shareholders of record on December 30, 2004. Such
distribution was made on January 20, 2005. Accordingly, the stock split was
recognized by reclassifying the par value of the
11
additional shares resulting from the split, from additional paid-in capital to
common stock. All references to number of common shares and per share amounts
except shares authorized in the accompanying consolidated financial statements
were retroactively adjusted to reflect the effect of the stock split.
In June 1999, the board of directors authorized the repurchase of shares of the
Company's outstanding common stock over a two-year period commencing July 2,
1999, which was subsequently extended. Through June 30, 2005, the Company has
repurchased 514,974 shares at an average cost of $6.17 per share of which no
shares remain in treasury at June 30, 2005. In June 2005, the board of directors
authorized an extension to the stock repurchase program for up to an additional
600,000 shares, that is, over and above those 514,974 shares repurchased to date
under the program, through June 30, 2005.
NOTE 11 - DEBT AND CREDIT AGREEMENTS
- ------------------------------------
There was no long-term debt outstanding at June 30, 2005. On June 1, 2001, the
Company and its principal bank entered into a loan agreement (the "Loan
Agreement") providing for a term loan of $13,500 (the "Term Loan"), the proceeds
of which were used to fund the acquisition of certain assets of DCV, Inc. and
its affiliate Ducoa L.P., (described in Note 4 of the Company's Form 10-K as of
December 31, 2004). During the quarter ended December 31, 2004, the Company
prepaid $7,839, the remaining balance of the Term Loan. Borrowings at June 30,
2004 included borrowings under the Term Loan bearing interest at LIBOR plus
1.25% (2.36% at June 30, 2004). Certain provisions of the Term Loan require
maintenance of certain financial ratios, limit future borrowings, and impose
certain other requirements as contained in the agreement. The Loan Agreement
also provides for a short-term revolving credit facility of $3,000 (the
"Revolving Facility"). Borrowings under the Revolving Facility bear interest at
LIBOR plus 1.00%. No amounts have been drawn on the Revolving Facility as of the
date hereof. The Revolving Facility was extended and now expires on May 31,
2006. Management believes that such facility will be renewed in the normal
course of business.
Indebtedness under the Loan Agreement is secured by substantially all of the
assets of the Company other than real properties.
The short term obligation at June 30, 2005 of $10,399 represents the amount due
for the assets acquired relating to the Loders Croklaan USA, LLC encapsulation,
aggolmeration and granulation acquisition, described in note 2, above.
NOTE 12 - EMPLOYEE BENEFIT PLANS
- --------------------------------
The Company sponsors a 401(k) savings and profit sharing plan for eligible
employees. The plan allows participants to make pretax contributions and the
Company matches certain percentages of those pretax contributions with shares of
the Company's common stock. The profit sharing portion of the plan is
discretionary and non-contributory. All amounts contributed to the plan are
deposited into a trust fund administered by independent trustees.
The Company also currently provides postretirement benefits in the form of an
unfunded retirement medical plan under a collective bargaining agreement
covering eligible retired employees of its Verona facility.
Net periodic benefit cost for such retirement medical plan for the six months
ended June 30 was as follows:
12
=========================================================================
2005 2004
- -------------------------------------------------------------------------
Service Cost $ 17 $ 16
Interest Cost 26 25
Expected return on plan assets -- --
Amortization of transition obligation -- --
Amortization of prior service cost (6) (2)
Amortization of (gain) or loss -- --
- -------------------------------------------------------------------------
Net periodic benefit cost $ 37 $ 39
=========================================================================
The plan is unfunded and approved claims are paid from Company funds. Historical
cash payments made under such plan approximated $50 per year.
In December 2003, the Medicare Prescription Drug, Improvement and Modernization
Act of 2003 ("the Act") was signed into law. The Act introduced a plan sponsor
subsidy based on a percentage of a beneficiary's annual prescription drug
benefits, within defined limits, and the opportunity for a retiree to obtain
prescription drug benefits under Medicare. There is no impact of the subsidy on
the postretirement benefit obligation and net periodic cost as Medicare eligible
retirees are not covered under the Company's plan.
