SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X][ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30,December 31, 2001
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 the registrant as specified in its charter)
INDIANA 35-1345024
------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
of incorporation or organization)
2701 KENT AVENUE
WEST LAFAYETTE, IN 47906
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(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
As of June 30,December 31, 2001, 4,564,2774,575,509 Common Shares of the registrant were
outstanding.
PAGE
NUMBER
PART I FINANCIAL INFORMATION NUMBER
Item 1 Financial Statements (Unaudited):
Consolidated Balance Sheets as of June 30,December 31, 2001 and
September 30, 2000 22001 3
Consolidated Statements of OperationsIncome for the Three Months and Nine Months4
ended June 30,December 31, 2001 and 2000 4
Consolidated Statements of Cash Flows for the NineThree 5
Months Ended June 30,December 31, 2001 and 2000 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial 8
Condition and Results of Operations 8
Item 3 Quantitative and Qualitative Disclosures About Market Risk 10
PART II OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 1211
- 2 -
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOANALYTICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30,December 31, September 30,
2001 20002001
(Unaudited) (Note)
----------- ------
ASSETS
Current Assets:
Cash and cash equivalents $ 400636 $ 477374
Accounts receivable, net 3,466 3,1283,380 4,266
Inventories 2,428 2,2352,960 2,391
Other current assets 108 56193 71
Refundable income taxes 48 313326 325
Deferred income taxes 411 411443 443
-------- --------
Total current assets 6,861 6,620Current Assets 7,938 7,870
Property and equipment:
Land and improvements 496 496
Buildings and improvements 13,525 13,34013,507 13,508
Machinery and equipment 10,220 9,53611,148 10,795
Office furniture and fixtures 1,079 1,0721,091 1,092
Construction in process 20 7306 113
-------- --------
Total propertyProperty and equipment 25,340 24,451Equipment 26,548 26,004
Less accumulated depreciation (6,721) (5,538)(7,443) (7,082)
-------- --------
Net property & equipment 18,619 18,91319,105 18,922
Goodwill, less accumulated amortization of $260$296 and $213 943 990$281 947 963
Other assets 236 139209 222
-------- --------
Total Assets $ 26,65928,199 $ 26,66227,977
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,7471,992 $ 1,3982,619
Income taxes payable --- 2210 176
Accrued expenses 557 619570 747
Customer advances 996 9291,135 1,063
Revolving line of credit 615 2,267883 236
Current portion of capital lease obligation 240 240261 261
Current portion of long-term debt 233 234233
-------- --------
Total current liabilities 4,388 5,6895,284 5,335
Capital lease obligation, less current portion 485 663338 403
Long-term debt, less current portion 2,800 2,9752,684 2,742
Deferred income taxes 1,608 1,2731,798 1,667
Shareholders equity:
Preferred Shares:
1,000,000 shares authorized;
no shares issued
and outstanding --- ---
Common Shares: 19,000,000 shares
authorized; 4,564,2774,575,509 and 4,562,6454,569,416
shares issued and outstanding 1,011 1,0111,014 1,012
Additional paid-in capital 10,499 10,49610,515 10,506
Retained earnings 5,870 4,5786,592 6,345
Accumulated other comprehensive loss (2) (23)(26) (33)
-------- --------
Total shareholders' equity 17,378 16,06218,095 17,830
-------- --------
Total liabilities and shareholders' equity $ 26,65928,199 $ 26,66227,977
======== ========
2
Note: The balance sheet at September 30, 20002001 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.
See accompanying notes.
