What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-24 compared with 2021-02-19 · 169 added, 186 removed, 1124 unchanged (24% of the section changed)

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Index to Financial Statements and Supplementary Data:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 20 2 1 and 20 20

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Reporting Units for Goodwill Impairment Testing

As described in Note 1 and 6 to the financial statements, the Company’s goodwill balance was $524 million as of December 31, 2021.

The Company performed an annual goodwill impairment test as of October 1, 2020 using a quantitative evaluation for each of their reporting units.

The Company performed an annual goodwill impairment test as of October 1, 2021 using a quantitative evaluation for each of its reporting units.

The Company determines the fair value of its reporting units using the income approach, based on a discounted cash flow valuation model.

To test for goodwill impairment, the Company compares fair value of each reporting unit to its carrying value.

When estimating the fair value of each reporting unit management makes significant estimates and assumptions related to a number of factors.

To test for goodwill impairment, the Company compares the fair value of each reporting unit to its carrying value.

When determining the fair value of each reporting unit, management makes significant estimates and assumptions related to a number of factors.

The Company considers the impact of factors that are specific to each of the reporting units such as industry and economic changes as well as projected revenue and expense growth rates based upon annual budgets and longer-range strategic plans, which are highly sensitive to changes in domestic and foreign economic conditions, and the selection of appropriate discount rates.

Given the significant estimates and assumptions management makes to estimate the fair value of the reporting units and the sensitivity of the operations to changes in U.S.

Given the significant estimates and assumptions management makes to determine the fair value of the reporting units and the sensitivity of the operations to changes in U.S.

and foreign economic conditions, we identified management’s assumptions related to the revenue and expense growth rates, the discount rates, and the terminal value calculation utilized in the valuation of the reporting units utilized in the Company’s goodwill impairment tests as a critical audit matter.

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Intangible assets with finite lives, net 94,665 121,660

Right of use assets 8,410 7,338

Right of use assets - operating leases 6,929 5,838

Right of use assets - finance lease 2,359 2,572

Other assets 11,674 11,326

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Dividends payable 20,886 18,941

Lease liabilities - current 2,337 2,475

Income tax payable 1,334 —

Operating lease liabilities - current 2,194 2,178

Finance lease liabilities - current 167 159

Total current liabilities 143,802 94,428

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Deferred income taxes 46,455 51,359

Lease liabilities - non-current 6,079 4,827

Operating lease liabilities - non-current 4,811 3,607

Finance lease liabilities - non-current 2,303 2,472

Derivative liabilities 2,658 11,658

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Authorized 120,000,000 shares;

32,448,705 shares issued and 32,372,621 outstanding at December 31, 2020 and 32,405,796 shares issued and 32,201,917 shares outstanding at December 31, 2019, respectively

32,287,150 shares issued and outstanding at December 31, 2021 and 32,372,621 shares issued and outstanding at December 31, 2020, respectively

Additional paid-in capital 147,716 165,160

Retained earnings 732,138 656,740

Accumulated other comprehensive income/(loss) 4,173 ( 5,564 )

Treasury stock, at cost:

76,084 and 203,879 shares at December 31, 2020 and 2019, respectively

( 7,873 ) ( 18,069 )

Accumulated other comprehensive (loss)/income ( 4,993 ) 4,173

Total stockholders’ equity 877,015 828,233

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Net earnings $ 96,104 $ 84,623 $ 79,671

Other comprehensive income/(loss), net of tax:

Other comprehensive (loss)/ income, net of tax:

Net foreign currency translation adjustment ( 11,255 ) 12,829 ( 891 )

Unrealized loss on cash flow hedge, net of taxes of $ 809 and $ 372 at December 31, 2020 and 2019, respectively

Unrealized gain/(loss) on cash flow hedge, net of taxes of $ 654 , $ 809 , and $ 372 at December 31, 2021, 2020, and 2019, respectively

2,053 ( 2,285 ) ( 1,399 )

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36 ( 807 ) 328

Other comprehensive income/(loss), net of tax 9,737 ( 1,962 ) ( 1,960 )

Other comprehensive (loss)/ income, net of tax ( 9,166 ) 9,737 ( 1,962 )

Comprehensive income $ 86,938 $ 94,360 $ 77,709

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Comprehensive

Income (Loss) Common Stock Treasury Stock Additional

Shares Amount Shares Amount

Income (Loss) Common Stock Additional

Shares Amount

Balance - December 31, 2018 $ 691,618 $ 528,027 $ ( 3,602 ) 32,256,209 $ 2,151 $ 165,042

Net earnings 79,671 79,671 — — — —

Other comprehensive loss, net of cumulative effect of accounting change ( 1,960 ) — ( 1,960 ) — — — — —

Other comprehensive (loss) ( 1,962 ) — ( 1,962 ) — — —

Dividends ($ .52 per share)

( 16,777 ) ( 16,777 ) — — — —

Treasury shares purchased ( 1,394 ) — — — — ( 16,755 ) $ ( 1,394 ) —

Repurchases of common stock ( 21,321 ) — — ( 240,995 ) ( 16 ) ( 21,305 )

Shares and options issued under stock plans 12,438 — — 186,703 13 12,425

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Net earnings 84,623 84,623 — — — —

Other comprehensive loss ( 1,962 ) — ( 1,962 ) — — — — —

Other comprehensive income 9,737 — 9,737 — — —

Dividends ($ .58 per share)

( 18,804 ) ( 18,804 ) — — — —

Treasury shares purchased ( 21,321 ) — — — — ( 240,995 ) ( 21,321 ) —

Shares and options issued under stock plans 12,438 — — 148,881 10 37,822 3,308 9,120

