STOCKHOLDERS' EQUITY

12 Months Ended

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.