- 3 -
BIOANALYTICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONSINCOME
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Three Months
Nine Months Nine Months
Ended June 30,Dec 31, Ended June 30, Ended June 30, Ended June 30,Dec 31,
2001 2000
2001 2000
---- ---- ---- ----------------- -------------
ServicesService revenue $ 3,6933,569 $ 2,528 $ 11,056 $ 7,9103,096
Product revenue 2,707 2,924 7,612 6,0772,454 2,330
---------- ----------
--------- ---------
Total revenue 6,400 5,452 18,668 13,9876,023 5,426
Cost of servicesservice revenue 2,414 2,278 7,167 6,8622,620 2,241
Cost of product revenue 886 1,013 2,507 2,157847 763
---------- ---------- --------- ---------
Total cost of revenue 3,300 3,291 9,674 9,0193,467 3,004
Gross profit 3,100 2,161 8,994 4,9682,556 2,422
Operating expenses:
Selling 817 1,009 2,505 2,539778 776
Research and development 390 471 1,201 1,367323 394
General and administrative 925 769 2,710 2,1471,018 761
---------- ---------- --------- ---------
Total operating expenses 2,132 2,249 6,416 6,0532,119 1,931
---------- ----------
Operating income (loss) 968 (88) 2,578 (1,085)437 491
Interest income 2 8 5 216 ---
Interest expense (89) (135) (361) (377)(59) (136)
Other income 10 2 15 15
Gain (loss)36 1
Loss on sale of property and equipment 5 (1) 5 (17)(8) ---
---------- ----------
--------- ---------
Income (loss) before income taxes 896 (214) 2,242 (1,443)412 356
Income taxes (benefit) 381 (75) 950 (505)165 161
---------- ----------
--------- ---------
Net income (loss) $ 515247 $ (139) $ 1,292 $ (938)195
========== ========== ========= =========
Basic net income (loss) per common share $ .11.05 $ (.03) $ .28 $ (.21).04
Diluted net income (loss) per common and common $ .05 $ .04
equivalent share $ .11 $ (.03) $ .28 $ (.21)
Basic weighted average common shares 4,569,772 4,563,242
outstanding 4,563,547 4,562,645 4,563,395 4,546,203
Diluted weighted average common and common 4,623,357 4,577,365
equivalent shares outstanding 4,601,040 4,562,645 4,589,095 4,546,203
See accompanying notes.
- 4 -
BIOANALYTICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
NineThree Months Three Months
Ended Nine MonthsDec 31, Ended June 30,Dec 31,
2001 June 30, 2000
------------- -------------
Operating activities:
Net income (loss) $ 1,292247 $ (938)195
Adjustments to reconcile net income (loss) to net
cash provided (used)used by operating activities:
Depreciation and amortization 1,230 893479 440
Loss (gain) on sale of property and equipment (5) 178 ---
Deferred income taxes 335 (581)131 135
Changes in operating assets and liabilities:
Accounts receivable (338) 1,036886 (367)
Inventories (193) (283)
Refundable income taxes 265 -------(569) (102)
Other assets (149) 63(133) (81)
Accounts payable 349 (748)(963) (80)
Income taxes payable 33 (2) (38)
Accrued expenses and customer advances 5 (159)
------- -------(105) (202)
---------- ----------
Net cash provided (used) by operating activities 2,789 (738)14 (64)
Investing activities:
Capital expenditures (884) (753)
Payments for purchase of net assets of TPS, Inc. net of cash acquired --- (446)
------- -------(294) (129)
---------- ----------
Net cash used by investing activities (884) (1,199)(294) (129)
Financing activities:
Payments of long-term debt (354) (792)(123) (117)
Borrowings on line of credit 1,213 2,201870 481
Payments on line of credit (2,865) (733)(223) (252)
Net proceeds from the exercise of stock options 3 25
------- -------11 1
---------- ----------
Net cash provided (used) by financing activities (2,003) 701535 113
Effects of exchange rate changes 21 (12)
------- -------7 (6)
---------- ----------
Net decreaseincrease (decrease) in cash and cash equivalents (77) (1,248)262 (86)
Cash and cash equivalents at beginning of period 374 477
1,924
----------------- ----------
Cash and cash equivalents at end of period $ 400636 $ 676
======= =======391
========== ==========
See accompanying notes.
- 5 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) DESCRIPTION OF THE BUSINESS
Bioanalytical Systems, Inc. and its subsidiaries (the "Company") engage in
supporting drug development with products and research services supplied
globally to pharmaceutical and biotechnology firms and research institutes. The
Company provides productivity tools, software and services required to obtain
numerical data supporting new drug and medical device applications. Company
personnel have special expertise for research on central nervous system
diseases, diabetes, in vivo sampling devices, veterinary instrumentation and
biosensors. Antidepressants, antipsychotics, chemotherapeutics,
antihypertensives, antibiotics and antivirals are among the drug programs in
which the Company has participated.
