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, 1999
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 3,868,176 shares of the Issuer's common stock, no par
value, outstanding as of June 30, 1999.
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
ASSETS JUNE 30, 1999 MARCH 31, 1999
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 6,562,562 $ 6,675,417
Accounts Receivable, Net 1,620,961 1,744,066
Inventories 1,643,822 1,741,815
Prepaid Expenses 19,136 33,879
Deferred Income Taxes 91,000 91,000
TOTAL CURRENT ASSETS 9,937,481 10,286,177
PROPERTY, PLANT & EQUIPMENT, NET 1,584,248 1,600,304
OTHER ASSETS
Intangible Assets, Net 721,061 752,670
TOTAL ASSETS $12,242,790 $12,639,151
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 99,364 $ 89,400
Accrued Salaries & Payroll Taxes 168,881 300,976
Other Accrued Expenses 137,542 195,879
Taxes Payable 239,244 69,272
TOTAL CURRENT LIABILITIES 645,031 655,527
LONG TERM LIABILITIES
Deferred Income Taxes Payable 78,000 78,000
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value - -
Common Stock, No Par Value;
authorized 8,000,000 shares;
issued and outstanding,
3,868,176 shares (6/30/99)
and 4,035,183 shares (3/31/98) 2,588,493 2,894,900
Retained Earnings 8,931,266 9,010,724
TOTAL STOCKHOLDERS' EQUITY 11,519,759 11,905,624
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,242,790 $12,639,151
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Page 2 of 9
ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1999 June 30, 1998
<S> <C> <C>
Sales $1,865,607 $1,783,895
Cost of Goods Sold 631,786 577,164
Selling, General & Administrative 528,477 534,048
Research and Development 71,017 56,852
Other (Income) and Expenses (64,908) (76,068)
1,166,372 1,091,996
Earnings Before Income Taxes 699,235 691,899
Income Taxes 244,000 242,000
Net Income $ 455,235 $ 449,899
Net Income Per Share (Basic) $ .12 $ .11
Net Income Per Share (Diluted) $ .11 $ .10
Average Common Shares Outstanding (Basic) 3,943,000 4,275,000
Average Common Shares Outstanding(Diluted)3,981,000 4,353,000
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1999 June 30, 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 455,235 $ 449,899
Depreciation and Amortization 47,220 58,428
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable 123,105 203,556
(Increase) Decrease in Inventories 97,993 (62,159)
(Increase) Decrease in Prepaid Expenses 14,743 40,414
Increase (Decrease) in Accounts Payable 9,964 52,659
Increase (Decrease) in Accrued Liabilities (20,460) 17,953
Net Cash (Used) Provided by Operating
Activities 727,800 760,750
Cash Flows From Investing Activities:
(Increase) Decrease in Intangible Assets - 871
(Increase) Decrease in Marketable Securities - 31,892
Capital Expenditures, Net of Retirements 445 (9,302)
Net Cash (Used) Provided by Investing Activities 445 23,461
Cash Flows From Financing Activities:
Treasury Stock Purchases (843,028) (164,195)
Proceeds From Stock Options Exercised 1,928 14,424
Net Cash (Used) Provided by Financing
Activities (841,100) (149,771)
Net Increase (Decrease) In Cash and Equivalents(112,855) 634,440
Cash and Cash Equivalents at Beginning of
Period 6,675,417 3,358,968
Cash and Cash Equivalents at End of Period $6,562,562 $3,993,408
</TABLE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FORM 10-QSB
MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
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, 1999.
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, 1999, the Company had cash and short term
investments of $6,562,562. In addition, the Company had other
current assets totaling $3,374,919 and total current assets of
$9,937,481. Current liabilities of Mesa Laboratories, Inc. were
$645,031 which resulted in a current ratio of 15.4:1.
The Company has made net capital asset disposals of $445 for the
fiscal year-to-date.
In July 1998, the Company had announced its intention to
repurchase up to 400,000 shares of its outstanding common stock which
was nearing completion. On August 5, 1999 the Board of Directors met
and approved the repurchase of 500,000 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 year 2000 issue is the result of computer programs being
written using two digits rather than four digits to define the
applicable year. Some computer programs that have time-sensitive
software may recognize a date using 00 as the year 1900 rather than
the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including a
temporary inability to process transactions, send invoices, or engage
in normal business and operating activities.
Most of the Company's systems are Year 2000 compliant. The
Company has a program in place to assess the remaining software and
systems and bring them into Year 2000 compliance in time to minimize
any significant detrimental effects on operations. The program
focuses on four main functional areas:
(i) Information technology which addresses data, phone and
administrative systems, including personal computers,
telecommunications, local area networks, and business
applications. These systems are computer devices and
software that the Company wrote or purchased. The software
systems include applications developed or purchased by corporate
departments and operated by departmental personnel. The
computer devices are desktop personal computers and server
computer equipment including system hardware, firmware, and
installed commercial application software.
(ii) Embedded chip technology which addresses manufacturing
systems, laboratory instruments and plant maintenance
systems with programmable logic controllers with date
functions. The Process Control Systems are used in the
Company's manufacturing and research and development
processes, among other operations. These generally are
systems, devices and instruments which utilize date
functionality and generate, send, receive or manipulate
date-stamped data and signals. These systems may be found
in data acquisition/processing software, laboratory
instrumentation, and other equipment with embedded code.
(iii) Material suppliers and marketing partners which address
third parties that are critical to the Company's
manufacturing process and distribution of product. The
Company has identified critical providers of information,
goods and services in order to assess their Year 2000
compliance/readiness. The Company will send letters to all
critical suppliers and marketing partners. The Company
recognizes that to a certain degree it is relying on
information provided by such third parties regarding their
Year 2000 compliance readiness. While the Company is
attempting to evaluate information provided by these third
parties, there can be no assurance that in all instances
accurate information is being provided. Failure of these
third parties' systems to be Year 2000 compliant could have
a material adverse effect on the Company's financial
position, results of operations and cash flows.
(iv) Products manufactured by the Company utilize microprocessors
that utilize date functions. Additionally, the Company has
developed software packages that are sold and utilized with
the Company's electronic hardware. These systems have been
tested extensively, and currently, the Company believes all
of its products are Year 2000 compliant.
The Company is using both internal and external resources to
identify, correct/reprogram, and test its computer systems, equipment
and software for Year 2000 compliance.
The Company estimates that the costs associated with the Year
2000 issue will not be material, and as such will not have a
significant impact on the Company's financial position or operating
results. However, the failure to correct a material Year 2000 problem
could result in an interruption in certain normal business activities
or operations. Such failures could materially and adversely affect
the Company's results of operations, liquidity and financial
condition. The aggregate additional costs of the Company's Year 2000
program cannot be known at this time. However, given the current
status of the validation phase the additional costs are expected to be
less than $25,000. The actual additional costs will depend on
numerous factors, including without limitation, the costs of
replacing, upgrading or repairing systems, software and equipment, and
consulting fees and expenses. All costs are expected to be funded
through operations.
The Company is also developing a contingency plan to address a
situation in which Year 2000 problems do cause an interruption in
normal business activities. Once developed, contingency plans and
related cost estimates will be continually refined, as additional
information becomes available. The Company expects to have the
contingency plan in place for critical operations by September 30,
1999.
There can be no assurance that the Company will be able to
complete all of the modifications in the required time frame, that
unanticipated events will not occur or that the Company will be able
to identify all Year 2000 issues before problems arise. Therefore,
there can be no assurance that the Year 2000 issue will not have a
material adverse effect on the Company's financial position, results
of operations and cash flows.
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, 1999, as well as those factors discussed
elsewhere herein.
RESULTS OF OPERATIONS
REVENUE
Net sales for the three months ended June 30, 1999 increased
$81,712 or 5% to $1,865,607 from the $1,783,895 net sales level
achieved for the same three month period last year. For the first
fiscal quarter, the Datatrace and Medical products groups showed
increases of 13% which were off-set by a decrease in Nusonics sales.
