x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934 for the quarterly period ended December 31, 2007
|
OR
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 for the transition period from ___________ to
_____________.
|
INDIANA
(State
or other jurisdiction of incorporation or
organization)
|
|
35-1345024
(I.R.S.
Employer Identification No.)
|
|
|
|
2701
KENT AVENUE
WEST
LAFAYETTE, INDIANA
(Address
of principal executive offices)
|
|
47906
(Zip
code)
|
|
||
(765)
463-4527
(Registrant's
telephone number, including area
code)
|
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1
|
Condensed
Consolidated Financial Statements (Unaudited):
|
|
Condensed
Consolidated Balance Sheets as of December 31, 2007 and September
30,
2007
|
3
|
|
Condensed
Consolidated Statements of Operations for the Three Months Ended
December
31, 2007 and 2006
|
4
|
|
Condensed
Consolidated Statements of Cash Flows for the Three Months Ended
December
31, 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
|
10
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
16
|
Item
4
|
Controls
and Procedures
|
16
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1A
|
Risk
Factors
|
16
|
Item
6
|
Exhibits
|
17
|
Signatures
|
||
Certification
of Principal Executive Officer
|
||
Certification
of Principal Financial Officer
|
||
Section
906 Written Statement of CEO and CFO
|
December
31,
2007
|
September
30,
2007
|
||||||
|
(Unaudited)
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
641
|
$
|
2,837
|
|||
Accounts
receivable
|
|||||||
Trade
|
5,503
|
6,674
|
|||||
Unbilled
revenues and other
|
3,265
|
2,565
|
|||||
Inventories
|
2,005
|
1,977
|
|||||
Deferred
income taxes
|
897
|
897
|
|||||
Refundable
income taxes
|
144
|
774
|
|||||
Prepaid
expenses
|
818
|
776
|
|||||
Total
current assets
|
13,273
|
16,500
|
|||||
Property
and equipment, net
|
23,453
|
22,927
|
|||||
Goodwill
|
1,855
|
1,855
|
|||||
Intangible
assets, net
|
251
|
304
|
|||||
Debt
issue costs
|
201
|
211
|
|||||
Other
assets
|
246
|
240
|
|||||
Total
assets
|
$
|
39,279
|
$
|
42,037
|
|||
Liabilities
and shareholders’ equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,386
|
$
|
1,589
|
|||
Accrued
expenses
|
2,298
|
3,056
|
|||||
Customer
advances
|
4,164
|
4,115
|
|||||
Income
tax accruals
|
240
|
56
|
|||||
Current
portion of capital lease obligation
|
582
|
510
|
|||||
Current
portion of long-term debt
|
455
|
4,821
|
|||||
Total
current liabilities
|
10,125
|
14,147
|
|||||
Capital
lease obligation, less current portion
|
1,326
|
1,138
|
|||||
Long-term
debt, less current portion
|
9,068
|
7,861
|
|||||
Deferred
income taxes
|
337
|
337
|
|||||
Shareholders’
equity:
|
|||||||
Preferred
Shares:
|
|||||||
Authorized
1,000 shares; none issued and outstanding
|
—
|
—
|
|||||
Common
shares, no par value:
|
|||||||
Authorized
19,000 shares; issued and outstanding 4,913 at
December
31, 2007 and 4,909 at September 30, 2007
|
1,191 |
1,189
|
|||||
Additional
paid-in capital
|
12,078
|
11,957
|
|||||
Retained
earnings
|
5,361
|
5,560
|
|||||
Accumulated
other comprehensive loss
|
(207
|
)
|
(152
|
)
|
|||
Total
shareholders’ equity
|
18,423
|
18,554
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