(2) INTERIM FINANCIAL STATEMENT PRESENTATION
The accompanying interim financial statements are unaudited and have been
prepared by the Company 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, 2000.2001. In the opinion of
management, the consolidated financial statements for the three month periods
and the nine month periods ended June 30,December 31, 2001 and 2000 include all normal and recurring adjustments
which are necessary for a fair presentation of the results of the interim
periods. The results of operations for the three month period and
the nine month period ended June 30,December 31,
2001 are not necessarily indicative of the results for the year ending September
30, 2001.2002.
(3) INVENTORIES
Inventories consisted of (in thousands):
June 30, 2001 September 30, 2000
------------- ------------------
Raw materials $ 1,207 $ 1,288
Work in progress 369 375
Finished goods 952 672
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2,528 2,335
LIFO reserve (100) (100)
------- -------
$ 2,428 $ 2,235
======= =======
Inventories consisted of (in thousands):
December 31, 2001 September 30, 2001
----------------- ------------------
Raw materials $ 1,539 $ 1,322
Work in progress 441 303
Finished goods 1,090 877
------- -------
3,070 2,502
LIFO reserve (110) (111)
------- -------
$ 2,960 $ 2,391
(4) DEBT
The Company has a working capitalrevolving line of credit, which expires April 1, 2002 and
allows borrowings of up to $3,500,000. Interest accrues monthly on the
outstanding balance at the bank's prime rate minus 25 to plus 75 basis points
(6.50%(4.50% at June 30,December 31, 2001). or at the London Interbank Offered Rate (LIBOR)
plus 200 to 300 basis points, as elected by the Company, depending upon certain
financial ratios. The line is collateralized by inventories and accounts
receivable and requires the Company to maintain certain financial ratios. ThereThe
Company pays a fee equal to 12.5 to 50 basis points, depending on certain
financial ratios, on the unused portion of the line of credit. As of December
31, 2001 and September 30, 2001, interest on the entire outstanding balance was
$614,638based on the prime rate minus 25 basis points. The balance outstanding on this
line of credit at June 30, 2001. The interest
accrues monthly on the outstanding balance at the bank's prime rate minus 25 to
plus 75 basis points or at the London Interbank Offered Rate (LIBOR) plus 200 to
300 basis points depending upon certain financial ratios.December 31, 2001 was $883,487.
- 6 -
On June 24, 1999, the Company obtained a $3,500,000 commercial mortgage
with a bank. The mortgage note requires 59 monthly principal payments of $19,444
plus interest, followed by a final payment for the unpaid principal amount of
$2,352,804 due June 24, 2004. Interest is charged at the one-month LIBOR rate
plus 200 basis points 5.75%(4.08% at June 30,December 31, 2001).
(5) LITIGATION
In April 1997, CMA Microdialysis Holding A.B. ("CMA") filed an action
against theThe Company is currently not involved in the United States District Court for the District of New
Jersey in which CMA alleged that the Company's microdialysis probes infringed
U.S. Patent No. 4,694,832. During the quarter ended December 31, 2000, the
Company settled this case for an immaterial amount.any material litigation.
(6) SEGMENT INFORMATION
The Company operatesoperated in two principal segments - analytical services and
analytical products. The Company's analytical services unit provides chemistry
support on a contract basis directly to pharmaceutical companies. The Company's
products unit provides liquid chromatography, electrochemical and physiological
monitoring products to pharmaceutical companies, universities, government
research centers and medical research institutions. The Company evaluates
performance and allocates resources based on these segments.
Three Months Three Months Nine Months Nine Months
Operating Income (Loss) Ended Ended Ended Ended
(In thousands) June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
------------- ------------- ------------- -------------
Services $ 547 $ (321) $ 1,828 $ (444)
Products 421 409 750 (641)
------- ------ ------- --------
Total operating income (loss) 968 (88) 2,578 (1,085)
Corporate income (expenses) (72) 126) (336) (358)
------- ------ ------- --------
Income (loss) before income taxes $ 896 $ (214) $ 2,242 $ (1,443)
======= ====== ======= ========
Operating Income Three Months Ended Three Months Ended
(In thousands) December 31, 2001 December 31, 2000
------------------ ------------------
Services $ 157 $ 282
Products 280 209
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Total operating income 437 491
Corporate income (expenses) (25) (135)
----- -----
Income before income taxes $ 412 $ 356
(7) NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000 (October 1, 2000 for the Company). SFAS No.
133 requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. Currently, the Company does not use derivatives.
