MEASUREMENT SPECIALTIES INC, 10-K, 1999-06-23

MEASUREMENT SPECIALTIES INC
10-K, 1999-06-23
MEASURING & CONTROLLING DEVICES, NEC

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
[FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
---------------------------------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
---------------------------------------------------------------------------

COMMISSION FILE NUMBER 0-16085

MEASUREMENT SPECIALTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEW JERSEY 22-2378738
- ------------------------------------ ---------------------------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)

80 LITTLE FALLS ROAD, FAIRFIELD, NEW JERSEY 07004
-------------------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (973) 808-1819
--------------

SECURITIES REGISTERED UNDER SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------------------ ------------------------
COMMON STOCK, NO PAR VALUE AMERICAN STOCK EXCHANGE

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE ACT: NONE

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within 60 days prior
to the date of filing: 3,211,626 shares of common stock, no par value -
$37,300,000 at June 9, 1999.

<PAGE>
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 3,722,787 shares of common
stock, no par, June 9, 1999.

DOCUMENTS INCORPORATED BY REFERENCE
Registrant's definitive Proxy Statement, which will be filed on or before August
13, 1999 with the Securities and Exchange Commission in connection with
Registrant's 1999 annual meeting of stockholders, is incorporated by reference
into Part III of this Report.

2
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
FORM 10-K
INDEX
MARCH 31, 1999

PAGE
----
PART I
<S> <C> <C>
Item 1. Business 4
Item 2. Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8

PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 8
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 10
Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 16
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and disagreements with Accountants on Accounting and Financial 17
Disclosure

PART III
Item 10. Directors and Executive Officers of the Registrant 18
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain Beneficial Owners and Management 18
Item 13. Certain Relationships and Related Transactions 18

PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 19

Other items are omitted because they are not required or are not applicable.

SIGNATURES
</TABLE>

3
<PAGE>
PART I

Item 1. Business

FORWARD LOOKING STATEMENTS
Any statements in this report, which discuss the Company's expectations,
intentions, and strategies for the future, are "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933 as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking
statements may be identified by such words or phrases as "will likely result",
"are expected to", "will continue", "is anticipated", "estimated", "projected"
or similar expressions. These statements are based on information available to
the Company on the date of this report and the Company assumes no obligation to
update them. Several factors could cause future results to differ materially
from those expressed in any forward looking statements in this report including,
but not limited to:
- - timely development, market acceptance, and warranty performance of new
products
- - impact of competitive products and pricing
- - continuity of bookings trends
- - customers' financial condition
- - continuity of sales to major customers
- - interruptions of suppliers' operations affecting availability of component
materials at reasonable prices
- - potential emergence of rival technologies
- - success in identifying, financing, and integrating acquisition candidates
- - fluctuations in foreign currency exchange rates
- - ability of material suppliers or key customers of the Company to reduce or
eliminate risks to their businesses or operations arising from the year
2000 issue
- - uncertainties of doing business in China and Hong Kong
- - such additional risks and uncertainties as are detailed from time to time
in the Company's reports and filings with the Securities and Exchange
Commission (the "SEC").

GENERAL DEVELOPMENT OF BUSINESS
Measurement Specialties, Inc. ("MSI") and its wholly owned subsidiaries,
Measurement Limited ("ML") and Jingliang Electronics (Shenzhen) Co. Ltd. ("JL"),
collectively referred to as the "Company," designs, develops, produces, and
sells electronic sensors and sensor based consumer products. The Company,
founded in 1981, has been manufacturing products of its own design since 1986.
These products employ a robust, core technology based on micromachining (the
three-dimensional sculpting of silicon), which permits accurate and efficient
measurement, resolution and display of ranges of distance, motion, force,
pressure or temperature. The Company targets high volume, low cost product
opportunities in two principal business segments: sensors and consumer.

DESCRIPTION OF BUSINESS
The Company's Consumer Products segment, accounting for 81 percent of revenues,
comprises bath scales, kitchen scales, tire pressure gauges, and distance
measuring devices which are sold, directly and through manufacturers'
representatives, to United States and European retail merchandisers and
distributors. These products feature contemporary designs, high-contrast liquid
crystal displays, and factory-installed lithium batteries which are intended to
last for the lives of the products. The Company was one of the first to utilize
"life-time" lithium batteries in its area of consumer products. This feature is
highly valued by consumers as it provides lower cost and greater convenience
over the life of the products. The Company markets several bath scale models
under its "Thinner" TM brand, kitchen scales under its "Portion Power" TM brand,
postal scales under its "Postal Power" TM brand, tire pressure gauges under its
"AccuTire" TM brand, and distance measuring devices under its "AccuTape" TM
brand. Products also are sold under private labels. In 1995, the Company
released a new bath scale model, designed with a tempered glass platform and
employing its "Sensor Disc" TM technological advance, which eliminated levers,
and other metal parts typically employed in consumer scales. The glass scale
and other "Sensor Disc" line extensions have become the Company's leading
products.

4
<PAGE>
For the Consumer Products segment, revenues are concentrated in distributors and
retailers of consumer products in both United States and Europe. The Company
has two Consumer Products segment customers who account for more than 10% of
consolidated net sales. Korona Haushaltswaren GmbH, a German distributor of
diversified housewares, accounted for 20 percent, 31 percent and 36 percent of
total net sales for the years ended March 31, 1999, 1998 and 1997, respectively,
and 5 percent and 16 percent of total accounts receivable at March 31, 1999and
1998 respectively. Sunbeam Corp. (Health o meter), a United States manufacturer
and distributor of electric housewares, accounted for 17 percent, 18 percent,
and 16 percent of total net sales for the years ended March 31, 1999, 1998, and
1997, respectively, and 9 percent and 14 percent of total accounts receivable as
of March 31, 1999 and 1998 respectively.

Within the Consumer segment, a large and growing portion of revenue is derived
from promotional activity. Promotions are large events occurring over a
relatively short period of time when retailers heavily promote products. The
timing of promotions may significantly influence sales for a given period.

Orders for consumer products are characterized by short lead times and seasonal
effects on volume. Additionally, production generally slows in February, when
ML, JL, and suppliers suspend operations in China and Hong Kong for the Lunar
New Year holiday. Accordingly, the Company's backlog and revenues ordinarily
fluctuate during the year. Backlog, which consists only of orders believed to
be firm, and shipped within the next twelve months, approximated $11.5 million
at March 31, 1999 and $4.4 million at March 31, 1998. Substantially all the
backlog at March 31, 1999 is expected to be filled within the fiscal year ending
March 31, 2000, although no assurance can be given. The dollar amount of
backlog orders is not necessarily indicative of the results that may be expected
for an ensuing fiscal period.

Consumer products are marketed under warranties to end users of up to ten years.
The Company provides for estimated product warranty obligations at the time of
sale, based on its warranty claims experience. This estimate is susceptible to
changes in the near term based on introductions of new products, product quality
improvements, and changes in end user behavior. The Company has a continuous
quality improvement program which, over the past several years, has resulted in
significantly improved quality levels. JL has received certification of its
conformity with the International Standards Organization ("ISO") 9002 Quality
System Standard.

For the Sensors segment, sensors are sold, directly, and through manufacturers'
representatives, principally to industrial customers for pressure
instrumentation and process control applications. The Company produces a line
of low cost, high output, stainless steel isolated pressure transducers using
its silicon strain gauge sensors. These compact pressure transducers, which
transmit measurements to systems, feature a pressure port, and sensing diaphragm
which are machined from a single piece of stainless steel, making them
well-suited for demanding environments, including pumps and compressors,
hydraulic and pneumatic systems, energy and water management.

In August, 1998 the Company acquired certain assets and assumed certain
liabilities of the Sensors Division of AMP Incorporated (PiezoSensors).
PiezoSensors designs, manufactures, and markets piezoelectric polymer sensors
for industrial, consumer and instrumentation applications. These sensors are
manufactured by melting polymer, stretching it into sheets of film, heating it,
and passing the material through a high-voltage field while hot. This charge
forces the atoms to align in a single direction. When physical force is applied
to this film, the position of the atoms is disturbed causing the generation of
an electrical charge. Conversely, applying a voltage to the completed sensor
will cause the film to bend.

To limit credit risk, the Company evaluates the financial condition of customers
to whom credit is extended. The Company generally does not require customers to
furnish collateral, though certain foreign customers furnish letters of credit.

PRODUCT RESEARCH AND DEVELOPMENT
The markets for the Company's products are characterized by frequent
introductions of competitive products and pricing pressures. Many of the
Company's competitors are larger than the Company and have achieved market
acceptance of their product lines. The Company has competed successfully on the
basis of its product designs, features, and value. Accordingly, reliance is
placed on research and development of new products, line extensions, and
technological, quality, and other continuous product improvements. There can be
no assurance that the Company will enjoy continued success in these efforts.
Research and development expenses, net of customer funding, aggregated $1.8
million for 1999, $2.0 million for 1998, and $1.8 million for 1997.

5
<PAGE>
The Company's core technology employs specialized electronic components known as
micromechanical transducers, and application specific integrated circuits
("ASICs"). Transducers transform measurable phenomena into analog electronic
signals which the ASICs convert to digital signals, for processing in
proprietary circuitry. Calibration is achieved using specialized equipment and
software developed by the Company. The Company holds patents for certain
applications of its core technology in the measurement of force, pressure,
distance, and temperature. Additionally, pursuant to an agreement with the
fabricator of its ASICs, the Company holds an irrevocable license to the
fabricator's related proprietary software under the Semiconductor Chip
Protection Act of 1984. However, the Company has not obtained patents for all
its innovations, nor does it plan to do so.

Certain of the Company's manufacturing processes requires the use of minute
quantities of chemicals identified by the Environment Protection Agency as
hazardous. The Company uses its best efforts to handle, store and dispose of
these materials in a safe and environmentally sound manner, in accordance with
federal, state and local regulations.

FOREIGN OPERATIONS
The Company manufactures the substantial majority of its sensor products, and
most of its sensor subassemblies used in its consumer products, in leased
premises located in Shenzhen, China. Sensors are also manufactured at the
Company's Pennsylvania facility and small production runs are completed at its
research facility in Virginia. Additionally, control of the primary
subcontractor, certain key management, sales and support activities are
conducted at leased premises in Hong Kong. Substantially all the Company's
consumer products are assembled in China, primarily by a single supplier, River
Display, Ltd. ("RDL"), although the Company is utilizing alternative Chinese
assemblers. There are no agreements which would require the Company to make
minimum payments to RDL, nor is RDL obligated to maintain capacity available for
the Company's benefit, though the Company accounts for a significant portion of
RDL's revenues. Additionally, most of the Company's products contain key
components that are obtained from a limited number of sources. These
concentrations in external and foreign sources of supply present risks of
interruption for reasons beyond the Company's control, including political and
other uncertainties regarding Hong Kong and China.

The Chinese government has continued to pursue economic reforms hospitable to
foreign investment and free enterprise, although, the continuation and success
of these efforts is not assured. The Company's operations could be adversely
affected by changes in Chinese laws and regulations, including those relating to
taxation and currency exchange controls, by the imposition of economic austerity
measures intended to reduce inflation, and by social and political unrest. The
United States has considered revoking China's most favored nation ("MFN") tariff
status in connection with controversies over the protection of human rights and
intellectual property rights, among other things. The loss of MFN could
adversely affect the cost of goods imported into the United States.
Additionally, if China does not join the World Trade Organization ("WTO"), the
Company may not benefit from the lower tariffs and other privileges enjoyed by
competitors located in countries that are members of the WTO.

