x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934 for the quarterly period ended June 30, 2008
|
OR
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 for the transition period from ___________ to
_____________.
|
INDIANA
|
|
35-1345024
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
|
|
2701
KENT AVENUE
WEST
LAFAYETTE, INDIANA
|
|
47906
|
(Address
of principal executive offices)
|
(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 June 30, 2008 and September 30,
2007
|
3
|
|
Condensed
Consolidated Statements of Operations for the Three and Nine Months
Ended
June 30, 2008 and 2007
|
4
|
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended
June 30,
2008 and 2007
|
5
|
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
|
|
||
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
|
11
|
Item
4T
|
Controls
and Procedures
|
18
|
PART
II
|
OTHER
INFORMATION
|
|
Item
6
|
Exhibits
|
19
|
Signatures
|
20
|
June 30, 2008
|
September 30, 2007
|
||||||
Assets
|
(Unaudited)
|
|
|||||
Current assets:
|
|||||||
Cash
and cash equivalents
|
$
|
1,045
|
$
|
2,837
|
|||
Accounts
receivable
|
|||||||
Trade
|
4,883
|
6,674
|
|||||
Unbilled
revenues and other
|
3,552
|
2,565
|
|||||
Inventories
|
2,174
|
1,977
|
|||||
Deferred
income taxes
|
897
|
897
|
|||||
Refundable
income taxes
|
967
|
774
|
|||||
Prepaid
expenses
|
623
|
776
|
|||||
Current
assets of discontinued operations
|
815
|
—
|
|||||
Total
current assets
|
14,956
|
16,500
|
|||||
Property
and equipment, net
|
23,419
|
22,927
|
|||||
Goodwill
|
1,855
|
1,855
|
|||||
Intangible
assets, net
|
152
|
304
|
|||||
Debt
issue costs
|
188
|
211
|
|||||
Other
assets
|
239
|
240
|
|||||
Total
assets
|
$
|
40,809
|
$
|
42,037
|
|||
Liabilities
and shareholders’ equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,085
|
$
|
1,589
|
|||
Accrued
expenses
|
1,899
|
3,056
|
|||||
Customer
advances
|
3,568
|
4,115
|
|||||
Income
tax accruals
|
240
|
56
|
|||||
Revolving
line of credit
|
1,244
|
—
|
|||||
Current
portion of capital lease obligation
|
703
|
510
|
|||||
Current
portion of long-term debt
|
483
|
4,821
|
|||||
Current
liabilities of discontinued operations
|
815
|
—
|
|||||
Total
current liabilities
|
11,037
|
14,147
|
|||||
Capital
lease obligation, less current portion
|
1,628
|
1,138
|
|||||
Long-term
debt, less current portion
|
8,840
|
7,861
|
|||||
Deferred
income taxes
|
1,110
|
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 4,914 at June
30, 2008 and 4,909 at September 30, 2007 December,
2007
|
1,191
|
1,189
|
|||||
Additional
paid-in capital
|
12,304
|
11,957
|
|||||
Retained
earnings
|
4,838
|
5,560
|
|||||
Accumulated
other comprehensive loss
|
(139
|
)
|
(152
|
)
|
|||
|
|||||||
Total
shareholders’ equity
|
18,194
|
18,554
|
|||||
|
|||||||
Total
liabilities and shareholders’ equity
|
$
|
40,809
|
$
|
42,037
|
Three Months Ended June 30,
|
Nine Months Ended June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Service
revenue
|
$
|
9,068
|
$
|
8,937
|
$
|
25,653
|
$
|
23,353
|
|||||
Product
revenue
|
2,379
|
1,928
|
6,660
|
6,789
|
|||||||||
Total
revenue
|