In June 2001, the FASB issued Statements of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations" and No. 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning after December 15, 2001.Assets." Under the new rules, goodwill (and intangible assets deemed
to have indefinite lives) will no longer be amortized but will be subject to
annual impairment tests in accordance with the Statements. Other intangible
assets will continue to be amortized over their useful lives. The Company will
be required to apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of fiscal year 2003 (with early adoption permitted in fiscal year 2002).2003.
Application of the nonamortizationnon-amortization provisions of the Statement is expected to
result in an increase in net income of $77,000 ($.02(approximately $.02 per share)
per year. The Company will perform the first of the required impairment tests of
goodwill and indefinite lived intangible assets as of October 1, of the year of adoption of
the Statements2002 and has
not yet determined what the effect of these tests will be on the earnings and
financial position of the Company.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" and also supercedes the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for
segments of a business to be disposed of. Among its many provisions, SFAS No.
144 retains the fundamental requirements of both previous standards, however, it
resolves significant implementation issues related to FASB Statement No. 121 and
broadens the separate presentation of discontinued operations in the income
statement required by APB Opinion No. 30 to include a component of an entity
(rather than a segment of a business). The provisions of SFAS No. 144 are
effective for financial statements issued for fiscal years beginning after
December 15, 2001, with early application encouraged. The Company does not
believe, based on current circumstances, the effect of adoption of SFAS No. 144
will be material.
- 7 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Form 10-Q may contain "forward-looking statements," within the meaning
of Section 27A of the Securities Act of 1933, as amended, and/or Section 21E of
the Securities Exchange Act of 1934, as amended. Those statements may include,
but are not limited to, discussions regarding the Company's intent, belief or
current expectations with respect to (i) the Company's strategic plans; (ii) the
Company's future profitability; (iii) the Company's capital requirements; (iv)
industry trends affecting the Company's financial condition or results of
operations; (v) the Company's sales or marketing plans; or (vi) the Company's
growth strategy. Investors in the Company's Common Shares are cautioned that
reliance on any forward-looking statement involves risks and uncertainties,
including the risk factors contained in Exhibit 99.1 to the Company's Registration Statementannual
report on Form S-1, File No. 333-36429.10-K for the year ended September 30, 2001. Although the Company
believes that the assumptions on which the forward-looking statements contained
herein are based are reasonable, any of those assumptions could prove to be
inaccurate, and as a result, the forward-looking statements based upon those
assumptions also could be incorrect. In light of the uncertainties inherent in
any forward-looking statement, the inclusion of a forward-looking statement
herein should not be regarded as a representation by the Company that the
Company's plans and objectives will be achieved.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30,DECEMBER 31, 2001 COMPARED WITH THREE MONTHS ENDED JUNE 30,DECEMBER
31, 2000
Total revenue for the three months ended June 30,December 31, 2001 increased 17.4%11.0%
to $6.4$6.0 million from $5.5$5.4 million for the three months ended June 30,December 31, 2000.
The net increase of $900,000$597,000 was primarily due to increased revenue from services,the addition of contracts in
the service group, which increased service revenue to $3.7 million in the three months ended June 30, 2001 from $2.5$3.6 million for the three
months ended June 30,December 31, 2001 from $3.1 million for the three months ended
December 31, 2000. This was primarily due to
additional bioanalytical, preclinical and pharmaceutical contracts.
Total cost of revenue for the three months ended June 30,December 31, 2001
was
unchanged at $3.3increased 15.4% to $3.5 million when compared tofrom $3.0 million for the three months ended
June 30,December 31, 2000. Cost of services revenue decreasedincreased to 65.4%73.4% of services
revenue for the three months ended June 30,December 31, 2001 from 90.1%72.4% for the three
months ended December 31, 2000. Cost of servicesproduct revenue increased to 34.5% of
product revenue for the three months ended June 30, 2000 primarily due to an increase in bioanalytical, preclinical
and pharmaceutical revenue. Cost of product revenue decreased toDecember 31, 2001 from 32.7% of
product revenue for the three months ended June 30, 2001 from 34.6% of product
revenue for the three months ended June 30,December 31, 2000, primarily due to a
change in product mix.