Sovereignty over Hong Kong reverted to China on July 1, 1997. The 1984
Sino-British Joint Declaration, the 1990 Basic Law of Hong Kong, the 1992 United
States-Hong Kong Policy Act and other agreements provide some indication of the
business climate the Company believes will continue to exist in Hong Kong after
this change in sovereignty. Hong Kong remains a Special Administrative Region
("SAR") of China, with certain autonomies from the Chinese government. Hong
Kong is a full member of the WTO. It has separate customs territory from China,
with separate tariff rates and export control procedures. It has a separate
intellectual property registration system. The Hong Kong dollar is legal tender
in the SAR, freely convertible and not subject to foreign currency exchange
controls by China. The SAR government has sole responsibility for tax policies,
though the Chinese government must approve the SAR's budgets. Notwithstanding
the provisions of these international agreements, the continued stability of
political, legal, economic or other conditions in Hong Kong cannot be assured.
No treaty exists between Hong Kong and the United States providing for the
reciprocal enforcement of foreign judgments. Accordingly, Hong Kong courts
might not enforce judgments predicated on the federal securities laws of the
United States, whether arising from actions brought in the United States or, if
permitted, in Hong Kong.

6
<PAGE>
Generally, the Company's revenues are priced in United States dollars and its
costs and expenses are priced in United States dollars, Hong Kong dollars and
Chinese renminbi. Accordingly, the competitiveness of Company's products
relative to locally produced products may be affected by the performance of the
United States dollar compared with that of its foreign customers' currencies.
Foreign sales comprised 38 percent, 44 percent and 51 percent of revenues for
the years ended March 31, 1999, 1998, and 1997, respectively. Additionally, the
Company is exposed to foreign currency transaction and translation losses which
might result from adverse fluctuations in the values of the Hong Kong dollar and
the renminbi. At March 31, 1999, the Company had net assets of $0.2 million
subject to fluctuations in the value of the Hong Kong dollar and net assets of
$0.8 million subject to fluctuations in the value of the renminbi. Fluctuations
in the value of the Hong Kong dollar have not been significant since October 17,
1983, when the Hong Kong government pegged the value of the Hong Kong dollar to
that of the United States dollar. However, there can be no assurance that the
value of the Hong Kong dollar will continue to be tied to that of the United
States dollar. China adopted a floating currency system on January 1, 1994,
unifying the market and official rates of foreign exchange. China approved
current account convertibility of the renminbi on July 1, 1996, followed by
formal acceptance of the International Monetary Fund's Articles of Agreement on
December 1, 1996. These regulations eliminated the requirement for prior
government approval to buy foreign exchange for ordinary trade transactions,
though approval is still required to repatriate equity or debt, including
interest thereon. As a result of these actions, the net inflow of capital into
China and government steps to restrict credit for the purpose of controlling
inflation, the value of the renminbi has been fairly stable, although inflation
has persisted. However, there can be no assurance that these currencies will
remain stable or will fluctuate to the Company's benefit. To manage its
exposure to these risks, the Company may, though to date it has not, purchase
currency exchange forward contracts, currency options or other derivative
instruments, provided such instruments can be obtained at suitable prices.

HEADCOUNT
At March 31, 1999, the Company employed 392 persons, compared with 289 persons
at March 31, 1998: 96 employees in the United States (46 for 1998), 8 employees
in Hong Kong (20 for 1998) and 288 employees in China (233 for 1998). Employees
are not covered by collective bargaining agreements. The Company considers its
global labor practices and employee relations to be good.

Item 2. Properties

MSI's headquarters, United States sales office and distribution warehouse, and
certain design engineering facilities are located in a 19,000 square foot
facility in Fairfield, New Jersey, under an operating lease expiring in June
2000. The Company leases 61,000 square feet in Valley Forge, PA for the
development and manufacture of piezoelectric sensors, and sales and marketing
for the Sensors Division. The operating lease for this facility expires in
January 2001. Additional design engineering, related to the Company's
industrial pressure sensor products, is conducted in a 3,000 square foot
facility in Newport News, Virginia under an operating lease expiring in November
2001.

JL occupies a 45,000 square foot facility in Shenzhen, the Special Economic Zone
in China's Guangdong Province, under an operating lease expiring in February
2002. This location contains the Company's China facilities for production
engineering, quality assurance, and certain manufacturing operations.

ML occupies a 1,500 square foot facility in Tsimshatsui, in Hong Kong's New
Territories, under an operating lease expiring in February 2000. This location
contains the Company's Hong Kong sales office and facilities for sale and
certain manufacturing support activities.

7
<PAGE>
These premises are suitable and adequate for the Company's present operations.

Item 3. Legal Proceedings

The Company is involved in various proceedings that are incidental to the normal
course of business. The Company does not expect that any of the proceedings
will have a material adverse effect on the Company's financial position or
results of operations.

In December 1998, KIH Kommunikations Industrie Holding AG and PAT Traffic
Control Corporation (together "KIH") filed a complaint in the United States
District Court for the Eastern District of Pennsylvania naming the Company as
defendant. The claim alleged, among other things, the Company infringed certain
patents owned by KIH in the production and sale of certain traffic sensors, a
product line acquired in connection with the PiezoSensors acquisition. The
complaint requested unspecified damages as well as an injunction. The Company's
potential liability from the action is limited to shipments of traffic sensor
products after the PiezoSensors acquisition, and under the terms of the
agreement under which that acquisition was made, the Company has obtained
specific indemnification for liability as a result of such action (including
costs) in an amount which management believes is adequate. Subsequent to March
31, 1999 the parties reached an agreement in principle and the litigation
conditionally was withdrawn. The resolution of this matter did not have a
material adverse effect on the Company's financial position or results of
operations.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fiscal
quarter ended March 31, 1999.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters

The Company's common stock, no par value, is traded on the American Stock
Exchange (ticker symbol MSS). At June 9, 1999, the Company's transfer agent
reported that there were 110 record holders of common shares, excluding
beneficial owners whose shares are held in the names of various dealers and
clearing agencies. The Company does not know the number of beneficial holders
of its common shares.

High and low sales prices for the last two fiscal years were:

<TABLE>
<CAPTION>
FISCAL QUARTER ENDED HIGH LOW
- -------------------- ---- ----
<S> <C> <C>
June 30, 1997. . . . 4.75 3.63
September 30, 1997 . 4.50 3.38
December 31, 1997. . 4.50 3.69
March 31, 1998 . . . 4.00 3.25
June 30, 1998. . . . 4.25 2.94
September 30, 1998 . 3.50 2.25
December 31, 1998. . 4.38 2.75
March 31, 1999 . . . 8.00 4.25
</TABLE>

The Company has not declared cash dividends on its common equity. Management
expects that earnings which may be generated from the Company's near-term
operations will be substantially reinvested and that, accordingly, dividends may
not be paid to common shareholders in the short term. Additionally, the payment
of dividends is subject to the consent of a bank with which the Company has a
revolving credit agreement.

At present, there are no material restrictions on ML's ability to transfer funds
to MSI in the form of cash dividends, loans, advances or purchases of materials,
products or services. JL's distribution and repatriation of dividends to ML or
MSI are restricted by Chinese laws and regulations.

8
<PAGE>
Item 6. Selected Financial Data

(Amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31, 1999 1998 1997 1996 1995
- ------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . 37,596 29,278 25,004 23,060 17,039

Results of Operations
Net Income. . . . . . . . . . . . . . . . 1,729 777 1,175 987 334

Net cash provided by (used in):
Operating activities. . . . . . . . . . . 3,474 1,722 (531) 880 417
Investing activities. . . . . . . . . . . (4,993) (1,036) (757) (829) (444)
Financing activities. . . . . . . . . . . 3,927 (612) 768 5 22

Basic earnings per common share(1):
Net income. . . . . . . . . . . . . . . . 0.48 0.22 0.33 0.28 0.09

Diluted earnings per common share(1):
Net income. . . . . . . . . . . . . . . . 0.46 0.21 0.33 0.27 0.09

Cash dividends declared per common share. . NONE None None None None

AS OF MARCH 31,
- -------------------------------------------
Total assets. . . . . . . . . . . . . . . 18,535 10,217 9,234 6,920 5,623
Long term debt, net of current maturities 3,250 21 778 None None
<FN>
(1) Amounts for the years ended March 31, 1997, 1996 and 1995 have been restated to
conform to SFAS 128
(2) Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
</TABLE>

9
<PAGE>
RESULTS OF OPERATIONS

The Company operates on a Fiscal year, ending March 31. The Company's revenues
and profits increased from 1999 versus 1998, with record sales and net income
achieved for 1999. Net sales for 1999, 1998 and 1997 were $37.6 million, $29.3
million and $25.0 million, respectively. Net income for 1999, 1998 and 1997 was
$1.7 million or $0.46 per share diluted, $0.8 million or $0.21 per share
diluted, and $1.2 million or $0.33 per share diluted, respectively. Results for
1999 include the acquisition of Sensors Division of AMP Incorporated
(PiezoSensors), which was acquired on August 14, 1998. PiezoSensors is the world
leader in designing, manufacturing, and marketing piezoelectric polymer sensors
for industrial, consumer and instrumentation applications. The acquisition is
accounted for as a purchase; accordingly, the financial statements include
operations from the date of acquisition.

The Company has two reportable segments: Sensors and Consumer Products. The
Sensor segment designs, manufactures, markets and sells sensors for Original
Equipment Manufacture (OEM) applications and includes the Company's "MSP"
piezoresistive transducer and Piezoelectric product lines. The Consumer
Products segment designs, manufactures, markets, and sells sensor based consumer
products. Consumer Products include bath, kitchen, and other scales, tire
pressure gauges and distance estimators. The Consumer Products segment
primarily utilizes the same piezoresistive technology contained in the Sensors
segment MSP product line, allowing for efficiencies of development and
manufacturing.

Sales in the Consumer Products segment grew 11% in 1999 to $30.5 million
compared to $27.0 million in 1998 and $23.1 million in 1997. Bath scale sales to
U.S. direct and OEM customers increased 30% compared with 1998 after increasing
18% in 1998 versus 1997. The increase is attributable expansion of product
offering as well as strong consumer spending. Other consumer product sales
increased by 23% in 1999 versus 1998 due in part to strong promotions in food
scales and large scale distribution low priced postal scales. For 1998, other
the consumer products grew 61% as a result of growth in the Company's tire
pressure gauge. European sales were flat for 1999 versus 1998 due to the impact
of changes in the buying pattern of the Company's major German distributor, and
increased competition in the European market, offset by expansion outside of
Germany. For 1998 European sales were flat compared to 1997. The Company is
expanding its European business with other distributors, and expects sales to
increase in Fiscal 2000. It is not practicable to determine the extent to which
revenues from continuing products were affected by changes in prices or unit
volumes for these years.

The Company has two Consumer Products customers who account for more than 10% of
total net sales. Sunbeam Corp. (Health o meter), a United States manufacturer
and distributor of electric housewares, accounted for 17 percent of total net
sales for 1999 compared with 18 percent in 1998, and 16 percent in 1997. Korona
Haushaltswaren GmbH, a German distributor of diversified housewares, accounted
for 20 percent, 31 percent, and 36 percent of total net sales for 1999, 1998,
and 1997, respectively. Foreign customers accounted for approximately 38
percent, 44 percent, and 51 percent of revenues for 1999, 1998, and 1997,
respectively. Substantially all revenues are priced in United States dollars.
Accordingly, the competitiveness of Company's products relative to locally
produced products may be affected by the performance of the United States dollar
compared with that of its foreign customers' currencies, although the Company's
cost reduction programs have allowed products to be competitively priced.

