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, 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 3,798,476 shares of the Issuer's common stock, no par
value, outstanding as of December 31, 1999.
<TABLE>
MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
ASSETS DECEMBER 31, 1999 MARCH 31, 1999
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 2,178,840 $ 6,675,417
Accounts Receivable, Net 2,233,381 1,744,066
Inventories 2,113,861 1,741,815
Prepaid Expenses 48,073 33,879
Deferred Income Taxes 91,000 91,000
TOTAL CURRENT ASSETS 6,665,155 10,286,177
PROPERTY, PLANT & EQUIPMENT, NET 1,563,627 1,600,304
OTHER ASSETS
Intangible Assets, Net 4,655,254 752,670
TOTAL ASSETS $12,884,036 $12,639,151
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 237,407 $ 89,400
Accrued Salaries & Payroll Taxes 252,180 300,976
Other Accrued Expenses 198,852 195,879
Taxes Payable 209,254 69,272
TOTAL CURRENT LIABILITIES 897,693 655,527
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,
3,798,476 shares (12/31/99)
and 4,035,183 shares (3/31/99) 2,694,958 2,894,900
Retained Earnings 9,213,385 9,010,724
TOTAL STOCKHOLDERS' EQUITY 11,908,343 11,905,624
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,884,036 $12,639,151
</TABLE>
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
Dec. 31, 1999 Dec. 31, 1998
<S> <C> <C>
Sales $2,277,250 $2,129,415
Cost of Goods Sold 735,313 712,042
Selling, General & Administrative 734,803 563,815
Research and Development 73,714 62,038
Other (Income) and Expenses (60,438) (56,529)
1,483,392 1,281,366
Earnings Before Income Taxes 793,858 848,049
Income Taxes 280,228 297,000
Net Income $ 513,630 $ 551,049
Net Income Per Share (Basic) $ .14 $ .14
Net Income Per Share (Diluted) $ .14 $ .13
Average Common Shares Outstanding (Basic) 3,739,000 4,068,000
Average Common Shares Outstanding (Diluted)3,753,000 4,120,000
</TABLE>
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Nine Months Nine Months
Ended Ended
Dec. 31, 1999 Dec. 31, 1998
<S> <C> <C>
Sales $5,946,332 $5,952,033
Cost of Goods Sold 2,051,404 2,015,627
Selling, General & Administrative 1,766,492 1,613,477
Research and Development 204,617 168,204
Other (Income) and Expenses (193,198) (207,226)
3,829,315 3,590,082
Earnings Before Income Taxes 2,117,017 2,361,951
Income Taxes 743,228 827,000
Net Income $1,373,789 $1,534,951
Net Income Per Share (Basic) $ .36 $ .37
Net Income Per Share (Diluted) $ .36 $ .36
Average Common Shares Outstanding (Basic) 3,833,000 4,167,000
Average Common Shares Outstanding (Diluted)3,861,000 4,226,000
</TABLE>
<TABLE>
MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Nine Months
Ended Ended
Dec. 31, 1999 Dec. 31, 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $1,373,789 $1,534,951
Depreciation and Amortization 201,943 179,639
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable (489,315) 14,566
(Increase) Decrease in Inventories (372,046) 162,716
(Increase) Decrease in Prepaid Expenses (14,194) 23,243
Increase (Decrease) in Accounts Payable 148,007 56,635
Increase (Decrease) in Accrued Liabilities 94,159 (19,686)
Net Cash (Used) Provided by Operating
Activities 942,343 1,952,064
Cash Flows From Investing Activities:
(Increase) Decrease in Marketable Securities - 2,048,199
(Increase) Decrease in Intangible Assets (4,024,546) -
Capital Expenditures, Net of Retirements (43,303) (17,232)
Net Cash (Used) Provided by Investing
Activities (4,067,849) 2,030,967
Cash Flows From Financing Activities:
Stock Issued for Acquisitions 387,500 -
Treasury Stock Purchases (1,829,905) (1,143,600)
Proceeds From Stock Options Exercised 71,334 19,174
Net Cash (Used) Provided by Financing Activities(1,371,071) (1,124,426)
Net Increase (Decrease) In Cash and Equivalents (4,496,577) 2,858,605
Cash and Cash Equivalents at Beginning of
Period 6,675,417 3,358,968
Cash and Cash Equivalents at End of Period $2,178,840 $6,217,573
</TABLE>
MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A. SUMMARY OF ACCOUNTING POLICIES
The summary of the Issuer's significant accounting policies is
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 December 31, 1999, the Company had cash and short term
investments of $2,178,840. In addition, the Company had other current
assets totaling $4,486,315 and total current assets of $6,665,155.
