x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the quarterly period ended June 30,
2009
|
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 June 30, 2009 and September 30,
2008
|
3
|
|
Condensed
Consolidated Statements of Operations for the Three and Nine Months Ended
June 30, 2009 and 2008
|
4
|
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended June 30,
2009 and 2008
|
5
|
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12
|
Item
4
|
Controls
and Procedures
|
21
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1A
|
Risk
Factors
|
22
|
Item
6
|
Exhibits
|
22
|
Signatures
|
23
|
June 30,
2009
|
September 30,
2008
|
|||||||
|
(Unaudited)
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 222 | $ | 335 | ||||
Accounts
receivable
|
||||||||
Trade
|
4,650 | 6,705 | ||||||
Unbilled
revenues and other
|
1,505 | 2,653 | ||||||
Inventories
|
1,913 | 2,184 | ||||||
Deferred
income taxes
|
516 | 516 | ||||||
Refundable
income taxes
|
677 | 1,283 | ||||||
Prepaid
expenses
|
483 | 639 | ||||||
Current
assets of discontinued operations
|
— | 629 | ||||||
Total
current assets
|
9,966 | 14,944 | ||||||
Property
and equipment, net
|
21,820 | 23,135 | ||||||
Deferred
income taxes
|
820 | — | ||||||
Goodwill
|
1,383 | 1,855 | ||||||
Intangible
assets, net
|
121 | 144 | ||||||
Debt
issue costs
|
142 | 177 | ||||||
Other
assets
|
88 | 92 | ||||||
Total
assets
|
$ | 34,340 | $ | 40,347 | ||||
Liabilities
and shareholders’ equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 1,765 | $ | 2,209 | ||||
Accrued
expenses
|
2,057 | 2,061 | ||||||
Customer
advances
|
3,603 | 4,032 | ||||||
Income
tax accruals
|
473 | 473 | ||||||
Revolving
line of credit
|
1,491 | 2,023 | ||||||
Current
portion of capital lease obligation
|
698 | 720 | ||||||
Current
portion of long-term debt
|
516 | 491 | ||||||
Current
liabilities of discontinued operations
|
— | 41 | ||||||
Total
current liabilities
|
10,603 | 12,050 | ||||||
Capital
lease obligation, less current portion
|
931 | 1,443 | ||||||
Long-term
debt, less current portion
|
8,324 | 8,715 | ||||||
Fair
value of interest rate swaps
|
110 | — | ||||||
Deferred
income taxes
|
— | 344 | ||||||
Shareholders’
equity:
|
||||||||
Preferred
Shares:
|
||||||||
Authorized
1,000 shares; none issued and outstanding
|
— | — | ||||||
Common
shares, no par value:
|
||||||||
Authorized
19,000 shares; issued and outstanding 4,915 at
|
||||||||
June
30, 2009 and September 30, 2008
|
1,191 | 1,191 | ||||||
Additional
paid-in capital
|
13,017 | 12,561 | ||||||
Retained
earnings
|
126 | 4,173 | ||||||
Accumulated
other comprehensive income (loss)
|
38 | (130 | ) | |||||
Total
shareholders’ equity
|
14,372 | 17,795 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 34,340 | $ | 40,347 |
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Service
revenue
|
$ | 6,113 | $ | 9,068 | $ | 17,423 | $ | 25,653 | ||||||||
Product
revenue
|
2,008 | 2,379 | 5,841 | 6,660 | ||||||||||||
Total
revenue
|
8,121 | 11,447 | 23,264 | 32,313 | ||||||||||||
Cost
of service revenue
|
5,212 | 6,240 | 15,777 | 17,348 | ||||||||||||
Cost
of product revenue
|
774 | 891 | 2,433 | 2,604 | ||||||||||||
Total
cost of revenue
|
5,986 | 7,131 | 18,210 | 19,952 | ||||||||||||
Gross
profit
|
2,135 | 4,316 | 5,054 | 12,361 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling
|
734 | 975 | 2,569 | 2,641 | ||||||||||||
Research
and development
|
174 | 212 | 592 | 583 | ||||||||||||
General
and administrative
|
1,325 | 1,952 | 5,765 | 5,631 | ||||||||||||
Impairment
loss
|
472 | — | 472 | — | ||||||||||||
Total
operating expenses
|
2,705 | 3,139 | 9,398 | 8,855 | ||||||||||||
Operating
income (loss)
|
(571 | ) | 1,177 | (4,344 | ) | 3,506 | ||||||||||
Interest
expense
|
(228 | ) | (251 | ) | (870 | ) | (702 | ) | ||||||||
Other
income
|
— | 1 | 3 | 34 | ||||||||||||
Income
(loss) from continuing operations before income taxes
