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 June 30, 2004
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 July 31, 2004, 4,869,502, common shares of the registrant were outstanding.
– 1 –
| PART 1 | FINANCIAL INFORMATION |
| Item 1 | Condensed Consolidated Financial Statements (Unaudited): |
|
Condensed Consolidated Balance Sheets as of June 30, 2004 and September 30, 2003 |
3 |
|
Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended June 30, 2004 and 2003 |
4 |
|
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2004 and 2003 |
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 6 | Exhibits and Reports on Form 8-K | 17 |
| SIGNATURES | 18 |
– 2 –
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| (Unaudited) June 30, 2004 |
September 30, 2003 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 778 | $ | 1,378 | |||||||
| Accounts receivable | |||||||||||
| Trade | 5,429 | 3,978 | |||||||||
| Grants | 13 | 13 | |||||||||
| Unbilled revenues and other | 1,085 | 954 | |||||||||
| Inventories | 1,833 | 2,055 | |||||||||
| Deferred income taxes | 465 | 465 | |||||||||
| Refundable income taxes | 167 | 84 | |||||||||
| Prepaid expenses | 589 | 397 | |||||||||
| Total current assets | 10,359 | 9,324 | |||||||||
| Property and equipment, net | 32,120 | 31,171 | |||||||||
| Goodwill | 1,659 | 984 | |||||||||
| Intangible assets, net | 2,259 | 2,778 | |||||||||
| Debt issue costs | 379 | 428 | |||||||||
| Other assets | 307 | 300 | |||||||||
| Total assets | $ | 47,083 | $ | 44,985 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 3,157 | $ | 3,073 | |||||||
| Accrued expenses | 995 | 1,245 | |||||||||
| Customer advances | 2,470 | 1,658 | |||||||||
| Revolving line of credit | 3,109 | 2,388 | |||||||||
| Current portion of capital lease obligation | 120 | 123 | |||||||||
| Current portion of long-term debt | 788 | 1,132 | |||||||||
| Total current liabilities | 10,639 | 9,619 | |||||||||
| Capital lease obligation, less current portion | 101 | --- | |||||||||
| Long-term debt, less current portion | 9,007 | 6,949 | |||||||||
| Construction line of credit | --- | 1,676 | |||||||||
| Subordinated debt, long-term | 5,231 | 5,188 | |||||||||
| Deferred income taxes | 2,251 | 1,827 | |||||||||
| Shareholders' equity: | |||||||||||
| Preferred shares: Authorized shares - 1,000, | |||||||||||
| Issued and outstanding shares - none | --- | --- | |||||||||
| Common shares, no par value: Authorized shares - 19,000, | |||||||||||
| Issued and outstanding shares - 4,870 at June 30, 2004 | |||||||||||
| and 4,831 at September 30, 2003 | 1,177 | 1,168 | |||||||||
| Additional paid-in capital | 11,263 | 11,122 | |||||||||
| Retained earnings | 7,500 | 7,498 | |||||||||
| Accumulated other comprehensive loss | (86 | ) | (62 | ) | |||||||
| Total shareholders' equity | 19,854 | 19,726 | |||||||||
| Total liabilities and shareholders' equity | $ | 47,083 | $ | 44,985 | |||||||
See accompanying notes to condensed consolidated financial statements.
– 3 –
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended June 30, |
Nine Months Ended June 30, | |||||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||||
| Service revenue | $ | 7,684 | $ | 5,643 | $ | 19,270 | $ | 14,739 | ||||||
| Product revenue | 2,948 | 2,231 | 8,789 | 7,059 | ||||||||||
| Total revenue | 10,632 | 7,874 | 28,059 | 21,798 | ||||||||||
| Cost of service revenue | 5,217 | 3,864 | 15,493 | 10,840 | ||||||||||
| Cost of product revenue | 1,191 | 858 | 3,503 | 2,864 | ||||||||||
| Total cost of revenue | 6,408 | 4,722 | 18,996 | 13,704 | ||||||||||
| Gross profit | 4,224 | 3,152 | 9,063 | 8,094 | ||||||||||
| Operating expenses: | ||||||||||||||
| Selling | 672 | 557 | 1,963 | 2,199 | ||||||||||
| Research and development | 260 | 305 | 801 | 996 | ||||||||||
| General and administrative | 2,054 | 1,436 | 5,686 | 3,723 | ||||||||||
| Total operating expenses | 2,986 | 2,298 | 8,450 | 6,918 | ||||||||||
| Operating income | 1,238 | 854 | 613 | 1,176 | ||||||||||
| Interest income | 2 | 1 | 5 | 3 | ||||||||||
| Interest expense | (306 | ) | (148 | ) | (720 | ) | (396 | ) | ||||||
| Other income | 21 | 20 | 39 | 79 | ||||||||||
| Gain (loss) on sale of property and equipment | (10 | ) | 49 | (10 | ) | 81 | ||||||||
| Income (loss) before income taxes | 945 | 776 | (73 | ) | 943 | |||||||||
| Income tax provision (benefit) | 310 | 422 | (75 | ) | 481 | |||||||||
| Net income | $ | 635 | $ | 354 | $ | 2 | $ | 462 | ||||||
| Net income per share: | ||||||||||||||
| Basic | $ | 0.13 | $ | 0.08 | $ | 0.00 | $ | 0.10 | ||||||
| Diluted | $ | 0.13 | $ | 0.08 | $ | 0.00 | $ | 0.10 | ||||||
| Weighted common and common equivalent | ||||||||||||||
| shares outstanding: | ||||||||||||||
| Basic | 4,870 | 4,605 | 4,857 | 4,595 | ||||||||||
| Diluted | 5,150 | 4,609 | 4,866 | 4,616 | ||||||||||
See accompanying notes to condensed consolidated financial statements.
