MEASUREMENT SPECIALTIES INC, 10-K, 2000-06-29

MEASUREMENT SPECIALTIES INC
10-K, 2000-06-29
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, 2000
----------------------------------------------------------------
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 of incorporation (I.R.S. Employer
or organization) Identification No.)

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 3,412,259 shares of common stock, no par value -
$110,900,000 at June 13, 2000.

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: 3,989,920 shares of common
stock, no par, at June 13, 2000.

DOCUMENTS INCORPORATED BY REFERENCE
Registrant's definitive Proxy Statement, which will be filed on or before August
18, 2000 with the Securities and Exchange Commission in connection with
Registrant's 2000 annual meeting of stockholders, is incorporated by reference
into Part III of this Report.

<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
FORM 10-K
INDEX
MARCH 31, 2000
<S> <C>
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . 8
-------------------------------------------------------------
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
------------------------------------------------------------------------
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . 9
------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
--------------------------------------------------------------------------
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . 18
-----------------------------------------------------------------------
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . 20
----------------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
--------------------------------------------------------------------------
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . 20
--------------------------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . 20
-----------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . 21
--------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . 21
--------------------------------------------------------------
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K . 22
----------------------------------------------------------------------------

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------
</TABLE>

Page 2
<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
- 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, IC
Sensors, Inc. (IC Sensors), 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, manufactures products of its own
design since 1986. These products employ several robust, core technologies
including micromachining (the three-dimensional sculpting of silicon),
application specific integrated circuits (ASICs), piezoelectric polymer, micro
electromechanical sensing (MEMS) which permits accurate and efficient
measurement, resolution and display of ranges of distance, motion, force,
pressure, temperature, vibration and acceleration. 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 74 percent of revenues,
comprises bath scales, kitchen and postal scales, tire pressure gauges,
parking-devices, and distance measuring devices which are sold, directly and

Page 3
<PAGE>
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 and "Park-Zone" TM brands. 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 are
one of the Company's leading products.

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 14 percent, 20 percent and 31 percent of
total net sales for the years ended March 31, 2000, 1999 and 1998, respectively,
and 9 percent and 5 percent of total accounts receivable at March 31, 2000 and
1999 respectively. Sunbeam Corp. (Health and Safety Division of Sunbeam Corp),
a United States manufacturer and distributor of electric housewares, accounted
for 20 percent, 17 percent, and 18 percent of total net sales for the years
ended March 31, 2000, 1999, and 1998, respectively, and 0 percent and 9 percent
of total accounts receivable as of March 31, 2000 and 1999 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 planned to be shipped within the next twelve months, approximated
$ 17 million at March 31, 2000 and $11 million at March 31, 1999. Substantially
all the backlog at March 31, 2000 is expected to be filled within the fiscal
year ending March 31, 2001, 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

Page 4
<PAGE>
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") 9001 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, isolated pressure transducers using its silicon strain
gauge sensors. These compact pressure transducers, which transmit measurements
to systems, feature a pressure port with an integrally machined stainless steel,
and sensing diaphragm. To meet a wide variety of customer applications, these
sensors may be produced from a single piece of stainless steel for demanding
environments, including pumps and compressors, hydraulic and pneumatic systems,
energy and water management. Welded pressure modules address lower pressure
applications such as sensors for disposable blood pressure monitors. The
Company uses its custom silicon micromachining technology to meet specific
customer requirements, including Mechanical Electrical MicroStructures (MEMS).

As part of the ongoing expansion of its sensor business, in February 2000, the
Company acquired IC Sensors, Inc (IC Sensors) from Perkin Elmer Inc. IC Sensors
designs, manufactures and markets micromachined silicon pressure sensors,
accelerometers and microstructures. IC Sensors was founded in 1982 by a core
group of leading university researchers and pioneers in commercializing
micromaching technology. IC Sensors continues to be a leader in the field.

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 the same degree of success in these
efforts. Research and development expenses, net of customer funding, aggregated
$1.7 million for 2000, $1.8 million for 1999, and $2.0 million for 1998.

Page 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 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 California and Pennsylvania facilities and small production runs are
completed at its research facility in Virginia. Additionally, control of the
Company's 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

Page 6
<PAGE>
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.

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 28 percent, 38 percent and 44 percent of revenues for
the years ended March 31, 2000, 1999, and 1998, 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, 2000, the Company had net liabilities of $ 3.2
million subject to fluctuations in the value of the Hong Kong dollar and net
assets of $2.1 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.

Personnel

At March 31, 2000, the Company employed 894 persons, compared with 392 persons
at March 31, 1999: 207 employees in the United States (96 for 1999), 11
employees in Hong Kong (8 for 1999), and 676 employees in China (288 for 1999).
Employees are not covered by collective bargaining agreements. The Company
considers its global labor practices and employee relations to be good.

Page 7
<PAGE>
ITEM 2. PROPERTIES

The Company leases all its properties under operating leases as follows:

<TABLE>
<CAPTION>
LOCATION PRIMARY USE SQ FT LEASE EXPIRATION
-------------------------------- ---------------------------- ------ ----------------
<S> <C> <C> <C>

Fairfield, NJ USA Corporate headquarters, 19,000 June, 2000
sales, and distribution
warehouse, and certain
design engineering
Valley Forge, PA USA Development and 63,000 January, 2001
manufacture of piezoelectric
sensors, and sales and
marketing for the Sensors
Division
Milpitas, CA USA IC Sensors sales, 34,000 December, 2005
development and
manufacturing
Newport News, VA USA Sensor design engineering 3,000 November, 2001
Shenzhen, PRC Sensor manufacturing, 73,000 February, 2002
product engineering, and
quality assurance
Hong Kong, SAR, PRC Sales and support 2,000 February, 2002
</TABLE>

These premises are suitable and adequate for the Company's present operations.
The Company is negotiating a new lease for the Fairfield, NJ USA location.