39,279
|
$
|
42,037
|
Three
Months Ended
December
31,
|
|||||||
2007
|
2006
|
||||||
Service
revenue
|
$
|
8,922
|
$
|
8,608
|
|||
Product
revenue
|
2,530
|
2,276
|
|||||
Total
revenue
|
11,452
|
10,884
|
|||||
Cost
of service revenue
|
6,913
|
6,622
|
|||||
Cost
of product revenue
|
1,034
|
877
|
|||||
Total
cost of revenue
|
7,947
|
7,499
|
|||||
Gross
profit
|
3,505
|
3,385
|
|||||
Operating
expenses:
|
|||||||
Selling
|
792
|
679
|
|||||
Research
and development
|
188
|
355
|
|||||
General
and administrative
|
2,252
|
1,622
|
|||||
(Gain)
loss on sale of property and equipment
|
(13
|
)
|
—
|
||||
Total
operating expenses
|
3,219
|
2,656
|
|||||
Operating
income
|
286
|
729
|
|||||
Interest
income
|
27
|
12
|
|||||
Interest
expense
|
(248
|
)
|
(241
|
)
|
|||
Other
income
|
3
|
3
|
|||||
Income
before income taxes
|
68
|
503
|
|||||
Income
taxes (benefit)
|
84
|
(53
|
)
|
||||
Net
income (loss)
|
$
|
(16
|
)
|
$
|
556
|
||
Net
income (loss) per share:
|
|||||||
Basic
|
$ |
(0.00
|
)
|
$
|
0.11
|
||
Diluted
|
$ |
(0.00
|
)
|
$
|
0.11
|
||
Weighted
common and common equivalent shares
outstanding:
|
|||||||
Basic
|
4,910
|
4,907
|
|||||
Diluted
|
4,910
|
4,942
|
Three Months Ended December 31,
|
|||||||
2007
|
2006
|
||||||
Operating
activities:
|
|||||||
Net
income (loss)
|
$
|
(16
|
)
|
$
|
556
|
||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
751
|
997
|
|||||
Employee
stock compensation expense
|
110
|
43
|
|||||
(Gain)
loss on sale of property and equipment
|
(13
|
)
|
—
|
||||
Deferred
income taxes
|
—
|
(173
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
470
|
585
|
|||||
Inventories
|
(28
|
)
|
(324
|
)
|
|||
Refundable
income taxes
|
630
|
126
|
|||||
Prepaid
expenses and other assets
|
(13
|
)
|
104
|
||||
Accounts
payable
|
797
|
(159
|
)
|
||||
Accrued
expenses
|
(758
|
)
|
(397
|
)
|
|||
Customer
advances
|
49
|
(201
|
)
|
||||
Net
cash provided by operating activities
|
1,979
|
1,157
|
|||||
Investing
activities:
|
|||||||
Capital
expenditures
|
(849
|
)
|
(268
|
)
|
|||
Proceeds
from sale of property and equipment
|
1
|
—
|
|||||
Net
cash used by investing activities
|
(848
|
)
|
(268
|
)
|
|||
Financing
activities:
|
|||||||
Payments
of long-term debt
|
(4,560
|
)
|
(448
|
)
|
|||
Borrowings
on long-term debt
|
1,400
|
—
|
|||||
Payments
on capital lease obligations
|
(139
|
)
|
(115
|
)
|
|||
Net
proceeds from the exercise of stock options
|
13
|
76
|
|||||
Net
cash used by financing activities
|
(3,286
|
)
|
(487
|
)
|
|||
Effect
of exchange rate changes
|
(41
|
)
|
(186
|
)
|
|||
Net
(decrease) increase in cash and cash equivalents
|
(2,196
|
)
|
216
|
||||
Cash
and cash equivalents at beginning of quarter
|
2,837
|
1,647
|
|||||
Cash
and cash equivalents at end of quarter
|
$
|
641
|
$
|
1,863
|
Three Months Ended December 31,
|
|||||||
2007
|
2006
|
||||||
Basic
net income/(loss) per share:
|
|||||||
Net
income/(loss) applicable to common shareholders
|
$
|
(16
|
)
|
$
|
556
|
||
Weighted
average common shares outstanding
|
4,910
|
4,907
|
|||||
Basic
net income/(loss) per share
|
$
|
(0.00
|
)
|
$
|
0.11
|
||
Diluted
net income/(loss) per share:
|
|||||||
Diluted