|
(799 | ) | 927 | (5,211 | ) | 2,838 | ||||||||||
Income
taxes (benefit)
|
(167 | ) | 520 | (1,164 | ) | 1,412 | ||||||||||
Net
income (loss) from continuing operations
|
$ | (632 | ) | $ | 407 | $ | (4,047 | ) | $ | 1,426 | ||||||
Discontinued
Operations (Note 5)
|
||||||||||||||||
Loss
from discontinued operations before income taxes
|
$ | — | $ | (829 | ) | $ | — | $ | (2,760 | ) | ||||||
Loss
on disposal
|
— | (431 | ) | — | (431 | ) | ||||||||||
Tax
benefit
|
— | 599 | — | 1,359 | ||||||||||||
Net
loss from discontinued operations
|
$ | — | $ | (661 | ) | $ | — | $ | (1,832 | ) | ||||||
Net
loss
|
$ | (632 | ) | $ | (254 | ) | $ | (4,047 | ) | $ | (406 | ) | ||||
Basic
net income (loss) per share:
|
||||||||||||||||
Net
income(loss) per share from continuing operations
|
$ | (0.13 | ) | $ | 0.08 | $ | (0.82 | ) | $ | 0.29 | ||||||
Net
loss per share from discontinued operations
|
— | (0.13 | ) | — | (0.37 | ) | ||||||||||
Basic
net loss per share
|
$ | (0.13 | ) | $ | (0.05 | ) | $ | (0.82 | ) | $ | (0.08 | ) | ||||
Diluted
net income (loss) per share:
|
||||||||||||||||
Net
income (loss) per share from continuing operations
|
$ | (0.13 | ) | $ | 0.08 | $ | (0.82 | ) | $ | 0.29 | ||||||
Net
loss per share from discontinued operations
|
— | (0.13 | ) | — | (0.37 | ) | ||||||||||
Diluted
net loss per share
|
$ | (0.13 | ) | $ | (0.05 | ) | $ | (0.82 | ) | $ | (0.08 | ) | ||||
Weighted
common shares outstanding:
|
||||||||||||||||
Basic
|
4,915 | 4,914 | 4,915 | 4,913 | ||||||||||||
Diluted
|
4,915 | 4,939 | 4,915 | 4,979 |
Nine Months Ended June 30,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities:
|
||||||||
Net
loss
|
$ | (4,047 | ) | $ | (406 | ) | ||
Adjustments
to reconcile net loss to net cash provided by continuing operating
activities:
|
||||||||
Net
loss from discontinued operations
|
— | 1,832 | ||||||
Depreciation
and amortization
|
2,008 | 2,150 | ||||||
Asset
impairment loss
|
472 | — | ||||||
Employee
stock compensation expense
|
456 | 336 | ||||||
Bad
debt expense
|
26 | 122 | ||||||
Loss
on interest rate swap
|
110 | — | ||||||
Loss
on sale of property and equipment
|
21 | 7 | ||||||
Deferred
income taxes
|
(1,164 | ) | 773 | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
3,176 | (652 | ) | |||||
Inventories
|
271 | (197 | ) | |||||
Refundable
income taxes
|
605 | (193 | ) | |||||
Prepaid
expenses and other assets
|
159 | 158 | ||||||
Accounts
payable
|
(444 | ) | 845 | |||||
Accrued
expenses
|
(4 | ) | (291 | ) | ||||
Customer
advances
|
(429 | ) | (402 | ) | ||||
Net
cash provided by continuing operating activities
|
1,216 | 4,082 | ||||||
Investing
activities:
|
||||||||
Capital
expenditures, net of proceeds from sale of property and
equipment
|
(690 | ) | (1,281 | ) | ||||
Net
cash used by continuing investing activities
|
(690 | ) | (1,281 | ) | ||||
Financing
activities:
|
||||||||
Payments
of long-term debt
|
(366 | ) | (4,760 | ) | ||||
Borrowings
on long-term debt
|
— | 1,400 | ||||||
Payments
on revolving line of credit
|
(13,511 | ) | (10,068 | ) | ||||
Borrowings
on revolving line of credit
|
12,979 | 11,312 | ||||||
Payments
on capital lease obligations
|
(534 | ) | (462 | ) | ||||
Net
proceeds from the exercise of stock options
|
— | 13 | ||||||
Net
cash used by continuing financing activities
|
(1,432 | ) | (2,565 | ) | ||||
Cash
Flow of Discontinued Operations:
|
||||||||
Cash
provided (used) by operating activities
|
588 | (2,709 | ) | |||||
Net
cash used by investing activities
|
— | 668 | ||||||
Net
cash provided (used) by discontinued operations
|
588 | (2,041 | ) | |||||
Effect
of exchange rate changes
|
205 | 13 | ||||||
Net
decrease in cash and cash equivalents
|
(113 | ) | (1,792 | ) | ||||
Cash
and cash equivalents at beginning of period
|
335 | 2,837 | ||||||
Cash
and cash equivalents at end of period
|
$ | 222 | $ | 1,045 |
1.
