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, 2004
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
52 Sunrise Park Road
PO Box 600
New Hampton, NY 10958
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, 2004 are presented herein.
Exhibits:
Consent of MCGLADREY & PULLEN, LLP, Independent Registered Public Accounting
Firm
Consent of KPMG LLP, Independent Registered Public Accounting Firm
EXHIBIT INDEX
Exhibit No. Exhibit Description
----------- -------------------
23 Consent of MCGLADREY & PULLEN, LLP
24 Consent of KPMG LLP
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, 2005 BALCHEM CORPORATION
401(k)/Profit Sharing Plan
By: Balchem Corporation,
Plan Administrator
By:/s/ Dino A. Rossi
--------------------------------
Dino A. Rossi, President,
Chief Executive Officer
By:/s/ Francis J. Fitzpatrick
--------------------------------
Francis J. Fitzpatrick,
Chief Financial Officer
BALCHEM CORPORATION
401(k)/ PROFIT SHARING PLAN
Financial Statements
and Supplemental Schedules
December 31, 2004 and 2003
(With Reports of Independent Registered Public Accounting Firms)
550SH
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Table of Contents
Page
Report of Independent Registered Public Accounting Firm - 2004 1
Report of Independent Registered Public Accounting Firm - 2003 2
Statements of Net Assets Available for Plan Benefits -
December 31, 2004 and 2003 3
Statements of Changes in Net Assets Available for Plan Benefits -
Years ended December 31, 2004 and 2003 4
Notes to Financial Statements 5
Supplemental Schedules
Schedule H, Part IV, Line 4(i) - Schedule of Assets Held at End of Year 11
Schedule H, Part IV, Line 4(j) - Schedule of Reportable Transactions 12
Report of Independent Registered Public Accounting Firm
Plan Administrator
Balchem Corporation 401(k)/Profit Sharing Plan:
We have audited the accompanying statement of net assets available for plan
benefits of Balchem Corporation 401(k)/Profit Sharing Plan (the Plan) as of
December 31, 2004, and the related statement of changes in net assets available
for plan benefits for the year 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audit provides 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 of the Plan as
of December 31, 2004, and the changes in net assets available for plan benefits
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held at end of
year as of December 31, 2004 and reportable transactions for the year then ended
are presented for the purpose of additional analysis and are not a required part
of the basic financial statements, but are 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. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in our audit of
the 2004 basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the 2004 basic financial statements taken
as a whole.
/s/ McGladrey & Pullen, LLP
New York, NY
June 16, 2005
1
Report of Independent Registered Public Accounting Firm
Plan Administrator
Balchem Corporation 401(k)/Profit Sharing Plan:
We have audited the accompanying statement of net assets available for plan
benefits of Balchem Corporation 401(k)/Profit Sharing Plan (the Plan) as of
December 31, 2003, and the related statement of changes in net assets available
for plan benefits for the year 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audit provides 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 of the Plan as
of December 31, 2003, and the changes in net assets available for plan benefits
for the year then ended in conformity with U.S. generally accepted accounting
principles.
/s/ KPMG LLP
Short Hills, New Jersey
June 21, 2004
2
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2004 and 2003
2004 2003
----------- -----------
Assets:
Investments at fair value (note 3) $10,270,939 8,258,111
Participant loans 333,838 149,285
Receivables:
Employer contribution 320,378 316,958
Participant contributions 72,191 43,063
Interest 2,207 924
----------- -----------
Total assets $10,999,553 8,768,341
=========== ===========
See accompanying notes to financial statements.
3
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2004 and 2003
2004 2003
------------ ------------
Addition to net assets attributed to:
Investment income:
Interest $ 72,279 72,090
Dividends 5,449 5,976
Net appreciation in fair value of investments (note 3) 1,319,879 762,249
------------ ------------
1,397,607 840,315
------------ ------------
Contributions:
Participant 916,289 881,259
Employer 558,513 577,237
------------ ------------
1,474,802 1,458,496
------------ ------------
Total additions 2,872,409 2,298,811
------------ ------------
Deductions from net assets attributed to:
Benefits paid to participants (619,321) (620,906)
Fees (5,121) (4,183)
Other, net (16,755) (38,816)
------------ ------------
Total deductions (641,197) (663,905)
------------ ------------
Net increase in net assets available for plan benefits 2,231,212 1,634,906
Net assets available for plan benefits at beginning of year 8,768,341 7,133,435
------------ ------------
Net assets available for plan benefits at end of year $ 10,999,553 8,768,341
============ ============
See accompanying notes to financial statements
4
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2004 and 2003
(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.