Current liabilities of Mesa Laboratories, Inc. were $897,693 which
resulted in a current ratio of 7.4:1.
The Company has made net capital asset purchases of $43,303 for
the fiscal year-to-date.
During the first nine months of the fiscal year, the Company
repurchased 366,185 shares of its outstanding common stock. In August
1999, the Board of Directors 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.
Repurchases will be made with existing cash flows until such time as
this capital is required for internal development programs or for
acquisition of product lines or businesses, which the company
continues to pursue.
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. To date, the company has
not suffered any failures of either its products or its internal
computer systems due to date related problems.
On December 7, 1999 the Company acquired Scottsdale, Arizona
based Automata Instrumentation, Inc. Producing annual revenues in
excess of $2,500,000, the addition of the Automata line of dialysis
meters and solutions is expected to complement and expand Mesa Labs
existing line of Western Dialysate Meters. Under the terms of the
transaction, Mesa Labs acquired all of the outstanding shares of
Automata for $4,100,000 and 100,000 shares of common stock. The
transaction will be accounted for under purchase accounting rules and
is expected to be accretive to both sales and earnings in the fiscal
fourth quarter of this year. Current plans
call for the operation of Automata to be moved from Arizona to the
Company's headquarters in Colorado by the end of February 2000, and
costs associated with consolidating operations are expected to be
fully absorbed during the quarter ending March 31, 2000.
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 nine months ended December 31, 1999 decreased
$5,701 to $5,946,332 from the $5,952,033 net sales level achieved for
the same nine month period last year. Net sales for the quarter
increased $147,835 or 7% to 2,277,250 from the $2,129,415 net sales
level achieved in the same quarter last year.
During the first nine months of the fiscal year, Datatrace
product sales increased 13% over the prior year with a 30% increase in
sales of Humidity Tracers and a 35% increase in sales of Flex Probe
Sensors. Medical product sales increased compared to the prior year.
Sales of the Medical products increased 49% due chiefly to Automata
sales, but the group's Reuse Data Management (RDM) System and the Echo
Dialyzer Reprocessor continued to be strong. These improvements are
offset by an overall decrease in Nusonics sales. Nusonics Product
sales have continued their downward sales trend of the last two years.
Demand for Flow Meters has been steady this year, but demand for
Concentration Analyzers has been down. Currently it is our
expectation that our position in the Concentration Analyzer market
should be improved by introduction of a new product offering this
year.
COST OF GOODS SOLD
Cost of goods sold for the first nine months as a percent of net
sales was 34% and compares to 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 32% which represents a decrease of 1% from
the 33% level in the same quarter last year.
Cost of goods sold as a percentage of sales continued a steady
trend despite the addition of the new Automata products during
December. No major changes in cost of goods sold percentages are
expected during the remainder of the fiscal year.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the first nine
months increased 9% or $153,015 to $1,766,492 from $1,613,477 in the
same period last year. For the current quarter, selling, general and
administrative expenses totaled $734,803 which was up 30%, or $170,988
from $563,815 expended in the same quarter one year ago.
For the first nine months, administrative costs increased 31%.
This increase is attributed to business development expenses
associated with the Automata acquisition. These acquisition costs
included broker commission, legal and accounting costs associated with
the transaction. Costs associated with relocation of the facility are
expected to be incurred in the fiscal fourth quarter. Marketing costs
had an overall decrease of 5% compared to the same period last year.