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.

On March 10, 2000, the Company brought suit in the United States District Court
for the Northern District of Illinois against Taylor Precision Products, L.P.
(Taylor), Kohl's Corporation, and Kohl's Department Stores, Inc. The suit
alleges, among other things, Taylor infringed two United States Patents related
to the Company's electronic scales. The action seeks injunctive relief as well
as unspecified damages. On April 10, 2000, Taylor filed a motion to dismiss and
for summary judgement. The litigation is ongoing, and the eventual outcome is
uncertain.

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, 2000.

Page 8
<PAGE>
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 13, 2000, the Company's transfer agent
reported that there were 105 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:

FISCAL QUARTER ENDED HIGH LOW

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
June 30, 1999 12.50 7.00
September 30, 1999 23.75 11.88
December 31, 1999 22.63 16.63
March 31, 2000 29.50 20.06

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.

ITEM 6. SELECTED FINANCIAL DATA

(Amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31, 2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>

Results of Operations
Sales 59,997 37,596 29,278 25,004 23,060

Page 9
<PAGE>
Net Income 5,531 1,729 777 1,175 987

Net cash provided by (used in):
Operating activities 8,129 3,474 1,722 (531) 880
Investing activities (15,999) (4,933) (1,036) (757) (829)
Financing activities 7,041 3,927 (612) 768 5

Basic earnings per common share(1): 1.45 0.48 0.22 0.33 0.28

Diluted earnings per common share(1): 1.27 0.46 0.21 0.33 0.27

Cash dividends declared per common share None None None None None

As of March 31,
Total assets 39,647 18,535 10,217 9,234 6,920
Long term debt, net of current
maturities 9,000 3,250 21 778 None
<FN>

Notes
(1) Amounts for the years ended March 31, 1998, 1997 and 1996 have been restated to
conform to SFAS 128
</TABLE>

Page 10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The Company operates on a Fiscal year, ending March 31. The Company achieved
record sales and net income for 2000. Net sales for 2000, 1999 and 1998 were
$60.0 million, $37.6 million and $29.3 million, respectively. Net income for
2000, 1999, and 1998 was $5.5 million or $1.27 per diluted share, $1.7 million
or $0.46 per diluted share, and $0.8 million or $0.21 per diluted share,
respectively. Results for 2000 include the post acquisition of IC Sensors (IC
Sensors) a leading silicon micro electro mechanical systems manufacturer (MEMS),
which was acquired on February 14, 2000 and Park-Zone product line of Exeter
Inc, which was acquired on January 5, 2000. Results for 1999 include the post
acquisition results 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. All acquisitions have
been 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 IC Sensors, and 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 45% in 2000 to $44.2 million
compared to $30.5 million 1999 and $27.0 million in 1998. Bath scale sales
to U.S. direct and OEM customers increased 42% compared with 1999 after
increasing 30% in 1999 versus 1998. The increase is attributable expansion of
product offering as well as strong consumer spending. Other consumer product
sales increased by 50% in 2000 versus 1999 due primarily to a doubling of
electronic tire pressure gauge sales. For 1999, other consumer products grew
23% as a result of growth in the Company's food scales and large scale
distribution of low priced postal scales. During 2000 European sales were
higher due to increased distribution and improved sales to the Company's German
distributor. For 1999 European sales were flat compared to 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. 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 20 percent of total net
sales for 2000 compared with 17 percent in 1999, and 18 percent in 1998. Korona
Haushaltswaren GmbH, a German distributor of diversified housewares, accounted
for 14 percent, 20 percent, and 31 percent of total net sales for 2000, 1999,
and 1998, respectively. Foreign customers accounted for approximately 28

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<PAGE>
percent, 38 percent, and 44 percent of revenues for 2000, 1999, and 1998,
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 124% to $15.8 million in 2000
versus $7.1 million in 1999 and $2.3 million in 1998. The increase in sales in
2000 is a result of the February 2000 acquisition of IC Sensors which
contributed $2,355 to 2000 sales, growth of the MSP transducer line, and the
August, 1998 acquisition of PiezoSensors.

Gross profit and gross profit percentage increased year-over-year for both 2000
and 1999. Gross profit was $26.9 million (45% of net sales) for 2000, $15.1
million (40% of net sales) for 1999, and $10.4 million (35% of net sales) for
1998. These changes in 2000 and 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 2000
compared to 1999 and 1998. These expenses were $17.6 million (29% of net sales)
for 2000, $10.6 million (28% of net sales) for 1999, and $7.5 million (26% of
net sales) for 1998. For both 2000 and 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. Additionally, fiscal 2000 S,G&A expense
includes the impact of IC Sensors.