NOTE 13 - NEW ACCOUNTING PRONOUNCEMENTS
- ---------------------------------------
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment." SFAS
No. 123(R) revises SFAS No. 123, Accounting for Stock-Based Compensation, and
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its
related implementation guidance. SFAS No. 123(R) will require compensation costs
related to share-based payment transactions to be recognized in the financial
statements (with limited exceptions). The amount of compensation cost will be
measured based on the grant-date fair value of the equity or liability
instruments issued. Compensation cost will be recognized over the period that an
employee provides service in exchange for the award. This statement was
originally effective as of the beginning of the first interim or annual
reporting period that begins after June 15, 2005. On April 14, 2005, the SEC
adopted a new rule that amended the compliance dates of SFAS No. 123R to require
implementation no later than the beginning of the first fiscal year after June
15, 2005 (the year beginning January 1, 2006 for the Company). The Company is
currently evaluating the impact of this standard on its results of operations
and financial position.
In November 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 151, "Inventory Costs." The new statement
amends Accounting Research Bulletin No. 43, Chapter 4, "Inventory Pricing," to
clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material. This statement requires that those items be
recognized as current period charges and requires that allocation of fixed
production overheads to the cost of conversion be based on the normal capacity
of the production facilities. This statement is effective for fiscal years
beginning after June 15, 2005. The Company does not expect adoption of this
statement to have a material impact on its financial condition or results of
operations.
13
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations (All dollar amounts in thousands)
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, 2004 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.
RESULTS OF OPERATIONS
---------------------
Overview
- --------
The Company develops, manufactures and markets specialty performance ingredients
and products for the food, feed and medical device sterilization industries. The
Company's reportable segments are strategic businesses that offer products and
services to different markets. The Company presently has three reportable
segments: specialty products, encapsulated / nutritional products and BCP
Ingredients.
Specialty Products
- ------------------
The specialty products segment repackages and distributes the following
specialty gases: ethylene oxide, blends of ethylene oxide, propylene oxide and
methyl chloride.
Ethylene oxide, at the 100% level, is sold as a sterilant gas, in returnable
cylinders, primarily for use in the health care industry to sterilize medical
devices. Contract sterilizers, medical device manufacturers and medical gas
distributors are the Company's principal customers for this product. In
addition, the Company sells 100% ethylene oxide in single use canisters to
customers that sell medical device sterilization equipment commonly found in
hospitals or doctor's offices. Blends of ethylene oxide are sold as fumigants
and are highly effective in killing bacteria, fungi, and insects in spices and
other seasoning materials. Propylene oxide and methyl chloride are sold
principally to customers seeking smaller (as opposed to bulk) quantities.
Management believes that future success in this segment is highly dependent on
the Company's ability to maintain its strong reputation for excellent quality,
safety and customer service. The Company is also required to maintain an EPA
regulatory permit.
Encapsulated / Nutritional Products
- -----------------------------------
The encapsulated / nutritional products segment predominantly encapsulates food
and nutritional ingredients for use throughout the food and animal health
industries to enhance performance of nutritional fortification, processing,
mixing, packaging applications and shelf-life. Major end product applications
are baked goods, refrigerated
14
and frozen dough systems, processed meats, seasoning blends, confections,
nutritional supplementations and animal nutrition.
Management believes this segment's key strengths are its proprietary technology
and end-product application capabilities. The success of the Company's efforts
to increase revenue in this segment is highly dependent on the timing of
marketing launches of new products in the U.S. and international food market by
the Company's customers and prospects. The Company, through its proprietary
technology and applications expertise, continues to develop new
microencapsulation products designed to solve and respond to customer problems
and needs. Sales of our REASHURE (TM) and NITROSHURE (TM) products for the
animal nutrition and health industry are highly dependent on dairy industry
economics as well as the ability of the Company to leverage the results of
existing successful university research on the animal health benefits of these
products.
BCP Ingredients
- ---------------
BCP Ingredients manufactures and supplies choline chloride, an essential
nutrient for animal health, to the poultry and swine industries. In addition,
certain derivatives of choline chloride are also marketed into industrial
applications.
Management believes that success in this commodity-oriented marketplace is
highly dependent on the Company's ability to maintain its strong reputation for
excellent quality and customer service. In addition, the Company must continue
to realize production efficiencies in order to maintain its low-cost position to
effectively compete for market share in a highly competitive marketplace.
The Company sells products for all segments through its own sales force,
independent distributors, and sales agents.
The following tables summarize consolidated net sales by segment and business
segment earnings for the three and six months ended June 30 (in thousands):
Business Segment Net Sales:
================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
- --------------------------------------------------------------------------------
Specialty Products $ 7,603 $ 7,116 $14,736 $14,144
Encapsulated/Nutritional
Products 6,787 6,377 14,628 12,023
BCP Ingredients 5,094 2,956 9,460 5,926
- --------------------------------------------------------------------------------
Total $19,484 $16,449 $38,824 $32,093
================================================================================
15
Business Segment Earnings (Loss):
================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
- --------------------------------------------------------------------------------
Specialty Products $ 2,926 $ 2,522 $ 5,531 $ 5,098
Encapsulated/Nutritional
Products 609 472 1,486 556
BCP Ingredients 744 195 1,293 463
Interest and other income
(expense) 67 (22) 105 (49)
- --------------------------------------------------------------------------------
Earnings before income
taxes $ 4,346 $ 3,167 $ 8,415 $ 6,068
================================================================================
Three months ended June 30, 2005 compared to three months ended June 30, 2004
Net Sales
- ---------
Net sales for the three months ended June 30, 2005 were $19,484 compared with
$16,449 for the three months ended June 30, 2004, an increase of $3,035 or
18.5%. Net sales for the specialty products segment were $7,603 for the three
months ended June 30, 2005 compared with $7,116 for the three months ended June
30, 2004, an increase of $487 or 6.8%. This increase was principally due to an
increase in sales volume of ethylene oxide for medical device sterilization as
well as a modest price increase adopted early in 2005 to help offset rising raw
material costs. This increase was partially offset by a decline in volumes sold
in the ethylene oxide blends product line. Net sales for the encapsulated /
nutritional products segment were $6,787 for the three months ended June 30,
2005 compared with $6,377 for the three months ended June 30, 2004, an increase
of $410 or 6.4% This increase was due principally to volume improvements in the
domestic food market as well as increased sales in the animal health industry of
REASHURE (TM) and the introduction of NIASHURE (TM), our microencapsulated
niacin product for dairy cows, and was partially offset by a decline in volumes
sold in the international food and human choline nutrient product lines. Net
sales of $5,094 were realized for the three months ended June 30, 2005 for the
BCP Ingredients (unencapsulated feed supplements) segment, which markets choline
additives for the poultry and swine industries as well as industrial choline
derivative products, as compared with $2,956 for the three months ended June 30,
2004, an increase of $2,138 or 72.3%. This increase was due to increased sales
volumes and modest price increases in key lines.
Gross Margin
- ------------
Gross margin for the three months ended June 30, 2005 increased to $7,112
compared to $6,023 for the three months ended June 30, 2004. Gross margin
percentage for the three months ended June 30, 2005 was 36.5% compared to 36.6%
for the three months ended June 30, 2004. Margins for the specialty products
segment increased slightly as increased sales volume, in addition to lower
amortization expense, were partially offset by
16
increases in raw material prices and distribution costs. Gross margin percentage
in the encapsulated / nutritional products segment also increased slightly as
margins were favorably affected by increased production, a result of greater
sales volume as described above. Margins for BCP Ingredients increased 6.8% and
were favorably affected by increased production volumes of choline chloride and
specialty derivative products.
Operating Expenses
- ------------------
Operating expenses for the three months ended June 30, 2005 decreased slightly
to $2,833 from $2,834 for the three months ended June 30, 2004. Total operating
expenses as a percentage of sales were 14.5% for the three months ended June 30,
2005 compared to 17.2% for the three months ended June 30, 2004. During the
three months ended June 30, 2005 and 2004, the Company spent $561 and $447,
respectively, on Company-sponsored research and development programs,
substantially all of which pertained to the Company's encapsulated / nutritional
products segment for both food and animal feed applications.
Earnings From Operations
- ------------------------
As a result of the foregoing, earnings from operations for the three months
ended June 30, 2005 were $4,279 as compared to $3,189 for the three months ended
June 30, 2004.
Other expenses (income)
- -----------------------
Interest income for the three months ended June 30, 2005 totaled $69 as compared
to $33 for the three months ended June 30, 2004. This increase is attributable
to the increase in the average total cash balance. Interest expense was $2 for
the three months ended June 30, 2005 compared to $55 for the three months ended
June 30, 2004. This decrease is the result of the prepayment of the Company's
outstanding loan balance in December 2004.
Income Tax Expense
- ------------------
The Company's effective tax rate for the three months ended June 30, 2005 and
2004 was 37.8% and 37.2%, respectively.
Net earnings
- ------------
As a result of the foregoing, net earnings were $2,730 for the three months
ended June 30, 2005 as compared with $2,001 for the three months ended June 30,
2004, an increase of 36.4%.
17
Six months ended June 30, 2005 compared to six months ended June 30, 2004
Net Sales
- ---------
Net sales for the six months ended June 30, 2005 were $38,824 compared with
$32,093 for the six months ended June 30, 2004, an increase of $6,731 or 21.0%.
