Company Quick10K Filing
Balchem
Price100.13 EPS2
Shares33 P/E41
MCap3,256 P/FCF36
Net Debt-59 EBIT104
TEV3,196 TEV/EBIT31
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-01
10-K 2019-12-31 Filed 2020-02-21
10-Q 2019-09-30 Filed 2019-11-05
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-02-28
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-03
10-Q 2018-03-31 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-04
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-30 Filed 2016-11-04
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-02-29
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-07
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-05-05
10-K 2013-12-31 Filed 2014-02-27
10-Q 2013-09-30 Filed 2013-11-05
10-Q 2013-06-30 Filed 2013-08-02
10-Q 2013-03-31 Filed 2013-05-03
10-K 2012-12-31 Filed 2013-02-25
10-Q 2012-09-30 Filed 2012-11-02
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-10
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-06
10-K 2010-12-31 Filed 2011-02-28
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-12
8-K 2020-06-18
8-K 2020-05-01
8-K 2020-02-21
8-K 2019-12-17
8-K 2019-12-13
8-K 2019-11-05
8-K 2019-09-12
8-K 2019-08-02
8-K 2019-08-01
8-K 2019-06-20
8-K 2019-05-27
8-K 2019-05-03
8-K 2019-05-02
8-K 2019-02-28
8-K 2019-02-04
8-K 2018-12-13
8-K 2018-11-06
8-K 2018-09-26
8-K 2018-08-03
8-K 2018-06-27
8-K 2018-06-20
8-K 2018-05-04
8-K 2018-02-27

BCPC 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Condensed Consolidated Financial Statements
Note 2 - Significant Acquisitions
Note 3 - Stockholders' Equity
Note 4 - Inventories
Note 5 - Property, Plant and Equipment
Note 6 - Intangible Assets
Note 7 - Equity - Method Investment
Note 8 - Revolving Loan
Note 9 - Net Earnings per Share
Note 10 - Income Taxes
Note 11 - Segment Information
Note 12 - Revenue
Note 13 - Supplemental Cash Flow Information
Note 14 - Accumulated Other Comprehensive Income (Loss)
Note 15 - Employee Benefit Plans
Note 16 - Commitments and Contingencies
Note 17 - Fair Value of Financial Instruments
Note 18 - Related Party Transactions
Note 19 - Leases
Note 20 - Derivative Instruments and Hedging Activities
Note 21 - Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (All Amounts in Thousands, Except Share and per Share Data)
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 2C. Issuer Purchase of Equity Securities
Item 6. Exhibits
EX-31.1 bcpcq1202010qex311.htm
EX-31.2 bcpcq1202010qex312.htm
EX-32.1 bcpc2020q110qex321.htm
EX-32.2 bcpcq1202010qex322.htm

Balchem Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.10.90.70.40.20.02012201420172020
Assets, Equity
0.20.20.10.10.00.02012201420172020
Rev, G Profit, Net Income
0.10.0-0.0-0.1-0.1-0.22012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        For the quarterly period ended March 31, 2020
        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 incorporation or organization) (I.R.S. Employer Identification Number)

52 Sunrise Park Road, New Hampton, NY 10958
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (845) 326-5600

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $.06-2/3 per shareBCPCNasdaq Global Market
Indicate by 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 such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
(Check one):Large accelerated filerAccelerated filer 
 Non-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of April 23, 2020, the registrant had 32,316,842 shares of its Common Stock, $.06 2/3 par value, outstanding.



Table of Contents
BALCHEM CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page No.



Table of Contents
Part I. Financial Information

Item 1. Financial Statements
BALCHEM CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
AssetsMarch 31, 2020 (unaudited)December 31, 2019
Current assets:  
Cash and cash equivalents$73,959  $65,672  
Accounts receivable, net of allowance for doubtful accounts of $2,511 and $2,080 at March 31, 2020 and December 31, 2019 respectively
105,867  93,444  
Inventories83,196  83,893  
Prepaid expenses4,134  4,385  
Prepaid income taxes527  5,098  
Other current assets2,998  2,454  
Total current assets270,681  254,946  
Property, plant and equipment, net215,279  216,859  
Goodwill522,785  523,998  
Intangible assets with finite lives, net136,515  143,924  
Right of use assets6,912  7,338  
Other assets9,940  8,617  
Total assets$1,162,112  $1,155,682  
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable$23,630  $37,267  
Accrued expenses35,848  24,604  
Accrued compensation and other benefits9,826  11,057  
Dividends payable137  16,855  
Lease liabilities - current2,279  2,475  
Total current liabilities71,720  92,258  
Revolving loan253,569  248,569  
Deferred income taxes57,095  56,431  
Lease liabilities - non-current4,336  4,827  
Derivative liabilities443  2,103  
Other long-term obligations8,678  7,827  
Total liabilities395,841  412,015  
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, $25 par value. Authorized 2,000,000 shares; none issued and outstanding
    