Repurchases of common stock ( 13,463 ) — — ( 136,629 ) ( 9 ) ( 13,454 )

Shares and options issued (canceled) under stock plans 22,473 — — 307,333 21 22,452

Balance - December 31, 2020 828,233 656,740 4,173 32,372,621 2,160 165,160

Net earnings 96,104 96,104 — — — —

Other comprehensive income 9,737 — 9,737 — — — — —

Other comprehensive (loss) ( 9,166 ) — ( 9,166 ) — — —

Dividends ($ .64 per share)

( 20,706 ) ( 20,706 ) — — — —

Treasury shares purchased ( 13,463 ) — — — — ( 136,629 ) ( 13,463 ) —

Repurchases of common stock ( 35,239 ) — — ( 249,848 ) ( 17 ) ( 35,222 )

Shares and options issued under stock plans 17,789 — — 164,377 11 17,778

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Provision for doubtful accounts 180 140 1,776

Unrealized loss/(gain) on foreign currency transactions and deferred compensation 173 72 ( 141 )

Unrealized (gain)/loss on foreign currency transactions and deferred compensation ( 384 ) 173 72

Asset impairment charge 1,675 1,915 1,140

Loss/(Gain) on disposal of assets 153 ( 3,134 ) ( 3,244 )

(Gain)/loss on disposal of assets ( 1,728 ) 153 ( 3,134 )

Changes in assets and liabilities, net of acquired balances

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Principal payments on finance lease ( 159 ) ( 151 ) —

Principal payments on long-term debt — — ( 219,500 )

Principal payment on acquired debt — — ( 17,567 )

Cash paid for financing costs — — ( 1,374 )

Proceeds from stock options exercised 6,943 14,155 4,839

Dividends paid ( 18,723 ) ( 16,705 ) ( 15,135 )

Purchase of treasury stock ( 13,463 ) ( 21,321 ) ( 1,394 )

Repurchases of common stock ( 35,239 ) ( 13,463 ) ( 21,321 )

Net cash (used in) provided by financing activities ( 102,178 ) ( 101,164 ) 43,385

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In instances of shipments made on consignment, revenue is recognized when control is transferred to the customer.

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers , was adopted for the fiscal year beginning on January 1, 2018.

Per the standard, revenue-generating contracts are assessed to identify distinct performance obligations, allocating transaction prices to those performance obligations, and criteria for satisfaction of a performance obligation.

In accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers , revenue-generating contracts are assessed to identify distinct performance obligations, allocating transaction prices to those performance obligations, and criteria for satisfaction of a performance obligation.

The standard allows for recognition of revenue only when we have satisfied a performance obligation through transferring control of the promised good or service to a customer.

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The Company assesses collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

The impact to revenues as a result of applying ASC 606 was an increase of $ 338 for the year ended December 31, 2018.

Cash and Cash Equivalents

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Based on this ASU, customers' credit limits are adjusted based upon their reasonably expected credit worthiness which is determined through review of their payment history, their current credit information, and any foreseeable future events.

Collections and payments from customers are continuously monitored and

allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments are maintained.

Estimated losses are based on historical experience, any specific customer collection issues identified, and any reasonably expected future adverse events.

Collections and payments from customers are continuously monitored and allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments are maintained.

Estimated losses are based on historical experience, any specific customer collection issues identified,

and any reasonably expected future adverse events.

If the financial condition of our customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances and related bad debt expense may be required.

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In 2021, 2020 and 2019, no customer accounted for more than 10% of total net sales or accounts receivable.

Post-employment Benefits

We provide life insurance, health care benefits, and defined benefit pension plan payments for certain eligible retirees and health care benefits for certain retirees’ eligible survivors.

The costs and obligations related to these benefits reflect our assumptions as to health care cost trends and key economic conditions including discount rates, expected rate of return on plan assets, and expected salary increases.

The cost of providing plan benefits also depends on demographic assumptions including retirements, mortality, turnover, and plan participation.

If actual experience differs from these assumptions, the cost of providing these benefits could increase or decrease.

In accordance with ASC 715, “Compensation-Retirement Benefits,” we are required to recognize the overfunded or underfunded status of a defined benefit post retirement plan (other than a multiemployer plan) as an asset or liability in our statement of financial position, and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.

Goodwill and Acquired Intangible Assets

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An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The guidance is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

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.

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However, during the second quarter of 2020, the Company recorded a goodwill impairment charge of $ 1,228 related to business formerly included in the Industrial Products segment.

Refer to Note 6, "Intangible Assets".

The Company may resume performing the qualitative assessment in subsequent periods.

The Company had goodwill in the amount of $ 529,463 and $ 523,998 as of December 31, 2020 and December 31, 2019, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.”

The Company had goodwill in the amount of $ 523,949 and $ 529,463 as of December 31, 2021 and 2020, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.”

Goodwill at December 31, 2019 $ 523,998

Goodwill as a result of the Acquisitions - see Note 2 77,392

Goodwill as a result of Zumbro Acquisition 432

Goodwill impairment ( 1,228 )

Impact due to change in foreign exchange rates 6,261

Goodwill at December 31, 2020 529,463

Goodwill as a result of the Acquisitions – see Note 2 432

Goodwill impairment - see Note 6 ( 1,228 )

Impact due to change in foreign exchange rates ( 5,514 )

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Patents & trade secrets 15 - 17

Intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, which is generally based on discounted cash flows.

