Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission File Number 0-11740
MESA LABORATORIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
COLORADO 84-0872291
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12100 WEST SIXTH AVENUE, LAKEWOOD, COLORADO 80228
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (303) 987-8000
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act, during the past 12 months and (2) has been
subject to the filing requirements for the past 90 days. Yes X No ___.
State the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
There were 4,256,608 shares of the Issuer's common stock, no par value,
outstanding as of June 30, 1998.
Page 1 of 7
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
JUNE 30, 1998 MARCH 31, 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 3,993,408 $ 3,358,968
Marketable Securities 2,016,307 2,048,199
Accounts Receivable, Net 1,551,226 1,754,782
Inventories 1,957,432 1,895,273
Prepaid Expenses 35,738 76,152
Deferred Income Taxes 85,000 85,000
TOTAL CURRENT ASSETS 9,639,111 9,218,374
PROPERTY, PLANT & EQUIPMENT, NET 1,659,380 1,677,023
OTHER ASSETS
Intangible Assets, Net 852,342 884,695
TOTAL ASSETS $12,150,833 $11,780,092
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 117,674 $ 65,015
Accrued Salaries & Payroll Taxes 131,834 306,547
Other Accrued Expenses 119,150 136,059
Taxes Payable 246,175 36,600
TOTAL CURRENT LIABILITIES 614,833 544,221
LONG TERM LIABILITIES
Deferred Income Taxes Payable 75,000 75,000
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value - -
Common Stock, No Par Value;
authorized 8,000,000 shares;
issued and outstanding,
4,256,608 shares (06/30/98)
and 4,284,587 shares (3/31/98) 3,306,338 3,352,009
Retained Earnings 8,154,662 7,808,862
TOTAL STOCKHOLDERS' EQUITY 11,461,000 11,160,871
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,150,833 $11,780,092
</TABLE>
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1998 June 30, 1997
<S> <C> <C>
Sales $1,783,895 $1,846,058
Cost of Goods Sold 577,164 633,864
Selling, General & Administrative 534,048 514,077
Research and Development 56,852 61,778
Other (Income) and Expenses (76,068) (45,544)
1,091,996 1,164,175
Earnings Before Income Taxes 691,899 681,883
Income Taxes 242,000 247,500
Net Income $ 449,899 $ 434,383
Net Income Per Share (Basic) $ .11 $ .10
Net Income Per Share (Diluted) $ .10 $ .10
Average Common Shares Outstanding (Basic) 4,275,000 4,307,000
Average Common Shares Outstanding (Diluted) 4,353,000 4,444,000
</TABLE>
Page 3 of 7
ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Increase (Decrease) in Cash and Cash Ended Ended
Equivalents June 30, 1998 June 30, 1997
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 449,899 $ 434,383
Depreciation and Amortization 58,428 68,259
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable 203,556 321,427
(Increase) Decrease in Inventories (62,159) (85,709)
(Increase) Decrease in Prepaid Expenses 40,414 14,951
Increase (Decrease) in Accounts Payable 52,659 11,380
Increase (Decrease) in Accrued Liabilities 17,953 (17,063)
Net Cash (Used) Provided by Operating
Activities 760,750 747,628
Cash Flows From Investing Activities:
(Increase) Decrease in Marketable Securities 31,892 -
(Increase) Decrease in Intangible Assets 871 -
Capital Expenditures, Net of Retirements (9,302) (6,093)
Net Cash(Used)Provided by Investing Activities 23,461 (6,093)
Cash Flows From Financing Activities:
Treasury Stock Purchases (164,195) (58,700)
Proceeds From Stock Options Exercised 14,424 7,568
Net Cash (Used) Provided by Financing
Activities (149,771) (51,132)
Net Increase (Decrease) In Cash and
Equivalents 634,440 690,403
Cash and Cash Equivalents at Beginning
of Period 3,358,968 3,867,549
Cash and Cash Equivalents at End of Period $3,993,408 $4,557,952
</TABLE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
NOTE A. SUMMARY OF ACCOUNTING POLICIES
The summary of the Issuer's significant accounting policies are incorporated
by reference to the Company's annual report on Form 10KSB, at March 31, 1998.
The accompanying unaudited condensed financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of operations, financial position and cash flows.