11,447
|
10,865
|
32,313
|
30,142
|
|||||||||
Cost
of service revenue
|
6,240
|
5,930
|
17,348
|
16,637
|
|||||||||
Cost
of product revenue
|
891
|
852
|
2,604
|
2,892
|
|||||||||
Total
cost of revenue
|
7,131
|
6,782
|
19,952
|
19,529
|
|||||||||
Gross
profit
|
4,316
|
4,083
|
12,361
|
10,613
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling
|
975
|
687
|
2,641
|
2,037
|
|||||||||
Research
and development
|
212
|
212
|
583
|
668
|
|||||||||
General
and administrative
|
1,953
|
1,781
|
5,624
|
5,060
|
|||||||||
(Gain)
loss on sale of property and equipment
|
(1
|
)
|
134
|
7
|
134
|
||||||||
Total
operating expenses
|
3,139
|
2,814
|
8,855
|
7,899
|
|||||||||
|
|||||||||||||
Operating
income
|
1,177
|
1,269
|
3,506
|
2,714
|
|||||||||
Interest
income
|
—
|
28
|
29
|
52
|
|||||||||
Interest
expense
|
(251
|
)
|
(245
|
)
|
(702
|
)
|
(717
|
)
|
|||||
Other
income
|
1
|
—
|
5
|
4
|
|||||||||
Income
from continuing operations before income taxes
|
927
|
1,052
|
2,838
|
2,053
|
|||||||||
Income
taxes
|
520
|
485
|
1,412
|
689
|
|||||||||
Net
income from continuing operations
|
$
|
407
|
$
|
567
|
$
|
1,426
|
$
|
1,364
|
|||||
Discontinued
Operations (Note 5)
|
|||||||||||||
Loss
from discontinued operations before income taxes
|
$
|
(829
|
)
|
$
|
(144
|
)
|
$
|
(2,760
|
)
|
$
|
(406
|
)
|
|
Loss
on disposal
|
(431
|
)
|
—
|
(431
|
)
|
—
|
|||||||
Tax
benefit
|
599
|
26
|
1,359
|
171
|
|||||||||
Net
loss from discontinued operations after income taxes
|
$
|
(661
|
)
|
$
|
(118
|
)
|
$
|
(1,832
|
)
|
$
|
(235
|
)
|
|
Net
income (loss)
|
$
|
(254
|
)
|
$
|
449
|
$
|
(406
|
)
|
$
|
1,129
|
|||
Basic
net income (loss) per share:
|
|||||||||||||
Net
income per share from continuing operations
|
$
|
0.08
|
$
|
0.12
|
$
|
0.29
|
$
|
0.28
|
|||||
Net
loss per share from discontinued operations
|
(0.13
|
)
|
(0.03
|
)
|
(0.37
|
)
|
(0.05
|
)
|
|||||
Basic
net income (loss) per share
|
$
|
(0.05
|
)
|
$
|
0.09
|
$
|
(0.08
|
)
|
$
|
0.23
|
|||
Diluted
net income (loss) per share:
|
|||||||||||||
Net
income per share from continuing operations
|
$
|
0.08
|
$
|
0.11
|
$
|
0.29
|
$
|
0.28
|
|||||
Net
loss per share from discontinued operations
|
(0.13
|
)
|
(0.02
|
)
|
(0.37
|
)
|
(0.05
|
)
|
|||||
Diluted
net income (loss) per share
|
$
|
(0.05
|
)
|
$
|
0.09
|
$
|
(0.08
|
)
|
$
|
0.23
|
|||
Weighted
common shares outstanding:
|
|||||||||||||
Basic
|
4,914
|
4,909
|
4,913
|
4,908
|
|||||||||
Diluted
|
4,939
|
4,976
|
4,979
|
4,952
|
Nine Months Ended June 30,
|
|||||||
2008
|
2007
|
||||||
Operating activities:
|
|||||||
Net
income (loss)
|
$
|
(406
|
)
|
$
|
1,129
|
||
Adjustments
to reconcile net income (loss) from continuing operations to net
cash
provided by operating activities:
|
|||||||
Net
loss from discontinued operations, including loss on
disposal
|
1,832
|
235
|
|||||
Depreciation
and amortization
|
2,150
|
2,536
|
|||||
Employee
stock compensation expense
|
336
|
164
|
|||||
Bad
debt expense
|
122
|
48
|
|||||
Loss
on sale of property and equipment
|
7
|
134
|
|||||
Deferred
income taxes
|
773
|
(101
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(652