The useful life of an intangible asset is based on our assumptions regarding expected use of the asset;

the relationship of the intangible asset to another asset or group of assets;

any legal, regulatory or contractual provisions that may limit the useful life of the asset or that enable renewal or extension of the asset’s legal or contractual life without substantial cost;

the effects of obsolescence, demand, competition and other economic factors;

and the level of maintenance expenditures required to obtain the expected future cash flows from the asset and their related impact on the asset’s useful life.

If events or circumstances indicate that the life of an

intangible asset has changed, it could result in higher future amortization charges or recognition of an impairment loss.

For the year ended December 31, 2021, there were no triggering events which required intangible asset impairment reviews.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the fiscal year in which those temporary differences are expected to be recovered or settled.

Valuation allowances would be established when necessary to reduce deferred tax assets to the amount expected to be realized.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, our forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies.

The assumptions utilized in determining future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

The assumptions utilized in determining future taxable income require judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

We recognize uncertain income tax positions taken on income tax returns at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority.

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These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and revenues and expenses during the reporting period.

Estimates and assumptions

are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Actual results could differ from those estimates.

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Long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated

undiscounted future cash flows expected to be generated by the asset.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

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As of December 31, 2021, we assessed the hedging relationships and determined them to be highly effective.

As such, the net change in fair values of the interest rate swap, that qualify as cash flow hedge, was recorded in accumulated other comprehensive income/(loss) and is subsequently reclassified into interest expense as interest payments are made on our debt.

As such, the net change in fair values of the interest rate swap, that qualifies as a cash flow hedge, was recorded in accumulated other comprehensive income/(loss) and is subsequently reclassified

into interest expense as interest payments are made on our debt.

For the cross-currency swap, the amounts that have not yet been recognized in earnings remained in the cumulative translation adjustment section of accumulated other comprehensive income until the hedged net investment is sold or liquidated in accordance with paragraphs 815-35-35-5A, "Derivatives and Hedging - Net Investment Hedges", and 830-30-40-1 through 40-1A, "Foreign Currency Matters - Derecognition".

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New Accounting Pronouncements

Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, "Reference Rate Reform (Topic 848):

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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.

In January 2021, the FASB issued Accounting Standards Update ("ASU") 2021-01, "Reference Rate Reform (Topic 848):

Scope." This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

Therefore, this Standard Update is in effect from March 12, 2020 through December 31, 2022.

In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848):

Scope." ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

The Company is currently evaluating the impact of this pronouncement on the consolidated financial statements and disclosures.

In December 2019, the FASB issued Accounting Standards Update ("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.

The Company adopted this new Standard in 2021.

The Standard did not have a significant impact on the Company's consolidated financial statements and disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies 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 Standard 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.

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 Update 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 adopted the new Standard on January 1, 2021.

The Standard did not have a significant impact on the Company's consolidated financial statements and disclosures.

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 contained in this ASU 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.

This ASU became effective 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.

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The Standard Update did not have a significant impact on the Company's consolidated financial statements and disclosures.

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.

2017-04, “Simplifying the Test for Goodwill Impairment”, 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.

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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.

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 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 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 did not elect 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 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 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 AND DIVESTITURES

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In May 2020, the Company received an adjustment for working capital acquired of $ 561 .

The estimated goodwill of $ 18,505 arising from the acquisition consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce.

The goodwill of $ 18,505 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 $ 4,723 is deductible for income taxes.

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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.

The Company is indemnified for tax liabilities related to periods prior to the acquisition date.

Indemnified tax liabilities will create an indemnification asset (receivable).

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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.

The Company is indemnified for tax liabilities related to periods prior to the acquisition date.

Indemnified tax liabilities will create an indemnification asset (receivable).

At this time, an indemnification asset balance has not been established.

In connection with Chemogas and Zumbro acquisitions, the Company incurred transaction and integration costs of $ 1,480 and $ 1,947 for the year ended December 31, 2020 and 2019, respectively.

In 2018, the Company, through its subsidiary, Balchem Italia, completed one immaterial acquisition, Bioscreen Technologies Srl.

An indemnification asset balance has not been established.

In connection with Chemogas and Zumbro acquisitions, the Company incurred transaction and integration costs of $ 26 , $ 1,480 , and $ 1,947 for the years ended December 31, 2021, 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.

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On September 6, 2019, the Company sold an insignificant portion of its business.

As a result of the transaction, the Company recorded a gain on sale, which was immaterial to the consolidated financial statements and included in general and administrative expenses.

As a result of the transaction, the Company recorded a gain on sale, which was immaterial to the consolidated financial statements and included in general and administrative

Operating results for the portion of the business sold were insignificant relative to the Company’s consolidated financial results for year ended December 31, 2019.

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Under the Restricted Stock Grant Agreements, certain shares of the Common Stock have been granted, ranging from 70 shares to 54,000 shares, to its non-employee directors and certain employees, subject to time-based vesting requirements.

(“TSR”) where vesting is dependent upon the Company’s TSR performance over the performance period (typically three years ) relative to a comparator group consisting of the Russell 2000 index constituents.

The Company also has performance share (“PS”) awards, which provide the recipients the right to receive a certain number of shares of the Common Stock in the future, subject to an (1) EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period, and (2) relative total shareholder return (“TSR”) where vesting is dependent upon the Company’s TSR performance over the performance period (typically three years ) relative to a comparator group consisting of the Russell 2000 index constituents.

The fair value of each option award issued under the Company’s stock plans is estimated on the date of grant using a Black-Scholes based option-pricing model that uses the assumptions noted in the following table.