Common stock, $0.0667 par value. Authorized 120,000,000 shares; 32,447,415 shares issued and 32,316,842 shares outstanding at March 31, 2020 and 32,405,796 shares issued and 32,201,917 outstanding at December 31, 2019, respectively
2,164  2,161  
Additional paid-in capital173,581  174,218  
Retained earnings610,689  590,921  
Accumulated other comprehensive loss(8,469) (5,564) 
Treasury stock, at cost: 130,573 and 203,879 shares at March 31, 2020 and December 31, 2019, respectively
(11,694) (18,069) 
Total stockholders' equity766,271  743,667  
Total liabilities and stockholders' equity$1,162,112  $1,155,682  
See accompanying notes to condensed consolidated financial statements.
3

Table of Contents
BALCHEM CORPORATION
Condensed Consolidated Statements of Earnings
(Dollars in thousands, except per share data)
(unaudited)
 Three Months Ended
March 31,
 20202019
Net sales$174,436  $157,029  
Cost of sales119,105  107,934  
Gross margin55,331  49,095  
Operating expenses:
Selling expenses15,430  14,126  
Research and development expenses2,700  2,895  
General and administrative expenses10,923  5,594  
 29,053  22,615  
Earnings from operations26,278  26,480  
Other expenses:
Interest expense, net1,696  1,589  
Other, net92  98  
1,788  1,687  
Earnings before income tax expense24,490  24,793  
Income tax expense4,722  6,010  
Net earnings$19,768  $18,783  
Net earnings per common share - basic$0.62  $0.58  
Net earnings per common share - diluted$0.61  $0.58  
See accompanying notes to condensed consolidated financial statements.

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BALCHEM CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Dollars in thousands)
(unaudited)

 Three Months Ended
March 31,
 20202019
Net earnings$19,768  $18,783  
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment781  (1,089) 
Unrealized loss on cash flow hedge(3,107)   
Change in postretirement benefit plans(579) 5  
Other comprehensive loss(2,905) (1,084) 
Comprehensive income$16,863  $17,699  
See accompanying notes to condensed consolidated financial statements.

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BALCHEM CORPORATION
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the three months ended March 31, 2020 and 2019
(Dollars in thousands, except share and per share data)
Total
Stockholders'
Equity
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Common StockTreasury StockAdditional
Paid-in
Capital
SharesAmountSharesAmount
Balance - December 31, 2019$743,667  $590,921  $(5,564) 32,405,796  $2,161  (203,879) $(18,069) $174,218  
Net earnings19,768  19,768  —  —  —  —  —  —  
Other comprehensive (loss)(2,905) —  (2,905) —  —  —  —  —  
Treasury shares purchased(891) —  —  —  —  (8,224) (891) —  
Shares and options issued under stock plans6,632  —  —  41,619  3  81,530  7,266  (637) 
Balance - March 31, 2020$766,271  $610,689  $(8,469) 32,447,415  $2,164  (130,573) $(11,694) $173,581  
Balance - December 31, 2018$691,618  $528,027  $(3,602) 32,256,209  $2,151  (706) $(56) $165,098  
Net earnings18,783  18,783  —  —  —  —  —  —  
Other comprehensive (loss)(1,084) —  (1,084) —  —  —  —  —  
Treasury shares purchased(727) —  —  —  —  (8,496) (727) —  
Shares and options issued under stock plans1,919  —  —  73,823  5  3,006  250  1,664  
Balance - March 31, 2019$710,509  $546,810  $(4,686) 32,330,032  $2,156  (6,196) $(533) $166,762  

See accompanying notes to condensed consolidated financial statements.