|
) |
686
|
||||
Inventories
|
(197
|
) |
81
|
||||
Refundable
income taxes
|
(193
|
) |
171
|
||||
Prepaid
expenses and other assets
|
158
|
20
|
|||||
Accounts
payable
|
845
|
(318
|
)
|
||||
Accrued
expenses
|
(291
|
) |
(230
|
)
|
|||
Customer
advances
|
(402
|
(1,144
|
)
|
||||
Net
cash provided by continuing operating activities
|
4,082
|
3,411
|
|||||
Investing
activities:
|
|||||||
Capital
expenditures
|
(1,283
|
) |
(597
|
)
|
|||
Proceeds
from sale of property and equipment
|
2
|
617
|
|||||
Net
cash (used) provided by continuing investing activities
|
(1,281
|
) |
20
|
||||
Financing
activities:
|
|||||||
Payments
of long-term debt
|
(4,760
|
) |
(621
|
)
|
|||
Borrowings
on long-term debt
|
1,400
|
—
|
|||||
Payments
on revolving line of credit
|
(10,068
|
) |
—
|
||||
Borrowings
on revolving line of credit
|
11,312
|
—
|
|||||
Payments
on capital lease obligations
|
(462
|
) |
(351
|
)
|
|||
Net
proceeds from the exercise of stock options
|
13
|
80
|
|||||
Net
cash used by continuing financing activities
|
(2,565
|
(892
|
)
|
||||
Cash
Flow of Discontinued Operations:
|
|||||||
Cash
used by operating activities
|
(2,709
|
) |
(836
|
)
|
|||
Net
cash provided (used) by investing activities
|
668
|
(63
|
)
|
||||
Net
cash used by discontinued operations
|
(2,041
|
) |
(899
|
)
|
|||
Effect
of exchange rate changes
|
13
|
(268
|
)
|
||||
Net
(decrease) increase in cash and cash equivalents
|
(1,792
|
) |
1,372
|
||||
Cash
and cash equivalents at beginning of period
|
2,837
|
1,647
|
|||||
Cash
and cash equivalents at end of period
|
$
|
1,045
|
$
|
3,019
|
|||
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Basic net income per
share from continuing operations:
|
|||||||||||||
Net
income applicable to common shareholders
|
$
|
407
|
$
|
567
|
$
|
1,426
|
$
|
1,364
|
|||||
Weighted
average common shares outstanding
|
4,914
|
4,909
|
4,913
|
4,908
|
|||||||||
Basic
net income per share from continuing operations
|
$
|
0.08
|
$
|
0.12
|
$
|
0.29
|
$
|
0.28
|
|||||
Diluted
net income per share from continuing operations:
|
|||||||||||||
Diluted
net income applicable to common shareholders
|
$
|
407
|
$
|
567
|
$
|
1,426
|
$
|
1,364
|
|||||
Weighted
average common shares outstanding
|
4,914
|
4,909
|
4,913
|
4,908
|
|||||||||
Dilutive
stock options/shares
|
25
|
67
|
66
|
44
|
|||||||||
Diluted
weighted average common shares outstanding
|
4,939
|
4,976
|
4,979
|
4,952
|
|||||||||
Diluted
net income per share from continuing operations
|
$
|
0.08
|
$
|
0.11
|
$
|
0.29
|
$
|
0.28
|
June 30,
2008
|
September 30,
2007
|
||||||
Raw materials
|
$
|
1,682
|
$
|
1,480
|
|||
Work
in progress
|
227
|
273
|
|||||
Finished
goods
|
265
|
224
|
|||||
$
|
2,174
|
$
|
1,977
|
(in
thousands)
|
Three Months Ended June 30,
|
Nine Months Ended June 30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Net Sales
|
$
|
570
|
$
|
1,750
|
$
|
2,187
|
$
|
4,668
|
|||||
Loss
before income taxes and disposal
|
(829
|
)
|
(144
|
)
|
(2,760
|
)
|
(406
|
)
|
|||||
Loss
on disposal
|
(431
|
)
|
--
|
(431
|
)
|
--
|
|||||||
Loss
from operations before tax benefit
|