|
DESCRIPTION
OF THE BUSINESS AND BASIS OF
PRESENTATION
|
2.
|
STOCK-BASED
COMPENSATION
|
Options
(shares)
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Grant Date
Fair Value
|
||||||||||
Outstanding
- October 1, 2008
|
754 | $ | 6.06 | $ | 3.50 | |||||||
Granted
|
60 | $ | 4.07 | $ | 2.73 | |||||||
Terminated
|
(174 | ) | $ | 5.61 | $ | 3.60 | ||||||
Outstanding
- June 30, 2009
|
640 | $ | 6.00 | $ | 3.39 |
3.
|
INCOME (LOSS) PER
SHARE
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Basic
net income (loss) per share from continuing operations:
|
||||||||||||||||
Net
income (loss) applicable to common shareholders
|
$ | (632 | ) | $ | 407 | $ | (4,047 | ) | $ | 1,426 | ||||||
Weighted
average common shares outstanding
|
4,915 | 4,914 | 4,915 | 4,913 | ||||||||||||
Basic
net income (loss) per share from continuing operations
|
$ | (0.13 | ) | $ | 0.08 | $ | (0.82 | ) | $ | 0.29 | ||||||
Diluted
net income (loss) per share from continuing operations:
|
||||||||||||||||
Diluted
net income (loss) applicable to common shareholders
|
$ | (632 | ) | $ | 407 | $ | (4,047 | ) | $ | 1,426 | ||||||
Weighted
average common shares outstanding
|
4,915 | 4,914 | 4,915 | 4,913 | ||||||||||||
Dilutive
stock options/shares
|
— | 25 | — | 66 | ||||||||||||
Diluted
weighted average common shares outstanding
|
4,915 | 4,939 | 4,915 | 4,979 | ||||||||||||
Diluted
net income (loss) per share from continuing operations
|
$ | (0.13 | ) | $ | 0.08 | $ | (0.82 | ) | $ | 0.29 |
4.
|
INVENTORIES
|
June 30,
2009
|
September 30,
2008
|
|||||||
Raw
materials
|
$ | 1,521 | $ | 1,748 | ||||
Work
in progress
|
181 | 234 | ||||||
Finished
goods
|
211 | 202 | ||||||
$ | 1,913 | $ | 2,184 |
5.
|
DISCONTINUED
OPERATIONS
|
Three
Months
ended
June 30,
2008
|
Nine
Months
ended
June 30,
2008
|
|||||||
Net
Sales
|
$ | 570 | $ | 2,187 | ||||
Loss
before income taxes and disposal
|
(829 | ) | (2,760 | ) | ||||
Loss
on disposal
|
(431 | ) | (431 | ) | ||||
Loss
from operations before tax benefit
|
(1,260 | ) | (3,191 | ) | ||||
Income
tax benefit
|
599 | 1,359 | ||||||
Net
loss
|
$ | (661 | ) | $ | (1,832 | ) |
June 30,
2009
|
September 30,
2008
|
|||||||
Receivables,
net of allowance for doubtful accounts
|
$ | — | $ | 346 | ||||
Other
current assets
|
— | 283 | ||||||
Total
assets
|
$ | — | $ | 629 | ||||
Accounts
payable, accrued liabilities and equity
|
$ | — | $ | 629 |
6.