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BALCHEM CORPORATION
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
 Three Months Ended
March 31,
 20202019
Cash flows from operating activities:  
Net earnings$19,768  $18,783  
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization12,549  10,836  
Stock compensation expense2,181  1,631  
Deferred income taxes135  35  
Provision for doubtful accounts522  88  
Foreign currency transaction (gain)/loss(23) 50  
Asset impairment charge  114  
Gain on disposal of assets  (2,719) 
Changes in assets and liabilities
Accounts receivable(13,516) (912) 
Inventories528  (139) 
Prepaid expenses and other current assets(349) 972  
Accounts payable and accrued expenses(3,098) (12,389) 
Income taxes4,523  6,575  
Other(655) (442) 
Net cash provided by operating activities22,565  22,483  
Cash flows from investing activities:
Capital expenditures and intangible assets acquired(5,394) (8,507) 
Proceeds from insurance  2,727  
Net cash used in investing activities(5,394) (5,780) 
Cash flows from financing activities:
Proceeds from revolving loan10,000    
Principal payments on revolving loan(5,000) (16,000) 
Proceeds from stock options exercised4,435  288  
Dividends paid(16,704) (15,135) 
Purchase of treasury stock(891) (727) 
Net cash used in financing activities(8,160) (31,574) 
Effect of exchange rate changes on cash(724) (393) 
Increase (decrease) in cash and cash equivalents8,287  (15,264) 
Cash and cash equivalents beginning of period65,672  54,268  
Cash and cash equivalents end of period$73,959  $39,004  
See accompanying notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All dollar amounts in thousands, except share and per share data)

NOTE 1 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in its December 31, 2019 consolidated financial statements, and should be read in conjunction with the consolidated financial statements and notes, which appear in the Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated financial statements reflect the operations of Balchem Corporation and its subsidiaries (the "Company"). All intercompany balances and transactions have been eliminated in consolidation.
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 (“U.S. GAAP” or “GAAP”) governing interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934 (the "Exchange Act") and therefore do not include some information and notes necessary to conform to annual reporting requirements. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results expected for the full year or any interim period.
Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.
Recent Accounting Pronouncements
Recently Issued Accounting Standards
In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, this standards update is in effect from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of this pronouncement on the consolidated financial statements and disclosures.
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The effective date of this update is for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The standard may be adopted either using the prospective or retrospective transition approach and could also be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this pronouncement on the Company’s consolidated financial statements and disclosures.
In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans,” which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans.  The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant.  This update should be applied on a retrospective basis to all periods presented and is effective for fiscal years ending after December 31, 2020.  Early adoption is permitted.  The Company expects this new guidance will not have a significant impact on its financial reporting.
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.”  The guidance requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the noncancelable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider.  The effective date of this pronouncement is for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  The standard may be adopted either using the prospective or retrospective transition approach.  The Company adopted the new standard on January 1, 2020. The standard update did not have a significant impact on the Company’s consolidated financial statements and disclosures.
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In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The guidance was issued with the objective of improving the financial reporting of hedging relationships to better portray the economic results of companies' risk management activities in its financial statements, as well as simplifying the application of hedge accounting guidance especially in the area of assessment of effectiveness of the hedge. In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 815, Derivative and Hedging", which further clarified ASU 2017-12. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted the new standards in the second quarter of 2019, upon entering into derivative transactions. Refer to Note 20, "Derivative Instruments and Hedging Activities."
In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (ASU 2017-04), which addresses changes to the testing for goodwill impairment by eliminating Step 2 of the process. The guidance is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company adopted the new standard on January 1, 2020. This ASU did not have a significant impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires that credit losses be reported based on expected losses instead of the incurred loss model. The update made several consequential amendments to the codification which requires the accounting for available-for-sale debt securities to be individually assessed for credit losses when fair value is less than the amortized cost basis. The FASB subsequently issued ASU 2019-04, ASU 2019-05, and ASU 2019-11, all of which further clarified ASU 2016-13. The Company adopted the new standard and related updates on January 1, 2020. The adoption did not have a significant impact on the consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which was clarified by ASU 2018-11 and addresses the recognition of assets and liabilities that arise from all leases. The guidance requires lessees to recognize right-of-use ("ROU") assets and lease liabilities for most leases in the Consolidated Balance Sheets and is effective for annual and interim periods beginning after December 15, 2018. The Company adopted the new standard on January 1, 2019 and has elected the optional transition method to account for the impact of the adoption with a cumulative-effect adjustment in the period of adoption. The new standard provides a number of optional practical expedients in transition. The Company has elected the “package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company has not elected the use-of-hindsight or the practical expedient pertaining to land easements, the latter not being applicable to the Company. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company has elected the short-term lease recognition exemption for all leases that qualify, which means for those leases that qualify, the Company will not recognize ROU assets or lease liabilities. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases. In March 2019, the FASB issued ASU 2019-01, "Leases (Topic 842): Codification Improvements," which further clarifies the determination of fair value of leases and modifies transition disclosure requirements for changes in accounting principles. The effective date of the amendments is for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The ASU was adopted by the Company on January 1, 2020 and did not have a significant impact on its consolidated financial statements and disclosures. Refer to Note 19, "Leases."

NOTE 2 – SIGNIFICANT ACQUISITIONS
Acquisition
On December 13, 2019, the Company completed the acquisition of Zumbro River Brand, Inc. ("Zumbro"). The Company made payments of $52,403 on the acquisition date, amounting to $47,058 to the former shareholders and $5,345 to Zumbro's lenders to pay Zumbro debt. Considering the cash acquired of $686, net payments made to the former shareholders were $46,372.
The estimated goodwill of $18,159 arising from the acquisition consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce. The goodwill is assigned to Human Nutrition & Health ("HNH") and its tax deductibility for income taxes is still being assessed.
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The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed:
Cash and cash equivalents$686  
Accounts receivable3,314  
Inventories4,498  
Prepaid & other current assets521  
Property, plant and equipment15,245  
Customer relationships8,200  
Developed technology4,400  
Trade name2,300  
Other non-current assets10  
Accounts payable & accrued expenses(1,539) 
Debt(5,345) 
Deferred income taxes(3,391) 
Goodwill18,159  
Amount paid to shareholders47,058  
Zumbro debt paid on purchase date5,345  
Total amount paid on acquisition date$52,403  
The estimated valuation of the fair value of tangible and intangible assets acquired and liabilities assumed are based on management's estimates and assumptions that are subject to change. In preparing our fair value estimates of the intangible assets and certain tangible assets acquired, management, among other things, consulted an independent advisor. Valuation methods utilized included cost and market approaches for property, plant and equipment, excess earnings method for customer relationships and the relief from royalty method for other intangible assets. The purchase price and related allocation to assets acquired and liabilities assumed is preliminary pending finalizing actual working capital acquired as of the acquisition date. Additionally, certain intangible assets are not tax deductible and the related deferred tax liabilities are preliminary pending management's final review.
Customer relationships are amortized over a 15-year period utilizing an accelerated method based on the estimated average customer attrition rate. Trade name and developed technology are amortized over 10 years and 12 years, respectively, utilizing the straight-line method as the consumption pattern of the related economic benefits cannot be reliably determined.
The Company is indemnified for tax liabilities prior to the acquisition date. Indemnified tax liabilities will create an indemnification asset (receivable). An indemnification asset balance has not been established.
On May 27, 2019, the Company acquired 100 percent of the outstanding common shares of Chemogas Holdings, NV and its subsidiary companies (collectively, "Chemogas"). The Company made payments of approximately €99,503 (translated to $111,324) on the acquisition date, amounting to approximately €88,579 (translated to $99,102) to the former shareholders and approximately €10,924 (translated to $12,222) to Chemogas' lender to pay Chemogas bank debt. Considering the cash acquired of €3,943 (translated to $4,412), net payments made to the former shareholders were €84,636 (translated to $94,690).
The goodwill of $59,319 arising from the acquisition consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce. The goodwill is assigned to the Specialty Products segment and is not tax deductible for income tax purposes.
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The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed:
Cash and cash equivalents$4,412  
Accounts receivable4,176  
Inventories957  
Property, plant and equipment15,972  
Customer relationships39,158  
Developed technology2,461  
Trade name1,119  
Other assets1,491  
Accounts payable(3,261) 
Bank debt(12,222) 
Other liabilities(1,030) 
Pension obligations (net)(594) 
Deferred income taxes(12,856) 
Goodwill59,319  
Amount paid to shareholders99,102  
Chemogas bank debt paid on purchase date12,222  
Total amount paid on acquisition date$111,324  