Selling expenses for the three months ended June 30,December 31, 2001 decreased 19.0%increased to
$817,000$778,000 from $1,009,000$776,000 for the three months ended June 30, 2000 primarily
due to decreased distributors commissions.December 31, 2000. Research
and development expenses for the three months ended June 30,December 31, 2001 decreased
17.2%18.0% to $390,000$323,000 from $471,000$394,000 for the three months ended June 30,December 31, 2000,
primarily due to increasedas a result of an increase in grant reimbursements. General and
administrative expenses for the three months ended June 30,December 31, 2001 increased
20.3%33.8% to $925,000$1.0 million from $769,000$761,000 for the three months ended June 30,December 31,
2000, primarily from increased administrative staffing in the organizational restructuring of our preclinical
services unit.operation.
Other expense net, decreased 42.9% to $72,000 inwas $25,000 for the three months ended June 30,December 31, 2001, as
compared to other expense of $126,000 in$135,000 for the three months ended June 30,December 31,
2000, primarily as a result of decreased interest expense due to the decrease in
the outstanding balance under the revolving line of credit.
8
debt.
The Company's effective tax rate for the three months ended June 30,December 31,
2001 was 42.5%40.0% as compared to 35.0%45.1% for the three months ended June 30, 2000
primarily due to nondeductible foreign losses.
NINE MONTHS ENDED JUNE 30, 2001 COMPARED WITH NINE MONTHS ENDED JUNE 30, 2000
Total revenue for the nine months ended June 30, 2001 increased 33.5% to
$18.7 million from $14.0 million for the nine months ended June 30, 2000. The
net increase of $4.7 million was primarily due to increased revenue from
services, which increased to $11.0 million in the nine months ended June 30,
2001 from $8.0 million for the nine months ended June 30, 2000 as a result of
the increase in bioanalytical, preclinical and pharmaceutical contracts. Product
revenue increased to $7.6 million for the nine months ended June 30, 2001 from
$6.1 million for the nine months ended June 30, 2000, primarily due to increased
revenue from the sale of Culex automated blood sampling devices and related
products, animal monitoring related products and the epsilon family of products.
Total cost of revenue for the nine months ended June 30, 2001 increased
7.3% to $9.7 million from $9.0 million for the nine months ended June 30, 2000.
This increase of $700,000 was primarily due to the additional cost of product
revenue due to the increase in product revenue. Cost of services revenue
decreased to 64.8% of services revenue for the nine months ended June 30, 2001
from 86.8% of services revenue for the nine months ended June 30, 2000 primarily
due to an increase in bioanalytical, preclinical and pharmaceutical contracts.
Cost of product revenue decreased to 32.9% of product revenue for the nine
months ended June 30, 2001 from 35.5% of product revenue for the nine months
ended June 30, 2000, primarily due to a change in product mix.
Selling expenses for the nine months ended June 30, 2001 decreased 1.3% to
$2,505,000 from $2,539,000 for the nine months ended June 30, 2000 primarily due
to decreased distributors commissions. Research and development expenses for the
nine months ended June 30, 2001 decreased 12.1% to $1,201,000 from $1,367,000
for the nine months ended June 30,December 31,
2000, primarily due to the increase in grant
reimbursements. General and administrative expenses forutilization of the nine months ended
June 30, 2001 increased 26.2% to $2,710,000 from $2,147,000 for the nine months
ended June 30, 2000, primarily from increased administrative staffing in the
preclinical services unit.
Other expense,tax benefit of foreign net
was $336,000 in the nine months ended June 30, 2001, as
compared to $358,000 in the nine months ended June 30, 2000 as a result of a
decrease in interest expense due to the decrease in the outstanding balance
under the revolving line of credit.
The Company's effective tax rate for the nine months ended June 30, 2001 was
42.4% as compared to 35.0% for the nine months ended June 30, 2000, primarily
due to nondeductible foreignoperating losses.
- 8 -
LIQUIDITY AND CAPITAL RESOURCES
At June 30,December 31, 2001, the Company had cash and cash equivalents of $400,000$636,000
compared to cash and cash equivalents of $477,000$374,000 at September 30, 2000.2001. The
decreaseincrease in cash resulted primarily from the Company's financing activities.