net income/(loss) applicable to common shareholders
|
$
|
(16
|
)
|
$
|
556
|
||
|
|||||||
Weighted
average common shares outstanding
|
4,910
|
4,907
|
|||||
Dilutive
stock options/shares
|
—
|
35
|
|||||
Dilutive
weighted average common shares outstanding
|
4,910
|
4,942
|
|||||
|
|||||||
Diluted
net income/(loss) per share
|
$
|
(0.00
|
)
|
$
|
0.11
|
December
31,
2007
|
September
30,
2007
|
||||||
Raw
materials
|
$
|
1,531
|
$
|
1,480
|
|||
Work
in progress
|
202
|
273
|
|||||
Finished
goods
|
272
|
224
|
|||||
$
|
2,005
|
$
|
1,977
|
Three Months Ended December 31,
|
|||||||
2007
|
2006
|
||||||
Revenue:
|
|||||||
Service
|
$
|
8,922
|
$
|
8,608
|
|||
Product
|
2,530
|
2,276
|
|||||
$
|
11,452
|
$
|
10,884
|
||||
Operating
Income (Loss):
|
|||||||
Service
|
$
|
(55
|
)
|
$
|
458
|
||
Product
|
341
|
271
|
|||||
$
|
286
|
$
|
729
|
||||
Total
Assets:
|
|||||||
Service
|
$
|
24,321
|
$
|
23,811
|
|||
Product
|
8,953
|
9,886
|
|||||
Corporate
|
6,005
|
7,934
|
|||||
$
|
39,279
|
$
|
41,631
|
Tax
Jurisdiction
|
|
Years
|
US
Federal and State
|
|
2003-2006
|
United
Kingdom
|
|
2001-2006
|
Tax
Jurisdiction
|
|
Years
|
US
Federal and State
|
|
2003-2006
|
United
Kingdom
|
|
2001-2006
|
|
•
|
Risk-free
interest rate.
The risk-free interest rate is based on U.S. Treasury yields in
effect at the time of grant for the expected term of the option.
|
|
||
|
•
|
Expected
volatility.
We
use the historical stock price volatility of our common shares to
compute our expected volatility.
|
|
||
|
•
|
Expected
term.
The expected term represents the weighted-average period the stock
options
are expected to remain outstanding. The expected term is determined
based
on historical exercise behavior, post-vesting termination patterns,
options outstanding and future expected exercise behavior.
|
|
||
|
•
|
Expected
dividends.
We
assumed that we will pay no
dividends.
|
Three Months Ended
December 31, |
|||||||
2007
|
2006
|
||||||
Service
revenue
|
77.9
|
%
|
79.1
|
%
|
|||
Product
revenue
|
22.1
|
20.9
|
|||||
Total
revenue
|
100.0
|
100.0
|
|||||
Cost
of service revenue (a)
|
77.5
|
76.9
|
|||||
Cost
of product revenue (a)
|
40.9
|
38.5
|
|||||
Total
cost of revenue
|
69.4
|
68.9
|
|||||
Gross
profit
|
30.6
|
31.1
|
|||||
Total
operating expenses
|
28.1
|
24.4
|
|||||
Operating
income
|
2.5
|
6.7
|
|||||
Other
expense
|
(1.9
|
)
|
(2.1
|
)
|
|||
Income
before income taxes
|
0.6
|
4.6
|
|||||
Income
tax provision (benefit)
|
0.7
|
(0.5
|
)
|
||||
Net
income (loss)
|
(0.1
|
)%
|
5.1
|
%
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
After 2012
|
Total
|
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
Mortgage
notes payable
|
$
|
339
|
$
|
479
|
$
|
513
|
$
|
1,521
|
$
|
458
|
$
|
6,213
|
$
|
9,523
|
||||||||
Capital
lease obligations
|
432
|
620
|
529
|
216
|
94
|
17
|
1,908
|
|||||||||||||||
Operating
leases
|
1,269
|
1,698
|
1,597
|
1,608
|
1,628
|
2,812
|
10,612
|
|||||||||||||||
|
$
|
2,040
|
$
|
2,797
|
2,639
|
3,345
|
$
|
2,180
|
$
|
9,042
|
$
|
22,043
|
Number
|
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
Amended and Restated Bylaws of Bioanalytical Systems, Inc., as
subsequently amended (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).