The estimated valuation of the fair value of tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions that are subject to change. In preparing our fair value estimates of the intangible assets and certain tangible assets acquired, management, among other things, consulted an independent advisor. Valuation methods utilized included cost and market approaches for property, plant and equipment, excess earnings method for customer relationships and the relief from royalty method for other intangible assets. The purchase price and related allocation to assets acquired and liabilities assumed is preliminary pending management's final review of fair value calculations and deferred tax liabilities related to certain non-deductible assets.
Customer relationships are amortized over a 20-year period utilizing an accelerated method based on the estimated average customer attrition rate. Trade name and developed technology are amortized over 2 years and 10 years, respectively, utilizing the straight-line method as the consumption pattern of the related economic benefits cannot be reliably determined.
The Company is indemnified for tax liabilities prior to the acquisition date. Indemnified tax liabilities will create an indemnification asset (receivable). An indemnification asset balance has not been established.
In connection with the Chemogas and Zumbro acquisitions, the Company incurred transaction and integration costs of $1,068 and $307 for the three months ended March 31, 2020 and 2019, respectively.
Total transaction and integration costs related to recent acquisitions, including the Chemogas and Zumbro acquisitions described above, are recorded in general and administrative expenses. These costs amounted to $1,097 and $485 for the three months ended March 31, 2020 and 2019, respectively.

NOTE 3 – STOCKHOLDERS’ EQUITY
STOCK-BASED COMPENSATION
The Company’s results for the three months ended March 31, 2020 and 2019 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:
Increase/(Decrease) for the
Three Months Ended March 31,
20202019
Cost of sales$266  $288  
Operating expenses1,915  1,343  
Net earnings(1,663) (1,258) 
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As allowed 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.
The Company’s stock incentive plans allow for the granting of stock awards and options to purchase common stock. Both incentive stock options and nonqualified stock options can be awarded under the plans. No option will be exercisable for longer than ten years after the date of grant. The Company has approved and reserved a number of shares to be issued upon exercise of the outstanding options that is adequate to cover all exercises. As of March 31, 2020, the plans had 905,996 shares available for future awards. Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, three to four years for employee restricted stock awards, three years for employee performance share awards, and three to four years for non-employee director restricted stock awards. Certain awards provide for accelerated vesting if there is a change in control (as defined in the plans) or other qualifying events.
Option activity for the three months ended March 31, 2020 and 2019 is summarized below:
For the three months ended
March 31, 2020
Shares (000s)Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 2019951  $68.18  $31,814  
Granted145  111.94  
Exercised(82) 54.39  
Forfeited(4) 89.90  
Canceled    
Outstanding as of March 31, 20201,010  $75.48  $25,399  6.7
Exercisable as of March 31, 2020664  $65.39  $22,131  5.4

For the three months ended
March 31, 2019
Shares (000s)Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 2018887  $61.59  $16,192  
Granted185  84.19  
Exercised(7) 40.85  
Forfeited    
Canceled    
Outstanding as of March 31, 20191,065  $65.64  $28,924  6.7
Exercisable as of March 31, 2019685  $56.91  $24,588  5.4
ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yields of 0.5% and 0.6%; expected volatilities of 26% and 24%; risk-free interest rates of 1.4% and 2.5%; and expected lives of 3.7 years and 4.0 years, in each case for the three months ended March 31, 2020 and 2019, respectively.
The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior. Expected volatility is based on the Company’s historical volatility levels. 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.
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Other information pertaining to option activity during the three months ended March 31, 2020 and 2019 was as follows:
 Three Months Ended March 31,
 20202019
Weighted-average fair value of options granted$23.05  $18.26  
Total intrinsic value of stock options exercised ($000s)$4,019  $302  
Non-vested restricted stock activity for the three months ended March 31, 2020 and 2019 is summarized below:
Three Months Ended March 31,
20202019
Shares (000s)Weighted
Average Grant
Date Fair
Value
Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 31138  $80.03  79  $72.75  
Granted34  111.44  66  84.27  
Vested(20) 67.43  (8) 58.52  
Forfeited(1)