The Company's net cash provided (used) by operating activities was $2,789,000$14,000 for the
ninethree months ended June 30,December 31, 2001 as compared to $ (738,000)net cash used of $64,000 for
the first ninethree months of fiscal 2000.2000, primarily due to the decrease in accounts
receivable in the quarter ended December 31, 2001. The positive cash flow from
operations during the ninethree months ended June 30,December 31, 2001, was partially the result of a
net income of $1,292,000. The most significant increase$247,000 plus non-cash charges of $618,000 offset by a net change
of $(851,000) in operating liabilities
related to accounts payable, which increased $349,000 to $1,747,000 at June 30,
2001.assets and liabilities.
Cash used by investing activities was $884,000$294,000 for the ninethree months ended
June 30,December 31, 2001 as compared to $1,199,000$129,000 for the ninethree months ended June 30, 2000,December
31, 2000. This increase was primarily due to the acquisitionincrease of T.P.S., Inc.construction in
progress at the preclinical site in Evansville, Indiana in the nine monthsquarter ended
June
30, 2000.December 31, 2001. Cash usedprovided by financing activities for the ninethree months
ended June 30,December 31, 2001 was $2,003,000$535,000, primarily due to the decreaseincreased utilization
of the revolving line of credit balance.
9
credit.
Total expenditures by the Company for property and equipment were $884,000$294,000
and $753,000$129,000 for the ninethree months ended June 30,December 31, 2001 and 2000,
respectively. Expenditures made in connection with the expansion of the
Company's operating facilities and purchases of laboratory equipment accountaccounted
for the largest portions of these expenditures. The Company currently has no firm commitments
for capital expenditures. The Companyalso expects to make
other investments to expand its operations through internal growth and, as
attractive opportunities arise, through strategic acquisitions, alliances and
joint ventures. During 2001, the Company signed a letter of intent to expand
facilities at its preclinical site in Evansville, Indiana. The commitment is for
approximately $2.5 million. Construction on the facilities expansion is expected
to be completed in December, 2002. The Company plans to obtain a mortgage with a
commercial lender to finance this construction.
Based on its current business activities, the Company believes that cash
generated from its operations and amounts available under its existing bank line
of credit will be sufficient to fund its anticipated working capital and capital
expenditure requirements.
The Company has a working capitalrevolving line of credit, which expires April 1, 2002 and
allows borrowings of up to $3,500,000. Interest accrues monthly on the
outstanding balance at the bank's prime rate minus 25 to plus 75 basis points
(6.50 %(4.50% at June 30,December 31, 2001). or at the London Interbank Offered Rate (LIBOR)
plus 200 to 300 basis points, as elected by the Company, depending upon certain
financial ratios. The line is collateralized by inventories and accounts
receivable and requires the Company to maintain certain financial ratios. ThereThe
Company pays a fee equal to 12.5 to 50 basis points, depending on certain
financial ratios, on the unused portion of the line of credit. As of December
31, 2001 and September 30, 2001, interest on the entire outstanding balance was
$614,638based on the prime rate minus 25 basis points. The borrowing base on this line
of credit is limited to 80% of accounts receivable and 50% of inventory. The
balance outstanding on this line of credit at June 30, 2001. The interest
accrues monthly on the outstanding balance at the bank's prime rate minus 25 to
plus 75 basis points or at the London Interbank Offered Rate (LIBOR) plus 200 to
300 basis points depending on certain financial ratios.December 31, 2001 was $883,487.
On June 24, 1999 the Company obtained a $3,500,000 commercial mortgage with
a bank. The mortgage note requires 59 monthly principal payments of $19,444 plus
interest followed by a final payment for the unpaid principal amount of
$2,352,804 due June 24, 2004. Interest is charged at the one-month LIBOR rate
plus 200 basis points (5.75%(4.08% at June 30,December 31, 2001).
The Company has capital lease arrangements to finance the acquisition of
equipment. Future minimum lease payments for the capital leases are $736,641
with $73,242 representing interest. The capital lease obligations will be paid
in full by fiscal year 2004.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April, 1997, CMA Microdialysis Holding A.B. ("CMA") filed an action
against the Company in the United States District Court for the District of New
Jersey in which CMA alleged that the Company's microdialysis probes infringe
U.S. Patent No. 4,694,832. As reported in the Company's 10-Q for the quarter
ended December 30, 2000, the Company settled this case during that quarter for
an immaterial amount.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Second Amended and Restated Articles of Incorporation of
Bioanalytical Systems, Inc. (Incorporated by reference to
Exhibit 3.1 to Quarterly report on
Form 10-Q for the quarter ended December 31,
1997).
