UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2003
or
[ ]
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
Commission File Number: 0-23357
BIOANALYTICAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| INDIANA | 35-1345024 | |
|
(State or other jurisdiction of incorporation or organization) | (IRS 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) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of April 30, 2003, 4,602,603 Common Shares of the registrant were outstanding.
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|
PAGE NUMBER |
| PART I | FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited): | ||
| Consolidated Balance Sheets as of | |||
| March 31, 2003 and September 30, 2002 | 3 | ||
| Consolidated Statements of Operations for the | |||
| Three Months and Six Months ended March 31, 2003 and 2002 | 5 | ||
| Consolidated Statements of Cash Flows for the | |||
| Six Months Ended March 31, 2003 and 2002 | 6 | ||
| Notes to Consolidated Financial Statements | 7 | ||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
10 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
15 | |
| Item 4. | Controls and Procedures | 15 | |
| PART II. | OTHER INFORMATION | ||
| Item 4. | Submission of Matters to Vote of Security Holders | 16 | |
| Item 6. | Exhibits and Reports on Form 8-K | 16 | |
| SIGNATURES | 20 |
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PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOANALYTICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| March 31, 2003 (Unaudited) |
September 30, 2002* | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 889 | $ | 826 | ||||
| Accounts receivable | ||||||||
| Trade | 4,622 | 3,699 | ||||||
| Grants | 63 | 116 | ||||||
| Unbilled revenues and other | 607 | 739 | ||||||
| Inventories | 2,415 | 2,624 | ||||||
| Deferred income taxes | 455 | 455 | ||||||
| Refundable income taxes | 125 | 52 | ||||||
| Prepaid expenses | 370 | 283 | ||||||
| Total current assets | 9,546 | 8,794 | ||||||
| Property and equipment: | ||||||||
| Land and improvements | 501 | 496 | ||||||
| Buildings and improvements | 18,158 | 14,476 | ||||||
| Machinery and equipment | 13,196 | 13,363 | ||||||
| Office furniture and fixtures | 1,133 | 1,114 | ||||||
| Construction in process | 1,475 | 2,359 | ||||||
| Total property and equipment | 34,463 | 31,808 | ||||||
| Less accumulated depreciation | (10,043 | ) | (8,984 | ) | ||||
| Net property and equipment | 24,420 | 22,824 | ||||||
| Goodwill, less accumulated amortization of $360 | 2,235 | 884 | ||||||
| Other assets | 1,620 | 961 | ||||||
| Debt issue costs | 460 | --- | ||||||
| Total assets | $ | 38,281 | $ | 33,463 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,961 | $ | 2,459 | ||||
| Income taxes payable | 14 | 42 | ||||||
| Accrued expenses | 735 | 753 | ||||||
| Customer advances | 1,202 | 1,285 | ||||||
| Revolving line of credit | 3,148 | 3,750 | ||||||
| Current portion of capital lease obligation | 236 | 1,138 | ||||||
| Current portion of long-term debt | 396 | 278 | ||||||
| Total current liabilities | 7,692 | 9,705 | ||||||
– 3 –
| March 31, 2003 (Unaudited) |
September 30, 2002* | |||||||
|---|---|---|---|---|---|---|---|---|
| Capital lease obligation, less current portion | 28 | 124 | ||||||
| Construction line of credit | 3,179 | --- | ||||||
| Long-term debt, less current portion | 5,027 | 3,124 | ||||||
| Subordinated debt, long-term | 1,754 | --- | ||||||
| Deferred income taxes | 1,556 | 1,612 | ||||||
| Shareholders' equity: | ||||||||
| Preferred Shares: | ||||||||
| Authorized shares - 1,000,000 | ||||||||
| Issued and outstanding shares - none | --- | --- | ||||||
| Common Shares: | ||||||||
| Authorized shares - 19,000,000 | ||||||||
| Issued and outstanding shares - 4,602,603 and 4,578,516 | 1,020 | 1,014 | ||||||
| Additional paid-in capital | 10,554 | 10,521 | ||||||
| Retained earnings | 7,519 | 7,411 | ||||||
| Accumulated other comprehensive loss | (48 | ) | (48 | ) | ||||
| Total shareholders' equity | 19,045 | 18,898 | ||||||
| Total liabilities and shareholders' equity | $ | 38,281 | $ | 33,463 | ||||
See accompanying notes to consolidated financial statements.
* The balance sheet at September 30, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
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BIOANALYTICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended March 31, 2003 |
Three Months Ended March 31, 2002 |
Six Months Ended March 31, 2003 |
Six Months Ended March 31, 2002 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Service revenue | $ | 4,564 | $ | 4,247 | $ | 9,096 | $ | 7,816 | ||||||
| Product revenue | 2,386 | 3,138 | 4,828 | 5,592 | ||||||||||
| Total revenue | 6,950 | 7,385 | 13,924 | 13,408 | ||||||||||
| Cost of service revenue | 3,721 | 2,793 | 6,976 | 5,413 | ||||||||||
| Cost of product revenue | 972 | 1,445 | 2,006 | 2,292 | ||||||||||
| Total cost of revenue | 4,693 | 4,238 | 8,982 | 7,705 | ||||||||||
| Gross profit | 2,257 | 3,147 | 4,942 | 5,703 | ||||||||||
| Operating expenses: | ||||||||||||||
| Selling | 884 | 876 | 1,642 | 1,654 | ||||||||||
| Research and development | 323 | 389 | 691 | 712 | ||||||||||
| General and administrative | 1,197 | 1,087 | 2,287 | 2,105 | ||||||||||
| Total operating expenses | 2,404 | 2,352 | 4,620 | 4,471 | ||||||||||
| Operating income (loss) | (147 | ) | 795 | 322 | 1,232 | |||||||||
| Interest income | 1 | (4 | ) | 2 | 2 | |||||||||
| Interest expense | (138 | ) | (56 | ) | (248 | ) | (115 | ) | ||||||
| Other income | 30 | 16 | 59 | 52 | ||||||||||
| Gain (loss) on sale of property and equipment | (5 | ) | (5 | ) | 32 | (13 | ) | |||||||
| Income (loss) before income taxes | (259 | ) | 746 | 167 | 1,158 | |||||||||
| Income taxes (benefit) | (92 | ) | 227 | 59 | 392 | |||||||||
| Net income (loss) | $ | (167 | ) | $ | 519 | $ | 108 | $ | 766 | |||||
| Basic and diluted net income (loss) per common | ||||||||||||||
| share and common equivalent share | $ | (.04 | ) | $ | .11 | $ | .02 | $ | .17 | |||||
| Basic weighted average common shares outstanding |
4,601,068 | 4,577,490 | 4,589,930 | 4,564,620 | ||||||||||
| Diluted weighted average common and common | ||||||||||||||
| equivalent shares outstanding | 4,601,068 | 4,622,462 | 4,619,025 | 4,622,914 | ||||||||||
See accompanying notes to consolidated financial statements.