Research and development expenses, net of customer funding, were $1.7 million
(3% of net sales) for 2000, $1.8 million (5% of net sales) for 1999, and $2.0
million (7% of net sales) for 1998. Excluding customer funding, research and
development expenses were $3.4 million (6% of net sales) for 2000, $2.9 million
(8% of net sales), and $2.0 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 $1.6 million in 2000 versus $1.1 in 1999
and $0 million in 1998. The increase in customer funding for both 2000 and 1999
more than offset the additional expenses associated with the IC Sensors and
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 2000 and 1999, the Company's effective tax rate was 24.1% and 25.5%
respectively, which is lower than the Federal and state statutory rates of
approximately 40% due primarily to lower tax rates on foreign earnings and a
higher percentage of income by the Companies foreign subsidiaries. The
effective tax rate for 1998 was 11.6% as a result of lower tax rates on foreign
earnings. While substantially all deferred tax benefits at March 31, 2000 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.

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<PAGE>
Deferred income taxes are not provided on the Subsidiaries' undistributed
earnings, which approximated $6.3 million at March 31, 2000, 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, 1999) 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 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
California and Pennsylvania facilities 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.

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")

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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, 2000, the Company had net liabilities of $3,177 subject to fluctuations in
the value of the Hong Kong dollar; and net assets of $2,171 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
2000, cash decreased by $829, as operating activities generated $8,129 and
investing activities used $15,999. Financing activities, principally
borrowings under the Company's term loan ($10 million of which was to finance
the IC Sensors acquisition)and bank line of credit, net of repayments, and
proceeds from exercise of stock options, generated $7,041 in 2000. For
1999, cash increased by $2,408 primarily from operations, excluding
depreciation, offset by capital expenditures and the PiezoSensors acquisition
costs.

The Company's working capital increased by $258 in 2000 compared to 1999.
Backlog approximated $17 million at March 31, 2000, compared with $11.5 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 $80 million for the year ended March 31,
2001, including an increase in Sales in the First Quarter ended
June 30, 2000 versus the prior year.

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Capital expenditures for 2000 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 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, 2000.

During the year, the Company financed its requirements, excluding the IC Sensors
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 February 2000, the Company renegotiated its bank line of credit. The new
agreement increased the maximum amount available from $5,000 to $10,000 until
the agreement's expiration on February 14, 2003. 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% (9.25 % as of March 31, 2000). Should the Company achieve certain
financial ratios, the lowest rate becomes the lesser of the bank's prime rate
plus 0.25% or a Eurodollar rate plus 2.0%. The agreement requires annual payment
of a commitment fee equal to 0.375 % 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, 2000 $0 was outstanding under the
bank line of credit.

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<PAGE>
In connection with the acquisition of IC Sensors, the Company repaid the then
outstanding balance of a previous term loan and entered into a $10,000 term loan
agreement with the Company's principal bank. As of March 31, 2000 $10,000 was
outstanding under the term loan. The term loan bears interest at a Eurodollar
rate plus 3.25% (10.0 % as of March 31, 2000. The term loan requires quarterly
repayments in the following remaining annual amounts:

Principal
Fiscal Year Repayments
----------- ----------
2001 $1,000
2002 1,333
2003 1,667
2004 2,000
2005 2,000
2006 2,000

Additional principal payments are required if the Company's cashflow exceeds
certain levels. 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 July 1,
2005. Additional payments required pursuant to the Swap for 2000 were not
material. The Swap has an initial notional amount of $9,000 with an effective
fixed rate of 10.19%. The amortization of the Swap is as follows:

Annual
Fiscal Year Amortization
----------- ------------
2001 $2,000
2002 1,000
2003 2,000
2004 1,000
2005 2,000
2006 1,000

The carrying amount of both outstanding indebtedness and the Swap approximate
their fair value because, in the opinion of management and the Company's
principal lending institution, 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, 2000, 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

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assurance can be given. Additional acquisitions most likely will require other
forms of financing.

NEW ACCOUNTING STANDARDS

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 as amended is effective for financial years
beginning after June 15, 2000. 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.

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

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- fluctuations in foreign currency exchange rates
- 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.

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 28 percent, 38 percent and 44 percent of revenues for
the years ended March 31, 2000, 1999, and 1998, 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, 2000, the Company had net liabilities of $3.2
million subject to fluctuations in the value of the Hong Kong dollar and net
assets of $2.1 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 $10.0 million term loan, which bears
interest at the Eurodollar rate plus 3.25% (10.0% as of March 31, 2000).

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

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<PAGE>
Principal
Fiscal Year Repayments
----------- ----------
2001 $1,000
2002 1,333
2003 1,667
2004 2,000
2005 2,000
2006 2,000

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,
2004. Additional payments required pursuant to the Swap for 2000 were not
material. The swap has an initial notional amount of $9 million with an
effective fixed rate of 10.19%.

The amortization of the Swap is as follows:

Annual
Fiscal Year Amortization
2001 $2,000
2002 1,000
2003 2,000
2004 1,000
2005 2,000
2006 1,000

As noted in Item 7 hereof, US $10 million was outstanding under this term loan
as of March 31, 2000.

As also noted under the caption "Liquidity and Capital Resources" in Item 7
hereof, in February 2000, the Company renegotiated its bank line of credit. The
new agreement increased the maximum amount available from $5,000 to $10,000
until the agreement's expiration on February 14, 2003. 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% (9.25 % as of March 31, 2000). Should the Company achieve
certain financial ratios, the lowest rate becomes the lesser of the bank's prime
rate plus 0.25% or a Eurodollar rate plus 2.0%. The agreement requires annual
payment of a commitment fee equal to 0.375% 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, 2000 $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

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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, 2000) by maturity date. For interest rate swaps, the table
presents notional amounts and weighted average interest rates by expected
(contractual) maturity dates.