Sales of the Company's Sensor segment increased 208% to $7.1 million in 1999
versus $2.3 million in 1998 and $1.9 million in 1997. The increase in sales is
a result of the August, 1998 acquisition of PiezoSensors.

Gross profit and gross profit percentage increased year-over-year for both 1998
and 1997. Gross profit was $15.1 million (40% of net sales) for 1999, $10.4
million (35% of net sales) for 1998, and $8.6 million (34% of net sales) for
1997. These changes in 1999 were affected primarily by increased volume, changes
in product mix toward higher margin Sensor products, and manufacturing cost
reductions.

Selling, general and administrative ("S,G&A") expenses increased in 1999
compared to 1998 and 1997. These expenses were $10.6 million (28% of net sales)
for 1999, $7.5 million (26% of net sales) for 1998, and $6.1 million (24% of net
sales) for 1997. In 1999, S,G&A expenses increased from 1998 due to the
PiezoSensor acquisition, increased U.S. sales which carry higher freight and
commission costs, expansion of the sales and marketing group, and investments in
infrastructure (both people and information technology related) to support the
continued growth.

10
<PAGE>
Research and development expenses, net of customer funding, were $1.8 million
(5% of net sales) for 1999, $2.0 million (7% of net sales) for 1998, and $1.7
million (7% of net sales) for 1997. Excluding customer funding, research and
development expenses were $2.9 million (8% of net sales) for 1999, $2.0 million
(7% of net sales), and $1.8 million (7% of net sales). The increase in expenses
excluding customer funding is primarily due to the PiezoSensors acquisition,
partially offset by additional design work being performed in lower cost Far
East locations. The Sensor segment receives substantial funding from customers
for development projects, amounting to $1.1 million in 1999 versus $0 in 1998
and $0.1 million in 1997. The increase in customer funding for 1999 more than
offset the additional expenses associated with the PiezoSensors acquisition and
automotive related development projects. The Company's revenue growth is likely
to continue to rely on expansion of its product lines. Accordingly, research
and development expenses will continue to be significant, although, it is
anticipated these expenses as a percentage of net sales will continue to
decline.

For 1999, the Company's effective tax rate was 25.5%, which is lower than the
Federal and state statutory rates of approximately 40% due primarily to lower
tax rates on foreign earnings. In 1998, the Company's effective tax rate was
11.6%, primarily as a result of lower tax rates on foreign earnings as well as a
$0.1 million reduction in the valuation reserve related to the alternative
minimum tax credit carryforward. The effective tax rate increased in 1999 as a
result of higher domestic earnings. For 1997, the Company reported a net tax
benefit of $0.4 million, reflecting reductions in the previously established
valuation allowance for deferred tax assets. While substantially all deferred
tax benefits at March 31, 1999 are expected to be realized, the amounts
realizable could be reduced in the near term if future taxable income is lower
than estimated or if there are differences in the timing or amount of future
reversals of taxable temporary differences.

Deferred income taxes are not provided on the Subsidiaries' undistributed
earnings, which approximated $2.0 million at March 31, 1999, because those
earnings are expected to be permanently reinvested. Distribution, in the form
of dividends or otherwise, would subject the Subsidiaries' earnings to United
States income taxes, subject to an adjustment for foreign tax credits.
Determination of the amount of unrecognized deferred United States income tax
liability is not practicable because of the complexities associated with its
hypothetical calculation. Pursuant to current Chinese tax policies, JL
qualifies for a special state corporate tax rate of 15 percent. However,
because JL has agreed to operate in China for a minimum of ten years, a full tax
holiday (which expired on March 31, 1998) was available for two years, and a 50
percent tax rate reduction to 7.5 percent is available through March 31, 2001.
After the expiration of the tax holiday, JL is expected to qualify for a
reduction of the tax rate to 10 percent, provided it exports a minimum of 70
percent of its production. The Hong Kong corporate tax rate, at which ML's
earnings are taxed, is 16.5 percent. The continuation of favorable tax rates in
China and Hong Kong cannot be assured.

The Company manufactures the substantial majority of its Sensor products, and
most its sensor subassemblies used in its consumer products, in leased premises
located in Shenzhen, China. Sensors are also manufactured at the Company's
Pennsylvania facility and small production runs are completed at its research
facility in Virginia. Additionally, control of the primary subcontractor,
certain key management, sales and support activities are conducted at leased
premises in Hong Kong. Substantially all the Company's consumer products are
assembled in China, primarily by a single supplier, River Display, Ltd. ("RDL"),
although the Company is utilizing alternative Chinese assemblers. There are no
agreements which would require the Company to make minimum payments to RDL, nor
is RDL obligated to maintain capacity available for the Company's benefit,
though the Company accounts for a significant portion of RDL's revenues.
Additionally, most of the Company's products contain key components are obtained
from a limited number of sources. These concentrations in external and foreign
sources of supply present risks of interruption for reasons beyond the Company's
control, including political and other uncertainties regarding Hong Kong and
China.

11
<PAGE>
The Chinese government continues to pursue economic reforms hospitable to
foreign investment and free enterprise, although the continuation and success of
these efforts is not assured. The Company's operations could be adversely
affected by changes in Chinese laws and regulations, including those relating to
taxation and currency exchange controls, by the imposition of economic austerity
measures intended to reduce inflation and by social and political unrest.
Revocation by the United States of China's most favored nation tariff status
could adversely affect the cost of goods imported into the United States.
Additionally, if China does not join the World Trade Organization ("WTO"), the
Company may not benefit from the lower tariffs and other privileges enjoyed by
competitors.

During the period 1997 through 1999, the Company significantly reduced the
workforce in Hong Kong and converted the operation from a manufacturing and
engineering entity to one focused on sales, marketing and control of
subcontractors. Sovereignty over Hong Kong reverted to China on July 1, 1997.
The 1984 Sino-British Joint Declaration, the 1990 Basic Law of Hong Kong, the
1992 United States-Hong Kong Policy Act and other agreements provide some
indication of the business climate the Company believes will continue to exist
in Hong Kong in the future. Hong Kong is a Special Administrative Region ("SAR")
of China, with certain autonomies relating to international trade, intellectual
and other property rights, foreign currency exchange and taxation.
Notwithstanding the provisions of these international agreements, the continued
stability of political, legal, economic or other conditions in Hong Kong cannot
be assured.

The Company's costs and expenses are priced in United States dollars, Hong Kong
dollars and Chinese renminbi. Accordingly, the Company is exposed to foreign
currency transaction and translation losses which might result from adverse
fluctuations in the values of the Hong Kong dollar and the renminbi. At March
31, 1999, the Company had net assets of $0.2 million subject to fluctuations in
the value of the Hong Kong dollar; and net assets of $0.8 million subject to
fluctuations in the value of the Chinese Renminbi. Past fluctuations in the
values of these foreign currencies have not had a material effect on the
Company's business. However, there can be no assurance that these currencies
will remain stable or will fluctuate to the Company's benefit. To manage its
exposure to these risks, the Company may, though to date it has not, purchase
currency exchange forward contracts, currency options or other derivative
instruments, provided such instruments can be obtained at suitable prices.

The Company believes that inflation has not had a material effect on its
business. The Company competes on the basis of its product designs, features
and value. Accordingly, its revenues generally have kept pace with inflation,
notwithstanding that inflation in the Subsidiaries' locations have been
consistently higher than that in the United States. The Company has ongoing
cost reduction programs, resulting in improved competitiveness and gross
margins. Increases in labor costs have not had a significant impact on the
Company's business because most of the Company's employees are in China, where
prevailing labor costs are low. Additionally, the Company believes that while
it has not experienced any significant increases in materials costs such
increases are likely to affect the entire electronics industry and, accordingly,
may not have a significant adverse effect on the Company's competitive position.

LIQUIDITY AND CAPITAL RESOURCES

The Company continues to have adequate resources for its financing requirements,
which have been concentrated in the working capital needs of its operations,
including significant research and development, and capital expenditures. For
1999, cash increased by $2.4 million, as operating activities generated $3.5
million and investing activities used $5.0 million (including $4.0 million
funding of the PiezoSensors acquisition). Financing activities, principally
borrowings under the Company's term loan and bank line of credit, net of
repayments, and proceeds from exercise of stock options, generated $3.9 million
in 1999. For 1998, cash increased by $0.1 million primarily from net income and
depreciation, offset by capital expenditures.

The Company's working capital increased by $2.3 million in 1999 reflecting the
revenue and profitability increase and PiezoSensors acquisition. Backlog
approximated $11.5 million at March 31, 1999, compared with $4.4 million a year
earlier. The dollar amount of backlog orders is not necessarily indicative of
the results that may be expected for an ensuing fiscal period. Orders for
consumer products are characterized by short lead times and, accordingly,
revenues and backlog will continue to fluctuate from period to period. As a
result of the strong backlog and incoming customer orders, the Company expects
sales to increase to $47 million for the year ended March 31, 2000, with a
substantial increase in the First Quarter ended June 30, 1999 versus the prior
year.

12
<PAGE>
Capital expenditures for 1999 continued to be driven mainly by new product
introductions and technologies as well as investments in computer hardware and
software. Production equipment was installed at MSI's engineering center in
Virginia and at JL, to expand their capabilities for development and production
of industrial pressure transducers and consumer product subassemblies. JL also
further improved its leased facility. The growth of consumer product line
extensions resulted in additional spending, by ML, on new product tooling for
use by subcontractors. MSI and JL purchased computer hardware and software to
improve engineering and office productivity. The Company expects such capital
spending to continue, in line with expansions of its product lines and staff
size. Additionally, the future success of the Company's Sensor segment could
necessitate significantly larger expenditures for production equipment. There
were no material commitments for capital expenditures at March 31, 1999.

During the year, the Company financed its requirements, excluding the
PiezoSensors acquisition, with internally generated cash, accounts payable and
bank borrowings. RDL, the Company's principal supplier, assembles substantially
all the Company's consumer products. While the Company furnishes RDL with the
proprietary subassemblies required in its products, RDL purchases many other
components from third parties on the Company's behalf, reducing the Company's
need to finance certain raw materials through their conversion to finished
inventories. RDL is not required to maintain capacity available for the
Company's benefit, nor is the Company obligated to make minimum payments to RDL.

In August, 1998 the Company renegotiated its bank line of credit. The new
agreement increased the maximum amount available from $3.3 million to $5.0
million until October 30, 1999 and $4.0 million thereafter until the agreement's
expiration on September 30, 2000. Borrowings bear interest at a maximum of the
lesser of the bank's prime rate plus 1.25% or the Eurodollar rate plus 2.75% (8%
as of March 31, 1999). As a result of achieving certain financial ratios in
1999, the rate decreases to the lesser of the bank's prime rate plus 0.125% or a
Eurodollar rate plus 2.0% (7.25% as of March 31, 1999). The agreement requires
annual payment of a commitment fee of 0.25 percent of the unutilized available
balance. Borrowings are limited to the sum of eligible Accounts Receivable and
Inventory and are collateralized by a senior security interest in substantially
all the Company's assets. Additionally, the Company is required to maintain
minimum levels of certain profitability ratios, limit its capital expenditures,
and advances to subsidiaries and requires the bank's consent for the payment of
dividends, acquisitions or divestitures. At March 31, 1999 $0 was outstanding
under the bank line of credit.

In connection with the acquisition of PiezoSensors, the Company entered into a
$4.0 million term loan agreement with the Company's principal bank. As of March
31, 1999 $3,800 was outstanding under the term loan. The term loan bears
interest at the Eurodollar rate plus 3.0% (8.25% as of March 31, 1999). The
term loan requires quarterly repayments in the following remaining annual
amounts:

<TABLE>
<CAPTION>
Fiscal Year Principal Repayments

Additional principal payments are required if the Company's cashflow exceeds
certain levels and security for the loan falls below the sum of the outstanding
term loan and the total bank line of credit. The term loan is collateralized by
a senior security interest in substantially all the Company's assets.
Additionally, the Company is required to maintain minimum levels of certain
profitability ratios, limit its capital expenditures, and advances to
subsidiaries, and requires the bank's consent for the payment of dividends,
acquisitions or divestitures

13
<PAGE>
As a hedge of its interest rate risk associated with the term loan, the Company
has entered a Rate Swap Transaction (Swap) with the same bank through August 1,
2002. Additional payments required pursuant to the Swap for 1999 were not
material. The swap has an initial notional amount of $3.5 million with a fixed
rate of 8.32%. The amortization of the Swap is as follows:

<TABLE>
<CAPTION>
Fiscal Year Annual Amortization
<S> <C>
2000 900
2001 700
2002 900
2003 1,000
</TABLE>

The carrying amount of both outstanding indebtedness and the Swap approximate
their fair value because, in the opinion of management, the borrowing rates
approximate market.

From time to time, export letters of credit received from foreign customers are
discounted, with recourse, with ML's banks in Hong Kong. At March 31, 1999, ML
was not contingently liable for any discounted letters of credit pending
collection by the banks.

Significant expansion of the Company's operations may require additional
resources. It is the Company's intention to enhance its internal growth with
strategic acquisitions. The Company believes that suitable resources for
expansion of its working capital requirements would be available, though no
assurance can be given. Additional acquisitions most likely will require other
forms of financing.

In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments." The statement, which is effective for financial years beginning
after June 15, 1999. SFAS 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities. SFAS 133 requires that
an entity recognize all derivatives as either assets or liabilities and measure
those instruments at fair market value. Under certain circumstances, a portion
of the derivative's gain or loss is initially reported as a component of income
when the transaction affects earnings. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. The Company believes that adoption of SFAS 133 will not have a material
impact on its financial position or results of operations.

THE YEAR 2000 ISSUE

The Year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. If uncorrected, this could result in a
major system failure or miscalculations.

14
<PAGE>
The Company's significant business computer systems have been upgraded, tested
and are believed to be compliant. The cost of these upgrades was not material.
Communications with suppliers and customers that interface with the Company's
business systems will continue throughout 1999 to try to assure there is not a
significant impact on the Company's operations. Based upon communications with
customers, and review of publically available information, the Company believes
its major suppliers and customers have either substantially achieved or have
active programs to achieve Year 2000 compliance.

None of the Company's products have date-sensitive software or embedded chips
and accordingly the Year 2000 issue is not applicable to products we sell.

The Company believes that it has an effective program to resolve the Year 2000
issue in a timely manner. Because of the range of possible issues and the large
number of variables involved, it is impossible to quantify the potential cost of
problems should the Company or its trading partners fail to complete all Year
2000 plans and become completely Year 2000 compliant. The current assessment is
that such costs and failure of compliance efforts would not have a material
adverse effect. The Company believes that the most likely risks of serious Year
2000 business disruption are external in nature, including disruption of utility
and transportation services, customers' non-compliance, and disruptions in the
general economy.

Because the Company expects to be compliant for all business-critical systems,
no contingency plans have been established at this time. The Company will
reevaluate its readiness throughout calendar 1999 and determine what, if any,
contingency plans are required at that time.

FORWARD-LOOKING STATEMENTS

Any statements in this report, which discuss the Company's expectations,
intentions and strategies for the future, are "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933 as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking
statements may be identified by such words or phrases as "will likely result",
"are expected to", "will continue", "is anticipated", "estimated", "project" or
similar expressions. These statements are based on information available to the
Company on the date of this report and the Company assumes no obligation to
update them. Several factors could cause future results to differ materially
from those expressed in any forward looking statements in this report including,
but not limited to:
- - timely development, market acceptance and warranty performance of new
products
- - impact of competitive products and pricing
- - continuity of bookings trends
- - customers' financial condition
- - continuity of sales to major customers
- - interruptions of suppliers' operations affecting availability of component
materials at reasonable prices
- - potential emergence of rival technologies
- - success in identifying, financing, and integrating acquisition candidates
- - fluctuations in foreign currency exchange rates
- - ability of material suppliers or key customers of the Company to reduce or
eliminate risks to their businesses or operations arising from the year
2000 issue
- - uncertainties of doing business in China and Hong Kong
- - such additional risks and uncertainties as are detailed from time to time
in the Company's reports and filings with the Securities and Exchange
Commission (the "SEC").
Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to a certain level of foreign currency exchange risk and
interest rate risk, its exposure to commodity price risk is not material.

15
<PAGE>
FOREIGN CURRENCY RISK
Generally, the Company's revenues are priced in United States dollars and its
costs and expenses are priced in United States dollars, Hong Kong dollars and
Chinese renminbi. Accordingly, the competitiveness of Company's products
relative to locally produced products may be affected by the performance of the
United States dollar compared with that of its foreign customers' currencies.
Foreign sales comprised 38 percent, 44 percent and 51 percent of revenues for
the years ended March 31, 1999, 1998, and 1997, respectively. Additionally, the
Company is exposed to foreign currency transaction and translation losses which
might result from adverse fluctuations in the values of the Hong Kong dollar and
the renminbi. At March 31, 1999, the Company had net assets of $0.2 million
subject to fluctuations in the value of the Hong Kong dollar and net assets of
$0.8 million subject to fluctuations in the value of the renminbi. Fluctuations
in the value of the Hong Kong dollar have not been significant since October 17,
1983, when the Hong Kong government pegged the value of the Hong Kong dollar to
that of the United States dollar. However, there can be no assurance that the
value of the Hong Kong dollar will continue to be tied to that of the United
States dollar. China adopted a floating currency system on January 1, 1994,
unifying the market and official rates of foreign exchange. China approved
current account convertibility of the renminbi on July 1, 1996, followed by
formal acceptance of the International Monetary Fund's Articles of Agreement on
December 1, 1996. These regulations eliminated the requirement for prior
government approval to buy foreign exchange for ordinary trade transactions,
though approval is still required to repatriate equity or debt, including
interest thereon. As a result of these actions, the net inflow of capital into
China and government steps to restrict credit for the purpose of controlling
inflation, the value of the renminbi has been fairly stable, although inflation
has persisted. However, there can be no assurance that these currencies will
remain stable or will fluctuate to the Company's benefit. To manage its
exposure to these risks, the Company may, though to date it has not, purchase
currency exchange forward contracts, currency options or other derivative
instruments, provided such instruments can be obtained at suitable prices.

INTEREST RATE RISK
As described under the caption "Liquidity and Capital Resources" in Item 7
hereof, the Company has entered into a US $4.0 million term loan, which bears
interest at the Eurodollar rate plus 3.0% (8.25% as of March 31, 1999).

Such term loan requires quarterly repayments in the following remaining annual
amounts:

<TABLE>
<CAPTION>
Fiscal Year Principal Repayments
<S> <C>
2000 550
2001 800
2002 950
2003 1,000
500
2004
</TABLE>

As a hedge of its interest rate risk associated with the term loan, the Company
has entered a Rate Swap Transaction (Swap) with the same bank through August 1,
2002. Additional payments required pursuant to the Swap for 1999 were not
material. The swap has an initial notional amount of $3.5 million with a fixed
rate of 8.32%.

The amortization of the Swap is as follows:

<TABLE>
<CAPTION>
Fiscal Year Annual Amortization
<S> <C>
2000 900
2001 700
2002 900
2003 1,000
</TABLE>

As noted in Item 7 hereof, US $3.8 million was outstanding under this term loan
as of March 31, 1999.

16
<PAGE>
As also noted under the caption "Liquidity and Capital Resources" in Item 7
hereof, in August, 1998 the Company renegotiated its bank line of credit. The
new agreement increased the maximum amount available from $3.3 million to $5.0
million until October 30, 1999 and $4.0 million thereafter until the agreement's
expiration on September 30, 2000. Borrowings bear interest at a maximum of the
lesser of the bank's prime rate plus 1.00% or a Eurodollar rate plus 2.75% (8%
as of March 31, 1999). As a result of achieving certain financial ratios in
1999, the rate decreases to the lesser of the bank's prime rate plus 0.125% or a
Eurodollar rate plus 2.0% (7.25% as of March 31, 1999). The agreement requires
annual payment of a commitment fee equal to 0.25 percent of the unutilized
available balance. Borrowings are limited to the sum of eligible Accounts
Receivable and Inventory and are collateralized by a senior security interest in
substantially all the Company's assets. Additionally, the Company is required
to maintain minimum levels of certain profitability ratios, limits capital
expenditures and advances to subsidiaries and requires the bank's consent for
the payment of dividends, acquisitions or divestitures. At March 31, 1999 $0 was
outstanding under the bank line of credit The Company has not entered into any
interest rate risk management agreements related to such bank line of credit.

The table below provides information about the Company's derivative financial
instruments and other financial instruments that are sensitive to changes in
interest rates, including interest rate swaps and long term debt. For debt
obligations, the table presents principal cash flows and the related swaps and
long term debt. For debt obligations, the table presents principal cash flows
and the related weighted average interest rates (experienced during the year
ended March 31, 1999) by maturity date. For interest rate swaps, the table
presents notional amounts and weighted average interest rates by expected
(contractual) maturity dates.

<TABLE>
<CAPTION>
March 31, 1999
Expected Maturity Date
----------------------

2000 2001 2002 2003 2004
----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Long-term debt:
Variable Rate. . . . 550 800 950 1,000 500
Average Interest Rate 8.18% 8.18% 8.18% 8.18% 8.18%
Interest Rate Swaps:
Fixed to variable . . 900 700 900 1,000 -
Average Pay Rate . . . 8.32% 8.32% 8.32% 8.32% 8.32%
Average Receive Rate . 8.18% 8.18% 8.18% 8.18% 8.18%
</TABLE>

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data, together with the report
thereon by the Company's Independent Certified Public Accountants, are listed
below in Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.

Item 9. Changes in and disagreements with Accountants on Accounting and
Financial Disclosure

None

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required by this item is incorporated by reference from the
information under the caption "Management" contained in the Company's definitive
Proxy Statement which will be filed on or before August 13, 1999 with the
Securities and Exchange Commission in connection with Registrant's 1999 annual
meeting of stockholders.

Item 11. Executive Compensation

The information required by this item is incorporated by reference from the
information under the caption "Executive Compensation" contained in the
Company's definitive Proxy Statement which will be filed on or before August 13,
1999 with the Securities and Exchange Commission in connection with Registrant's
1999 annual meeting of stockholders.

17
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this item is incorporated by reference from the
information under the caption "Security ownership of Certain Beneficial Owners
and Management" contained in the Company's definitive Proxy Statement which will
be filed on or before August 13, 1999 with the Securities and Exchange
Commission in connection with Registrant's 1999 annual meeting of stockholders.

Item 13. Certain Relationships and Related Transactions

The information required by this item is incorporated by reference from the
information under the caption "Certain Relationships and Related Transactions"
contained in the Company's definitive Proxy Statement which will be filed on or
before August 13, 1999 with the Securities and Exchange Commission in connection
with Registrant's 1999 annual meeting of stockholders.

18
<PAGE>
PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following financial statements and schedules are filed at the end of this
report, beginning on page F-l. Other schedules are omitted because they are not
required, not applicable or the required information is shown in the
consolidated financial statements or notes thereto.

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Report of Independent Certified Public Accountants. . . . . . . . . . F-1
Consolidated Statements of Income, For the Years Ended March 31,
1999, 1998, and 1997. . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets, As of March 31, 1999 and 1998. . . . . . F-3-4
Consolidated Statements of Shareholders' Equity, For the Years Ended
March 31, 1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows, For the Years Ended March 31,
1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . F-7-18
Schedule II - Valuation and Qualifying Accounts, For the Years Ended
March 31, 1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . . S-1
</TABLE>

Exhibits

Exhibits listed below marked with an asterisk (*) are included herein. Other
listed exhibits, incorporated by reference, were previously filed with the SEC
as indicated. Other exhibits are omitted because they are not required, not
applicable or the required information is shown in the consolidated financial
statements or notes thereto.

(3)(i) Articles of incorporation

Certificate of Incorporation and Amendments thereto, incorporated by
reference to Exhibit 3(a).1 to Annual Report on Form 10-K for the year
ended March 31, 1992

Second Restated Certificate of Incorporation

(3)(ii) By-laws

Bylaws, as amended, incorporated by reference to Exhibit (3)(ii) to Annual
Report on Form 10-KSB for the year ended March 31, 1994

(4) Instruments defining the rights of security holders, including
indentures

Form of Common Stock Certificate, incorporated by reference to Exhibit 4(a)
to Registration Statement on Form S-18 (File No. 33-3530-NY)

Consulting Agreement, dated April 1, 1993, and Common Stock Purchase
Warrant, executed on or about May 26, 1993, with Sherleigh Associates,
Inc., incorporated by reference to Exhibit 10.36 to Annual Report on Form
10-KSB for the year ended March 31, 1993

Private Offering Memorandum to Accredited Investors Only, dated March 24,
1993, incorporated by reference to Exhibit (4) to Annual Report on Form
10-KSB for the year ended March 31, 1994

Revolving Loan and Security Agreement between Midlantic Bank, N.A. and
Measurement Specialties Inc., executed on or about July 17, 1995,
incorporated by reference to Exhibit 10 to Quarterly Report on Form 10-QSB
for the quarterly period ended September 30, 1995

First Amendment to Revolving Loan and Security Agreement by and between
Measurement Specialties, Inc. and PNC Bank, National Association, successor
by merger to Midlantic Bank, N.A., dated November 11, 1996

19
<PAGE>
Second Amendment to Revolving Loan and Security Agreement with PNC Bank,
N.A.

Revolving Credit, Term Loan and Security Agreement between PNC Bank, NA and
Measurement Specialties, Inc

(10) Material contracts

Addendum to Lease with CMEP I

Supply and Distribution Agreement with Korona GmbH & Company, KG

Form of Employment Agreement with Damon Germanton effective July 1, 1988,
as amended, incorporated by reference to Exhibit 10(a).2 to Annual Report
on Form 10-KSB for the year ended March 31, 1993

Restated Measurement Specialties, Inc. Stock Option Plan (1985), as amended
pursuant to Annual Meeting of Shareholders on January 31, 1990,
incorporated by reference to Exhibit 10(i).1 to Annual Report on Form 10-K
for the year ended March 31, 1992

Measurement Specialties, Inc. 1995 Stock Option Plan, incorporated by
reference to Exhibit A to Proxy Statement for Annual Meeting of
Shareholders To Be Held on October 30, 1995

Lease Agreement, executed on May 20, 1996, by and between CMI, Inc. and
Measurement Specialties, Inc., incorporated by reference to Exhibit (10) to
Annual Report on Form 10-KSB for the year ended March 31, 1996

Tenancy Agreement in respect of All Those Units A to B on the 12th Floor of
Wo Kee Hong Building Kwai Chung New Territories for a term of Two Years,
Dated the 3rd day of June, 1996, by and between Stoneycroft Estates Limited
and Measurement Limited

Building Lease by and between Beijing Qinglian Leather Group Company and
Jingliang Electronics (Shenzhen) Co., Ltd., dated January 17, 1997

First Amendment to Lease by and between Transcube Associates and
Measurement Specialties, Inc., dated February 24, 1997

Building Lease by and between Shenzhen Dongming Technology Co., Ltd. and
Jingliang Electronics (Shenzhen) Co., Ltd., as amended March 18, 1997

Asset Purchase agreement between Measurement Specialties, Inc., AMP
Incorporated, and The Whitaker Corporation

(21) Subsidiaries of the registrant: The registrant has two subsidiaries,
Measurement Limited, organized in Hong Kong, is a wholly owned subsidiary
of the Company. Jingliang Electronics (Shenzhen) Co. Ltd., is a wholly
owned subsidiary of Measurement Limited.

*(27) Financial Data Schedule

20
<PAGE>
Reports on Form 8-K

During the three months ended March 31, 1999, the Company did not file any
reports on Form 8-K.

The SEC maintains a site on the world wide web, at <http://www.sec.gov>, which
contains reports, proxy and information statements and other information
regarding registrants which file electronically with the SEC, pursuant to its
Electronic Data Gathering And Retrieval ("EDGAR") program. EDGAR filings
generally are made available within 24 hours of filing. The Company's
electronic filings may be found at
<http://www.sec.gov/cgi-bin/srch-edgar?0000778734>.

21
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

MEASUREMENT SPECIALTIES, INC.

By: s/ Joseph R. Mallon, Jr. June 21, 1999
----------------------------
Joseph R. Mallon, Jr.
Chief Executive Officer and Chairman
of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

s/ Joseph R. Mallon, Jr. June 21, 1999
- ----------------------------
Joseph R. Mallon, Jr., principal executive officer

s/ Kirk J. Dischino June 21, 1999
- ----------------------
Kirk J. Dischino, principal financial and accounting officer

A majority of the Board of Directors:

s/ Joseph R. Mallon, Jr. June 21, 1999
----------------------------
Joseph R. Mallon, Jr., Chairman

s/ John D. Arnold June 21, 1999
--------------------
John D. Arnold, Director

s/ Theodore J. Coburn June 21, 1999
------------------------
Theodore J. Coburn, Director

s/ Damon Germanton June 21, 1999
--------------------
Damon Germanton, Director

s/ Steven P. Petrucelli June 21, 1999
--------------------------
Steven P. Petrucelli, Director

s/ Dan J. Samuel June 21, 1999
-------------------
The Hon. Dan J. Samuel, Director

22
<PAGE>
REPORT OF
INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
9 Campus Drive
Parsippany, NJ 07054-4477
201-540-0250
Fax 201 292-1821

Grant Thornton
Grant Thornton LLP Accountants and Management Consultants
The U.S. Member Firm of
Grant Thornton International

Board of Directors and Shareholders
MEASUREMENT SPECIALTIES, INC

We have audited the accompanying consolidated balance sheets of Measurement
Specialties, Inc. and Subsidiaries as of March 31, 1999 and 1998, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended March 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Measurement Specialties, Inc. and Subsidiaries as of March 31, 1999 and 1998,
and the consolidated results of their operations and their consolidated cash
flows for each of the three years in the period ended March 31, 1999, in
conformity with generally accepted accounting principles.

We have also audited Schedule II for each of the three years in the period ended
March 31, 1999. In our opinion, this schedule presents fairly, in all material
respects, the information required to be set forth therein.

GRANT THORNTON LLP

Parsippany, New Jersey
May 17, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED MARCH 31,
----------------------------

<S> <C> <C> <C>
($IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998 1997
- ------------------------------------------------------- ------- -------- --------
Net sales $37,596 $29,278 $25,004
Cost of goods sold. 22,538 18,896 16,393
------- -------- --------
Gross profit 15,058 10,382 8,611
------- -------- --------
Other expenses (income):
Selling, general and administrative . . . . . . . . . 10,612 7,513 6,057
Research and development, net of customer funding of
$1,105 for 1999, $15 for 1998 and $54 for 1997 . . 1,822 1,964 1,746
Interest expense 276 80 19
Interest and other income 24 (54) (36)
------- -------- --------
12,734 9,503 7,786
------- -------- --------
Income before income taxes 2,324 879 825
Income tax provision (benefit). . . . . . . . . . . . . 595 102 (350)
------- -------- --------
Net income $ 1,729 $ 777 $ 1,175
------- -------- --------
Earnings per common share
Basic $ 0.48 $ 0.22 $ 0.33
------- -------- --------
Diluted $ 0.46 $ 0.21 $ 0.33
------- -------- --------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-2
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, MARCH 31,
($IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998
- -------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,711 $ 303
Accounts receivable, trade, net of allowance for doubtful
accounts of $326 (1999) and $363 (1998) 4,918 3,124
Inventories 4,662 3,815
Deferred income taxes 580 213
Prepaid expenses and other current assets 259 173
---------- ----------
Total current assets 13,130 7,628
---------- ----------

PROPERTY AND EQUIPMENT 6,061 3,934
Less accumulated depreciation and amortization 2,801 2,171
---------- ----------
3,260 1,763
---------- ----------
OTHER ASSETS:
Goodwill and other intangible assets, net of accumulated amortization of
$218 (1999) and $165 (1998) 1,898 155
Deferred income taxes 21 372
Other assets 226 299
---------- ----------
2,145 826
---------- ----------
$ 18,535 $ 10,217
---------- ----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3

<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
CONSOLIDATED BALANCE SHEETS

MARCH 31, MARCH 31,
($IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998
- ---------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt $ 550 $ -
Accounts payable 4,067 3,123
Accrued compensation 897 384
Current portion of product warranty obligations 290 261
Income taxes payable 539 63
Accrued acquisition costs 508
Accrued expenses and other current liabilities 514 462
----------- -----------
Total current liabilities 7,365 4,293
----------- -----------
OTHER LIABILITIES:
Long term debt, net of current portion 3,250 -
Borrowings under bank line of credit agreement - 21
Product warranty obligations, net of current portion 302 211
Other liabilities, including deferred income taxes 76 112
----------- -----------
3,628 344
----------- -----------
Total liabilities 10,993 4,637
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Serial preferred stock; 221,756 shares authorized; none outstanding - -
Common stock, no par; 20,000,000 shares authorized;
shares issued and outstanding 3,663,787(1999) and 3,582,287 (1998) 5,502 5,502
Additional paid-in capital 308 75
Retained earnings 1,733 4
Currency translation and other adjustments (1) (1)
----------- -----------
Total shareholders' equity 7,542 5,580
----------- -----------
$ 18,535 $ 10,217
----------- -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the years ended March 31, 1999, 1998 and 1997
-------------------------------------------------

Currency
Additional Retained translation
Common paid-in Earnings/ and other
($IN THOUSANDS EXCEPT PER SHARE AMOUNTS) stock capital (Deficit) adjustments Total
- --------------------------------------------------------- ------ ---------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C>
Balance, April 1, 1996 5,385 25 (1,948) (3) 3,459
Fair value of nonemployee common stock purchase warrants - 22 - - 22
Net income for the year ended March 31, 1997 - - 1,175 - 1,175
Currency translation adjustment - - - (13) (13)
------ ---------- ---------- ------------ ------
Balance, March 31, 1997 5,385 47 (773) (16) 4,643
50,900 common shares issued upon exercise of options 117 28 - - 145
Net income for the year ended March 31, 1998 - - 777 - 777
Currency translation adjustment - - - 15 15
------ ---------- ---------- ------------ ------
Balance, March 31, 1998 5,502 75 4 (1) 5,580
81,500 common shares issued upon exercise of options - 233 - - 233
Net income for the year ended March 31, 1999 - - 1,729 - 1,729
------ ---------- ---------- ------------ ------
BALANCE, MARCH 31, 1999 5,502 308 1,733 (1) 7,542
- --------------------------------------------------------- ------ ---------- ---------- ------------ ------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31,
----------------------------

($IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1999 1998 1997
- -------------------------------------------------------------- -------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,729 $ 777 $ 1,175
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and Amortization 1,118 594 415
Provision for doubtful accounts 199 314 70
Provision for warranty 403 549 497
Deferred income taxes (56) (17) (343)
Other adjustments (5) 31
Net changes in operating assets and liabilities:
Accounts receivable, trade (1,193) (626) (864)
Inventories 275 (139) (1,175)
Prepaid expenses and other current assets 9 66 (74)
Other assets 73 (70) (98)
Accounts payable, trade 831 803 1,286
Severance benefit payable to former officer - - (195)
Accrued expenses and other liabilities 86 (524) (1,256)
-------- --------- --------
Net cash provided by (used in) operating activities 3,474 1,722 (531)
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (898) (908) (659)
Purchases of intangible assets (110) (128) (98)
Acquisition of business, net of cash acquired (3,985) - -
-------- --------- --------
Net cash used in investing activities (4,993) (1,036) (757)
-------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under bank line of credit agreement 6,015 12,669 6,026
Repayments under bank line of credit agreement (6,036) (13,426) (5,248)
Proceeds from long term debt 4,000 - -
Repayments of long term debt (200) - -
Payment of deferred financing costs (85) - (10)
Proceeds from exercise of options and warrants 233 145 -
-------- --------- --------
Net cash provided by (used in) financing activities 3,927 (612) 768
-------- --------- --------
Effect of exchange rate changes on cash and cash equivalents - (10) (12)
-------- --------- --------

Net change in cash and cash equivalents 2,408 64 (532)
Cash and cash equivalents, beginning of year 303 239 771
-------- --------- --------

Cash and cash equivalents, end of year 2,711 303 239
-------- --------- --------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6

<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
MARCH 31, 1999

COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------- ---------- -------------------------- ------------- ----------
DESCRIPTION BALANCE AT ADDITIONS DEDUCTIONS -- BALANCE AT
BEGINNING DESCRIBE END
OF PERIOD OF PERIOD
----------- -------------
(1) (2)
CHARGED TO CHARGED TO
COSTS AND OTHER
EXPENSES ACCOUNTS --
DESCRIBE
<S> <C> <C> <C> <C> <C>

Year ended March 31, 1999
- ----------------------------------------
Deducted from asset accounts:
Allowance for doubtful accounts $ 363 $ 199 $ 236 (a) $ 326
Write-downs of inventories 385 439 288 (b) 536
---------- ----------- ------------- ----------
Totals $ 748 $ 638 $ 524 $ 862
========== =========== ============= ==========

Product warranty obligations $ 472 $ 403 $ 204(d) $ 487 (c) $ 592
========== =========== ============= ============= ==========

Year ended March 31, 1998:
- ----------------------------------------
Deducted from asset accounts:

Allowance for doubtful accounts $ 44 $ 314 $ (5)(a) $ 363
Write-downs of inventories 236 430 281 (b) 385
---------- ----------- ------------- ----------
Totals $ 280 $ 744 $ 276 $ 748
========== =========== ============= ==========

Product warranty obligations $ 496 $ 549 $ 573 (c) $ 472
========== =========== ============= ==========

Year ended March 31, 1997:
- ----------------------------------------
Deducted from asset accounts:
Allowance for doubtful accounts $ 38 $ 70 $ 64 (a) $ 44
Write-downs of inventories 324 131 219 (b) 236
---------- ----------- ------------- ----------
Totals $ 362 $ 201 $ 283 $ 280
========== =========== ============= ==========
Product warranty obligations $ 498 $ 497 $ 499 (c) $ 496
========== =========== ============= ==========

(a) Bad debts written-off, net of
recoveries
(b) Cost of inventories scrapped
(c) Cost of warranty claims
(d) Acquired through Sensor acquisition
</TABLE>

S-1

<PAGE>
Measurement Specialties, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999

(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:

Description of business:

Measurement Specialties, Inc. ("MSI" or "the "Company") designs, develops,
pro-duces, and sells electronic sensors and sensor-based consumer products. The
Company's products include sensors for high volume industrial applications,
body-weight, kitchen, and postal scales, electronic tire pressure gauges, and
distance estimators.

Principles of consolidation:

The consolidated financial statements include the accounts of MSI and its wholly
owned subsidiaries (the "Subsidiaries") -Measurement Limited, organized in Hong
Kong on August 8, 1986 ("ML"), and Jingliang Electronics (Shenzhen) Co. Ltd.,
organized in the People's Republic of China ("China") on January 12, 1995 ("JL")
collectively, referred to as the "Company." As discussed in Note 2, on August
14, 1998, the Company acquired certain assets and assumed certain liabilities of
the Sensors Division of AMP Incorporated (PiezoSensors). Significant
intercompany balances and transactions have been eliminated.

Use of estimates:

The preparation of the consolidated financial statements in con-formity with
generally accepted accounting principles requires management to make estimates
and assumptions which affect the reported amounts of assets and liabilities and
the disclosure of the contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash equivalents:

The Company considers highly liquid investments with maturities of up to three
months, when purchased, to be cash equivalents.

Inventories:

Inventories are stated at the lower of cost (first-in, first-out) or market.

Property and equipment:

Property and equipment are stated at cost. Assets acquired in connection with
purchase business combinations are stated at fair market value. Depreciation is
computed by the straight-line method over the estimated useful lives of the
assets, generally three to ten years. Leasehold improvements are amortized over
the shorter of the lease terms or the estimated useful lives of the assets.

Income taxes:

The Company follows Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes." Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.

Foreign currency translation and transactions:

The functional currency of the Company's foreign operations is the applicable
local currency. The Subsidiaries' assets and liabilities are translated into
United States dollars using exchange rates in effect at the balance sheet date
and their oper-ations are translated using weighted average exchange rates
during the period. The resulting translation adjustments are recorded as other
comprehensive income. Foreign currency transaction gains and losses are
included in operations.

F - 7
<PAGE>
Measurement Specialties, Inc.

Intangible assets:

Goodwill representing the excess of the cost over the net tangible and
identifiable intangible assets of the acquired business is amortized on a
straight-line basis over 15 years. Other intangible assets are amortized over a
period of 3 to 5 years.

Whenever events or circumstances indicate that the carrying amount of an asset
may not be recoverable, management assesses the recoverability of the asset. It
is possible that the actual cash flows that result will be insufficient to
recover the carrying amount of certain of these intangibles. No impairment loss
was required for 1999 and 1998.

Revenue recognition:

Revenue is recorded when products are shipped and the Company provides for
allowance for returns based upon historical and estimated return rates.

Research and development:

Research and development expenditures are expensed as incurred. Customer funding
is recognized as earned.

Advertising:

Advertising expenditures of $236, $311, and $250 in 1999, 1998 and 1997
respectively are expensed as incurred.

Comprehensive Income:

On April 1, 1998, the Company implemented Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." Comprehensive
income consists of net earnings or loss for the current period and other
comprehensive income (income, expenses, gains, and losses that currently bypass
the income statement and are reported directly as a separate component of
equity). Comprehensive income does not differ materially from net earnings for
the Company.

Stock based compensation:

The Company has elected to follow Accounting Principles Board Opinion No. 25
(APB 25), "Accounting for Stock Issued to Employees" and related interpretations
in accounting for its employee stock options. Under APB 25, because the
exercise price of the employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recorded. The
Company has adopted the disclosures only provisions of Statement of Financial
Accounting Standards No. 123 (SFAS 123), "Accounting for Stock Based
Compensation."

Deriative Financial Instruments

The Company uses deriative financial instruments to manage interest rate risk
and are for purposes other than trading. It has purchased an interest rate swap
which is intended as a hedge of interest rate risk against specifically
identified variable rate debt. The differentials to be received or paid are
recognized over the life of the contract as an adjustment to interest expense.
See Note 5 for further discussion.

Recent Accounting Pronouncements:

In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments." The statement is effective for financial years beginning after
June 15, 1999. SFAS 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities and measure
those instruments at fair market value. Under certain circumstances, a portion
of the derivative's gain or loss is initially reported as a component of income
when the transaction affects earnings. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. The Company utilizes an interest rate swap as a hedge of its interest
rate risk associated with long term debt. The Company believes that adoption of
SFAS 133 will have no material impact on its financial position or results of
operations.

F - 8
<PAGE>
Measurement Specialties, Inc.

Reclassifications:

Certain reclassifications have been made to prior year financial statements to
conform to current presentation.

2. ACQUISITION:

On August 14, 1998, the Company acquired certain assets and assumed certain
liabilities of the Sensors Division of AMP Incorporated (PiezoSensors).
PiezoSensors designs, manufactures and markets piezoelectric polymer sensors for
industrial, consumer and instrumentation applications. The acquisition is being
accounted for as a purchase, and accordingly, the financial statements include
operations from the date of acquisition. The aggregate purchase price was
$3,985. The excess purchase price over assets acquired (goodwill) of $1,693 is
being amortized over 15 years. The transaction was financed with a term loan
issued by the Company's principal bank. Net assets acquired were $2,292
consisting of the fair value of assets acquired ($3,545) less liabilities
assumed ($1,253).

The following unaudited pro forma consolidated results of operations for the
years ended March 31 assume the PiezoSensors acquisition had occurred as of
April 1, 1997, giving effect to purchase accounting adjustments. The proforma
data is for informational purposes only and may not necessarily reflect results
of operations had Sensors been operated as part of the Company since April 1,
1997.

<TABLE>
<CAPTION>
1999 1998
------- --------
<S> <C> <C>
Net Sales . . . . . . . . . . . . $40,018 $36,824
Net Income (loss) . . . . . . . . 608 (2,207)
Earnings (loss) per common share
Basic . . . . . . . . . . . . $ 0.17 $ (0.62)
Diluted . . . . . . . . . . . $ 0.16 $ (0.62)
</TABLE>

3. INVENTORIES:

Inventories are summarized as follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Raw materials . $1,378 $ 731
Work in process 420 475
Finished goods. 2,864 2,609
$4,662 $3,815
</TABLE>

4. PROPERTY AND EQUIPMENT:

Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Production machinery and equipment $2,528 $1,409
Tooling costs. . . . . . . . . . . 954 1,244
Furniture and equipment. . . . . . 1,179 919
Leasehold improvements . . . . . . 1,400 362
$6,061 $3,934
</TABLE>

Depreciation expense was $973, $530, and $344 for 1999, 1998, and 1997
respectively.

F - 9
<PAGE>
Measurement Specialties, Inc.

5. LONG - TERM DEBT:

In August, 1998 the Company renegotiated it bank line of credit. The new
agreement increased the maximum amount available from $3,300 to $5,000 until
October 30, 1999 and $4,000 thereafter until the agreement's expiration on
September 30, 2000. Borrowings bear interest at a maximum of the lesser of the
bank's prime rate plus 1.00% or the Eurodollar rate plus 2.75% (8% as of March
31, 1999). As a result of achieving certain financial ratios in 1999, the rate
decreases to the lesser of the bank's prime rate plus 0.125% or a Eurodollar
rate plus 2.0% (7.25% as of March 31, 1999). The agreement requires annual
payment of a commitment fee equal to 0.25 percent of the unutilized available
balance. Borrowings are limited to the sum of eligible Accounts Receivable and
Inventory and are collateralized by a senior security interest in substantially
all the Company's assets. Additionally, the Company is required to maintain
minimum levels of certain profitability ratios, limits capital expenditures and
advances to subsidiaries and requires the bank's consent for the payment of
dividends, acquisitions or divestitures. At March 31, 1999 $0 was outstanding
under the bank line of credit.

In connection with the acquisition of Sensors, the Company entered into a $4,000
term loan agreement with the Company's principal bank. As of March 31, 1999
$3,800 was outstanding under the term loan. The term loan bears interest at a
Eurodollar rate plus 3.0% (8.25% as of March 31, 1999). In connection with the
term loan, the Company granted to the company's principal bank, 10,000 warrants
to purchase 10,000 shares of common stock at $3.00 per share which was the fair
market value on the date of the loan. The term loan requires quarterly
repayments in the following remaining annual amounts:

Principal
Fiscal Year Repayments
----------- ----------
2000 550
2001 800
2002 950
2003 1,000
2004 500

Additional principal payments are required if the Company's cashflow exceeds
certain levels and security for the loan falls below the sum of the outstanding
term loan and the total bank line of credit. The term loan is collateralized by
a senior security interest in substantially all the Company's assets.
Additionally, the Company is required to maintain minimum levels of certain
profitability ratios, limits capital expenditures and advances to subsidiaries
and requires the bank's consent for the payment of dividends, acquisitions or
divestitures

As a hedge of its interest rate risk associated with the term loan, the Company
has entered a Rate Swap Transaction (Swap) with the same bank through August 1,
2002. Additional payments required pursuant to the Swap for 1999 were not
material. The Swap has an initial notional amount of $3,500 with a fixed rate
of 8.32%. The amortization of the Swap is as follows:

Fiscal Year Annual
Fiscal Year Amortization
----------- ------------
2000 900
2001 700
2002 900
2003 1,000

The carrying amount of both outstanding indebtedness and the Swap approximate
their fair value because, in the opinion of management, the borrowing rates
approximate market.

F - 10
<PAGE>
Measurement Specialties, Inc.

6. SHAREHOLDERS' EQUITY:

The Company is authorized to issue 21,200,000 shares of capital stock, of which
221,756 shares have been designated as serial preferred stock and 20,000,000
shares have been designated as common stock. The Board of Directors (the
"Board") has not designated 978,244 authorized shares.
JL is subject to certain Chinese government regulations, includ-ing currency
exchange controls, which limit cash dividends and loans to ML and MSI. At March
31, 1999, JL's restricted net assets approximated $1,591.

7. COMMON STOCK PURCHASE WARRANTS:

<TABLE>
<CAPTION>
Average price
per share
------------------
Number Exercise Market
of shares
---------- --------- -------
<S> <C> <C> <C>
Outstanding at March 31, 1996 322,500 $ 4.97 $ 4.00
Expired . . . . . . . . . (119,500) 6.63 N/A
Outstanding at March 31, 1997 203,000 4.00 3.69
----------
Expired . . . . . . . . . (203,000) 4.00 3.69
Outstanding at March 31, 1998 - - -
==========
</TABLE>

As of March 31, 1999 none of the above common stock purchase warrants were
outstanding.

8. STOCK OPTION PLANS:

Options to purchase up to 914,100 common shares may be granted under MSI's 1995
Stock Option Plan and its predecessor plan (together the "1995 Plan"), until its
expiration on September 8, 2005. Shares issuable under 1995 Plan grants which
expire or other-wise terminate without being exercised become available for
later issuance. The aggregate numbers of shares available for grants of options
under the plans were 0 at March 31, 1999, 65,500 at March 31, 1998, and 196,000
at March 31, 1997. As of March 31, 1999 there were 762,600 options outstanding.

On October 19, 1998 the Board of Directors approved, subject to shareholder
approval prior to October 19, 1999 the 1998 Stock Option Plan (the "1998 Plan").
The plan provides for granting of options to purchase up to 750,000 common
shares until its expiration on October 19, 2008. Shares issuable under 1998
Plan grants which expire or otherwise terminate without being exercised become
available for later issuance. The aggregate numbers of shares available for
grants of options under the 1998 Plan were 683,500 and 66,500 were outstanding
at March 31, 1999.

Options under all Plans generally vest over service periods of up to five years,
and expire no later-than ten years from the date of grant. Options may, but need
not, qualify as "incentive stock options" under section 422 of the Internal
Revenue Code. Tax benefits are recog-nized upon nonqualified exercises and
disqualifying dispositions of shares acquired by qualified exercises. There were
no changes in the exercise prices of outstanding options, through cancella-tion
and reissuance or otherwise, for 1999, 1998, or 1997.

F - 11
<PAGE>
Measurement Specialties, Inc.

A summary of the status of stock options as of March 31, 1999, 1998, and 1997
and changes during the years ending on those dates is presented below:

<TABLE>
<CAPTION>
Number of shares Weighted average
----------------
outstanding exercisable exercise price
------------ ----------- ---------------
<S> <C> <C> <C>
March 31, 1996. . . . 749,000 338,000 $ 3.91
Granted at market 50,000 3.79
Forfeited . . . . (25,000) 3.88
March 31, 1997. . . . 774,000 495,000 3.89
------------

Granted at market 135,500 3.80
Forfeited . . . . (10,000) 4.44
Exercised . . . . (50,900) 2.30
March 31, 1998. . . . 848,600 527,100 3.97
------------

Granted at market 147,000 2.84
Forfeited . . . . (85,000) 5.10
Exercised . . . . (81,500) 2.86
------------ -----------
MARCH 31, 1999. . . . 829,100 499,266 3.76
============ ===========
</TABLE>

Summarized information about stock options outstanding at March 31, 1999
follows:

<TABLE>
<CAPTION>
Weighted average Weighted average
Number of underlying shares Exercise Exercise price remaining
=========================== ==========================
Outstanding Exercisable Price range Outstanding Exercisable contractual life
============ ============= =============== ============ ============ ================
<S> <C> <C> <C> <C> <C>
249,100 122,100 $ 2.69 - $2.75 $ 2.72 $ 2.69 4.3 years
208,000 126,000 3.30 - 3.63 3.49 3.49 4.3
322,000 211,166 3.94 - 4.88 4.51 4.51 4.2
50,000 40,000 5.00 - 5.64 5.22 5.27 3.5
- -----------
829,100 . . 499,266
=========== ============
</TABLE>

The Company accounts for transactions in which employees receive equity
instruments of the employer using the intrinsic value based method. Accordingly,
no compensation cost has been recognized for employee stock option grants. Had
the Company adopted the fair value based method for employee stock option grants
on April 1, 1996, the Company's net income for 1999, 1998, and 1997 would have
been reduced to $1,562 ($0.43 basic per share and$0.42 per share diluted), $670
($0.19 basic per share and $0.18 per share diluted), and $1,137 ($0.32 basic per
share and$0.31 per share diluted), per share diluted), respectively. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model (single grant assumption with straight-line
amortization) with the following weighted average assumptions:

<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Expected volatility 81% 58% 41%
Risk free interest. 4.7% 5.8% 6.3%
Dividend yield. . . - - -
Expected life years 5 5 5
</TABLE>

F - 12
<PAGE>
Measurement Specialties, Inc.

9. DEFINED CONTRIBUTION PLAN:

MSI has a qualified defined contribution plan under section 401 (k) of the
Internal Revenue Code. Substantially all its employees are eligible to
participate after completing three months of service. Participants may elect to
contribute a portion of their compensa-tion to the plan. MSI matches a portion
of participants' contribu-tions and, at the discretion of the Board, may make
profit sharing contributions. Matching participants' contributions cost $78 for
1999, $49 for 1998, and $39 for 1997. No profit sharing contributions were made
for 1998, 1997, or 1996.

10. MAJOR CUSTOMERS:

A United States manufacturer and distributor of electric house-wares accounted
for 17 percent, 18 percent and 16 percent of net sales for 1999, 1998, and 1997,
respectively and 9 percent and 14 percent of total accounts receivable at March
31, 1999 and 1998 respectively. A German distributor of diversified housewares
accounted for 20 percent, 31 percent, and 36 percent of net sales for 1999,
1998, and 1997, respectively, and 5 percent and 16 percent of total accounts
receivable at March 31, 1999 and 1998 respectively. Both customers are in the
Company's Consumer Products segment

11. INCOME TAXES:

Earnings (loss) before income taxes were:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ -----
<S> <C> <C> <C>
Domestic $1,117 $ (30) $ 259
Foreign. 1,207 909 566
------ ------ -----
$2,324 $ 879 $ 825
====== ====== =====
</TABLE>

The income tax provision (benefit) consisted of:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Current:
Federal . . $ 416 $ 20 $ 3
Foreign . . 214 98 (11)
State . . . 21 1 1
------ ------ ------
Total current. 651 119 (7)
------ ------ ------
Deferred
Federal . . (30) (20) (307)
Foreign . . (34) (5) 13
State . . . 8 8 (49)
------ ------ ------
Total deferred (56) (17) (343)
------ ------ ------
$ 595 $ 102 $(350)
====== ====== ======
</TABLE>

Differences between the federal statutory income tax rate and the effective tax
rates in those years were:

<TABLE>
<CAPTION>
1999 1998 1997
------ ------ -------
<S> <C> <C> <C>
Statutory tax rate . . . . . . . 34.0% 34.0% 34.0%
Reduction in valuation allowance
for deferred tax assets. . . . - (5.4) (65.3)
Lower tax on foreign earnings. . (10.0) (23.6) (15.6)
Operating loss carryforwards . . - - (8.9)
Other. . . . . . . . . . . . . . 1.5 6.6 13.3
------ ------ -------
25.5% 11.6% (42.5%)
====== ====== =======
</TABLE>

F - 13
<PAGE>
Measurement Specialties, Inc.

Income taxes for 1998 and 1997 reflect reductions in the valuation allowance for
deferred taxes of $47 and $539, respectively. These reductions, reflected in
operating results for the quarters ended March 31, 1998, and 1997, respectively,
were based on management's annual assessments of the extent to which the
benefits of federal net operating loss carryforwards and, in 1998, the amount
for alternative minimum tax credit carryforward were more likely than not to be
realized. The amounts realizable, however, could be reduced in the near term if
future taxable income is lower than estimated or if there are differences in the
timing or amount of future reversals of existing taxable temporary differences.
Income taxes for 1997 reflect federal tax benefits of $69 from the use of net
operating loss carryforwards of $204.

Deferred income taxes are not provided on the Subsidiaries' undistributed
earnings, which approximated $1,982 at March 31, 1999. Because those earnings
are expected to be per-manently reinvested, no provision for federal and state
income taxes on those earnings was provided. Upon distribution of those earnings
in the form of dividends or otherwise, the Company would be subject to United
States income taxes, subject to an adjustment for foreign tax credits.
Determination of the amount of unrecognized deferred United States income tax
liability is not practicable because of the complexities associated with its
hypothetical calculation.

Pursuant to current Chinese tax policies, JL qualifies for a special state
corporate tax rate of 15 percent. Additionally, because JL has agreed to operate
in China for a minimum of ten years, a tax holiday (which expired on March 31,
1998) was available for two years, and a 50 percent tax rate reduction to 7.5
percent (expected to expire on March 31, 2001) is available for the three years
thereafter. After the expiration of the tax holiday, JL is expected to qualify
for a reduction of the tax rate to 10 percent, provided it exports a minimum of
70 percent of its production. Furthermore, if JL's profits are reinvested in
qualified activities in China for a minimum of five years, it may obtain a
rebate of 40 percent of the taxes paid on the reinvested profits. Although JL's
undistributed earn-ings are expected to be permanently reinvested, the Company
does not intend to recognize the potential rebate until it is real-ized. The
Hong Kong corporate tax rate, at which ML's earnings are taxed, is 16.5 percent.

The estimated tax effects of temporary differences and carry-forwards were:

<TABLE>
<CAPTION>
1999 1998
----- -----
<S> <C> <C>
Deferred tax assets:
Accrued expenses and other current liabilities. . . . . $ 375 $ 122
Net operating loss carryforwards. . . . . . . . . . . . - 271
Other, net. . . . . . . . . . . . . . . . . . . . . . . 226 192
----- -----
Total deferred tax assets . . . . . . . . . . . . . . . $ 601 $ 585
===== =====

Deferred tax liabilities:
Depreciation and amortization of property and equipment $ 20 $ 61
Other, net. . . . . . . . . . . . . . . . . . . . . . . 1 0
----- -----
Total deferred tax liabilities. . . . . . . . . . . . . $ 21 $ 61
===== =====
</TABLE>

Net current deferred tax assets aggregated $580 and $213 at March 31, 1999 and
1998, respectively. Net noncurrent deferred tax assets aggregated $21 and $372
at March 31, 1999 and 1998, respectively. Noncur-rent deferred tax liabilities
aggregated $21 and $61 at March 31, 1999 and 1998, respectively.

12. PER SHARE INFORMATION:

Per share information is presented in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share," which requires presen-tation
of basic and diluted per share information. Basic per share information is
computed based on the weighted average common shares outstanding during each
period. Diluted per share information additionally considers the shares that
may be issued upon exercise or conversion of stock options, warrants, and
convertible securities less the shares that may be repurchased with the funds
received from their exercise.

F - 14
<PAGE>
Measurement Specialties, Inc.

The weighted average options to purchase common stock of 406,000 and 582,000
were outstanding as of March 31, 1998 and 1997 but were not included in the
computation of diluted earnings per share since the options exer-cise price was
greater than the average market price of the com-mon shares creating an
antidilutive effect.

The following is a reconciliation of the numerators and denomi-nators of basic
and diluted EPS computations:

<TABLE>
<CAPTION>
Income Shares Per share
(Numerator) (Denominator) amount
------------ ------------- ----------
<S> <C> <C> <C>
MARCH 31, 1999
BASIC PER SHARE INFORMATION . $ 1,729 3,601 $ 0.48
EFFECT OF DILUTIVE SECURITIES 137
------------ ------------- ----------
DILUTED PER SHARE INFORMATION $ 1,729 3,738 $ 0.46
------------ ------------- ----------

March 31, 1998
Basic per share information . $ 777 3,561 $ 0.22
Effect of dilutive securities -- 88
------------ ------------- ----------
Diluted per share information $ 777 3,649 $ 0.21
------------ ------------- ----------

March 31, 1997
Basic per share information . $ 1,175 3,532 $ 0.33
Effect of dilutive securities --- 77
------------ ------------- ----------
Diluted per share information $ 1,175 3,609 $ 0.33
------------ ------------- ----------
</TABLE>

13. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

For 1999, payments of interest expense were $249 and pay-ments of income taxes
approximated $102. For 1998, pay-ments of interest expense approximated $76 and
payments of income taxes approximated $35. For 1996, payments of interest
expense approximated $11 and payments of income taxes approximated $105.

14. COMMITMENTS AND CONTINGENCIES:

The Company leases certain property and equipment under non-cancellable
operating leases expiring on various dates through November, 2001. Rent expense,
including real estate taxes, insur-ance and maintenance expenses associated with
net operating leases, approximated $831 for 1999, $350 for 1998, and $282 for
1997. At March 31, 1999, total minimum rentals under operating leases with
initial or remaining noncancellable lease terms of more than one year were:

Year ending March 31,
- ---------------------
2000 $809
2001 525
2002 41

Consumer products generally are marketed under warranties to end users of up to
ten years. The Company provides for estimated product warranty obligations at
the time of sale, based on its warranty claims experience. This estimate is
particularly suscep-tible to changes in the near term based on introductions of
new products, product quality improvements and changes in end user behavior.

One of the Company's manufacturing processes requires the use of minute
quantities of chemicals identified by the Environmental Protection Agency as
hazardous. The Company uses its best efforts to handle, store and dispose of
these materials in a safe and environmentally sound manner, in accordance with
federal, state and local regulations.

F - 15
<PAGE>
Measurement Specialties, Inc.

The Company manufactures the substantial majority of its sensor products, and
most its sensor subassemblies used in its consumer products, in leased premises
located in Shenzhen, China. Sensors are also manufactured at the Company's
Pennsylvania facility and small production runs are completed at its research
facility in Virginia. Additionally, control of the primary subcontractor,
certain key management, sales and support activities are conducted at leased
premises in Hong Kong. Substantially all the Company's consumer products are
assembled in China, primarily by a single supplier, although the Company is
utilizing alternative Chinese assemblers. There are no agreements which would
require the Company to make minimum payments to the supplier, nor is the
supplier obligated to maintain capacity available for the Company's benefit,
though the Company accounts for a significant portion of the supplier's
revenues. Additionally, most of the Company's products contain key components
are obtained from a limited number of sources. These concentrations in external
and foreign sources of supply present risks of interruption for reasons beyond
the Company's control, including, with respect to China, political, economic and
legal uncertainties.

15. FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK OR OFF-BALANCE
SHEET RISK:

Financial instruments which potentially subject the Company to significant
concentrations of credit risk principally are cash investments and trade
accounts receivable.

The Company generally maintains its cash and cash equivalents at major financial
institutions in the United States, Hong Kong and China. Cash held in foreign
institutions amounted to $279 and $182 at March 31, 1999 and 1998, respectively.
The Company periodically evaluates the relative credit standing of financial
institutions considered in its cash investment strategy.

Accounts receivable are concentrated in United States and European distributors
and retailers of consumer products. To limit credit risk, the Company evaluates
the financial condition and trade payment experience of customers to whom credit
is extended. The Company generally does not require customers to furnish
collat-eral, though certain foreign customers furnish letters of credit.

F - 16
<PAGE>
Measurement Specialties, Inc.

16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):

<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
ENDED JUNE 30 ENDED SEPT 30 ENDED DEC 31 ENDED MARCH 31
-------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C>
YEAR ENDED MARCH 31, 1999
NET SALES. . . . . . . . 3,822 10,455 13,928 9,691
GROSS PROFIT . . . . . . 1,314 4,026 5,950 3,768
NET INCOME (LOSS). . . . (800) 837 1,260 432
EPS (LOSS) DILUTED . . . (0.22) 0.23 0.34 0.11

Year ended March 31, 1998
Net sales. . . . . . . . 6,600 7,345 9,235 6,098
Gross profit . . . . . . 2,128 2,798 3,257 2,199
Net Income (loss). . . . (55) 279 628 (75)
EPS (loss) diluted . . . (0.02) 0.08 0.17 (0.02)

Year ended March 31, 1997
Net sales. . . . . . . . 4,701 4,878 8,810 6,614
Gross profit . . . . . . 1,617 1,700 3,168 2,125
Net Income (loss). . . . (212) (160) 1,145 402
EPS (loss) diluted . . . (0.06) (0.05) 0.30 0.11
</TABLE>

17. SEGMENT INFORMATION:

The Company adopted SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information" in 1999.

The Company's reportable segments are strategic business units that offer
different products. They are managed separately because each business requires
different technology and marketing strategies. The Company has two reportable
segments: Sensors and Consumer Products. The Sensor segment designs,
manufactures, markets and sells sensors for OEM (Original Equipment Manufacture)
applications and includes the Company's "MSP" transducer and Piezoelectric
product lines. Consumer Products segment designs, manufactures, markets and
sells sensor based consumer products.

The accounting policies of the segments are substantially the same as those
described in the summary of significant accounting policies.

The Company has no material intersegment sales.

At March 31, 1999, the Subsidiaries' total assets aggregated $4,272 of which
$2,392 were in Hong Kong and $1,880 were in China. At March 31, 1998, the
Subsidiaries' total assets aggregated $4,088 of which $2,608 were in Hong Kong
and $1,480 were in China. The Company is potentially subject to the risks of
foreign currency transaction and translation losses which might result from
fluctuations in the values of the Hong Kong dollar and the Chinese renminbi. At
March 31, 1999, the Subsidiaries had net assets of $236 subject to fluctuation
in the value of the Hong Kong dollar and net assets of $811 subject to
fluctuation in the value of the Chinese renminbi. The Subsidiaries' operations
reflect intercompany transfers of costs and expenses, including interest on
intercompany trade receivables, at amounts established by the Company.

The following is information related to industry segments:

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net Sales
Consumer Products . . . . . $30,526 $27,023 $23,109
Sensors . . . . . . . . . . 7,070 2,255 1,895
-------- -------- --------
Total. . . . . . . . . . $37,596 $29,278 $25,004
-------- -------- --------

Segment Profitability
Consumer Products . . . . . $ 5,862 $ 3,187 $ 2,928
Sensors . . . . . . . . . . 437 714 335
Unallocated expenses. . . . (3,675) (2,996) (2,455)
Interest expense. . . . . . (276) (80) (19)
Other (expenses) income . . (24) 54 36
-------- -------- --------
Income before taxes. . . $ 2,324 $ 879 $ 825
-------- -------- --------

Depreciation and Amortization
Consumer Products . . . . . $ 719 $ 555 $ 388
Sensors . . . . . . . . . . 399 39 27
-------- -------- --------
Total. . . . . . . . . . $ 1,118 $ 594 $ 415
-------- -------- --------

Segment Assets
Consumer Products . . . . . $ 9,033 $ 8,652 $ 8,175
Sensors . . . . . . . . . . 6,191 676 276
Unallocated . . . . . . . . 3,311 889 783
-------- -------- --------
Total. . . . . . . . . . $18,535 $10,217 $ 9,234
-------- -------- --------

Capital expenditures
Consumer Products . . . . . $ 949 $ 1,032 $ 757
Sensors . . . . . . . . . . 121 -- --
-------- -------- --------
Total. . . . . . . . . . $ 1,070 $ 1,032 $ 757
-------- -------- --------
</TABLE>

F - 17
<PAGE>
Measurement Specialties, Inc.

The following shows information about the Company's foreign operations:

<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Revenues
Germany . . . $ 9,056 $10,556 $ 9.751
Other Europe. 3,585 1,723 2,250
Other . . . . 1,705 546 750
United States 23,250 16,453 12,253
------- ------- -------
Total. . . $37,596 $29,278 $25,004
------- ------- -------
</TABLE>

Long Lived Assets located in countries other than the United States are as
follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Hong Kong $ 543 $ 521
China . . 862 774
------ ------
Total. $1,405 $1,295
------ ------
</TABLE>

F - 18
<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 2711
<SECURITIES> 0
<RECEIVABLES> 4918
<ALLOWANCES> 0
<INVENTORY> 4662
<CURRENT-ASSETS> 13130
<PP&E> 3260
<DEPRECIATION> 0
<TOTAL-ASSETS> 18535
<CURRENT-LIABILITIES> 7365
<BONDS> 0
<COMMON> 5502
0
0
<OTHER-SE> 2040
<TOTAL-LIABILITY-AND-EQUITY> 18535
<SALES> 37596
<TOTAL-REVENUES> 37596
<CGS> 22538
<TOTAL-COSTS> 12458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 276
<INCOME-PRETAX> 2324
<INCOME-TAX> 595
<INCOME-CONTINUING> 1729
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1729
<EPS-BASIC> .48
<EPS-DILUTED> .46

</TABLE>