BIOANALYTICAL
SYSTEMS, INC.
|
||
(Exact
name of the registrant as specified in its charter)
|
||
INDIANA
|
35-1345024
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
2701
KENT AVENUE
|
||
WEST
LAFAYETTE, IN
|
47906
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
|
(765)
463-4527
|
||
(Registrant’s
telephone number, including area code)
|
|
|
PAGE
NUMBER
|
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1
|
Condensed
Consolidated Financial Statements (Unaudited):
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of June 30, 2007 and September 30,
2006
|
3
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the Three Months and Nine
Months
Ended June 30, 2007 and 2006
|
4
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended June
30,
2007 and 2006
|
5
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
|
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
|
11
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
16
|
Item
4
|
Controls
and Procedures
|
16
|
PART
II
|
OTHER
INFORMATION
|
|
Item
6
|
Exhibits
|
17
|
|
|
|
SIGNATURES
|
|
18
|
(Unaudited)
June
30, 2007
|
September
30, 2006
|
||||||
Assets
|
|
|
|||||
Current
assets:
|
|
||||||
Cash
and cash equivalents
|
$
|
3,019
|
$
|
1,647
|
|||
Accounts
receivable
|
|||||||
Trade
|
5,252
|
6,492
|
|||||
Unbilled
revenues and other
|
2,695
|
1,545
|
|||||
Inventories
|
1,806
|
1,887
|
|||||
Deferred
income taxes
|
723
|
604
|
|||||
Refundable
income taxes
|
718
|
888
|
|||||
Prepaid
expenses
|
710
|
599
|
|||||
Total
current assets
|
14,923
|
13,662
|
|||||
Property
and equipment, net
|
23,483
|
25,766
|
|||||
Goodwill
|
1,855
|
1,855
|
|||||
Intangible
assets, net
|
357
|
517
|
|||||
Debt
issue costs
|
231
|
246
|
|||||
Other
assets
|
244
|
268
|
|||||
Total
assets
|
$
|
41,093
|
$
|
42,314
|
|||
Liabilities
and shareholders’ equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,480
|
$
|
1,610
|
|||
Accrued
expenses
|
2,753
|
3,081
|
|||||
Customer
advances
|
2,981
|
4,226
|
|||||
Current
portion of capital lease obligation
|
500
|
472
|
|||||
Current
portion of long-term debt
|
4,815
|
721
|
|||||
Total
current liabilities
|
12,529
|
10,110
|
|||||
Capital
lease obligation, less current portion
|
1,270
|
1,648
|
|||||
Long-term
debt, less current portion
|
7,948
|
8,186
|
|||||
Subordinated
debt, long-term
|
—
|
4,477
|
|||||
Deferred
income taxes
|
558
|
539
|
|||||
Shareholders’
equity:
|
|||||||
Preferred
shares: Authorized shares - 1,000
|
|||||||
Issued
and outstanding shares - none
|
—
|
—
|
|||||
Common
shares: Authorized shares - 19,000
|
|||||||
Issued
and outstanding shares 4,909 at June 30, 2007
|
|||||||
and
4,892 at September 30, 2006
|
1,190
|
1,182
|
|||||
Additional
paid-in capital
|
11,913
|
11,677
|
|||||
Retained
earnings
|
5,713
|
4,584
|
|||||
Accumulated
other comprehensive loss
|
(28
|
)
|
(89
|
)
|
|||
Total
shareholders’ equity
|
18,788
|
17,354
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
41,093
|
$
|
42,314
|
Three
Months Ended
June
30,
|
Nine
Months Ended
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Service
revenue
|
$
|
10,687
|
$
|
7,956
