form-10qsb_063003
Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 ___. ---
State the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
There were 3,049,807 shares of the Issuer's common stock, no par value,
outstanding as of June 30, 2003.
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
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MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS JUNE 30, 2003 MARCH 31, 2002
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CURRENT ASSETS
Cash and Cash Equivalents $ 5,580,130 $ 4,761,102
Accounts Receivable, Net 1,916,174 2,281,791
Inventories 2,276,812 2,328,999
Prepaid Expenses and Other 138,809 231,766
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TOTAL CURRENT ASSETS 9,911,925 9,603,658
PROPERTY, PLANT & EQUIPMENT, NET 1,323,984 1,347,980
OTHER ASSETS
Goodwill and Other 4,207,942 4,207,942
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TOTAL ASSETS $15,443,851 $15,159,580
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts Payable $ 90,202 $ 117,979
Accrued Salaries & Payroll Taxes 247,404 332,537
Other Accrued Expenses 90,222 100,698
Taxes Payable 239,008 35,492
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TOTAL CURRENT LIABILITIES 666,836 586,706
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,
3,049,807 shares (6/30/03)
and 3,098,907 shares (3/31/03) 1,169,212 1,284,887
Retained Earnings 13,521,452 13,201,636
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TOTAL STOCKHOLDERS' EQUITY 14,690,664 14,486,523
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,443,851 $15,159,580
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
June 30, 2003 June 30, 2002
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Sales $2,252,741 $2,052,455
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Cost of Goods Sold 806,079 811,783
Selling, General & Administrative 584,813 581,616
Research and Development 67,587 49,449
Other (Income) and Expenses (12,739) (14,612)
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1,445,740 1,428,236
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Earnings Before Income Taxes 807,001 624,219
Income Taxes 283,875 204,500
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Net Income $ 523,126 $ 419,719
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Net Income Per Share (Basic) $ .17 $ .13
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Net Income Per Share (Diluted) $ .17 $ .12
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Average Common Shares Outstanding (Basic) 3,077,000 3,333,000
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Average Common Shares Outstanding (Diluted) 3,158,000 3,415,000
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MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Three Months
Ended Ended
June 30, 2003 June 30, 2002
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Cash Flows From Operating Activities:
Net Income $ 523,126 $ 419,719
Depreciation and Amortization 25,649 29,597
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable 365,617 248,968
(Increase) Decrease in Inventories 52,187 22,544
(Increase) Decrease in Prepaid Expenses 92,957 208,854
Increase (Decrease) in Accounts Payable (27,777) 17,902
Increase (Decrease) in Accrued Liabilities 107,907 (41,980)
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Net Cash (Used) Provided by Operating
Activities 1,139,666 905,604
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Cash Flows From Investing Activities:
Capital Expenditures, Net of Retirements (1,653) (23,978)
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Net Cash (Used) Provided by Investing Activities (1,653) (23,978)
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Cash Flows From Financing Activities:
-
Treasury Stock Purchases (320,678) (194,033)
Proceeds From Stock Options Exercised 1,693 13,125
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Net Cash (Used) Provided by Financing Activities (318,985) (180,908)
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Net Increase (Decrease) In Cash and Equivalents 819,028 700,718
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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 $5,580,130 $4,162,696
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MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 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 first quarter would have been
reduced to the pro forma amount indicated below:
June 30,
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2004 2003
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Net income - as reported $ 523,126 $ 419,719
Net income - pro forma $ 461,533 $ 411,126
Income per diluted share - as reported $ .17 $ .12
Income per diluted share - pro forma $ .15 $ .12
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 June 30, 2003, the Company had cash and short-term investments of
$5,580,130. In addition, the Company had other current assets totaling
$4,331,795 and total current assets of $9,911,925. Current liabilities of Mesa
Laboratories, Inc. were $666,836, which resulted in a current ratio of 15:1.
The Company has made net capital asset purchases of $1,653 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 three months ended June 30, 2003 increased $200,286 or
ten percent to $2,252,741 from the $2,052,455 net sales level achieved for the
same three-month period last year. The sales increase during the first quarter
of the fiscal year was due to a 38 percent increase in sales of Datatrace
logging instruments. This increase was partially offset by small declines of
less than ten percent in Medical and Nusonics instruments. Last year's
introduction of the Micropack III Temperature Logger continued to drive the
increase in Datatrace instrument sales during the first quarter.
COST OF GOODS SOLD
Cost of goods sold for the first three months as a percent of net sales was
36%, which represents a 4% decrease from the 40% level for the same three-month
period last year. The decrease realized during the first quarter of fiscal 2004
was attributable to changing mix of products sold due to an increase in sales of
Datatrace logging products in comparison to sales of the Company's medical
products.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the first three months
increased 1% or $3,197 to $584,813 from $581,616 in the same period last year.
Marketing expenses increased less than $10,000 while Administrative expenses
decreased slightly. The largest variation within expense categories is an
increase in total commission costs, which trended higher due to higher sales
volume.
RESEARCH AND DEVELOPMENT
Research and development for the first three months increased to $67,587
from $49,449, which represents a 37% increase from the same period last year.
Research and development costs increased 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 parameter 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 recently begun, and we
estimate that we will begin to introduce our next generation medical instruments
in approximately twelve months.
NET INCOME
Net income for the three months ended June 30, 2003 increased 25% to
$523,126 or $.17 per diluted share from $419,719 or $.12 per diluted share last
year. The change in net income from fiscal 2003 to fiscal 2004 was due chiefly
to an increase in sales during the current quarter. Within the major expense
categories, a decrease in cost of goods sold was offset by an increase in
selling, general and administration costs and research and development spending.
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.
PART II-OTHER INFORMATION
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 August 6, 2003, we furnished a report on Form 8-K under Item 9,
Regulation FD Disclosure, to announce that we issued a press release
on August 6, 2003 announcing preliminary results for the first quarter
period ended June 30, 2003, and filed under Item 7, Financial
Statements and Exhibits, a copy of the press release dated August 6,
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.
(Issuer)
DATED: August 14, 2003 BY: /s/ Luke R. Schmieder
Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: August 14, 2003 BY: /s/ Steven W. Peterson
Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary