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STOCKHOLDERS' EQUITY | 12 Months Ended
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Dec. 31, 2011
STOCKHOLDERS' EQUITY [Abstract] |
STOCKHOLDERS' EQUITY | NOTE 2 - STOCKHOLDERS' EQUITY STOCK-BASED COMPENSATION In accordance with ASC 718, all share-based payments, including grants of stock options, are recognized in the income statement as an operating expense, based on their fair values. As required by ASC 718, the Company has made an estimate of expected forfeitures, based on its historical experience, and is recognizing compensation cost only for those stock-based compensation awards expected to vest. Additionally, since adoption of ASC 718, excess tax benefits related to stock compensation are presented as a cash inflow from financing activities. This change had the effect of decreasing cash flows from operating activities and increasing cash flows from financing activities by $2,894, $4,230 and $2,289 for the years ended December 31, 2011, 2010 and 2009, respectively. The Company's results for the years ended December 31, 2011, 2010 and 2009 reflected the following compensation cost as a result of adopting ASC 718 and such compensation cost had the following effects on net earnings:
|  | Increase/(Decrease) for the Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Cost of sales |  | $ | 582 |  |  | $ | 508 |  |  | $ | 365 |
Operating expenses |  |  | 3,110 |  |  |  | 3,484 |  |  |  | 2,711 |
Net earnings |  |  | (2,340 | ) |  |  | (2,449 | ) |  |  | (1,963 | )
On December 31, 2011, the Company had one share-based compensation plan, which is described below (the “1999 Stock Plan”). In June 1999, the Company adopted the Balchem Corporation 1999 Stock Plan for officers, directors, directors emeritus and employees of and consultants to the Company and its subsidiaries. The 1999 Stock Plan is administered by the Compensation Committee of the Board of Directors of the Company. Under the plan, options and rights to purchase shares of the Company's common stock are granted at prices established at the time of grant. Option grants generally become exercisable 20% after 1 year, 60% after 2 years and 100% after 3 years from the date of grant for employees and are fully exercisable on the date of grant for directors. Other option grants are either fully exercisable on the date of grant or become exercisable thereafter in such installments as the Committee may specify. Options granted under the 1999 Stock Plan expire ten years from the date of grant. The 1999 Stock Plan initially reserved an aggregate of 600,000 shares (unadjusted for the stock splits) of common stock for issuance under the Plan. In April 2003, the Board of Directors of the Company adopted and stockholders subsequently approved, the Amended and Restated 1999 Stock Plan (the “Amended Plan”) which amended the 1999 Stock Plan by: (i) increasing the number of shares of common stock reserved for issuance under the 1999 Stock Plan by 600,000 shares (unadjusted for the stock splits), to a total of 1,200,000 shares (unadjusted for the stock splits) of common stock; and (ii) confirming the right of the Company to grant awards of common stock (“Awards”) in addition to the other Stock Rights available under the 1999 Stock Plan, and providing certain language changes relating thereto. The Amended Plan was scheduled to expire in April, 2009. In April, 2008, the Board of Directors of the Company adopted and stockholders subsequently approved, the adoption of an amendment and restatement of the Amended Plan (collectively to be referred to as the “Second Amended Plan”), which provides as follows: (i) for a termination date of April 9, 2018; (ii) to authorize 6,000,000 shares reserved for future grants under the Second Amended Plan; (iii) for the making of grants of stock appreciation rights, restricted stock and performance awards; (iv) for immediate acceleration of vesting of awards issued under the plan in the event of a change in control of the Company; and (v) for compliance with the requirements of Sections 409A and 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or the “Code”). The 1999 Stock Plan replaced the Company's incentive stock option plan (the “ISO Plan”) and its non-qualified stock option plan (the “Non-Qualified Plan”), both of which expired on June 24, 1999. Unexercised options granted under the ISO Plan and the Non-Qualified Plan prior to such termination remained exercisable in accordance with their terms and expired ten years from the date of grant. The shares to be issued upon exercise of the outstanding options have been approved, reserved and are adequate to cover all exercises. As of December 31, 2011, the plans had 4,784,376 shares available for future awards. The Company has Restricted Stock Purchase Agreements (the “RSP Agreements”) with its non-employee directors and certain employees of the Company to purchase the Company's common stock pursuant to the Company's 1999 Stock Plan. Under the RSP Agreements, certain shares have been purchased, ranging from 1,000 shares to 20,250 shares, of the Company's common stock at purchase prices ranging from approximately $.02 per share to $.07 per share. The purchased stock is subject to a repurchase option in favor of the Company and to restrictions on transfer until it vests in accordance with the provisions of the Agreements. In 2011, the Company discontinued the use of RSP Agreements and replaced them with Restricted Stock Grant Agreements for the Company's non-employee directors and certain employees. The forms of Restricted Stock Grant Agreements for Directors and for Employees are filed as Exhibit 10.14 to this Annual Report on Form 10-K. In 2011, the Company entered into Restricted Stock Grant Agreements with its non-employee directors under which shares of common Stock were granted, subject to time-based vesting requirements. The fair value of each option award issued under the 1999 Stock Plan is estimated on the date of grant using a Black-Scholes based option-pricing model that uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company's stock. The expected term of the options is based on the Company's historical experience of employees' exercise behavior. Dividend yields are based on the Company's historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life.
|  | Year Ended |
Weighted Average Assumptions: |  | December 31, 2011 |  |  | December 31, 2010 |  |  | December 31, 2009 |
Expected Volatility |  |  | 36.3 | % |  |  | 39.5 | % |  |  | 46.9 | %
Expected Term (in years) |  |  | 4.5 |  |  |  | 4.3 |  |  |  | 3.8 |
Risk-Free Interest Rate |  |  | 1.4 | % |  |  | 1.1 | % |  |  | 1.8 | %
Dividend Yield |  |  | 0.5 | % |  |  | 0.6 | % |  |  | 0.5 | %
The value of the restricted shares is based on the fair value of the award at the date of grant. Compensation expense for stock options and restricted stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, four years for employee restricted stock awards, and four to seven years for non-employee director restricted stock awards. A summary of stock option plan activity for 2011, 2010, and 2009 for all plans is as follows:
2011 |  | # of Shares (000s) |  |  | Weighted Average Exercise Price |
Outstanding at beginning of year |  |  | 2,955 |  |  | $ | 14.21 |
Granted |  |  | 15 |  |  |  | 40.59 |
Exercised |  |  | (405 | ) |  |  | 10.98 |
Forfeited |  |  | (51 | ) |  |  | 24.54 |
Outstanding at end of year |  |  | 2,514 |  |  | $ | 14.68 |
Exercisable at end of year |  |  | 2,157 |  |  | $ | 12.35 |
2010 |  | # of Shares (000s) |  |  | Weighted Average Exercise Price |
Outstanding at beginning of year |  |  | 3,286 |  |  | $ | 11.28 |
Granted |  |  | 291 |  |  |  | 32.13 |
Exercised |  |  | (616 | ) |  |  | 7.04 |
Forfeited |  |  | (6 | ) |  |  | 17.83 |
Outstanding at end of year |  |  | 2,955 |  |  | $ | 14.21 |
Exercisable at end of year |  |  | 2,053 |  |  | $ | 10.53 |
2009 |  | # of Shares (000s) |  |  | Weighted Average Exercise Price |
Outstanding at beginning of year |  |  | 3,594 |  |  | $ | 9.21 |
Granted |  |  | 339 |  |  |  | 21.38 |
Exercised |  |  | (628 | ) |  |  | 4.79 |
Forfeited |  |  | (19 | ) |  |  | 14.10 |
Outstanding at end of year |  |  | 3,286 |  |  | $ | 11.28 |
Exercisable at end of year |  |  | 2,255 |  |  | $ | 8.52 |
The aggregate intrinsic value for outstanding stock options was $65,043, $57,930 and $36,342 at December 31, 2011, 2010 and 2009, respectively, with a weighted average remaining contractual term of 5.5 years at December 31, 2011. Exercisable stock options at December 31, 2011 had an aggregate intrinsic value of $60,810 with a weighted average remaining contractual term of 5.0 years. Other information pertaining to option activity during the years ended December 31, 2011, 2010 and 2009 was as follows:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Weighted-average fair value of options granted |  | $ | 12.37 |  |  | $ | 10.10 |  |  | $ | 7.74 |
Total intrinsic value of stock options exercised ($000s) |  | $ | 11,577 |  |  | $ | 12,821 |  |  | $ | 7,425 |
Additional information related to stock options outstanding under all plans at December 31, 2011 is as follows:
|  |  |  |  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  |  | Shares Outstanding (000s) |  | Weighted Average Remaining Contractual Term |  | Weighted Average Exercise Price |  |  | Number Exercisable (000s) |  |  | Weighted Average Exercise Price |
$ | 4.51 - $17.28 |  |  |  | 1,915 |  | 4.6 years |  | $ | 10.90 |  |  |  | 1,915 |  |  | $ | 10.90 |