(1,260
|
)
|
(144
|
)
|
(3,191
|
)
|
(406
|
)
|
|||||
Income
tax benefit
|
599
|
26
|
1,359
|
171
|
|||||||||
Net
loss
|
$
|
(661
|
)
|
$
|
(118
|
)
|
$
|
(1,832
|
)
|
$
|
(235
|
)
|
(in
thousands)
|
June 30, 2008
|
|||
Receivables,
net of allowance for doubtful accounts
|
$
|
473
|
||
Other
current assets
|
342
|
|||
Total
assets
|
$
|
815
|
||
Accounts
payable, accrued liabilities and other liabilities
|
815
|
|||
Total
liabilities
|
$
|
815
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
||||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|||||
Revenue:
|
|||||||||||||
Service
|
$
|
9,068
|
$
|
8,937
|
$
|
25,653
|
$
|
23,353
|
|||||
Product
|
2,379
|
1,928
|
6,660
|
6,789
|
|||||||||
$
|
11,447
|
$
|
10,865
|
$
|
32,313
|
$
|
30,142
|
Operating
income (loss) from continuing operations:
|
|||||||||||||
Service
|
$
|
846
|
$
|
1,421
|
$
|
2,725
|
$
|
2,428
|
|||||
Product
|
331
|
(152
|
)
|
781
|
286
|
||||||||
$
|
1,177
|
$
|
1,269
|
$
|
3,506
|
$
|
2,714
|
Tax
Jurisdiction
|
|
Years
|
US
Federal and State
|
2004-2007
|
|
United
Kingdom
|
|
2001-2007
|
•
|
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
currently assume that we will pay no
dividends.
|
Three Months Ended June 30,
|
Nine Months Ended June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Service revenue
|
79.2
|
%
|
82.3
|
%
|
79.4
|
%
|
77.5
|
%
|
|||||
Product
revenue
|
20.8
|
17.7
|
20.6
|
22.5
|
|||||||||
Total
revenue
|
100.0
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost
of service revenue (a)
|
68.8
|
66.4
|
67.6
|
71.2
|
|||||||||
Cost
of product revenue (a)
|
37.5
|
44.2
|
39.1
|
42.6
|
|||||||||
Total
cost of revenue
|
62.3
|
62.4
|
61.7
|
64.8
|
|||||||||
Gross
profit
|
37.7
|
37.6
|
38.3
|
35.2
|
|||||||||
Total
operating expenses
|
27.4
|
25.9
|
27.4
|
26.2
|
|||||||||
Operating
income
|
10.3
|
11.7
|
10.9
|
9.0
|
|||||||||
Other
expense
|
2.2
|
2.0
|
2.1
|
2.2
|
|||||||||
Income
from continuing operations before income taxes
|
8.1
|
9.7
|
8.8
|
6.8
|
|||||||||
Income
taxes
|
4.5
|
4.5
|
4.4
|
2.3
|
|||||||||
Net
income from continuing operations
|
3.6
|
%
|
5.2
|
%
|
4.4
|
%
|
4.5
|
%
|
(a)
|
Percentage
of service and product revenues,
respectively
|
Number
|
Description
of Exhibits
|
||
(2)
|
2.1
|
Asset
Purchase Agreement, dated June 30, 2008, by and among Bioanalytical
Systems, Inc., BASi Maryland, Inc., Algorithme Pharma USA Inc. and
Algorithme Pharma Holdings Inc (incorporated by reference to Exhibit
2.1
of Form 8-K filed July 7, 2008).
|
|
(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)
|
10.1
|
Assignment
and Assumption of Office Lease, dated June 30, 2008, between Bioanalytical
Systems, Inc. and AP USA Algorithme Pharma USA Inc (incorporated
by
reference to Exhibit 10.1 of Form 8-K filed July 7,
2008).
|
|
(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:
August 14, 2008
|
By:
|
/s/
Richard M. Shepperd
|
Richard
M. Shepperd
|
||
President
and Chief Executive Officer
|
||
Date:
August 14, 2008
|
By:
|
/s/
Michael R. Cox
|
Michael
R. Cox
|
||
Vice
President, Finance and Administration, Chief Financial Officer and
Treasurer
|