The Medical products sales increase was attributable to sales of
Reprocessor products and Reuse Data Management systems which continue
to improve steadily. Concentration Analyzer sales in the Nusonics
group showed a decrease from last year, while Flow Meter sales
increased compared to the same period last year. The increase in
Datatrace sales was due to increasing Standard Temp Tracer sales and
addition of the new Pressure Tracer product.
COST OF GOODS SOLD
Cost of goods sold for the first three months as a percent of
net sales was 34% which represents a 2% increase from the 32% level
for the same three month period last year. Most of the increase
realized in the quarter was attributable to an increase in reserve
levels for obsolete inventory. The Company expects to continue to
have to adjust its reserves through the fiscal year due to
introduction of a new generation of Nusonics Ultrasonic products.
This change over in technology is expected to be implemented
gradually to the product line, minimizing the impact on inventory
obsolescence.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the first three
months decreased 1% or $5,571 to $528,477 from $534,048 in the same
period last year. Marketing expenses accounted for an overall 2%
decrease with Medical marketing expenses gaining over 40% from the
prior year and Nusonics marketing expenses
decreasing over 40%. 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. Decreased
Nusonics marketing expenses are attributed to elimination of
consulting fees incurred to study marketing alternatives due to the
declining position in the Flow Meter market. For the fiscal first
quarter, Datatrace Marketing and Administration costs gained at
rates that were less than the comparable sales increases.
RESEARCH AND DEVELOPMENT
Research and development for the first three months increased to
$71,017 from $56,852 which represents a 25% increase over the same
period last year. During the fiscal quarter, research and
development costs increased due to increased consulting for Datatrace
and Medical software product projects and continued activity on the
Company's new Nusonics Concentration Analyzer which is expected to be
released later in this fiscal year.
NET INCOME
Net income for the three months ended June 30, 1999 increased 1%
to $455,235 or $.11 per share from $449,899 or $.10 per share last
year. During the fiscal first quarter, cost of goods sold increased
due to increases in inventory reserves which were partially off-set
by a decrease in marketing expense.
PART II-OTHER INFORMATION
None.
FORM 10-QSB
MESA LABORATORIES, INC.
JUNE 30, 1999
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 12, 1999 BY: /s/ Luke R. Schmieder
. Luke R. Schmieder
President, Chief Executive
Officer,
Treasurer and Director
DATED: August 12, 1999 BY: /s/ Steven W. Peterson
. Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting
Officer and Secretary
[ARTICLE] 5
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<S> <C> <C>
[PERIOD-TYPE] 3-MOS 3-MOS
[FISCAL-YEAR-END] MAR-31-2000 MAR-31-1999
[PERIOD-END] JUN-30-1999 JUN-30-1998
[CASH] 6,562,562 3,993,408
[SECURITIES] 0 2,016,307
[RECEIVABLES] 1,644,634 1,563,135
[ALLOWANCES] 33,545 35,516
[INVENTORY] 1,643,822 1,957,432
[CURRENT-ASSETS] 9,937,481 9,639,111
[PP&E] 2,759,920 2,743,410
[DEPRECIATION] 1,175,672 1,084,031
[TOTAL-ASSETS] 12,242,790 12,150,833
[CURRENT-LIABILITIES] 645,031 614,833
[BONDS] 0 0
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[COMMON] 2,588,493 3,359,157
[OTHER-SE] 8,931,267 8,101,843
[TOTAL-LIABILITY-AND-EQUITY] 12,242,790 12,150,833
[SALES] 1,865,607 1,783,895
[TOTAL-REVENUES] 1,865,607 1,783,895
[CGS] 631,786 577,164
[TOTAL-COSTS] 1,166,372 1,091,996
[OTHER-EXPENSES] 0 0
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] 0 0
[INCOME-PRETAX] 699,235 691,899
[INCOME-TAX] 244,000 242,000
[INCOME-CONTINUING] 455,235 449,899
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 455,235 449,899
[EPS-BASIC] .12 .11
[EPS-DILUTED] .11 .10
</TABLE>