Net sales for the specialty products segment were $14,736 for the six months
ended June 30, 2005 compared with $14,144 for the six months ended June 30,
2004, an increase of $592 or 4.2%. This increase was due principally to greater
sales volumes of ethylene oxide for medical device sterilization and single use
ethylene oxide canisters for use in sterilization equipment. Net sales for the
encapsulated / nutritional products segment were $14,628 for the six months
ended June 30, 2005 compared with $12,023 for the six months ended June 30,
2004, an increase of $2,605 or 21.7%, led by volume improvements in the domestic
and international food markets as well as increased sales in the animal health
industry of REASHURE (TM) and NITROSHURE (TM), as well as the introduction of
NIASHURE (TM), our encapsulated niacin product for dairy cows. Net sales of
$9,460 were realized for the six months ended June 30, 2005 in the BCP
Ingredients segment compared with $5,926 for the six months ended June 30, 2004,
an increase of $3,534 or 59.6%. This increase was due to increased volumes sold
in the dry choline, aqueous choline, and specialty industrial product lines,
along with modest price increases in all three product lines.
Gross Margin
- ------------
Gross margin for the six months ended June 30, 2005 increased to $14,294
compared to $11,636 for the six months ended June 30, 2004. Gross margin
percentage for the six months ended June 30, 2005 was 36.8% as compared to 36.3%
for the six months ended June 30, 2004. Gross margin percentage for the
specialty products segment increased slightly as a result of increased sales
volume and product mix in addition to lower amortization expense, partially
offset by increases in raw material prices and distribution costs. Gross margin
percentage in the encapsulated / nutritional products segment increased 3.6% as
the increased production volume yielded favorable production variances. Gross
margin percentage in BCP Ingredients increased 4.7% and was favorably affected
by increased production volumes of choline chloride and specialty derivative
products.
Operating Expenses
- ------------------
Operating expenses for the six months ended June 30, 2005 increased to $5,984
from $5,519 for the six months ended June 30, 2004, an increase of $465 or 8.4%.
Total operating expenses as a percentage of sales were 15.4% for the six months
ended June 30, 2005 compared to 17.2% for the six months ended June 30, 2004.
The increase in operating expense for the six months ended June 30, 2005 was
principally a result of new hires, increased charges for search fees associated
with new hires, and higher professional fees, including those required to comply
with the Sarbanes Oxley Act. These increases were partially offset by a decrease
in selling expenses. Such decrease is principally a result of the Company having
realized additional expenses for organizational and business model changes in
the Encapsulated/Nutritional Products segment in the fourth quarter of 2003 and
the first quarter of 2004. During the six months ended June 30, 2005 and 2004,
the Company spent $1,045 and $869, respectively, on Company-sponsored
18
research and development programs, substantially all of which pertained to the
Company's encapsulated / nutritional products segment for both food and animal
feed applications.
Earnings From Operations
- ------------------------
As a result of the foregoing, earnings from operations for the six months ended
June 30, 2005 were $8,310 as compared to $6,117 for the six months ended June
30, 2004.
Other expenses (income)
- -----------------------
Interest income for the six months ended June 30, 2005 totaled $109 as compared
to $52 for the six months ended June 30, 2004. This increase is attributable to
the increase in the average total cash balance. Interest expense was $4 for the
six months ended June 30, 2005 compared to $113 for the three months ended June
30, 2004. This decrease is the result of the prepayment of the Company's
outstanding loan balance in December 2004.
Income Tax Expense
- ------------------
The Company's effective tax rate for the six months ended June 30, 2005 and 2004
was 37.5% compared to a 37.2% rate for the six months ended June 30, 2004
Net earnings
- ------------
As a result of the foregoing, net earnings were $5,298 for the six months ended
June 30, 2005 as compared with $3,817 for the six months ended June 30, 2004.
19
FINANCIAL CONDITION
-------------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Contractual Obligations
- -----------------------
Effective June 30, 2005, pursuant to an asset purchase agreement of same date
(the "Asset Purchase Agreement"), the Company acquired certain assets of Loders
Croklaan USA, LLC ("Seller") relating to the encapsulation, agglomeration and
granulation business for a purchase price including acquisition costs of $9,877
plus $725 for certain product inventories and $809 for certain accounts
receivable. With the exception of $985, which was paid during the quarter ended
June 30, 2005, all of such payment was made on July 1, 2005 from the Company's
cash reserves.