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BIOANALYTICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Six Months Ended March 31, 2003 |
Six Months Ended March 31, 2002 |
|---|
| Operating activities: | ||||||||
| Net income | $ | 108 | $ | 766 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| (used) provided by operating activities: | ||||||||
| Depreciation and amortization | 1,155 | 966 | ||||||
| Loss (gain) on sale of property and equipment | (32 | ) | 12 | |||||
| Deferred income taxes | (124 | ) | 336 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (234 | ) | (1,052 | ) | ||||
| Inventories | 208 | (316 | ) | |||||
| Prepaid expenses and other assets | 86 | (160 | ) | |||||
| Accounts payable | (592 | ) | (972 | ) | ||||
| Income taxes payable | (101 | ) | (83 | ) | ||||
| Accrued expenses | (137 | ) | (54 | ) | ||||
| Customer advances | (83 | ) | (162 | ) | ||||
| Net cash provided (used) by operating activities | 254 | (719 | ) | |||||
| Investing activities: | ||||||||
| Deposit on purchase of building | --- | (250 | ) | |||||
| Capital expenditures | (3,217 | ) | (1,227 | ) | ||||
| Proceeds from sale of property and equipment | 892 | --- | ||||||
| Payments for purchase of net assets | ||||||||
| from LC Resources, Inc. net of cash acquired | (163 | ) | --- | |||||
| Loans to PharmaKinectics Laboratories, Inc. | (517 | ) | --- | |||||
| Deferred acquisition costs for PharmaKinectics Laboratories, Inc. | (239 | ) | --- | |||||
| Net cash used by investing activities | (3,244 | ) | (1,477 | ) | ||||
| Financing activities: | ||||||||
| Borrowings on line of credit | 3,826 | 2,483 | ||||||
| Payments on line of credit | (4,428 | ) | (70 | ) | ||||
| Borrowings on construction line of credit | 3,179 | --- | ||||||
| Payments on capital lease obligations | (998 | ) | (129 | ) | ||||
| Borrowings of long-term debt | 5,410 | --- | ||||||
| Payments of debt issue costs | (460 | ) | --- | |||||
| Payments of long-term debt | (3,515 | ) | (117 | ) | ||||
| Net proceeds from the exercise of stock options | 39 | 13 | ||||||
| Net cash provided by financing activities | 3,053 | 2,180 | ||||||
| Effects of exchange rate changes | --- | 23 | ||||||
| Net increase in cash and cash equivalents | 63 | 7 | ||||||
| Cash and cash equivalents at beginning of period | 826 | 374 | ||||||
| Cash and cash equivalents at end of period | $ | 889 | $ | 381 | ||||
See accompanying notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) DESCRIPTION OF THE BUSINESS
Bioanalytical Systems, Inc. and its subsidiaries (“BASi”) engage in laboratory services, consulting and research related to analytical chemistry and chemical instrumentation. BASi also manufactures and markets scientific instruments for use in the determination of trace amounts of organic compounds in biological, environmental and industrial materials. BASi also sells its equipment and software for use in industrial, government and academic laboratories. BASi customers are located throughout the world.
(2) INTERIM FINANCIAL STATEMENT PRESENTATION AND STOCK BASED COMPENSATION
The accompanying interim financial statements are unaudited and have been prepared by BASi pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and therefore these consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements, and the notes thereto, for the year ended September 30, 2002. In the opinion of management, the consolidated financial statements for the six months ended March 31, 2003 and 2002 include all adjustments, consisting only of normal and recurring adjustments, which are necessary for a fair presentation of the results of the interim periods. The results of operations for the six months ended March 31, 2003 are not necessarily indicative of the results for the year ending September 30, 2003.
At March 31, 2003, BASi had four stock-based employee compensation plans, which are described more fully in Note 8 of the annual report of BASi on Form 10-K for the year ended September 30, 2002, BASi accounts for these plans under the recognition and measurement principals of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations. No stock-based employee compensation cost is reflected in the net income of BASi, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income (loss) and earnings (loss) per share if BASi had applied the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Statement No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.
| Three Months Ended March 31, 2003 |
Three Months Ended March 31, 2002 |
Six Months Ended March 31, 2003 |
Six Months Ended March 31, 2002 |
|---|
| Net income (loss) as reported | $ | (167 | ) | $ | 519 | $ | 108 | $ | 766 | |||||
| Deduct: Total stock-based employee | ||||||||||||||
| compensation expense determined | ||||||||||||||
| under fair value based method for | ||||||||||||||
| all awards, net of related tax | ||||||||||||||
| effects | 5 | 5 | 10 | 10 | ||||||||||
| Pro forma net income (loss) | $ | (172 | ) | $ | 514 | $ | 98 | $ | 756 | |||||
| Earnings (loss) per share: | ||||||||||||||
| Basic and diluted - as reported | $ | (.04 | ) | $ | .11 | $ | .02 | $ | .17 |