form_10qsb-093003
Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
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OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission File Number 0-11740
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MESA LABORATORIES, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
COLORADO 84-0872291
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(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12100 WEST SIXTH AVENUE, LAKEWOOD, COLORADO 80228
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(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (303) 987-8000
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act, during the past 12 months and (2) has been subject
to the filing requirements for the past 90 days. Yes X No ___.
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State the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
There were 3,048,838 shares of the Issuer's common stock, no par value,
outstanding as of September 30, 2003.
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
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MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS SEPTEMBER 30, 2003 MARCH 31, 2003
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CURRENT ASSETS
Cash and Cash Equivalents $ 6,019,929 $ 4,761,102
Accounts Receivable, Net 1,721,168 2,281,791
Inventories 2,208,051 2,328,999
Prepaid Expenses 155,225 231,766
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TOTAL CURRENT ASSETS 10,104,373 9,603,658
PROPERTY, PLANT & EQUIPMENT, NET 1,312,778 1,347,980
OTHER ASSETS
Goodwill and Other 4,207,942 4,207,942
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TOTAL ASSETS $15,625,093 $15,159,580
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts Payable $ 97,087 $ 117,979
Accrued Salaries & Payroll Taxes 262,739 332,537
Other Accrued Expenses 101,712 100,698
Taxes Payable 36,335 35,492
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TOTAL CURRENT LIABILITIES 497,873 586,706
LONG TERM LIABILITIES
Deferred Income Taxes Payable 86,351 86,351
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value - -
Common Stock, No Par Value;
authorized 8,000,000 shares;
issued and outstanding,
3,048,838 shares (9/30/03)
and 3,098,907 shares (3/31/03) 1,115,332 1,284,887
Retained Earnings 13,925,537 13,201,636
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TOTAL STOCKHOLDERS' EQUITY 15,040,869 14,486,523
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,625,093 $15,159,580
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
Sept. 30, 2003 Sept. 30, 2002
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Sales $2,276,286 $2,431,869
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Cost of Goods Sold 901,836 878,325
Selling, General & Administrative 479,127 493,455
Research and Development 82,878 79,480
Other (Income) and Expenses (10,604) (15,979)
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1,453,237 1,435,281
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Earnings Before Income Taxes 823,049 996,588
Income Taxes 294,631 335,500
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Net Income $ 528,418 $ 661,088
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Net Income Per Share (Basic) $ .17 $ .20
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Net Income Per Share (Diluted) $ .17 $ .20
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Average Common Shares Outstanding (Basic) 3,052,000 3,304,000
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Average Common Shares Outstanding (Diluted) 3,180,000 3,366,000
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Six Months
Ended Ended
Sept. 30, 2003 Sept. 30, 2002
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Sales $4,529,027 $4,484,324
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Cost of Goods Sold 1,707,916 1,690,108
Selling, General & Administrative 1,063,940 1,075,071
Research and Development 150,464 128,930
Other (Income) and Expenses (23,343) (30,592)
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2,898,977 2,863,517
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Earnings Before Income Taxes 1,630,050 1,620,807
Income Taxes 578,505 540,000
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Net Income $1,051,545 $1,080,807
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Net Income Per Share (Basic) $ .34 $ .33
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Net Income Per Share (Diluted) $ .33 $ .32
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Average Common Shares Outstanding (Basic) 3,066,000 3,318,000
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Average Common Shares Outstanding (Diluted) 3,167,000 3,389,000
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MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Six Months
Ended Ended
Sept. 30, 2003 Sept. 30, 2002
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Cash Flows From Operating Activities:
Net Income $1,051,545 $1,080,807
Depreciation and Amortization 51,299 59,194
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable 560,623 138,799
(Increase) Decrease in Inventories 120,948 (43,475)
(Increase) Decrease in Prepaid Expenses 76,541 278,617
Increase (Decrease) in Accounts Payable (20,892) (15,045)
Increase (Decrease) in Accrued Liabilities (67,941) 99,105
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Net Cash (Used) Provided by Operating
Activities 1,772,123 1,598,002
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Cash Flows From Investing Activities:
Capital Expenditures, Net of Retirements (16,097) (55,580)
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Net Cash (Used) Provided by Investing Activities (16,097) (55,580)
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Cash Flows From Financing Activities:
-
Treasury Stock Purchases (516,789) (350,675)
Proceeds From Stock Options Exercised 19,590 30,188
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Net Cash (Used) Provided by Financing Activities (497,199) (320,487)
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Net Increase (Decrease) In Cash and Equivalents 1,258,827 1,221,935
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Cash and Cash Equivalents at Beginning of Period 4,761,102 3,461,978
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Cash and Cash Equivalents at End of Period $6,019,929 $4,683,913
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MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
NOTE A. SUMMARY OF ACCOUNTING POLICIES
The summary of the Issuer's significant accounting policies are
incorporated by reference to the Company's annual report on Form 10KSB, at March
31, 2003.