General
The Plan is principally a participant directed, defined contribution plan
covering all active employees of Balchem Corporation (the Company), except
those that are currently covered by a collective bargaining agreement, who
have 60 days of service, as defined, 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 75% of pretax annual
compensation, as defined in the Plan. 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.
Participants direct the investment of their contributions into various
investment options offered by the Plan. The employer matching
contributions equal 35% of each participant's elected contribution and the
Company may make discretionary profit-sharing contributions at the option
of the Company's Board of Directors. Matching contributions are made in
Balchem Corporation common 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. Included in employers'
contribution receivable as of December 31, 2004 and 2003 were
discretionary company profit sharing contributions made in February 2005
and 2004 for the 2004 and 2003 plan years totaling $301,270 and $305,294,
respectively.
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.
5
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2004 and 2003
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% vested after
two years of service, except for employees hired as part of the Company's
June 1, 2001 acquisition of certain assets of DCV, Inc. and its affiliate,
DuCoa L.P., whose prior credited service is used in determining the vested
portion of such matching contributions.
Investment Options
Upon enrollment in the Plan, participants may direct employee
contributions to the various investment options administered by Prudential
Retirement Insurance and Annuity Company (PRIAC) and a maximum of 10% of
participant contribution to Balchem Corporation Common Stock Fund.
Employer matching and discretionary contributions are made in company
stock and are directed to the Balchem Corporation Common Stock Fund (see
Schedule I).
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% 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 a fixed rate
based on the prime rate plus 2% at the time of loan origination and range
from 6% to 11%.
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.
Income (Loss) Allocations
Investment income (loss) for an accounting period shall be allocated to
participants' accounts in proportion to the total of their respective
account balances at the beginning of such accounting period plus any
contributions or loan repayments credited to the account during the
period.
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 $9,534 and $3,235 at
December 31, 2004 and 2003, respectively.
6
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2004 and 2003
(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, 2004 and 2003 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. The investments are subject to risk conditions of the
individual investments' objectives, the stock market, interest rates,
economic conditions, world affairs and the results of operations and other
risks specific to Balchem Corporation.
Investment Valuation and Income Recognition
Except for the Guaranteed Income Fund, 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.
Payment of Benefits
Benefits are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
7
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2004 and 2003
(3) Investments
Investments at December 31, 2004 and 2003 consisted of:
2004 2003
----------- -----------
Cash equivalents $ 2,058,523 2,059,656
Mutual funds 5,729,216 4,645,566
Common stock* 2,483,200 1,552,889
----------- -----------
$10,270,939 8,258,111
=========== ===========
* A portion of the common stock is non-participant directed.
The following represents investments that represent 5% or more of the
Plan's net assets:
2004 2003
---------- ----------
Balchem Corporation Common Stock* $2,483,200 1,552,889
Guaranteed Income Fund 2,058,523 2,059,656
Janus Adviser Balanced Account 873,746 784,864
S&P 500 Index Fund 2,261,099 1,757,602
Prudential Lifetime 40 703,083 587,499
========== ==========
* A portion of the Balchem Corporation Common Stock is non-participant
directed.
During the years ended December 31, 2004 and 2003, the Plan's investments
(including gains and losses on investments bought and sold, as well as
held during the year) appreciated (depreciated) in value as follows:
2004 2003
---------- ----------
Mutual funds $ 484,214 880,305
Common stock 835,665 (118,056)
---------- ----------
$1,319,879 762,249
========== ==========
(4) Non-participant directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the non-participant directed investments
is as follows:
8
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2004 and 2003
2004 2003
---------- ---------
Net assets - Balchem Corporation Common Stock $2,483,200 1,552,889
========== =========
Year ended December 31
---------------------
2004 2003
---------- ---------
Change in net assets:
Contributions $ 303,254 336,375
Dividends and interest 7,212 7,659
Net appreciation (depreciation) 835,665 (118,056)
Benefits paid to participants (102,092) (72,932)
Fees (1,104) (1,420)
Transfers to participant-directed investments (112,624) (413,952)
---------- ---------
Net (decrease) increase 930,311 (262,326)
Net assets at beginning of year 1,552,889 1,815,215
---------- ---------
Net assets at end of year $2,483,200 1,552,889
========== =========
A portion of the Balchem Corporation Common Stock is participant directed.
(5) Related-Party Transactions
As of December 31, 2004 and 2003, the Plan holds 71,583 and 68,109 shares
of Balchem Corporation common stock, respectively, with a market value of
$2,483,200 and $1,552,889 at December 31, 2004 and 2003, respectively.
Certain Plan investments are shares of various funds managed by PRIAC.
PRIAC is the trustee of the Plan and, therefore, these transactions are
considered related-party transactions.