RESEARCH AND DEVELOPMENT
Research and development for the first nine months increased 22%
to $204,617 from $168,204 last year. For the quarter, research and
development was $73,714 which represents an increase of $11,676 or 19%
from the $62,038 level expensed in the same quarter last year.
For the first nine months, the increase in research and
development costs are attributed mainly to consulting and staffing
costs and offset further by decreased material purchases and legal
fees. For the third fiscal quarter, research and development costs
increased due chiefly to an increase in compensation costs.
NET INCOME
Net income for the nine months ended December 31, 1999 decreased
10% to $1,373,789 or $.36 per share from $1,534,951 or $.36 per share
last year. Net income for the quarter was $513,630 or $.14 per share
which represents a 7% decrease from net income of $551,049 or $.13 per
share in the same quarter last year.
For the first nine months of the fiscal year, net income
decreased due chiefly to Automata acquisition costs, increased
materials costs and compensation costs. For the quarter, an increase
in net income from existing operations was offset by one-time
acquisition costs.
PART II-OTHER INFORMATION
The Annual Meeting of Shareholders of Mesa Laboratories, Inc. was
held on October 21, 1999. Of the 3,790,476 Shares entitled to vote,
3,454,488 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:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Michael T. Brooks 3,434,965 19,523
H. Stuart Campbell 3,432,065 22,423
Paul D. Duke 3,436,165 18,323
Philip D. Quedenfeld 3,432,265 22,223
Luke R. Schmieder 3,436,165 18,323
</TABLE>
On August 5, 1999, the Board of Directors adopted, subject to
shareholder approval, the 1999 Stock Compensation Plan (the "1999
Plan). The purpose of the 1999 Plan is to encourage ownership of the
Common Stock of the Company by certain officers, directors, employees,
and advisors of the Company or any subsidiary of the Company in order
to provide additional incentive for such persons to promote the
success and the business of the Company or its subsidiaries and to
encourage them to remain in the employ of the Company or its
subsidiaries by providing such persons an opportunity to benefit from
any appreciation of the Common Stock of the Company through the
issuance of stock options to such persons in accordance with the terms
of the 1999 Plan. The 1999 Plan provides that incentive stock options
be granted to certain officers, directors, employees and advisors of
the Company or its subsidiaries, if any, as selected by the
Compensation Committee. A total of 300,000 shares of Common Stock are
authorized and reserved for issuance under the 1999 Plan, subject to
adjustment to reflect changes in the Company's capitalization in the
case of a stock split, stock dividend or similar event. The 1999
Stock Compensation Plan Proposal was voted on and approved by the
shareholders by the following vote:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1999 Stock Compensation Plan 2,225,796 303,478 69,740
</TABLE>
MESA LABORATORIES, INC.
DECEMBER 31, 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: 2/22/00 BY: /s/ Luke R. Schmieder
.
Luke R. Schmieder
President, Chief Executive
Officer, Treasurer and
Director
DATED: 2/22/00 BY: /s/ Steven W. Peterson
.
Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting
Officer and Secretary
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] MAR-31-2000
[PERIOD-END] DEC-31-1999
[CASH] 2,178,840
[SECURITIES] 0
[RECEIVABLES] 2,306,926
[ALLOWANCES] (73,545)
[INVENTORY] 2,113,861
[CURRENT-ASSETS] 6,665,155
[PP&E] 2,842,933
[DEPRECIATION] (1,279,306)
[TOTAL-ASSETS] 1,563,627
[CURRENT-LIABILITIES] 897,693
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 2,694,958
[OTHER-SE] 9,213,385
[TOTAL-LIABILITY-AND-EQUITY] 11,908,343
[SALES] 5,946,332
[TOTAL-REVENUES] 5,946,332
[CGS] 2,051,404
[TOTAL-COSTS] 4,022,513
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 2,117,017
[INCOME-TAX] 743,228
[INCOME-CONTINUING] 1,373,789
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 1,373,789
[EPS-BASIC] .36
[EPS-DILUTED] .36
</TABLE>