– 4 –
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended June 30, | ||||||||
| 2004 |
2003 | |||||||
| Operating activities | ||||||||
| Net income | $ | 2 | $ | 462 | ||||
| Adjustments to reconcile net income to net | ||||||||
| cash provided by operating activities: | ||||||||
| Depreciation and amortization | 2,771 | 1,783 | ||||||
| (Gain) loss on sale of property and equipment | 10 | (81 | ) | |||||
| Interest on subordinated debt | 193 | --- | ||||||
| Deferred income taxes | --- | 242 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,582 | ) | 605 | |||||
| Inventories | 222 | 255 | ||||||
| Prepaid expenses and other assets | (199 | ) | 153 | |||||
| Accounts payable | 84 | (476 | ) | |||||
| Income taxes | (261 | ) | (92 | ) | ||||
| Accrued expenses | (1,355 | ) | 1 | |||||
| Customer advances | 812 | (141 | ) | |||||
| Net cash provided by operating activities | 697 | 2,711 | ||||||
| Investing activities | ||||||||
| Capital expenditures | (2,029 | ) | (4,077 | ) | ||||
| Proceeds from sale of property and equipment | --- | 1,023 | ||||||
| Payments for purchase of LC Resources, Inc. net of cash acquired | --- | (163 | ) | |||||
| Payments for purchase of PharmaKinetics Laboratories, Inc., net of cash acquired | --- | (816 | ) | |||||
| Net cash used by investing activities | (2,029 | ) | (4,033 | ) | ||||
| Financing activities | ||||||||
| Borrowings on line of credit | 9,629 | 3,826 | ||||||
| Payments on line of credit | (8,908 | ) | (5,955 | ) | ||||
| Borrowings on construction line of credit | 574 | 3,343 | ||||||
| Payments on capital lease obligations | (3 | ) | (1,071 | ) | ||||
| Borrowings of long-term debt, net of issuance costs | 2,250 | 4,950 | ||||||
| Payments of long-term debt | (2,786 | ) | (3,658 | ) | ||||
| Net proceeds from the exercise of stock options | --- | 39 | ||||||
| Net cash provided by financing activities | 756 | 1,474 | ||||||
| Effects of exchange rate changes | (24 | ) | (6 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (600 | ) | 146 | |||||
| Cash and cash equivalents at beginning of period | 1,378 | 826 | ||||||
| Cash and cash equivalents at end of period | $ | 778 | $ | 972 | ||||
See accompanying notes to condensed consolidated financial statements.
– 5 –
BIOANALYTICAL SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of the Business and Basis of Presentation
Bioanalytical Systems, Inc. and its subsidiaries (“We,” the “Company” or “BASi”) engage in laboratory services and other services related to pharmaceutical development. We also manufacture scientific instruments for medical research, which we sell with related software for use in industrial, governmental and academic laboratories. Our customers are located throughout the world.
We have prepared the accompanying unaudited interim condensed consolidated financial statements 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 accounting principles generally accepted in the United States (“GAAP”), and therefore should be read in conjunction with our audited consolidated financial statements, and the notes thereto, included in our Form 10-K for the year ended September 30, 2003. In the opinion of management, the condensed consolidated financial statements for the three and nine months ended June 30, 2004 and 2003 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of our financial position at June 30, 2004. The results of operations for the three and nine months ended June 30, 2004 are not necessarily indicative of the results for the year ending September 30, 2004.
All amounts in the condensed consolidated financial statements and the notes thereto are presented in thousands, except for per share data or where otherwise noted.
At June 30, 2004, we had four stock-based employee compensation plans, which are described more fully in Note 9 in the Notes to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2003. Because 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, we do not recognize any stock-based employee compensation cost in our financial statements. The following table illustrates the effect on net income (loss) and earnings (loss) per share had we applied the alternative fair value treatment of recognizing as stock-based employee compensation.
| Three Months Ended June 30, |
Nine Months Ended June 30, | |||||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||||
| Net income as reported | $ | 635 | $ | 354 | $ | 2 | $ | 462 | ||||||
| Deduct: Total stock-based employee | ||||||||||||||
| compensation expense determined under | ||||||||||||||
| the fair value based method for all | ||||||||||||||
| awards, net of related tax effects | (49 | ) | (5 | ) | (67 | ) | (15 | ) | ||||||
| Pro forma net income (loss) | $ | 586 | $ | 349 | $ | (65 | ) | $ | 447 | |||||
| Earnings (loss) per share: | ||||||||||||||
| Basic - as reported | $ | 0.13 | $ | 0.08 | $ | 0.00 | $ | 0.10 | ||||||
| Basic - pro forma | $ | 0.12 | $ | 0.08 | $ | (0.01 | ) | $ | 0.10 | |||||
| Diluted-as reported | $ | 0.13 | $ | 0.08 | $ | 0.00 | $ | 0.10 | ||||||
| Diluted--pro forma | $ | 0.12 | $ | 0.08 | $ | (0.01 | ||||||||