March 31, 2000
----------------------------------------
Expected Maturity Date
2001 2002 2003 2004 2005 2006
----- ----- ----- ----- ----- -----
Long-term debt: 1,000 1,333 1,667 2,000 2,000 2,000
Variable Rate 10.45% 10.45% 10.43% 10.58% 10.58% 10.68%
Average interest rate 10.37% 10.47% 10.45% 10.47% 10.55% 10.66%
Interest Rate Swaps:
Fixed to variable 2,000 1,000 2,000 1,000 2,000 1,000
Average Pay Rate 10.19% 10.19% 10.19% 10.19% 10.19% 10.19%
Average Receive Rate 10.47% 10.57% 10.55% 10.57% 10.65% 10.76%

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 18, 2000 with the
Securities and Exchange Commission in connection with Registrant's 2000 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 18,
2000 with the Securities and Exchange Commission in connection with Registrant's
2000 annual meeting of stockholders.

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<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 18, 2000 with the Securities and Exchange
Commission in connection with Registrant's 2000 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 18, 2000 with the Securities and Exchange Commission in connection
with Registrant's 2000 annual meeting of stockholders.

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<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 or are not applicable
or the required information is shown in the consolidated financial statements or
notes thereto.

Pages
-----
Report of Independent Certified Public Accountants F- 1

Consolidated Statements of Income for the Years Ended March 31,
2000, 1999, and 1998 F- 2

Consolidated Balance Sheets as of March 31, 2000 and 1999
F- 3-4

Consolidated Statements of Shareholders' Equity for the Years Ended
March 31, 2000, 1999 and 1998 F- 5

Consolidated Statements of Cash Flows for the Years Ended March 31,
2000, 1999 and 1998 F- 6

Notes to Consolidated Financial Statements F- 7-21

Schedule II - Valuation and Qualifying Accounts, For the Years Ended
March 31, 2000, 1999 and 1998 S- 1

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

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<PAGE>
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

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

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<PAGE>
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 three 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. IC Sensors organized in USA is a wholly owned
subsidiary of Measurement Specialties, Inc.

*(27) Financial Data Schedule

Reports on Form 8-K

During the three months ended March 31, 2000, the Company did not file 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>.

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<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 22, 2000
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 22, 2000
Joseph R. Mallon, Jr., principal executive officer

/s/ Kirk J. Dischino June 22, 2000
Kirk J. Dischino, principal financial and accounting officer

A majority of the Board of Directors:

/s/ Joseph R. Mallon, Jr. June 22, 2000
Joseph R. Mallon, Jr., Chairman

/s/ John D. Arnold June 22, 2000
John D. Arnold, Director

/s/ Theodore J. Coburn June 22, 2000
Theodore J. Coburn, Director

/s/ Damon Germanton June 22, 2000
Damon Germanton, Director

/s/ Steven P. Petrucelli June 22, 2000
Steven P. Petrucelli, Director

/s/ Dan J. Samuel June 22, 2000
The Hon. Dan J. Samuel, Director

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<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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, 2000 and 1999, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended March 31, 2000. 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 auditing standards generally accepted
in the United States of America. 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, 2000 and 1999,
and the consolidated results of their operations and their consolidated cash
flows for each of the three years in the period ended March 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.

We have also audited Schedule II for each of the three years in the period ended
March 31, 2000. In our opinion, this schedule presents fairly, in all material
respects, the information required to be set forth therein.

GRANT THORNTON LLP

Edison, New Jersey
May 25, 2000
F-1

<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEAR ENDED MARCH 31,
----------------------------
($IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 2000 1999 1998
------------------------------------------------------- -------- ------- --------
<S> <C> <C> <C>
Net sales $59,997 $37,596 $29,278
Cost of goods sold . . . . . . . . . . . . . . . . . . 33,052 22,538 18,896
-------- ------- --------
Gross profit 26,945 15,058 10,382
-------- ------- --------
Other expenses (income):
Selling, general and administrative . . . . . . . . . 17,604 10,612 7,513
Research and development, net of customer funding of
$1,611 for 2000, $1,105 for 1999 and $15 for 1998. 1,749 1,822 1,964
Interest expense 386 276 80
Interest income and other . . . . . . . . . . . . . (82) 24 (54)
-------- ------- --------
19,657 12,734 9,503
-------- ------- --------
Income before income taxes 7,288 2,324 879
Income taxes. . . . . . . . . . . . . . . . . . . . . . 1,757 595 102
-------- ------- --------
Net income $ 5,531 $ 1,729 $ 777
======== ======= ========
Earnings per common share
Basic $ 1.45 $ 0.48 $ 0.22
======== ======= ========
Diluted $ 1.27 $ 0.46 $ 0.21
======== ======= ========
</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) 2000 1999
-------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,882 $ 2,711
Accounts receivable, trade, net of allowance for doubtful
accounts of $318 (2000) and $326 (1999) 8,181 4,918
Inventories 9,136 4,662
Deferred income taxes 1,084 580
Prepaid expenses and other current assets 647 259
---------- ----------
Total current assets 20,930 13,130
---------- ----------