| 21.39 - 32.21 |  |  |  | 584 |  | 8.4 years |  |  | 26.39 |  |  |  | 242 |  |  |  | 23.81 |
| 33.81 - 45.09 |  |  |  | 15 |  | 9.4 years |  |  | 40.59 |  |  |  | - |  |  |  | - |
|  |  |  |  | 2,514 |  | 5.5 years |  | $ | 14.68 |  |  |  | 2,157 |  |  | $ | 12.35 |
Non-vested restricted stock activity for the years ended December 31, 2011, 2010 and 2009 is summarized below:
|  | Shares (000s) |  |  | Weighted Average Grant Date Fair Value |
Non-vested balance as of December 31, 2010 |  |  | 363 |  |  | $ | 17.66 |
Granted |  |  | 15 |  |  |  | 41.34 |
Vested |  |  | (7 | ) |  |  | 12.41 |
Forfeited |  |  | (17 | ) |  |  | 19.12 |
Non-vested balance as of December 31, 2011 |  |  | 354 |  |  | $ | 18.77 |
|  | Shares (000s) |  |  | Weighted Average Grant Date Fair Value |
Non-vested balance as of December 31, 2009 |  |  | 418 |  |  | $ | 14.56 |
Granted |  |  | 51 |  |  |  | 32.26 |
Vested |  |  | (106 | ) |  |  | 12.47 |
Forfeited |  |  | - |  |  |  | - |
Non-vested balance as of December 31, 2010 |  |  | 363 |  |  | $ | 17.66 |
|  | Shares (000s) |  |  | Weighted Average Grant Date Fair Value |
Non-vested balance as of December 31, 2008 |  |  | 347 |  |  | $ | 13.39 |
Granted |  |  | 71 |  |  |  | 21.34 |
Vested |  |  | - |  |  |  | - |
Forfeited |  |  | - |  |  |  | - |
Non-vested balance as of December 31, 2009 |  |  | 418 |  |  | $ | 14.56 |
As of December 31, 2011, 2010 and 2009, there was $5,398, $8,795 and $8,291, respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. As of December 31, 2011, the unrecognized compensation cost is expected to be recognized over a weighted-average period of 2 years. We estimate that share-based compensation expense for the year ended December 31, 2012 will be approximately $4,000. STOCK SPLITS AND REPURCHASE OF COMMON STOCK On December 11, 2009, the Board of Directors of the Company approved a three-for-two split of the Company's common stock to be effected in the form of a stock dividend to shareholders of record on December 30, 2009. Such stock dividend was made on January 20, 2010. The stock split was recognized by reclassifying the par value of the additional shares resulting from the split, from additional paid-in capital to common stock. The stock split was applied retroactively to all periods presented. The Company has an approved stock repurchase program. The total authorization under this program is 3,763,038 shares. Since the inception of the program in June 1999, a total of 2,010,488 shares have been purchased, none of which remained in treasury at December 31, 2011 or 2010. During 2011, a total of 19,545 shares have been purchased at an average cost of $5.55 per share. 16,830 of these shares were related to the repurchase of forfeited restricted shares. 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 on its assessment of corporate cash flow, market conditions and other factors.

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- Definition The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 3, 4, 5, 6, 7, 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 4 -Section 08 -Paragraph d Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7, 11A -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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