|
SEGMENT
INFORMATION
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenue:
|
||||||||||||||||
Service
|
$ | 6,113 | $ | 9,068 | $ | 17,423 | $ | 25,653 | ||||||||
Product
|
2,008 | 2,379 | 5,841 | 6,660 | ||||||||||||
$ | 8,121 | $ | 11,447 | $ | 23,264 | $ | 32,313 | |||||||||
Operating
income (loss) from continuing operations:
|
||||||||||||||||
Service
|
$ | (683 | ) | $ | 846 | $ | (3,738 | ) | $ | 2,725 | ||||||
Product
|
112 | 331 | (606 | ) | 781 | |||||||||||
$ | (571 | ) | $ | 1,177 | $ | (4,344 | ) | $ | 3,506 |
7.
|
INCOME
TAXES
|
Tax Jurisdiction
|
Years
|
|||
US
Federal and States
|
2004-2008
|
|||
United
Kingdom
|
2001-2008
|
8.
|
DEBT
|
9.
|
FAIR VALUE OF FINANCIAL
INSTRUMENTS
|
10.
|
GOODWILL
IMPAIRMENT
|
11.
|
NEW
ACCOUNTING PRONOUNCEMENTS
|
12.
|
SUBSEQUENT
EVENTS
|
|
·
|
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 our historical stock price volatility on our common stock for our
expected volatility assumption.
|
|
·
|
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
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Service
revenue
|
75.3 | % | 79.2 | % | 74.9 | % | 79.4 | % | ||||||||
Product
revenue
|
24.7 | 20.8 | 25.1 | 20.6 | ||||||||||||
Total
revenue
|
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Cost
of service revenue (a)
|
85.3 | 68.8 | 90.6 | 67.6 | ||||||||||||
Cost
of product revenue (a)
|
38.5 | 37.5 | 41.7 | 39.1 | ||||||||||||
Total
cost of revenue
|
73.7 | 62.3 | 78.3 | 61.7 | ||||||||||||
Gross
profit
|
26.3 | 37.7 | 21.7 | 38.3 | ||||||||||||
Total
operating expenses
|
33.3 | 27.4 | 40.4 | 27.4 | ||||||||||||
Operating
income (loss)
|
(7.0 | ) | 10.3 | (18.7 | ) | 10.9 | ||||||||||
Other
expense
|
2.8 | 2.2 | 3.7 | 2.1 | ||||||||||||
Income
(loss) from continuing operations before income taxes
|
(9.8 | ) | 8.1 | (22.4 | ) | 8.8 | ||||||||||
Income
taxes (benefit)
|
(2.1 | ) | 4.5 | (5.0 | ) | 4.4 | ||||||||||
Net
income (loss) from continuing operations
|
(7.7 | )% | 3.6 | % | (17.4 | )% | 4.4 | % |
|
(a)
|
Percentage
of service and product revenues,
respectively
|
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 (filed herewith).
|
||
(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
|
Fourth
Amendment to Amended and Restated Credit Agreement between Bioanalytical
Systems,
Inc.
and National City Bank, executed July 17, 2009 (incorporated by reference
to Exhibit 10.1 to Form 8-K filed July 17, 2009).
|
|
10.2
|
Replacement
Promissory Note by and between Bioanalytical Systems, Inc. and National
City Bank, executed July 17, 2009 (filed herewith).
|
||
10.3
|
Replacement
Subsidiary Guaranty by and between Bioanalytical Systems Inc. and National
City Bank, executed July 17, 2009 (filed herewith).
|
||
(31)
|
31.1
|
Certification
of Richard M. Shepperd (filed herewith).
|
|
31.2
|
Certification
of Michael R. Cox (filed herewith).
|
||
(32)
|
32.1
|
Written
Statement of Chief Executive Officer and Chief Financial Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350) (filed herewith)..
|
BIOANALYTICAL
SYSTEMS, INC.
|
||
(Registrant)
|
||
Date:
August 12, 2009
|
By:
|
/s/ Richard
M. Shepperd
|
Richard
M. Shepperd
|
||
President
and Chief Executive Officer
|
||
Date: August
12, 2009
|
By:
|
/s/ Michael
R. Cox
|
Michael
R. Cox
|
||
Vice
President, Finance and Administration,
Chief
Financial Officer and
Treasurer
|