The Asset Purchase Agreement also provides for the contingent payment by the
Company of additional consideration to Seller based upon the volume of sales
associated with one particular product acquired by the Company during the three
year period following the acquisition. Such contingent consideration will be
recorded as an additional cost of the acquired product lines.
The Company's other contractual obligations and commitments principally include
obligations associated with future minimum non-cancelable operating lease
obligations (including for the headquarters office space entered into in 2002).
The Company knows of no current or pending demands on, or commitments for, its
liquid assets that will materially affect its liquidity.
The Company expects its operations to continue generating sufficient cash flow
to fund working capital requirements and necessary capital investments. The
Company is actively pursuing additional acquisition candidates. While at the
present time it has no agreements or understandings to enter into any such
transactions, the Company could seek bank loans or access to financial markets
to fund such acquisitions, its operations, working capital, necessary capital
investments or other cash requirements should it deem it necessary to do so.
20
Cash
- ----
Cash and cash equivalents increased to $17,762 at June 30, 2005 from $12,734 at
December 31, 2004. The $5,028 increase resulted primarily from an increase in
net cash provided by operating activities and financing activities of $6,344 and
$10,950, respectively, offset partially by net cash used in investing activities
of $12,266 principally for capital expenditures, including the acquisition of
certain assets of the Loders Croklaan USA, LLC fluidized bed encapsulation and
granulation business on June 30, 2005. Working capital amounted to $20,955 at
June 30, 2005 as compared to $23,505 at December 31, 2004, a decrease of $2,550.
Operating Activities
- --------------------
Cash flows from operating activities provided $6,344 for the six months ended
June 30, 2005 compared to $4,464 for the six months ended June 30, 2004. The
increase in cash flows from operating activities was due primarily to an
increase in earnings partially offset by an increase in accounts receivable and
a decrease in depreciation and amortization expense.
Investing Activities
- --------------------
Capital expenditures were $817 for the six months ended June 30, 2005 compared
to $547 for the six months ended June 30, 2004. Cash paid for product lines
acquired for the acquisition of assets of the Loders Croklaan USA, LLC fluidized
bed encapsulation and granulation business, including acquisition costs, was
$11,411. With the exception of $985, which was paid during the quarter ended
June 30, 2005, all of such payment was made on July 1, 2005 from the Company's
cash reserves.
Financing Activities
- --------------------
In June 1999, the board of directors authorized the repurchase of shares of the
Company's outstanding common stock over a two-year period commencing July 2,
1999, which was subsequently extended. Through June 30, 2005, the Company has
repurchased 514,974 shares at an average cost of $6.17 per share of which no
shares remain in treasury at June 30, 2005. In June 2005, the board of directors
authorized an extension to the stock repurchase program for up to an additional
600,000 shares, that is, over and above those 514,974 shares repurchased to date
under the program, through June 30, 2006. 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 factors, on its assessment of corporate
cash flow and market conditions.
There was no debt outstanding at June 30, 2005. On June 1, 2001, the Company and
its principal bank entered into a Loan Agreement (the "Loan Agreement")
providing for a term loan of $13,500 (the "Term Loan"), the proceeds of which
were used to fund the acquisition of certain assets of DCV, Inc. and its
affiliate Ducoa L.P. During the quarter ended December 31, 2004, the Company
prepaid $7,839, the remaining balance of the
21
Term Loan. Borrowings at June 30, 2004 included borrowings under the Term Loan
bearing interest at LIBOR plus 1.25% (2.36% at June 30, 2004). Certain
provisions of the Term Loan require maintenance of certain financial ratios,
limit future borrowings, and impose certain other requirements as contained in
the agreement. At June 30, 2005 and 2004, the Company was in compliance with all
restrictive covenants contained in the Loan Agreement. The Loan Agreement also
provides for a short-term revolving credit facility of $3,000 (the "Revolving
Facility"). Borrowings under the Revolving Facility bear interest at LIBOR plus
1.00%. No amounts have been drawn on the Revolving Facility as of June 30, 2005
and 2004. The Revolving Facility was extended and now expires on May 31, 2006.
Management believes that such facility will be renewed in the normal course of
business.
Indebtedness under the Loan Agreement is secured by substantially all of the
assets of the Company other than real properties.
Proceeds from stock options exercised totaled $1,243 and $1,631 for the six
months ended June 30, 2005 and 2004, respectively. Dividend payments were $685
and $389 for the six months ended June 30, 2005 and 2004, respectively.