|
$
|
28,021
|
$
|
25,548
|
|||||
Product
revenue
|
1,928
|
2,082
|
6,789
|
6,751
|
|||||||||
Total
revenue
|
12,615
|
10,038
|
34,810
|
32,299
|
|||||||||
Cost
of service revenue
|
7,644
|
6,343
|
21,229
|
18,965
|
|||||||||
Cost
of product revenue
|
853
|
1,165
|
2,892
|
2,725
|
|||||||||
Total
cost of revenue
|
8,497
|
7,508
|
24,121
|
21,690
|
|||||||||
Gross
profit
|
4,118
|
2,530
|
10,689
|
10,609
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling
|
687
|
625
|
2,038
|
2,038
|
|||||||||
Research
and development
|
212
|
350
|
668
|
989
|
|||||||||
General
and administrative
|
2,097
|
3,966
|
5,596
|
9,737
|
|||||||||
(Gain)/loss
on sale of property and equipment
|
(3
|
)
|
—
|
80
|
—
|
||||||||
Total
operating expenses
|
2,993
|
4,941
|
8,382
|
12,764
|
|||||||||
Operating
income (loss)
|
1,125
|
(2,411
|
)
|
2,307
|
(2,155
|
)
|
|||||||
Interest
income
|
27
|
2
|
52
|
6
|
|||||||||
Interest
expense
|
(245
|
)
|
(272
|
)
|
(717
|
)
|
(780
|
)
|
|||||
Other
income
|
1
|
—
|
4
|
—
|
|||||||||
Income
(loss) before income taxes
|
908
|
(2,681
|
)
|
1,646
|
(2,929
|
)
|
|||||||
Income
taxes (benefit)
|
459
|
(925
|
)
|
517
|
(995
|
)
|
|||||||
Net
income (loss)
|
$
|
449
|
$
|
(1,756
|
)
|
$
|
1,129
|
$
|
(1,934
|
)
|
|||
Net
income (loss) per share:
|
|||||||||||||
Basic
|
$
|
0.09
|
$
|
(
0.36
|
)
|
$
|
0.23
|
$
|
(0.40
|
)
|
|||
Diluted
|
$
|
0.09
|
$
|
(
0.36
|
)
|
$
|
0.23
|
$
|
(0.40
|
)
|
|||
Weighted
common and common equivalent
|
|||||||||||||
shares
outstanding:
|
|||||||||||||
Basic
|
4,909
|
4,892
|
4,908
|
4,879
|
|||||||||
Diluted
|
4,976
|
4,892
|
4,952
|
4,879
|
Nine
Months Ended June 30,
|
|||||||
2007
|
2006
|
||||||
Operating
activities
|
|
|
|||||
Net
income/(loss)
|
$
|
1,129
|
$
|
(1,934
|
)
|
||
Adjustments
to reconcile net income (loss) to net
|
|||||||
cash
provided by operating activities:
|
|||||||
Depreciation
and amortization
|
2,640
|
3,069
|
|||||
Impairment
of assets
|
—
|
1,100
|
|||||
Loss
on sale of property and equipment
|
80
|
—
|
|||||
Employee
stock option expense
|
164
|
210
|
|||||
Deferred
income taxes
|
(100
|
)
|
(591
|
)
|
|||
Other
|
118
|
—
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
91
|
3,587
|
|||||
Inventories
|
81
|
152
|
|||||
Prepaid
expenses and other assets
|
(96
|
)
|
(194
|
)
|
|||
Accounts
payable
|
(130
|
)
|
(325
|
)
|
|||
Refundable
income taxes
|
170
|
(776
|
)
|
||||
Accrued
expenses
|
(327
|
)
|
(505
|
)
|
|||
Customer
advances
|
(1,245
|
)
|
(1,218
|
)
|
|||
Net
cash provided by operating activities
|
2,575
|
2,575
|
|||||
Investing
activities
|
|||||||
Capital
expenditures
|
(660
|
)
|
(1,286
|
)
|
|||
Proceeds
from sale of property and equipment
|
617
|
45
|
|||||
Net
cash used by investing activities
|
(43
|
)
|
(1,241
|
)
|
|||
Financing
activities
|
|||||||
Borrowings
on line of credit
|
—
|
11,360
|
|||||
Payments
on line of credit
|
—
|
(12,280
|
)
|
||||
Exercise
of stock options
|
80
|
94
|
|||||
Payments
on capital lease obligations
|
(351
|
)
|
(305
|
)
|
|||
Payments
of long-term debt
|
(621
|
)
|
(638
|
)
|
|||
Net
cash used by financing activities
|
(892
|
)
|
(1,769