The accompanying unaudited condensed financial statements reflect all
adjustments, which, in the opinion of management, are necessary for a fair
presentation of the results of operations, financial position and cash flows.
The results of the interim period are not necessarily indicative of the results
for the full year.
NOTE B. STOCK BASED COMPENSATION
The Company has stock based compensation plans, which are described more
fully in Note 7 of the Company's annual report on Form 10KSB, at March 31, 2003.
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost has been recognized for the stock option
plans. Had compensation cost for the Company's stock option plans been
determined based on the fair value at the grant date for awards in fiscal 2004
and 2003 consistent with the provisions of SFAS No. 123, the Company's net
earnings and earnings per share for the fiscal second quarter and year-to-date
would have been reduced to the pro forma amount indicated below:
Three Months Ended Six Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Net income - as reported $ 528,418 $ 661,088 $1,051,545 $1,080,807
Net income - pro forma $ 528,418 $ 661,088 $ 989,552 $1,072,214
Income per diluted share - as reported $ .17 $ .20 $ .33 $ .32
Income per diluted share - pro forma $ .17 $ .20 $ .31 $ .32
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants: dividend yield of 0%; expected volatility of
approximately 14% (2004) and 20% (2003); discount rate of 3.0% (2004) and
(2003); and expected lives of 5 years.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On September 30, 2003, the Company had cash and short-term investments of
$6,019,929. In addition, the Company had other current assets totaling
$4,084,444 and total current assets of $10,104,373. Current liabilities of Mesa
Laboratories, Inc. were $497,873, which resulted in a current ratio of 20.3:1.
The Company has made net capital asset purchases of $16,097 for the fiscal
year-to-date.
The Company has instituted a program to repurchase up to 300,000 shares of
its outstanding common stock. Under the plan, the shares may be purchased from
time to time in the open market at prevailing prices or in negotiated
transactions off the market. Shares purchased will be canceled and repurchases
will be made with existing cash reserves.
RESULTS OF OPERATIONS
REVENUE
Net sales for the six months ended September 30, 2003 increased $44,703 or
1% to $4,529,027 from the $4,484,324 net sales level achieved for the same
six-month period last year. Net sales for the quarter decreased $155,583 or 6%
to $2,276,286 from the $2,431,869 net sales level achieved in the same quarter
last year. Over the first six months of the fiscal year, revenues are up a small
amount compared to prior year. Datatrace sales for the six month period produced
a five percent gain while medical instruments decreased by approximately seven
percent. Nusonics products have increased over thirty percent for the same
period, but this gain is on a much smaller base of sales. Net sales for the
quarter were down a small amount from the prior year quarter, but was up
slightly from last quarter. For the quarter, medical products decreased
approximately five percent and Nusonics products almost doubled. Datatrace
products decreased 17 percent from the prior year quarter, which was helped by
initial shipments of the Micropack III product, which included shipments of
backlogged product from the first quarter of that year.
COST OF GOODS SOLD
Cost of goods sold for the first six months as a percent of net sales was
38%, which is unchanged from the same six-month period last year. Cost of goods
sold for the current quarter as a percent of net sales was 40%, representing a
4% increase compared to the 36% level in the same quarter last year. While the
mix of products during the first six months of the fiscal year was fairly stable
compared to prior year leading to no change in the cost of goods sold as a
percent of sales, the quarter saw an increase in cost of goods sold due to the
lower Datatrace product sales described above.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the first six months
decreased 1% or $11,131 to $1,063,940 from $1,075,071 in the same period last
year. For the current quarter, selling, general and administrative expenses
totaled $479,127, which was down 3% or $14,328 from $493,455 expended in the
same quarter last year. Marketing expenses increased nine percent and five
percent for the quarter and six month periods, respectively with Medical
marketing expenses declining two percent and five percent from the prior year
while Datatrace marketing expenses increased 14 percent for the quarter and 13
percent for the six-month period. The increase in marketing expenses for
Datatrace products was due chiefly to higher compensation and commissions to
outside sale representatives. Individual marketing costs for medical products
trended down for the quarter and six month periods and were relatively unchanged
within the major expense categories. Administration costs decreased 17 percent
and nine percent for the quarter and six month periods due to the elimination of
consulting expenses during the first six months of the current fiscal year.
RESEARCH AND DEVELOPMENT
Research and development for the first six months increased to $150,464
from $128,930, which represents a 17% increase from the same period last year.
Research and development for the quarter was $82,878, which represents an
increase of $3,398 or 4% from the $79,480 level expensed in the same quarter
last year. Research and development costs increased for the quarter and six
month periods due to higher compensation and consulting costs. This trend is
expected to continue throughout the fiscal year. Development of three new
versions of the Micropack III Logger that will measure other parameters besides
temperature is proceeding well and is expected to see introduction later in the
fiscal year. Development projects for the company's line of Dialysate Meters for
kidney dialysis have begun, and we estimate that we will begin to introduce our
next generation medical instruments in the next fiscal year.
NET INCOME
Net income for the six months ended September 30, 2003 decreased 3% to
$1,051,545 or $.33 per diluted share from $1,080,807 or $.32 per diluted share
last year. Net income for the quarter was $528,418 or $.17 per diluted share
compared to net income of $661,088 or $.20 per diluted share last year. For the
quarter, the decrease in net income compared to last year was due chiefly to a
decreased in the sales of logging products, and the resulting change in mix. For
the year-to-date, income was down slightly due to higher research and
development spending and a small increase in income tax rate compared to prior
year.
PART II-OTHER INFORMATION
ITEM 4. Controls and Procedures
a. Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and Chief Financial Officer, have evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the Exchange Act)) as of a date within 90 days prior to the filing date
of this quarterly report (the Evaluation Date). Based on such evaluation, such
officers have concluded that, as of the Evaluation Date, the Company's
disclosure controls and procedures are effective in alerting them, on a timely
basis, to material information relating to the Company(including its
consolidated subsidiaries) required to be included in the Company's periodic
filings under the Exchange Act.
b. Changes in Internal Controls. Since the Evaluation Date, there have not
been any significant changes in the Company's internal controls or in other
factors that could significantly affect such controls.
ITEM 6. Exhibits and reports on Form 8-K
a) Exhibits:
31.1 Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
b) Reports on Form 8-K:
On October 31, 2003, we furnished a report on Form 8-K under Item
9, Regulation FD Disclosure, to announce that we issued a press
release on October 30, 2003 announcing preliminary results for the
second quarter period ended September 30, 2003, and filed under Item
7, Financial Statements and Exhibits, a copy of the press release
dated October 30, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MESA LABORATORIES, INC.
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(Issuer)
DATED: November 12, 2003 BY: /s/Luke R. Schmieder
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Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: November 12, 2003 BY: /s/Steven W. Peterson
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Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary