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 December 31, 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 4,061,143 shares of the Issuer's common stock, no par value,
outstanding as of December 31, 1998.
Page 1 of 9
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
<S>
ASSETS DECEMBER 31, 1998 MARCH 31, 1998
CURRENT ASSETS <C> <C>
Cash and Cash Equivalents $ 6,217,573 $ 3,358,968
Marketable Securities - 2,048,199
Accounts Receivable, Net 1,740,216 1,754,782
Inventories 1,732,557 1,895,273
Prepaid Expenses 52,909 76,152
Deferred Income Taxes 85,000 85,000
TOTAL CURRENT ASSET 9,828,255 9,218,374
PROPERTY, PLANT & EQUIPMENT, NET 1,613,417 1,677,023
OTHER ASSETS
Intangible Assets, Net 785,894 884,695
TOTAL ASSETS $12,227,566 $11,780,092
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 121,650 $ 65,015
Accrued Salaries & Payroll Taxes 216,686 306,547
Other Accrued Expenses 164,531 136,059
Taxes Payable 78,303 36,600
TOTAL CURRENT LIABILITIES 581,170 544,221
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,
4,061,143 shares (12/31/98)
and 4,284,587 shares (3/31/98) 2,952,626 3,352,009
Retained Earnings 8,618,770 7,808,862
TOTAL STOCKHOLDERS' EQUITY 11,571,396 11,160,871
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,227,566 $11,780,092
</TABLE>
Page 2 of 9
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
Dec. 31, 1998 Dec. 31, 1997
<S> <C> <C>
Sales $2,129,415 $1,904,030
Cost of Goods Sold 712,042 597,802
Selling, General & Administrative 563,815 526,853
Research and Development 62,038 58,422
Other (Income) and Expenses (56,529) (61,607)
1,281,366 1,121,470
Earnings Before Income Taxes 848,049 782,560
Income Taxes 297,000 281,524
Net Income $ 551,049 $ 501,036
Net Income Per Share (Basic) $ .14 $ .12
Net Income Per Share (Diluted) $ .13 $ .11
Average Common Shares Outstanding (Basic) 4,068,000 4,311,000
Average Common Shares Outstanding(Diluted) 4,120,000 4,474,000
</TABLE>
Page 3 of 9
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Nine Months Nine Months
Ended Ended
Dec. 31, 1998 Dec. 31, 1997
<S> <C> <C>
Sales $5,952,033 $5,909,074
Cost of Goods Sold 2,015,627 2,012,211
Selling, General & Administrative 1,613,477 1,566,269
Research and Development 168,204 199,415
Other (Income) and Expenses (207,226) (162,118)
3,590,082 3,615,777
Earnings Before Income Taxes 2,361,951 2,293,297
Income Taxes 827,000 827,000
Net Income $1,534,951 $1,466,297
Net Income Per Share (Basic) $ .37 $ .34
Net Income Per Share (Diluted) $ .36 $ .33
Average Common Shares Outstanding (Basic 4,167,000 4,309,000
Average Common Shares Outstanding(Dilute 4,226,000 4,452,000
</TABLE>
Page 4 of 9
ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Nine Months
Ended Ended
<S> Dec. 31, 1998 Dec. 31, 1997
Cash Flows From Operating Activities: <C> <C>
Net Income $1,534,951 $1,466,297
Depreciation and Amortization 179,639 183,850
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable 14,566 259,044
(Increase) Decrease in Inventories 162,716 66,652
(Increase) Decrease in Prepaid Expenses 23,243 (4,566)
Increase (Decrease) in Accounts Payable 56,635 49,169
Increase (Decrease) in Accrued Liabilities (19,686) (94,630)
Net Cash (Used) Provided by Operating
Activities 1,952,064 1,925,816
Cash Flows From Investing Activities:
(Increase) Decrease in Marketable Securities 2,048,199 -
Capital Expenditures, Net of Retirements (17,232) (176,167)
Net Cash (Used) Provided by Investing Activiti 2,030,967 (176,167)
Cash Flows From Financing Activities:
Treasury Stock Purchases (1,143,600) (192,470)
Proceeds From Stock Options Exercised 19,174 15,959
Net Cash (Used) Provided by Financing Activit (1,124,426) (176,511)
Net Increase (Decrease) In Cash and Equivalent 2,858,605 1,573,138
Cash and Cash Equivalents at Beginning of Per 3,358,968 3,867,549
Cash and Cash Equivalents at End of Period $6,217,573 $5,440,687
</TABLE>
Page 5 of 9
ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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 December 31, 1998, the Company had cash and short term investments of
$6,217,573. In addition, the Company had other current assets totaling
$3,610,682 and total current assets of $9,828,255. Current liabilities of
Mesa Laboratories, Inc. were $581,170 which resulted in a current ratio of
16.9:1.
The Company has made net capital asset purchases of $17,232 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 purchases 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 result in a material financial risk. Accordingly, the Company plans
to devote the necessary resources to resolve all significant year 2000
issues in a timely manner.