|
)
|
|||
Effects
of exchange rate changes
|
(268
|
)
|
(42
|
)
|
|||
Net
increase (decrease) in cash and cash equivalents
|
1,372
|
(477
|
)
|
||||
Cash
and cash equivalents at beginning of period
|
1,647
|
1,254
|
|||||
Cash
and cash equivalents at end of period
|
$
|
3,019
|
$
|
777
|
Risk-free
interest rate
|
4.65%
|
|||
Dividend
yield
|
0.00%
|
|||
Volatility
factor of the expected market price of the Company’s common
stock
|
0.497
to 0.623
|
|||
Expected
life of the options (years)
|
5.4
- 7.7
|
Three
Months Ended June 30,
|
|
Nine
Months Ended June 30,
|
|||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Shares:
|
|||||||||||||
Basic
shares
|
4,909
|
4,892
|
4,908
|
4,879
|
|||||||||
Effect
of dilutive securities
|
|||||||||||||
Options
|
67
|
—
|
44
|
—
|
|||||||||
Convertible
Subordinated debt
|
—
|
—
|
—
|
—
|
|||||||||
Diluted
shares
|
4,976
|
4,892
|
4,952
|
4,879
|
|||||||||
Basic
and diluted net income (loss)
|
$
|
449
|
$
|
(1,756
|
)
|
$
|
1,129
|
$
|
(1,934
|
)
|
|||
Basic
earnings (loss) per share
|
$
|
0.09
|
$
|
(0.36
|
)
|
$
|
0.23
|
$
|
(0.40
|
)
|
|||
Diluted
earnings (loss) per share
|
$
|
0.09
|
$
|
(0.36
|
)
|
$
|
0.23
|
$
|
(0.40
|
)
|
June
30,
2007
|
September
30,
2006
|
||||||
Raw
materials
|
$
|
1,337
|
$
|
1,335
|
|||
Work
in progress
|
294
|
278
|
|||||
Finished
goods
|
258
|
357
|
|||||
1,889
|
1,970
|
||||||
Less
LIFO reserve
|
(83
|
)
|
(83
|
)
|
|||
$
|
1,806
|
$
|
1,887
|
Three
Months Ended June 30,
|
Nine
Months Ended June
30,
|
||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Operating
income (loss):
|
|||||||||||||
Services
|
$
|
1,271
|
$
|
(2,169
|
)
|
$
|
2,021
|
$
|
(2,628
|
)
|
|||
Products
|
(146
|
)
|
(242
|
)
|
286
|
473
|
|||||||
Total
operating income (loss)
|
1,125
|
(2,411
|
)
|
2,307
|
(2,155
|
)
|
|||||||
Corporate
expenses
|
(217
|
)
|
(270
|
)
|
(661
|
)
|
(774
|
)
|
|||||
Income
(loss) before income taxes
|
$
|
908
|
$
|
(2,681
|
)
|
$
|
1,646
|
$
|
(2,929
|
)
|
Nine
Months Ended June 30, 2007
|
|||||||
Options
|
Weighted
average
exercise
price
|
||||||
Outstanding
- beginning of period
|
404
|
$
|
4.98
|
||||
Exercised
|
(17
|
)
|
4.48
|
||||
Granted
|
295
|
6.97
|
|||||
Terminated
|
(41
|
)
|
4.87
|
||||
Outstanding
- end of period
|
641
|
$
|
5.92
|
||||
Weighted
grant date fair values
|
$
|
3.50
|
Number
|
Weighted
Average
Grant
Date
Fair
Value
|
||||||
Non-vested
options, beginning of period
|
278
|
$
|
3.56
|
||||
Granted
|
295
|
3.57
|
|||||
Vested
|
(106
|
)
|
3.38
|
||||
Forfeited
|
(31
|
)
|
3.47
|
||||
Non-vested
options, end of period
|
436
|
3.57
|
Range
of exercise prices
|
|
Number
outstanding
at
June 30,
2007
|
|
Weighted
average
remaining
contractual
life
(years)
|
|
Weighted
average
exercise
price
|
|
Number
exercisable
at
June 30, 2007
|
|
Weighted
average
exercise
price
|
|
$2.80
- 4.58
|
|
159
|
|
5.33
|
|
4.35
|
|
120
|
|
4.33
|
|
$4.96
- 5.74
|
|
190
|
|
7.29
|
|
5.34
|
|
68
|
|
5.37
|
|
$7.10
- 8.00
|
|
292
|
|
9.08
|
|
7.15
|
|
17
|
|
8.00
|
|
Three
Months Ended
June
30,
|
Nine
Months Ended
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Service
revenue
|
84.7
|
79.3