The results of the interim period are not necessarily indicative of the results
for the full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 1998, the Company had cash and short term investments of
$6,009,715. In addition, the Company had other current assets totaling
$3,629,396 and total current assets of $9,639,111. Current liabilities of Mesa
Laboratories, Inc. Were $614,833 which resulted in a current ratio of 15.7:1.
The Company has made net capital asset purchases of $9,302 for the fiscal
year-to-date.
The Company had announced its intention to repurchase up to 10% of its
outstanding common stock which was completed in July, 1998. On July 24, 1998
the Board of Directors met and approved the repurchase of 400,000 additional
shares of outstanding common stock. Under the plan, the shares may be
purchased from time to time in the open market at prevailing prices or in
negotiated
transactions off the market. Shares purchased will be used for general
corporate purposes and repurchases will be made with existing cash reserves.
The Company is currently working to resolve the potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information systems. Based on preliminary information, costs of
addressing potential problems are not currently expected to have a materially
adverse impact on the Company's financial position, results of operations or
cash flows in future periods. However, if the Company, its customers or
vendors are unable to resolve such processing issues in a timely manner, it
could resultin a material financial risk. Accordingly, the Company plans
to devote the necessary resources to resolve all significant year 2000
issues in a timely manner.
Page 5 of 7
FORM 10-QSB
RESULTS OF OPERATIONS
REVENUE
Net sales for the three months ended June 30, 1998 decreased $62,163 or 3%
to $1,783,895 from the $1,846,058 net sales level achieved for the same three
month period last year. For the first fiscal quarter, the Medical products
group showed strong increases which were off-set by decreases in Nusonics
sales.
The Datatrace products group showed little change over the prior year. Over
half of the Medical products sales were attributed to the Reprocessor products
which continue to improve steadily. While the Concentration Analyzers in the
Nusonics group showed improvement over last year, a decrease in the Flow Meter
line was responsible for the overall decline in Nusonics and total sales for
the period.
COST OF GOODS SOLD
Cost of goods sold for the first three months as a percent of net sales
was 32% which represents a 2% decrease from the 34% level for the same three
month period last year. Most of the decrease realized in the quarter was
attributable to a decrease in Nusonics product costs. This decrease as a
percent of sales was realized from a change in the sales mix between the Flow
Meter line and the Concentration Analyzers. The more specialized, less
competitive Concentration Analyzers carry a greater gross margin than the more
competitive Flow Meter line. The quarter's strong sales in the Concentration
Analyzers and declining sales in the Flow Meter line combined to produce an
overall decrease to cost of goods sold as a percent of sales.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the first three months
increased 4% or $19,971 to $534,048 from $514,077 in the same period last year.
Marketing expenses accounted for an overall 6% increase with Medical marketing
expenses gaining 22% over the prior year and Nusonics marketing expenses
increasing 11%. The increased marketing expense for the Medical group can be
attributed to increased advertising costs in marketing its newest product, the
Reuse Data Management System, not yet released. Increased Nusonics marketing
expenses are attributed to consulting fees incurred to study alternatives to
the declining position in the Flow Meter market. Datatrace marketing
expenses posted a 2% decline while administrative expenses had less than
a 1% increase.
RESEARCH AND DEVELOPMENT
Research and development for the first three months decreased to $56,852
from $61,778 which represents an 8% decrease over the same period last year.
During the fiscal quarter, research and development costs decreased due to
Datatrace's completion and release of its Windows software project which
resulted in less consulting and legal fees incurred compared to the same period
last year.
NET INCOME
Net income for the three months ended June 30, 1998 increased 3% to
$449,899 or $.10 per share from $434,383 or $.10 per share last year. During
the fiscal first quarter, cost of goods sold improved because of the shift in
sales mix in the Nusonics' Concentration Analyzers and Flow Meter lines. In
addition, an increase in other income contributed to the overall increase in
net income.
PART II-OTHER INFORMATION
None.
Page 6 of 7
FORM 10-QSB
MESA LABORATORIES, INC.
JUNE 30, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MESA LABORATORIES, INC.
(Issuer)
DATED: August 11, 1998 BY: /S/ Luke R. Schmieder
Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: August 11, 1998 BY: /S/ Steven W. Peterson
Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary
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