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Exercisable at end of year 538 $ 75.51 494 $ 69.04 581 $ 59.29

The aggregate intrinsic value for outstanding stock options was $ 29,735 , $ 31,814 and $ 16,192 at December 31, 2020, 2019 and 2018, respectively, with a weighted average remaining contractual term of 6.7 at December 31, 2020.

Exercisable stock options at December 31, 2020 had an aggregate intrinsic value of 22,805 with a weighted average remaining contractual term of 5.4 .

The aggregate intrinsic value for outstanding stock options was $ 69,711 , $ 29,735 and $ 31,814 at December 31, 2021, 2020 and 2019, respectively, with a weighted average remaining contractual term of 6.4 years at December 31, 2021.

Exercisable stock options at December 31, 2021 had an aggregate intrinsic value of 50,128 with a weighted average remaining contractual term of 5.3 years.

Other information pertaining to option activity during the years ended December 31, 2021, 2020 and 2019 is as follows:

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REPURCHASE OF COMMON STOCK

The Company has an approved stock repurchase program.

The Company's Board of Directors has approved a 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 2,568,396 shares have been purchased, of which 76,084 shares and 203,879 shares remained in treasury at December 31, 2020, and 2019, respectively.

The Company repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans.

The Company also intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors.

During 2020, 2019, and 2018, the Company purchased 136,629 , 240,995 , and 16,755 shares, respectively, from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes and from open market purchases.

Since the inception of the program in June 1999, a total of 2,818,244 shares have been purchased.

The Company’s prior presentation of reflecting treasury stock separately within stockholders’ equity has been adjusted to conform to the presentation prescribed by the State of Maryland, where the Company is incorporated.

In connection therewith, $ 7,873 of previously acquired treasury stock has been offset against additional paid-in capital and common stock in the consolidated balance sheet as of December 31, 2020.

Corresponding adjustments to balances previously reflected as treasury stock of $ 7,873 and $ 18,069 for the years ended December 31, 2020 and 2019 were made to the consolidated statements of stockholders’ equity and prior references to “Treasury shares purchased” were updated to “Repurchases of common stock”, accordingly.

There was no impact to total stockholders’ equity in any of the years presented as a result of these updates.

The Company intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors.

The Company also repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans.

During 2021, 2020, and 2019, the Company purchased 249,848 , 136,629 , and 240,995 shares, respectively, from open market purchases and from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes.

These shares were purchased at an average cost of $ 141.04 , $ 98.54 , and $ 88.47 per share, respectively.

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NOTE 6 - INTANGIBLE ASSETS

The Company had goodwill in the amount of $ 529,463 and $ 523,998 as of December 31, 2020 and 2019, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The increase in goodwill is primarily due to foreign exchange translation adjustments and an adjustment related to the Zumbro acquisition, partially offset by an impairment of $ 1,228 related to business formerly included in the Industrial Products segment.

The Company had goodwill in the amount of $ 523,949 and $ 529,463 as of December 31, 2021 and 2020, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is due to foreign exchange translation adjustments.

As of December 31, 2021 and 2020, the Company had identifiable intangible assets as follows:

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The Company recognized a loss of $ 557 , $ 575 , and $ 388 for the years ended December 31, 2021, 2020, and 2019, respectively, relating to its portion of the joint venture’s expenses in other expense.

The carrying value of the joint venture at December 31, 2020 and 2019 is $ 4,971 and $ 4,513 , respectively, and is recorded in other assets.

The carrying value of the joint venture at December 31, 2021 and 2020 was $ 4,499 and $ 4,971 , respectively, and is recorded in other assets.

NOTE 8 – REVOLVING LOAN

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The initial proceeds from the Credit Agreement were used to repay the outstanding balance of $ 210,750 on its senior secured term loan, which was due May 2019.

On May 23, 2019, the Company drew down $ 108,569 to fund the Chemogas acquisition (see Note 2, "Significant Acquisitions and Divestitures").

On May 23, 2019, the Company drew down $ 108,569 to fund the Chemogas acquisition.

In connection with these additional borrowings, the Company entered into an interest rate swap to protect against adverse fluctuations in interest rates (see Note 20, "Derivative Instruments and Hedging Activities").

On December 13, 2019, the Company drew down $ 45,000 to fund the Zumbro acquisition (see Note 2, "Significant Acquisitions and Divestitures").

As of December 31, 2020, the total balance outstanding on the Credit Agreement amounted to $ 163,569 .

On December 13, 2019, the Company drew down $ 45,000 to fund the Zumbro acquisition.

As of December 31, 2021, the total balance outstanding on the

Credit Agreement amounted to $ 108,569 .

There are no installment payments required on the revolving loans;

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The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the Credit Agreement, and the interest rate was 1.102 % at December 31, 2021.

The Company is also required to pay a

commitment fee on the unused portion of the revolving loan, which is based on the Company’s consolidated net leverage ratio as defined in the Credit Agreement and ranges from 0.15 % to 0.275 % ( 0.175 % at December 31, 2020).

The Company is also required to pay a commitment fee on the unused portion of the revolving loan, which is based on the Company’s consolidated net leverage ratio as defined in the Credit Agreement and ranges from 0.15 % to 0.275 % ( 0.15 % at December 31, 2021).

The unused portion of the revolving loan amounted to $ 391,431 at December 31, 2021.

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Capitalized costs net of accumulated amortization totaled $ 421 and $ 703 at December 31, 2021 and 2020, respectively, and are included in other assets on the consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 282 for each of the years ended December 31, 2020 and 2019 and $ 680 for the year ended December 31, 2018, and is included in interest expense in the accompanying consolidated statements of earnings.

In 2018, such interest expense included a write off $ 363 of deferred financing costs in connection with the extinguished debt in the second quarter of 2018.

Amortization expense pertaining to these costs totaled $ 282 for each of the years ended December 31, 2021, 2020, and 2019, and is included in interest expense in the accompanying consolidated statements of earnings.

The Credit Agreement contains quarterly covenants requiring the consolidated leverage ratio to be less than a certain maximum ratio and the consolidated interest coverage ratio to exceed a certain minimum ratio.

At December 31, 2021, the Company was in compliance with these covenants.

Indebtedness under the Company’s loan agreements are secured by assets of the Company.

Indebtedness under the Company’s loan agreements is secured by assets of the Company.

NOTE 9 - NET EARNINGS PER COMMON SHARE

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The Company’s effective tax rate for 2021, 2020 and 2019 was 23.3 %, 20.5 %, and 17.4 %, respectively.

The increase from 2019 to 2020 is primarily due to a reduction in certain tax credits.

The increase from 2020 to 2021 is primarily due to a reduction in certain tax credits, lower tax benefits from stock-based compensation, and higher enacted state tax rates.

On March 27, 2020 Congress passed the Coronavirus Aid, Relief, and Economic Security Act, and on December 31, 2020 Congress passed an additional round of COVID relief legislation as part of the Bipartisan-Bicameral Omnibus COVID Relief Deal.

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In addition, Balchem will continue to evaluate and analyze the impact of the U.S.

Tax Cuts and Jobs Act that was enacted on December 22, 2017 and the additional guidance that has been issued, and may be issued, by the U.S.

and Jobs Act that was enacted on December 22, 2017 and the additional guidance that has been issued, and may be issued, by the U.S.

Department of Treasury, the SEC, and/or the Financial Accounting Standards Board ("FASB") regarding this act.

The Company considers the undistributed earnings of certain non-U.S.

subsidiaries to be indefinitely reinvested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs

and the Company's specific plans for reinvestment of those subsidiary earnings.

subsidiaries to be indefinitely reinvested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and the Company's specific plans for reinvestment of those subsidiary earnings.

The Company projects that its foreign earnings will be utilized offshore for working capital and future foreign growth.

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State 3,664 3,590 818

Deemed Repatriation — — ( 970 )

Federal ( 3,709 ) ( 3,017 ) ( 3,707 )

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FDII ( 1,540 ) ( 1,400 ) ( 1,922 )

Deemed Repatriation — — ( 970 )

Patent Box Decree (related to prior years) — — ( 1,948 )

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The amount of deferred tax asset realizable, however, could change if management’s estimate of future taxable income should change.

As of December 31, 2020, the Company has federal and state income tax net operating loss (NOL) carryforwards of $ 2,367 and $ 1,026 , respectively, The federal NOL will not expire.

As of December 31, 2021, the Company has state income tax net operating loss (NOL) carryforwards of $ 335 .

The state NOL carryforwards will expire between 2025 and 2034.

The Company believes that the benefit from the state NOL carryforwards will be realized, therefore a valuation allowance is not required to be established on these assets.

However, the Company also acquired an insignificant amount of NOL carryforwards with the acquisition of Chemogas.

These NOLs are not expected to be realized and therefore a valuation allowance on these items was established.

The Company also acquired an insignificant amount of NOL carryforwards with the acquisition of Chemogas.

The Company considers the undistributed earnings of certain non-U.S.

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The Company recognizes both interest and penalties as part of the income tax provision.

During the years ended December 31, 2020, 2019 and 2018, these amounted to approximately $ 232 , $ 132 and $ 207 , respectively.

As of December 31, 2020 and 2019, accrued interest and penalties were $ 1,845 and $ 1,612 , respectively.

During the years ended December 31, 2021, 2020 and 2019, these amounted to approximate ly $ 262 , $ 232 and $ 132 , respectively.

As of December 31, 2021 and 2020, accrued interest and penalties were $ 2,106 and $ 1,845 , respectivel y.

Balchem files income tax returns in the U.S.

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NOTE 11 - SEGMENT INFORMATION

The Company currently reports three reportable segments:

Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products.

Previously, the Company's four reportable segments were:

Human Nutrition and Health, Animal Nutrition and Health, Specialty Products, and Industrial Products.

However, effective in the first quarter of 2020, in order to align with the Company's strategic focus on health and nutrition, allocation of resources, and evaluation of operating performance, and given the 2019 reduction in portfolio scale of Industrial Products, the Company has revised its reporting segment structure to three reportable segments:

Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products.

However, effective in the first quarter of 2020, in order to align with the Company's strategic focus on health and nutrition, allocation of resources, and evaluation of operating performance, and given the 2019 reduction in portfolio scale of Industrial Products, the Company revised its reporting segment structure to three reportable segments stated above.

These reportable segments are strategic businesses that offer products and services to different markets.

This realignment has been retrospectively applied.

Sales and production of products outside of our reportable segments and other minor business activities are included in "Other and Unallocated" and applied retroactively to 2019 and 2018.

There was no change to the Consolidated Financial Statements as a result of the change to the reportable segments.

Sales and production of products outside of our reportable segments and other minor business activities are included in "Other and Unallocated" and applied retroactively to 2019.

There were no changes to the Consolidated Financial Statements as a result of the change to the reportable segments.

The Company expects that the new reportable segment structure will provide investors greater understanding of and alignment with the Company’s strategic focus.

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Choline is recognized to play a key role in the development and structural integrity of brain cell membranes in infants, processing dietary fat, reproductive development and neural functions, such as memory and muscle function.

The Company's mineral amino acid chelates, specialized mineral salts, and mineral complexes are used as raw materials for inclusion in premier human nutrition products.

HNH's mineral amino acid chelates, specialized mineral salts, and mineral complexes are used as raw materials for inclusion in premier human nutrition products.

Proprietary technology has been combined to create an organic molecule in a form the body can readily assimilate.

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Additionally, this segment provides microencapsulation solutions to a variety of applications in food, pharmaceutical and nutritional ingredients to enhance performance of nutritional fortification, processing, mixing, and packaging applications and shelf-life.

Major product applications are baked goods, refrigerated and frozen dough systems, processed meats, seasoning blends,

confections, sports and protein bars, dietary plans, and nutritional supplements.

Major product applications are baked goods, refrigerated and frozen dough systems, processed meats, seasoning blends, confections, sports and protein bars,

dietary plans, and nutritional supplements.

The Company also creates cereal systems for ready-to-eat cereals, grain-based snacks, and cereal based ingredients.

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The Company’s Animal Nutrition & Health ("ANH") segment provides nutritional products derived from its microencapsulation and chelation technologies in addition to basic choline chloride.

For ruminant animals, the Company’s microencapsulated products boost health and milk production, delivering nutrient supplements that are biologically available, providing required nutritional levels.

For ruminant animals, ANH’s microencapsulated products boost health and milk production, delivering nutrient supplements that are biologically available, providing required nutritional levels.

The Company’s proprietary chelation technology provides enhanced nutrient absorption for various species of production and companion animals and is marketed for use in animal feed throughout the world.

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Management believes that success in the commodity-oriented basic choline chloride marketplace is highly dependent on the Company’s ability to maintain its strong reputation for excellent product quality and customer service.

The Company continues to drive production efficiencies in order to maintain its competitive-cost position to effectively compete in a competitive global marketplace.

The Company continues to drive production efficiencies in order to maintain its competitive-cost position to effectively compete in a global marketplace.

Specialty Products

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It is used to sterilize a wide range of medical devices because of its versatility and effectiveness in treating hard or soft surfaces, composites, metals, tubing and different types of plastics without negatively impacting the performance of the device being sterilized.

The Company’s 100% ethylene oxide product and blends are distributed worldwide in specially designed, reusable and recyclable drum and cylinder packaging, to assure compliance with safety, quality and environmental standards as outlined by the applicable regulatory agencies in the countries our products are shipped to.

Specialty Products' 100% ethylene oxide product and blends are distributed worldwide in specially designed, reusable and recyclable drum and cylinder packaging, to assure compliance with safety, quality and environmental standards as outlined by the applicable regulatory agencies in the countries our products are shipped to.

The Company’s inventory of these specially built drums and cylinders, along with its five filling facilities, represents a significant capital investment.

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The Company distributes its propylene oxide product in the U.S.

primarily in recyclable, single-walled, carbon steel cylinders according to standards outlined by the EPA and the DOT.

primarily in recyclable, single-walled, carbon steel cylinders according to standards outlined by the Environmental Protection Agency ("EPA") and the Department of Transportation ("DOT").

Propylene oxide is also sold worldwide to customers in approved reusable and recyclable drum and cylinder packaging for various chemical synthesis applications, such as increasing paint durability and manufacturing specialty starches and textile coatings.

Ammonia is used primarily as a refrigerant, and also for heat treatment of metals and various chemical synthesis applications, and is distributed in reusable and recyclable drum and cylinder drum and cylinder packaging approved for use in the countries these products are shipped to.

Ammonia is used primarily as a refrigerant, and also for heat treatment of metals and various chemical synthesis applications, and is distributed in reusable and recyclable drum and cylinder packaging, which are approved for use in the countries these products are shipped to.

The Company's inventory of cylinders for these products also represents a significant capital investment.

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Other and Unallocated (2)

423 707 1,912

Total $ 36,142 $ 32,080 $ 25,790

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Net change of cash flow hedge (see Note 20 for further information)

Unrealized loss on cash flow hedge ( 3,094 ) ( 1,771 ) —

Unrealized gain/(loss) on cash flow hedge 2,707 ( 3,094 ) ( 1,771 )

Tax ( 654 ) 809 372

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Net of tax 36 ( 807 ) 328

Total other comprehensive income/(loss) $ 9,737 $ ( 1,962 ) $ ( 1,960 )

Total other comprehensive (loss)/income $ ( 9,166 ) $ 9,737 $ ( 1,962 )

(1) One-time adjustment to the postretirement account.

Included in "Net foreign currency translation adjustment" were $ 4,882 and $ 262 of losses related to a net investment hedge, net of taxes of $ 1,579 and $ 70 for the years ended December 31, 2020 and 2019, respectively.

There were no hedging activities during the year ended December 31, 2018.

Included in "Net foreign currency translation adjustment" were $ 4,766 of gain, $ 4,882 of loss, and $ 262 of loss, related to a net investment hedge, net of taxes of $ 1,527 , $ 1,579 , and $ 70 , for the years ended December 31, 2021, 2020, and 2019, respectively.

See Note 20, "Derivative Instruments and Hedging Activities."

Accumulated other comprehensive income/(loss) at December 31, 2020 consisted of the following:

Accumulated other comprehensive (loss)/income at December 31, 2021 consisted of the following:

Foreign currency

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Balance December 31, 2020 $ 7,653 $ ( 3,684 ) $ 204 4,173

Other comprehensive gain/(loss) 12,829 ( 2,285 ) ( 807 ) 9,737

Other comprehensive (loss)/gain ( 11,255 ) 2,053 36 ( 9,166 )

Balance December 31, 2021 $ ( 3,602 ) $ ( 1,631 ) $ 240 ( 4,993 )

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Defined Contribution Plans

During 2020, the Company sponsored two 401(k) savings plans for eligible employees.

The plans allow participants to make pretax contributions and the Company matches certain percentages of those pretax contributions.

One of the plans has a discretionary profit sharing portion and matches 401(k) contributions with shares of the Company’s Common Stock.

All amounts contributed to the plans are deposited into a trust fund administered by independent trustees.

The Company sponsored two 401(k) savings plans for eligible employees, which were merged into one plan on January 1, 2021.

The remaining plan allows participants to make pretax contributions and the Company matches certain percentages of those pretax contributions.

The remaining plan also has a discretionary profit sharing portion and matches 401(k) contributions with shares of the Company’s Common Stock.

All amounts contributed to the plan are deposited into a trust fund administered by independent trustees.

The Company provided for profit sharing contributions and matching 401(k) savings plan contributions of $ 1,459 and $ 4,142 in 2021, $ 1,022 and $ 3,751 in 2020, and $ 592 and $ 3,451 in 2019, respectively.

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Funded status 1,293 1,374

Unrecognized prior service cost N/A N/A

Unrecognized net (gain)/loss N/A N/A

Unrecognized prior service cost 74 74

Unrecognized net gain ( 50 ) ( 46 )

Net amount recognized in consolidated balance sheet (after ASC 715) (included in other long-term obligations) $ 1,293 $ 1,374

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Interest cost 23 26 39

Amortization of prior service credit 74 74 74

Amortization of prior service cost 74 74 74

Amortization of gain ( 24 ) ( 50 ) ( 46 )

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The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees.

The amount recorded for these obligations on the Company's balance sheet as of December 31, 2020 and 2019 was $ 950 and $ 596 , respectively, and was included in other long-term obligations.

The actuarial recorded liabilities for such unfunded defined benefit pension plan are as follows:

1 unchanged sentence

Benefit obligation at beginning of year $ 2,053 $ 1,738

Acquisitions — 1,738

Service cost with interest to end of year 67 104

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Fair value of plan assets at beginning of year $ 1,103 895

Acquisitions — 895

Actual return on plan assets 76 57

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Unrecognized prior service cost N/A N/A

Unrecognized net (gain)/loss N/A 247

Unrecognized net (gain)/loss N/A N/A

Net amount recognized in consolidated balance sheet (after ASC 715) (included in other long-term obligations) $ 684 $ 950

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Components of net periodic benefit cost:

2021 2020 2019

Service cost with interest to end of year $ 67 $ 104 $ —

1 unchanged sentence

Expected return on plan assets ( 34 ) ( 14 ) —

Amortization of prior service credit — —

Amortization of gain — —

Amortization of prior service cost — — —

Amortization of net loss 3 — —

Total net periodic benefit cost $ 50 $ 110 $ —

Estimated employer contributions to the plan in 2021 are $ 59 .

Estimated future benefit payments are as follows:

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Assumptions to determine net cost:

2021 2020 2019

Discount rate 0.75 % 1.00 % N/A

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The deferred compensation liability as of December 31, 2021 and 2020 was $ 6,270 and $ 3,581 , respectively, and was included in other long-term obligations on the Company's balance sheet.

The related rabbi trust assets were $ 6,267 and $ 3,582 as of December 31, 2021 and 2020, respectively, and were included in other non-current assets on the Company's consolidated balance sheets.

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Aggregate future minimum rental payments required under non-cancelable operating leases at December 31, 2020 are as follows:

Aggregate future minimum rental payments required under non-cancelable operating and finance leases at December 31, 2021 are as follows:

Thereafter 2,428

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In September 2020, BCP Ingredients, Inc.

"(BCP"), the Company subsidiary that operates the site received a General Notice Letter from the EPA regarding BCP's potential liability for 1,4 dioxane contamination at the site.

BCP currently believes that the 1,4 dioxane contamination is associated with the former owner’s operations and has engaged experts to study site conditions and hydrogeology in connection with preparing its response to the notice.

(“BCP”), the Company subsidiary that operates the site received a General Notice Letter from the EPA regarding BCP’s potential liability for contamination at the site and, in February 2022, received a Special Notice Letter from EPA for the performance of a focused remedial investigation/feasibility study at the site with regard to the presence of certain contaminants, including 1,4 dioxane,.

The Company has engaged experts to study site conditions and hydrogeology in connection with preparing its response to the notices.

From time to time, the Company is a party to various litigation, claims and assessments.

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Cash and cash equivalents at December 31, 2021 and 2020 included $ 933 and $ 817 in money market funds, respectively.

Non-current assets at December 31, 2020 and December 31, 2019 included $ 3,582 and $ 1,982 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

Non-current assets at December 31, 2021 and 2020 included $ 6,267 and $ 3,582 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

The money market and rabbi trust funds are valued using level one inputs, as defined by ASC 820, “Fair Value Measurement.”

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The fair values of these derivative instruments are determined based on Level 2 inputs, using significant inputs that are observable either directly or indirectly, including interest rate curves and implied volatilities.

The derivative liability related to the cross-currency swap was $ 6,793 and $ 332 at December 31, 2020 and December 31, 2019, respectively.

The derivative liability related to the interest rate swap was $ 4,865 and $ 1,771 at December 31, 2020 and December 31, 2019, respectively.

The derivative liability related to the cross-currency swap was $ 500 and $ 6,793 at December 31, 2021 and 2020, respectively.

The derivative liability related to the interest rate swap was $ 2,158 and $ 4,865 at December 31, 2021 and 2020, respectively.

NOTE 18 – RELATED PARTY TRANSACTIONS

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At December 31, 2021 and 2020, the Company had receivables of $ 10,504 and $ 2,809 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC for services rendered and raw materials sold and payables of $ 2,239 and $ 3,230 , respectively, for finished goods received recorded in accounts payable in 2020 and accrued expenses in 2019.

In addition, the Company had receivables in the amount of $ 72 , r elated to non-contractual monies owed from St.

Gabriel CC Company, LLC, recorded in receivables as of December 31, 2020.

There was no such receivable as of December 31, 2019.

The Company had payables in the amount of $ 296 and $ 366 related to non-

contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable as of December 31, 2020 and accrued expenses as of December 31, 2019.

Gabriel CC Company, LLC for services rendered and raw materials sold and payables of $ 7,552 and $ 2,239 , respectively, for finished goods received recorded in accounts payable in 2021 and 2020.

In addition, the Company had receivables in the amount of $ 164 and $ 72 related to non-contractual monies owed from St.

Gabriel CC Company, LLC, recorded in receivables as of December 31, 2021 and 2020.

Company had payables in the amount of $ 296 related to non-contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable as of December 31, 2021 and 2020.

NOTE 19 – LEASES

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The warehouse can be purchased at a pre-determined price beginning in 2023.

At December 31, 2020, the Company had a finance lease liability of $ 2,631 , which was recorded under lease liabilities (current and non-current) in the consolidated balance sheet.

Right of use assets and lease liabilities at December 31, 2021 and 2020 are summarized as follows:

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Total $ 7,114 $ 6,079

For the year ended December 31, 2020 and 2019, the Company's total lease costs were as follows, which included both amounts recognized in profits or losses during the period and amounts capitalized on the balance sheet, and the cash flows arising from lease transactions:

For the years ended December 31, 2021, 2020, and 2019, the Company's total lease costs were as follows, which included both amounts recognized in profits or losses during the period and amounts capitalized on the balance sheet, and the cash flows arising from lease transactions:

Year ended December 31

2021 2020 2019

Operating lease cost $ 3,143 $ 3,105 $ 3,181

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ROU assets obtained in exchange for new finance lease liabilities, net of ROU asset disposals $ — $ 2,782 $ —

Weighted-average remaining lease term - operating leases 4.15 years 4.93 years

Weighted-average remaining lease term - finance leases 12.25 years n/a

Weighted-average remaining lease term - operating leases 4.21 years 4.15 years 4.93 years

Weighted-average remaining lease term - finance leases 11.41 years 12.25 years n/a

Weighted-average discount rate - operating leases 3.5 % 4.5 % 4.6 %

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The Company is meeting its objective since changes in the cash flows of the interest rate swap are expected to exactly offset the changes in the cash flows attributable to fluctuations in the contractually specified interest rate on the interest payments associated with the Credit Agreement.

The net interest expense related to the interest rate swap contract was $ 1,593 for the year ended December 31, 2020 and the net interest income

related to the interest rate swap contract was $ 40 for the year ended December 31, 2019.

These amounts were recorded in the condensed consolidated statements of operations under interest expense, net.

The net interest expense related to the interest rate swap contract were $ 2,144 and $ 1,593 for the year ended December 31, 2021 and 2020.

net interest income related to the interest rate swap contract was $ 40 for the year ended December 31, 2019.

These amounts were recorded in the consolidated statements of operations under interest expense, net.

At the same time, the Company also entered into a pay-fixed ( 0.00 %), receive-fixed ( 2.05 %) cross-currency swap to manage foreign exchange risk related to the Company's net investment in Chemogas.

The derivative has a notional amount of $ 108,569 , an effective date of May 28, 2019, and a maturity date of June 27, 2023.

The interest income related to the cross-currency swap contract was $ 2,275 and $ 1,317 for the years ended December 31, 2020 and 2019, respectively, which were recorded in the condensed consolidated statements of operations under interest expense, net.

The interest income related to the cross-currency swap contract was $ 2,257 , $ 2,275 , and $ 1,317 for the years ended December 31, 2021, 2020, and 2019, respectively, which were recorded in the consolidated statements of operations under interest expense, net.

The derivative instruments are with a single counterparty and are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract.

As such, the derivative instruments are categorized as a master netting arrangement and presented as a net derivative asset or derivative liability on the consolidated balance sheets.

As of December 31, 2020 and 2019, the fair value of the derivative instruments is presented as follows in the Company's condensed consolidated balance sheets:

As of December 31, 2021 and 2020, the fair value of the derivative instruments is presented as follows in the Company's consolidated balance sheets:

Derivative liabilities 2021 2020

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Location within Statements of Comprehensive Income Year ended December 31

Cash flow hedge (interest rate swap), net of tax Unrealized (loss) on cash flow hedge, net $ ( 2,285 ) $ ( 1,399 )

2021 2020 2019

Cash flow hedge (interest rate swap), net of tax Unrealized gain (loss) on cash flow hedge, net $ 2,053 $ ( 2,285 ) $ ( 1,399 )

Net investment hedge (cross-currency swap), net of tax Net foreign currency translation adjustment 4,766 ( 4,882 ) ( 262 )

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Adjustments/deductions (a)

( 306 ) ( 5,363 )

Balance - December 31, 2019 2,080 4,281

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data