|
80.5
|
79.1
|
|||||||||
Product
revenue
|
15.3
|
20.7
|
19.5
|
20.9
|
|||||||||
Total
revenue
|
100.0
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost
of service revenue (a)
|
71.5
|
79.7
|
75.8
|
74.2
|
|||||||||
Cost
of product revenue (a)
|
44.2
|
56.0
|
42.6
|
40.4
|
|||||||||
Total
cost of revenue
|
67.4
|
74.8
|
69.3
|
67.2
|
|||||||||
Gross
profit
|
32.6
|
25.2
|
30.7
|
32.8
|
|||||||||
Total
operating expenses
|
23.7
|
49.2
|
24.1
|
39.5
|
|||||||||
Operating
income (loss)
|
8.9
|
(24.0
|
)
|
6.6
|
(6.7
|
)
|
|||||||
Other
expense
|
(1.7
|
)
|
(2.7
|
)
|
(1.9
|
)
|
(2.4
|
)
|
|||||
Income
(loss) before income taxes
|
7.2
|
(26.7
|
)
|
4.7
|
(9.1
|
)
|
|||||||
Income
tax (expense) benefit
|
(3.6
|
)
|
9.2
|
(1.5
|
)
|
3.1
|
|||||||
Net
income (loss)
|
3.6
|
(17.5
|
)
|
3.2
|
(6.0
|
)
|
(a) |
Percentage
of service and product revenues,
respectively.
|
2007
|
2008
|
2009
|
2010
|
2011
|
After
2011
|
Total
|
||||||||||||||||
Capital
expenditures
|
$
|
85
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
85
|
||||||||
Mortgage
notes payable
|
81
|
343
|
369
|
396
|
426
|
6,670
|
8,285
|
|||||||||||||||
Subordinated
debt
|
—
|
4,477
|
—
|
—
|
—
|
—
|
4,477
|
|||||||||||||||
Capital
lease obligations
|
122
|
510
|
553
|
453
|
132
|
—
|
1,770
|
|||||||||||||||
Operating
leases
|
526
|
1,471
|
1,378
|
1,341
|
1,355
|
4,214
|
10,285
|
|||||||||||||||
$
|
814
|
$
|
6,801
|
$
|
2,300
|
$
|
2,190
|
$
|
1,913
|
$
|
10,884
|
$
|
24,902
|
Number
assigned
in
Regulation S-K
Item
601
|
Description
of Exhibits
|
||
(3)
|
3.1
|
Second
Amended and Restated Articles of Incorporation of Bioanalytical Systems,
Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q for the
quarter ended December 31, 1997).
|
|
3.2
|
Second
Restated Bylaws of Bioanalytical Systems, Inc. (incorporated by reference
to Exhibit 3.2 to Form 10-Q for the quarter ended March 31,
2007).
|
||
(4)
|
4.1
|
Specimen
Certificate for Common Shares (incorporated by reference to Exhibit
4.1 to
Registration Statement on Form S-1, Registration No. 333-36429).
|
|
(10)
|
10.1
|
Employment
Agreement by and among Bioanalytical Systems, Inc. and Richard M.
Shepperd, entered into on May 18, 2007. †
|
|
10.2
|
Option
Agreement by and among Bioanalytical Systems, Inc. and Richard M.
Shepperd, entered into on May 18, 2007. †
|
||
10.3
|
First
Amendment to Lease by and between 300 W. Fayette Street, LLC and
Bioanalytical Systems, Inc., entered into on May 20, 2007.
†
|
||
10.4
|
Lease
Agreement by and between 300 W. Fayette Street, LLC and Bioanalytical
Systems, Inc., entered into on May 20, 2007. †
|
||
(31)
|
31.1
|
Certification
of Richard M. Shepperd †
|
|
31.2
|
Certification
of Michael R. Cox †
|
||
(32)
|
32.1
|
Section
1350 Certifications †
|
† |
Filed
with this Quarterly Report on Form
10-Q.
|
By: | /s/ RICHARD M. SHEPPERD | |||
Richard
M. Shepperd
President
and Chief Executive Officer
(Principal
Executive Officer)
Date:
August 14, 2007
|
By: | /s/ MICHAEL R. COX | |||
Michael
R. Cox
Vice
President-Finance
and
Chief Financial Officer
(Principal
Financial and Accounting Officer)
Date:
August 14, 2007
|