3.2 Second Restated Bylaws of Bioanalytical Systems, Inc.
(Incorporated by reference to Exhibit 3.2 to Quarterly report on Form 10-Q for the
quarter ended December 31, 1997).
4.1 Specimen Certificate for Common Shares (Incorporated by
reference to Exhibit 4.1 to Registration Statement on Form S-1,
Registration No. 33-36429)333-36429).
10
10.2 Bioanalytical Systems, Inc. Outside Director Stock Option Plan
(Incorporated by reference to Exhibit 10.2 to Registration
Statement on Form S-1, Registration No. 333-36429).
10.3 Form of Bioanalytical Systems, Inc. Outside Director Stock
Option Agreement (Incorporated by reference to Exhibit 10.3 to
Registration Statement on Form S-1, Registration No. 333-36429).
10.4 Bioanalytical Systems, Inc. 1990 Employee Incentive Stock Option
Plan (Incorporated by reference to Exhibit 10.4 to Registration
Statement on Form S-1, Registration No. 333-36429).
10.5 Form of Bioanalytical Systems, Inc. 1990 Employee Incentive
Stock Option Agreement (Incorporated by reference to Exhibit
10.5 to Registration Statement on Form S-1, Registration No.
333-36429).
10.6 Bioanalytical Systems, Inc. 1997 Employee Incentive Stock Option
Plan (Incorporated by reference to Exhibit 10.26 to Registration
Statement on Form S-1, Registration No. 333-36429).
10.7 Form of Bioanalytical Systems, Inc. 1997 Employee Incentive
Stock Option Agreement (Incorporated by reference to Exhibit
10.27 to Registration Statement on Form S-1, Registration No.
333-36429).
10.8 1997 Bioanalytical Systems, Inc. Outside Director Stock Option
Plan (Incorporated by reference to Exhibit 10.28 to Registration
Statement on Form S-1, Registration No. 333-36429).
10.9 Form of Bioanalytical Systems, Inc. 1997 Outside Director Stock
Option Agreement (Incorporated by reference to Exhibit 10.29 to
Registration Statement on Form S-1, Registration No. 333-36429).
10.10 Business Loan Agreement by and between Bioanalytical Systems,
Inc., and Bank One, Indiana, N.A. dated April 1, 2001.
(Incorporated by reference to Exhibit 10.10 to Form 10-Q for the
quarter ended June 30, 2001).
10.11 Commercial Security Agreement by and between Bioanalytical
Systems, Inc. and Bank One, Indiana, N.A., dated March 1, 1998
(Incorporated by reference to Exhibit 10.15 to Form 10-Q for the
quarter ended March 31, 1998).
10.12 Negative Pledge Agreement by and between Bioanalytical Systems,
Inc. and Bank One, Indiana, N.A., dated March 1, 1998
(Incorporated by reference to Exhibit 10.16 to Form 10-Q for the
quarter ended March 31, 1998).
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10.13 Promissory Note by and between Bioanalytical Systems, Inc. and
Bank One, Indiana, N.A.,NA, dated June 24, 1999 related to loan in
the amount of $3,500,000 (Incorporated by reference to exhibitExhibit
10.18 to Form 10-Q for the quarter ended June 30, 1999).
10.14 Promissory Note for $3,500,000 executed by Bioanalytical
Systems, Inc. in favor of Bank One, Indiana, N.A. dated April 1,
2001. (Incorporated by reference to Exhibit 10.14 to Form 10-Q
for the quarter ended June 30, 2001).
11.1 Statement Regarding Computation of Per Share Earnings.
99.1 Risk factors (Incorporated by reference Exhibit 99.1 to Form
10-K for the year ended September 30, 2001).
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter for which this report is
filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
BIOANALYTICAL SYSTEMS, INC.
By /s/ PETER T. KISSINGER
- -------------------------------------------------------------------
Peter T. Kissinger
President and Chief Executive Officer
Date: August 9, 2001February 6, 2002
By /s/ DOUGLAS P. WIETEN
- -------------------------------------------------------------------
Douglas P. Wieten
Vice President-Finance, Chief Financial Officer, and Treasurer
(Principal Financial and Accounting Officer)
Date: August 9, 2001
12February 6, 2002
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