(6) 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% vested in their accounts.
(7) Income Tax Status
The Plan has received a favorable determination letter dated March 22,
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
qualifications. Although the Plan has been amended since receiving the
9
determination letter, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
(8) Trust Services
Effective April 1, 2004, CIGNA Corporation signed an agreement to sell its
retirement business, including CIGNA Bank & Trust Company, FSB, to
Prudential Financial. As a result of the transaction, CIGNA Bank & Trust
Company, FSB merged with a Prudential owned institution to form Prudential
Bank & Trust, FSB.
With the completion of the merger, trust services previously provided by
CIGNA Bank & Trust Company, FSB will now be provided by Prudential Bank &
Trust, FSB, and any investments held by CIGNA Bank & Trust Company. FSB
will now be held by Prudential Bank & Trust, FSB.
10
Schedule 1
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Schedule H, Part IV, Line 4(i) - Schedule of Assets
Held at End of Year
December 31, 2004
Identity of issue, Description of investments including maturity date, Current
borrower, lessor or similar party rate of interest, collateral, par or maturity value value
------------------------------------------ -------------------------------------------------------------------- -----------
Guaranteed Income Fund(1) Units of participation in Guaranteed Income Fund -
66,190 units, $31.10 per unit $ 2,058,523
Janus Adviser Balanced Account(1) Units of participation in Janus Adviser Balanced Account -
29,331 units, $29.79 per unit 873,746
Prudential Lifetime 60(1) Units of participation in Prudential Lifetime 60 -
5,575 units, $14.43 per unit 80,460
Prudential Lifetime 50(1) Units of participation in Prudential Lifetime 50 -
3,939 units, $14.24 per unit 56,080
Prudential Lifetime 40(1) Units of participation in Prudential Lifetime 40 -
49,888 units, $14.09 per unit 703,083
Prudential Lifetime 30(1) Units of participation in Prudential Lifetime 30 -
22,635 units, $14.28 per unit 323,185
Prudential Lifetime 20(1) Units of participation in Prudential Lifetime 20
4,057 units, $14.16 per unit 57,431
Large Cap Value/John A. Levin & Co. Fund(1) Units of participation in Large Cap Value/John A. Levin & Co. Fund -
21,902 units, $13.28 per unit 290,840
Dryden S&P Index Fund(1) Units of participation in Dryden S&P Index Fund -
32,548 units, $69.47 per unit 2,261,099
Aim Premeire Equity Fund(1) Units of participation in AIM Premier Equity Fund -
2,109 units, $43.27 per unit 91,286
Large Cap Growth/Turner Investment(1) Fund Units of participation in Large Cap Growth/Turner Investment
15,188 units, $10.76 per unit 163,364
Aim Dynamics Fund Units of participation in AIM Dynamics Fund -
9,868 units, $23.49 per unit 231,818
TimesSquare Capital Management, Inc.
Small Cap Growth/Times Square Fund(1) Units of participation in Small Cap Growth/Times Square Fund -
16,208 units, $19.62 per unit 318,010
Janus Adviser Worldwide Growth Account(1) Units of participation in Janus Adviser Worldwide Growth Account -
9,271 units, $30.08 per unit 278,814
Balchem Corporation Common Stock(1)(2) Units of participation in Balchem Common Stock -
71,583 units, $34.69 per unit 2,483,200
Participant loans(1) Interest rates range from 6.00% to 11.00% 333,838
-----------
Total $10,604,777
===========
(1) Parties-in-interest
(2) The cost basis of the Balchem Corporation Common Stock Fund at December
31, 2004 was $1,253,411.
See accompanying report of independent registered public accounting firm.
11
Schedule 2
BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Schedule H, Part IV, Line 4(j) -
Schedule of Reportable Transactions
Year ended December 31, 2004
Current
value of asset
Identity of Purchase Selling Cost of on transaction Net gain
party involved Description of asset price price asset date (loss)
------------------------------------ -------------------------------- -------- -------- -------- -------- --------
Prudential Financial Services, Inc. Balchem Corporation Common Stock $262,358 -- 262,358 262,358 --
Prudential Financial Services, Inc. Balchem Corporation Common Stock -- 177,000 110,953 177,000 66,047
-------- -------- -------- -------- --------
$262,358 177,000 373,311 439,358 66,047
======== ======== ======== ======== ========
Reportable transactions include those purchases and sales of the same securities
which, individually or in the aggregate (net of individual reportable
transactions) exceed 5% of the market value of plan assets as of the beginning
of the year. See accompanying report of independent registered public accounting
firm.
See accompanying report of independent registered public accounting firm.
12