PROPERTY AND EQUIPMENT 15,884 6,061
Less accumulated depreciation and amortization 6,516 2,801
---------- ----------
9,368 3,260
---------- ----------
OTHER ASSETS:
Goodwill , net of accumulated amortization of
$265 (2000) and 73 (1999) 5,553 1,620
Other intangible assets, net of accumulated amortization of
$292 (2000) and $145 (1999) 1,128 278
Deferred income taxes 2,189 21
Other assets 479 226
---------- ----------
9,349 2,145
---------- ----------
$ 39,647 $ 18,535
========== ==========
</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) 2000 1999
---------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt $ 1,000 $ 550
Accounts payable 6,827 4,067
Accrued compensation 1,654 897
Income taxes payable 621 539
Accrued acquisition costs 1,205 508
Accrued expenses and other current liabilities 3,600 804
----------- -----------
Total current liabilities 14,907 7,365
----------- -----------
OTHER LIABILITIES:
Long term debt, net of current portion 9,000 3,250
Other liabilities, including deferred income taxes 933 378
----------- -----------
9,933 3,628
----------- -----------
Total liabilities 24,840 10,993
----------- -----------
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 3,989,920(2000) and 3,663,787 (1999) 5,502 5,502
Additional paid-in capital 2,042 308
Retained earnings 7,264 1,733
Currency translation and other adjustments (1) (1)
----------- -----------
Total shareholders' equity 14,807 7,542
----------- -----------
$ 39,647 $ 18,535
=========== ===========
</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, 2000, 1999 and 1998
-------------------------------------------------
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, 1997 5,385 47 (773) (16) 4,643
Fair value of nonemployee common stock purchase warrants 117 28 - - 145
Net income - - 777 - 777
Currency translation adjustment - - - 15 15
---------- -------- ------------ ------------ ------
Balance, March 31, 1998 5,502 75 4 (1) 5,580
50,900 common shares issued upon exercise of options - 233 - - 233
Net income - - 1,729 - 1,729
Currency translation adjustment - - - - -
---------- -------- ------------ ------------ ------
Balance, March 31, 1999 5,502 308 1,733 (1) 7,542
326,133 common shares issued upon exercise of options - 1,124 - - 1,124
Tax benefit on exercise of options - 610 - - 610
Net income - - 5,531 - 5,531
---------- -------- ------------ ------------ ------
BALANCE, MARCH 31, 2000 5,502 2,042 7,264 (1) 14,807
========================================================= ========== ======== ============= ============ ======
</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) 2000 1999 1998
-------------------------------------------------------------- ---- --------- -------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,531 $ 1,729 $ 777
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and Amortization 2,083 1,118 594
Provision for doubtful accounts (8) 199 314
Provision for warranty (80) 403 549
Deferred income taxes 8 (56) (17)
Tax benefit upon exercise of stock options 610 0 0
Net changes in operating assets and liabilities
(net of effects of acquisition):
Accounts receivable, trade (1,020) (1,193) (626)
Inventories (3,417) 275 (139)
Prepaid expenses and other current assets (324) 9 66
Other assets (151) 73 (70)
Accounts payable, trade 2,760 831 798
Accrued expenses and other liabilities 2,137 86 (524)
--------- -------- ---------
Net cash provided by operating activities 8,129 3,474 1,722
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,510) (898) (908)
Purchases of intangible assets (1,121) (110) (128)
Acquisition of business, net of cash acquired (12,368) (3,985) -
--------- -------- ---------
Net cash used in investing activities (15,999) (4,993) (1,036)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under bank line of credit agreement - 6,015 12,669
Repayments under bank line of credit agreement - (6,036) (13,426)
Proceeds from long term debt 10,000 4,000 -
Repayments of long term debt (3,800) (200) -
Payment of deferred financing costs (283) (85) -
Proceeds from exercise of options and warrants 1,124 233 145
--------- -------- ---------
Net cash provided by (used in) financing activities 7,041 3,927 (612)
--------- -------- ---------
Effect of exchange rate changes on cash and cash equivalents - - (12)
--------- -------- ---------

Net change in cash and cash equivalents (829) 2,408 64
Cash and cash equivalents, beginning of year 2,711 303 239
--------- -------- ---------

Cash and cash equivalents, end of year 1,882 2,711 303
========= ======== =========
</TABLE>

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

F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000

(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. For the Consumer Products segment, revenues are
concentrated in distributors and retailers of consumer products in both United
States and Europe. For the Sensors segment, sensors are sold, directly, and
through manufacturers' representatives, principally to industrial customers for
pressure instrumentation and process control applications.

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"), and IC Sensors Inc. ("IC Sensors") acquired on February 14, 2000
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) and acquired the
stock of IC Sensors from Perkin Elmer Inc. on February 14, 2000. Results
of operations of acquired subsidiaries are included in consolidated results of
operations from their date of acquisition. 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:

F-7
<PAGE>
Property and equipment are stated at cost. 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:

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.

Tax benefits from early disposition of the stock by employees of
incentive stock options and from exercise of non-qualified stock options
are credited to additional paid-in capital.

Foreign currency translation and transactions:

The functional currency of the Company's foreign operations is the applicable
local currency. The foreign 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.