Except for the historical information contained herein, the discussion in
this report contains or may contain forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially
from those discussed here. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this
Management's Discussion and Analysis, and the Company's Report on Form 10-KSB
for the year ended March 31, 1998, as well as those factors discussed
elsewhere herein.
Page 6 of 9
FORM 10-QSB
RESULTS OF OPERATIONS
REVENUE
Net sales for the nine months ended December 31, 1998 increased $42,959 or
1% to $5,952,033 from the $5,909,074 net sales level achieved for the same
nine month period last year. Net sales for the quarter increased $225,385
or 12% to $2,129,415 from the $1,904,030 net sales level achieved in the
same quarter last year. During the first nine months of the fiscal year,
Medical product sales continued their trend of strong improvement,
increasing over 19% compared to the previous year. Strong sales of the Echo
Dialyzer Reprocessing System contributed to the overall increase in the
Medical division along with initial shipments of the Company's Reuse Data
Management (RDM) System during the third fiscal quarter. This improvement
was off-set by a decrease of 17% in Nusonics product
sales. While a decline in Flow Meter product sales contributed to the overall
decrease in Nusonics sales, the focus of sales efforts toward Concentration
Analyzer products has resulted in a 35% increase in this product line over
last year. Datatrace product sales were little changed with a 2% increase
compared to the prior year.
COST OF GOODS SOLD
Cost of goods sold for the first nine months as a percent of net sales was
34% and unchanged from the 34% level for the same nine month period last year.
Cost of goods sold for the current quarter as a percent of net sales was 33%
which represents an increase of 2% from the 31% level in the same quarter last
year. During the third fiscal quarter of the year, the increase in product
costs as a percent of sales can be attributed to modest increases in material
costs and reserve levels.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the first nine months
increased 3% or $47,208 to $1,613,477 from $1,566,269 in the same period last
year. For the current quarter, selling, general and administrative expenses
totaled $563,815 which was up 7% or $36,962 from $526,853 expended in the same
quarter one year ago. For the first nine months, administrative costs increased
6% while marketing costs increased by 1% compared to the same period last year.
For the year the Medical and Datatrace divisions had increases of 15% and 5%,
respectively, in marketing expenses which were off-set by a 11% decrease in
Nusonics' marketing expenses.
RESEARCH AND DEVELOPMENT
Research and development for the first nine months decreased to $168,204
from $199,415 last year. For the quarter, research and development was
$62,038 which represents an increase of $3,616 or 6% from the $58,422 level
expensed in the same quarter last year. For the third fiscal quarter,
research and development costs increased due chiefly to an increase in
staffing.
Page 7 of 9
NET INCOME
Net income for the nine months ended December 31, 1998 increased 5% to
$1,534,951 or $.36 per share from $1,466,297 or $.33 per share last year. Net
income for the quarter was $551,049 or $.13 per share which rose 10% over the
net income of $501,036 or $.11 per share in the same quarter last year. For
the first nine months of the fiscal year, net income improved due to
increases in revenues and interest income. For the most recent quarter,
an increase in revenues was only slightly off-set by an increase in cost
of goods sold as a percent of sales.
PART II-OTHER INFORMATION
The Annual Meeting of Shareholders of Mesa Laboratories, Inc. was held on
October 9, 1998. Of the 4,158,908 Shares entitled to vote, 3,557,475 were
represented either in person or by proxy. Five directors were elected to
serve until the next Annual Meeting of Shareholders.
The five directors elected were:
Michael Brooks
H. Stuart Campbell
Paul D. Duke
Philip D. Quedenfeld
Luke R. Schmieder
Page 8 of 9
FORM 10-QSB
MESA LABORATORIES, INC.
DECEMBER 31, 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: 2/12/99 BY: /s/ Luke R. Schmieder .
Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: 2/12/99 BY: /s/ Steven W. Peterson .
Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary
Page 9 of 9
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1999 MAR-31-1998
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 6,217,573 5,440,687
<SECURITIES> 0 0
<RECEIVABLES> 1,790,290 1,532,045
<ALLOWANCES> (50,000) (33,000)
<INVENTORY> 1,732,557 1,896,920
<CURRENT-ASSETS> 9,828,256 8,866,329
<PP&E> 2,751,339 2,734,108
<DEPRECIATION> (1,137,923) (1,052,223)
<TOTAL-ASSETS> 12,227,566 11,429,828
<CURRENT-LIABILITIES> 581,170 509,085
<BONDS> 0 0
0 0
0 0
<COMMON> 2,952,626 3,372,495
<OTHER-SE> 8,618,770 7,485,448
<TOTAL-LIABILITY-AND-EQUITY> 12,227,566 11,429,828
<SALES> 5,952,033 5,909,074
<TOTAL-REVENUES> 5,952,033 5,909,074
<CGS> 2,015,627 2,012,211
<TOTAL-COSTS> 1,781,681 1,765,684
<OTHER-EXPENSES> (207,226) (162,118)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 2,361,951 2,293,297
<INCOME-TAX> 827,000 827,000
<INCOME-CONTINUING> 1,534,951 1,466,297
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,534,951 1,466,297
<EPS-PRIMARY> .37 .34
<EPS-DILUTED> .36 .33
</TABLE>