Other Matters Impacting Liquidity
- ---------------------------------
Effective June 30, 2005, Balchem Corporation (the "Company"), acquired certain
assets of the Loders Croklaan USA, LLC encapsulation, agglomeration and
granulation business for a purchase price in cash of $9,877 plus $725 for
certain product inventories and $809 for certain accounts receivable. With the
exception of $985, which was paid during the quarter ended June 30, 2005, all of
such payment was made on July 1, 2005 from the Company's cash reserves.
The Company currently provides postretirement benefits in the form of a
retirement medical plan under a collective bargaining agreement covering
eligible retired employees of its Verona facility. The amount recorded on the
Company's balance sheet as of June 30, 2005 for this obligation is $964. The
postretirement plan is not funded. Historical cash payments made under such plan
have approximated $50 per year.
Critical Accounting Policies
- ----------------------------
There were no changes to the Company's Critical Accounting Policies, as
described in its December 31, 2004 Annual Report on Form 10-K, during the six
months ended June 30, 2005.
Related Party Transactions
- --------------------------
The Company was not engaged in related party transactions during the three and
six months ended June 30, 2005 and all transactions of the Company during such
period were at arms length.
22
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Cash and cash equivalents are invested primarily in money market accounts.
Accordingly, we believe we have limited exposure to market risk for changes in
interest rates. 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.
23
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the
Company's management, under the supervision and with the participation of
the Company's Chief Executive Officer and Chief Financial Officer, has
evaluated, as of the end of the period covered by this Quarterly Report on
Form 10-Q, the effectiveness of the Company's disclosure controls and
procedures (including its internal controls and procedures), except for
the disclosure controls and procedures of the Loders Croklaan
encapsulation, agglomeration and granulation business, which were excluded
from management's evaluation. We completed the acquisition of this
business on June 30, 2005, and it was not possible to conduct a complete
assessment of the business' disclosure controls and procedures in the
period between the completion of the acquisition and the date of our
management's assessment of our disclosure controls and procedures.
Based upon management's evaluation, the Chief Executive Officer and the
Chief Financial Officer have concluded that, as of the end of such period,
the Company's disclosure controls and procedures were effective in
identifying the information required to be disclosed in the Company's
periodic reports filed with the Security and Exchange Commission ("SEC"),
including this Quarterly Report on Form 10-Q, and ensuring that such
information is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms.
(b) Changes in Internal Controls
During the most recent fiscal quarter, there has been no significant
change in the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
24
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
On June 23, 2005, the Company held its annual meeting of stockholders, at which
two Class I directors were elected. The following directors were elected to
serve until the annual meeting of stockholders in 2007 and until the election
and qualification of their respective successors and shares of the Company were
voted as follows:
Director For Votes Withheld
--------- ----------------- --------------
Hoyt Ammidon, Jr. 6,525,966 639,285
----------------- --------------
Dr. John Y. Televantos 6,772,519 392,732
----------------- --------------
The other directors of the Company whose term of office continued after the
annual meeting are: Edward L. McMillan, Kenneth P. Mitchell, Dino A. Rossi, and
Elaine R. Wedral.
In addition, the following matter was voted on and approved by the stockholders:
To approve an amendment to the first paragraph of Article Fourth of the
Corporation's Restated Articles of Incorporation which increases the total
number of shares of common stock which the Corporation has authority to
issue from ten million (10,000,000) shares of common stock to twenty-five
million (25,000,000) shares.
The voting of shares on this proposal was as follows:
For Against Abstain Broker Non-vote
-------------------------------------------------------------------------------
5,639,019 1,521,927 4,305
Item 6. Exhibits
Exhibit 3.1 Composite Articles of Incorporation of Balchem
Corporation
Exhibit 31.1 Certification of Chief Executive Officer pursuant to
Rule 13a-14(a).
Exhibit 31.2 Certification of Chief Financial Officer pursuant to
Rule 13a-14(a).
Exhibit 32.1 Certification of Chief Executive Officer pursuant to
Rule 13a-14(b) and Section 1350 of Chapter 63 of
Title 18 of the United States Code.
25
Exhibit 32.2 Certification of Chief Financial Officer pursuant to
Rule 13a-14(b) and Section 1350 of Chapter 63 of Title
18 of the United States Code.
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 and
Chief Executive Officer
Date: August 8, 2005
26
Exhibit Index
Exhibit No. Description
- ----------- -----------
Exhibit 3.1 Composite Articles of Incorporation of Balchem Corporation
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a).
Exhibit 31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a).
Exhibit 32.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code.
Exhibit 32.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code.
27