|
||
10.1
|
Agreement
for Lease, by and among Bioanalytical Systems, Inc., Bioanalytical
Systems
Limited and Pettifer Estates Limited, dated October 11, 2007 (incorporated
by reference to Exhibit 10.1 to Form 8-K filed October 17,
2007).
|
|||
10.2
|
Form
of Lease, by and among Bioanalytical Systems, Inc., Bioanalytical
Systems
Limited and Pettifer Estates Limited (incorporated by reference to
Exhibit
10.2 to Form 8-K filed October 17, 2007).
|
|||
10.3
|
Second
Amendment to Amended and Restated Credit Agreement by and between
Bioanalytical Systems, Inc. and National City Bank executed October
24,
2007 (filed herewith).
|
|||
10.4
|
Employment
Agreement between Michael R. Cox and Bioanalytical Systems, Inc.,
dated
November 6, 2007 (incorporated by reference to Exhibit 10.1 to Form
8-K
filed November 13, 2007).
|
|||
10.5
|
Employee
Incentive Stock Option Agreement between Michael R. Cox and Bioanalytical
Systems, Inc., dated November 6, 2007 (incorporated by reference
to
Exhibit 10.2 to Form 8-K filed November 13, 2007).
|
|||
10.6
|
Nonqualified
option letter agreement between Michael R. Cox and Bioanalytical
Systems,
Inc., dated November 6, 2007 (incorporated by reference to Exhibit
10.3 to
Form 8-K filed November 13, 2007).
|
|||
10.7
|
Employment
Agreement between Edward M. Chait and Bioanalytical Systems, Inc.,
dated
November 6, 2007 (incorporated by reference to Exhibit 10.4 to Form
8-K
filed November 13, 2007).
|
|||
10.8
|
Employee
Incentive Stock Option Agreement between Edward M. Chait and Bioanalytical
Systems, Inc., dated November 6, 2007 (incorporated by reference
to
Exhibit 10.5 to Form 8-K filed November 13, 2007).
|
|||
10.9
|
Nonqualified
option letter agreement between Edward M. Chait and Bioanalytical
Systems,
Inc., dated November 6, 2007 (incorporated by reference to Exhibit
10.6 to
Form 8-K filed November 13, 2007).
|
|||
10.10
|
Loan
Agreement between Bioanalytical Systems, Inc. and Regions Bank dated
December 18, 2007 (filed herewith).
|
|||
(31)
|
31.1
|
Certification
of Richard M. Shepperd (filed herewith).
|
||
31.2
|
Certification
of Michael R. Cox (filed herewith).
|
|||
(32)
|
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (filed herewith).
|
||
32.2
|
Certification
of Executive Vice President, Chief Financial Officer pursuant to
Section
906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
BIOANALYTICAL
SYSTEMS, INC.
|
|
(Registrant)
|
|
Date: February
13, 2008
|
By: /s/ Richard
M. Shepperd
|
Richard
M. Shepperd
|
|
President
and Chief Executive Officer
|
|
Date: February
13, 2008
|
By: /s/ Michael
R. Cox
|
Michael
R. Cox
|
|
Vice
President, Finance and Administration,
Chief Financial Officer and Treasurer |