Intangible assets:

Intangible assets, consisting of patents, covenants not to compete and purchased
computer software, are being amortized on a straight-line basis over their
estimated useful lives which range from three to ten years. Goodwill, which
represents the excess of cost over the net identifiable assets of acquired
businesses is being amortized on a straight line basis over its estimated useful
lives which range from seven to fifteen years. The Company's policy is to review
all long-lived assets (including goodwill) for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable, the Company will estimate the
future cash flows expected to result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows expected to be
generated by an asset less the future cash outflows expected to be necessary to
obtain those inflows. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, the Company would recognize an impairment loss.

Revenue recognition:

Revenue is recorded when products are shipped. The Company provides for
allowances for returns and warranties based upon historical and estimated return
rates and warranty costs.

Research and development:

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

Advertising:

F-8
<PAGE>
Advertising expenditures of $123, $236, and $311 in 2000, 1999, and 1998
respectively are expensed as incurred.

Warranty Reserve

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
suscep-tible to changes in the near term based on introductions of new products,
product quality improvements and changes in end user behavior.

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 of
the Company.

Stock based compensation:

As permitted by Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock Based Compensation", the Company has elected to continue
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, when 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 presented the
additional proforma disclosures required by Statement of Financial Accounting
Standards No. 123 (SFAS 123), "Accounting for Stock Based Compensation."

Derivative Financial Instruments

The Company uses derivative 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 as amended is effective for financial years
beginning after June 15, 2000. 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-9
<PAGE>
Reclassifications:

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

2. ACQUISITIONS:

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 was
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).

On January 5, 2000 the Company acquired, for cash, certain assets comprising the
ultrasonic garage parking system business of Exeter Technologies, Inc. Pursuant
to the acquisition agreement, the Company made an initial payment of $625 and is
required to pay additional consideration based upon future sales. The
additional consideration is equal to 15% of net sales in year one, 10% in year
two and 5% in year three. No payments are to be made after year 3. The
Company has estimated this consideration to be $800. The acquisition was
accounted for under the purchase method of accounting. Net assets aquired were
$469, consisting of the fair value of the assets acquired of $625 and
liabilities assumed of $156. .Goodwill of $956 is being amortized over 7
years.

On February 14, 2000, the Company acquired IC Sensors, Inc from Perkin Elmer
Inc. (IC Sensors). IC Sensors designs, manufactures and markets micromachined
silicon pressure sensors, accelerometers and microstructures. The acquisition is
being accounted for as a purchase, and accordingly, the consolidated financial
statements include operations of IC Sensors from the date of acquisition. The
aggregate cash paid was $12,368 (including payment to Perkin Elmer of $12,000
and closing costs of $368). The excess purchase price over assets acquired
(principally goodwill) of $3,538 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 $8,830 consisting of the fair value of assets
acquired ($10,091) less liabilities assumed ($1,260).

The following unaudited pro forma consolidated results of operations for the
years ended March 31 assume the IC Sensors acquisition and the PiezoSensors
acquisition had occurred as of April 1,1998, giving effect to purchase
accounting adjustments. The proforma data is for informational purposes only
and may not necessarily reflect results of operations had IC Sensors been
operated as part of the Company since April 1, 1998. The effects of the Exeter
acquisition were not material.

2000 1999
-------- ---------
Net Sales $ 70,727 $ 66,491
Net Income (loss) 1,320 (1,515)
Earnings (loss) per
common share
BASIC $ 0.35 $ (0.41)
DILUTED $ 0.30 $ (0.41)

F-10
<PAGE>
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.

1999 1998
------- ---------
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)

In connection with the acquisition of IC Sensors Inc., the company recorded a
provision for approximately $350 relating to costs for integration of operation
Of IC Sensors, Inc with the company. As of March 31, 2000 none of the above has
been paid.

In connection with the acquisition of PiezoSensors, the company recorded an
accrual for integration of $508 of which $508 was unpaid as of March 31, 1999.
During the year ended March 31, 2000 an aggregate of $298 was paid.

3. INVENTORIES:

Inventories are summarized as follows:

2000 1999
------ -------
Raw materials $2,895 $ 1,378
Work in process 2,033 420
Finished goods 4,208 2,864
------ -------
9,136 $ 4,662
====== =======

4. PROPERTY AND EQUIPMENT:

Property and equipment are summarized as follows:

2000 1999
------- -------
Production machinery and equipment $10,684 $ 2,528
Tooling costs 994 954
Furniture and equipment 1,645 1,179
Leasehold improvements 2,561 1,400
------ -------
$ 15,884 $ 6,061
------- -------

Depreciation expense was $1,744, $973, and $530 for 2000, 1999, and 1998
respectively.

F-11
<PAGE>
5. LONG - TERM DEBT:

In February 2000, the Company renegotiated its bank line of credit. The new
agreement increased the maximum amount available from $5,000 to $10,000 until
the agreement's expiration on February 14, 2003. 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% (9.25 % as of March 31, 2000). Should the Company achieve certain
financial ratios, the lowest rate becomes the lesser of the bank's prime rate
plus 0.25% or a Eurodollar rate plus 2.0%. The agreement requires annual payment
of a commitment fee equal to 0.375% 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, 2000 $0 was outstanding under the
bank line of credit.

In connection with the acquisition of IC Sensors, the Company repaid the then
outstanding balance of a previous term loan and entered into a $10,000 term loan
agreement with the Company's principal bank. As of March 31, 2000 $10,000 was
outstanding under the term loan. The term loan bears interest at a Eurodollar
rate plus 3.25% (10.0 % as of March 31, 2000. The term loan requires quarterly
repayments in the following remaining annual amounts:

Principal
Fiscal Year Repayments
----------- ----------
2001 $1,000
2002 1,333
2003 1,667
2004 2,000
2005 2,000
2006 2,000
-------
Total $10,000
-------

Annual
Fiscal Year Amortization
----------- ------------
2001 $2,000
2002 1,000
2003 2,000
2004 1,000
2005 2,000
2006 1,000

F-12
<PAGE>
The carrying amount of both outstanding indebtedness and the Swap approximate
their fair value because, in the opinion of management and the Company's
principal lending institution, the borrowing rates approximate market.

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. Each share of common stock has one
vote. 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, 2000, JL's restricted net assets approximated $3,983.

Information on common stock purchase warrants is as follows:

Average price per
share
Number exercise market
of shares
----------------------------------
Outstanding at March 31, 1998 203,000 $4.00 $3.69
Expired -203,000 4.00 3.69
--------
Outstanding at March 31, 1999 - - -
========

As of March 31, 2000 none of the above common stock purchase warrants were
outstanding.

7. 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. All shares eligible for grant were issued prior to March 31,
1999.

Options to purchase up to 750,000 may be granted under the Company's 1998 Stock
Option Plan, (the "1998 Plan") 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 645,275 and
683,500 as of March 31, 2000 and March 31, 1999 respectively. A total of 99,725
and 66,500 were outstanding at March 31, 2000 and March 31, 1999 respectively.

F-13
<PAGE>
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 2000, 1999, or 1998.

A summary of the status of stock options as of March 31, 2000, 1999, and 1998
and changes during the years ended on those dates is presented below:

<TABLE>
<CAPTION>
Number of shares
---------------------- Weighted average
outstanding exercisable exercise price
------------ ----------- --------------
<S> <C> <C> <C>
March 31, 1997 774,000
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) 2.83
------------
March 31, 1999 829,100 499,266 3.76

Granted at market 61,225 12.55
Forfeited (26,000) 4.45
Exercised (326,133) 3.49
------------ -----------
MARCH 31, 2000 538,192 300,700 4.91
============ ===========
</TABLE>

Summarized information about stock options outstanding at March 31, 2000
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>
227,000 103,400 $ 2.75 - $3.50 $ 3.10 $ 3.31 5.27 years
80,467 50,800 3.63 - 4.75 4.24 4.30 4.11
144,000 120,000 4.88 - 4.88 4.88 4.88 2.74
86,725 26,500 5.00 - 19.00 10.30 5.40 5.02
----------- -----------
538,192 300,700
=========== ===========
</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, 1997, the Company's net income for 2000, 1999, and 1998 would have
been reduced to $5,257 ($1.38 per basic share and $1.21 per diluted share ,
$1,562 ($0.43 per basic share and $0.42 per diluted share ), and $670 ($0.19
per basic share and $0.18 per diluted share). 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:

F-14
<PAGE>
2000 1999 1998
---- ----- -----
Expected volatility 63% 81% 58%
Risk free interest 5.9 % 4.7% 5.8%
Dividend yield - - -
Expected life years 5 5 5

8. 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 $164 for
2000, $78 for 1999, and $49 for 1998. No profit sharing contributions were made
for 2000, 1999 or 1998.

9. MAJOR CUSTOMERS:

A United States manufacturer and distributor of electric house-wares accounted
for 20 percent 17 percent, and 18 percent of net sales for 2000, 1999, and 1998,
respectively and 0 percent and 9 percent of total accounts receivable at March
31, 2000 and 1999 respectively. A German distributor of diversified housewares
accounted for 14 percent, 20 percent, 31 percent of net sales for 2000, 1999,
and 1998, respectively, and 9 percent and 5 percent of total accounts receivable
at March 31, 2000 and 1999 respectively. Both customers are in the Company's
Consumer Products segment

10. INCOME TAXES:

Earnings (loss) before income taxes were:

2000 1999 1998
------- ------- -------
Domestic $ 2,384 $ 1,117 $ (30)
Foreign 4,903 1,207 909
------- ------- -------
$ 7,287 $2,324 $ 879
======= ====== =======

The income tax provision (benefit) consisted of:

2000 1999 1998
------- -------- -------
Current:
Federal $ 939 $ 416 $ 20
Foreign 670 214 98
State 140 21 1
------- -------- -------
Total current 1,749 651 119
------- -------- -------
Deferred
Federal 55 (30) (20)
Foreign (47) (34) (5)
State 0 8 8
------- -------- -------
Total deferred 8 (56) (17)
------- -------- -------
$ 1,757 $ 595 $ 102
======= ======== ======

F-15
<PAGE>
Differences between the federal statutory income tax rate and the effective tax
rate are as follows:

2000 1999 1998
-------- ------- ---------
Statutory tax rate 34.0 % 34.0 % 34.0 %
Reduction in valuation - - (5.4)
allowance for deferred tax
assets
Effect of foreign taxes (14.3) (10.0) (23.6)
State taxes and other 4.4 1.5 6.6
-------- -------- ---------
24.1 % 25.5 % (11.6 %)
======== ======== =========

Income taxes for 1998 reflect reductions in the valuation allowance for deferred
taxes of $47. This reduction, reflected in operating results for the quarter
ended March 31, 1998, was based on management's annual assessments of the extent
to which the benefit of an alternative minimum tax credit carryforward was more
likely than not to be realized.

Deferred income taxes are not provided on the foreign Subsidiaries'
undistributed earnings, which approximated $6,262 at March 31, 2000. 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 realized. The
Hong Kong corporate tax rate, at which ML's earnings are taxed, is 16 percent.

<TABLE>
<CAPTION>
As of March 31,
2000 1999
------- ------
<S> <C> <C>
Current deferred tax assets (liabilities)
Accrued expenses $ 343 $ 335
Inventory 588 112
Accounts receivable allowance 129 121
Other 24 12
------- ------
Total $1,084 $ 580
------- ------

F-16
<PAGE>
Long term deferred tax assets:
Basis difference in acquired property and equipment $2,176 $ 0
Other, net 13 21
------- ------
Total $2,189 $ 21
------- ------

Long term deferred tax liabilities
Depreciation, difference between straight line and
accelerated methods $ (36) $ (21)
------- ------
</TABLE>

The deferred tax assets resulting from the basis difference in acquired property
and equipment is net of a valuation allowance of approximately $0.5 million ,
which if realized, will further reduce goodwill relating to the IC Sensor
acquisition.

11. 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, less the shares that may be repurchased with the funds
received from their exercise.

The weighted average options to purchase common stock of 406,000 were
outstanding as of March 31, 1998 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, 2000
BASIC PER SHARE INFORMATION $ 5,531 3,806 $ 1.45
EFFECT OF DILUTIVE SECURITIES 542 ----------
------------ -------------
DILUTED PER SHARE INFORMATION $ 5,531 4,348 $ 1.27
------------ ------------- ----------

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
------------ ------------- ----------
</TABLE>

12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

F-17
<PAGE>
Payments of interest expense were $368, $249, and $76 for 2000, 1999, and 1998
respectively. Payments of income taxes approximated $681, $102 and $35 for
2000, 1999, and 1998 respectively.

13. 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 $1,050 for 2000, $831 for
1999, and $350 for 1998. At March 31, 2000, total minimum rentals under
operating leases with initial or remaining noncancellable lease terms of more
than one year were:

Year ending March 31,
------------------------

2001 $1,191
2002 697
2003 305
2004 305
2005 305

14. CONCENTRATIONS:

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 $887 and $279 at March 31, 2000 and 1999, 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.

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 and California facilities 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

F-18
<PAGE>
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. 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, 2000
Net sales $ 12,021 $ 15,445 $ 15,960 $ 16,571
Gross profit 5,410 6,697 7,153 7,685
Net income (loss) 1,008 1,720 1,868 935
EPS basic 0.27 0.46 0.49 0.24
EPS diluted 0.24 0.40 0.43 0.21

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) basic (0.22) 0.23 0.35 0.12
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) basic (0.02) 0.08 0.18 (0.02)
EPS (loss) diluted (0.02) 0.08 0.17 (0.02)
</TABLE>

16. SEGMENT INFORMATION:

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.

F-19
<PAGE>
At March 31, 2000, the Subsidiaries' total assets aggregated $10,650 of which
$5,185 were in Hong Kong and $5,465 were in China. 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. 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, 2000, the Subsidiaries had net liabilities of $3,177 subject to
fluctuation in the value of the Hong Kong dollar and net assets of $2,171
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>
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Net Sales
Consumer Products $44,123 $30,526 $27,023
Sensors 15,874 7,070 2,255
-------- -------- --------
Total $59,997 $37,596 $29,278
-------- -------- --------

Segment Profitability
Consumer Products $ 9,302 $ 5,862 $ 3,187
Sensors 3,275 437 714
Unallocated expenses (5,289) (3,675) (2,996)
Interest expense (386) (276) (80)
Other (expenses) income 82 (24) 54
-------- -------- --------
Income before taxes $ 7,288 $ 2,324 $ 879
-------- -------- --------

Depreciation and amortizaton
Consumer Products $ 1,079 $ 719 $ 555
Sensors 1,004 399 39
-------- -------- --------
Total $ 2,083 $ 1,118 $ 594
-------- -------- --------

Segment Assets
Consumer Products $12,505 $ 9,033 $ 8,652
Sensors 23,672 6,191 676
Unallocated 3,470 3,311 889
-------- -------- --------
Total $39,647 $18,535 $10,217
-------- -------- --------

Capital expenditures
Consumer Products $ 841 $ 949 $ 1,032
Sensors 1,669 121 --
-------- -------- --------
Total $ 2,510 $ 1,070 $ 1,032
-------- -------- --------
</TABLE>

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

F-20
<PAGE>
2000 1999 1998
---------- ----------- --------
Revenues
Germany $ 9,835 $ 9,056 $ 10,556
Other Europe 5,857 3,585 1,723
Other 1,351 1,705 546
United States 42,954 23,250 16,453
---------- ----------- --------
Total $ 59,997 $ 37,596 $ 29,278
---------- ----------- --------

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

2000 1999
----- -------
Hong Kong $707 $ 543
China 1,936 862
----- -------
Total $2,643 $ 1,405
----- -------

F-21
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
March 31, 2000

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, 2000
Deducted from asset accounts:
Allowance for doubtful accounts $326 $(8) $318
Write-downs of inventories 536 362(b) 898
------------ ---------- ------------- ----------
Totals $862 $(8) $362 $1,216
============ ========== ============= ==========
Product warranty obligations $592 $(80) $512
============ ========== ============= ==========

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

S-1
<PAGE>