form_10qsb-123103
Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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 3,080,127 shares of the Issuer's common stock, no par value,
outstanding as of December 31, 2003.
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
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MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS DECEMBER 31, 2003 MARCH 31, 2003
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CURRENT ASSETS
Cash and Cash Equivalents $ 4,687,678 $ 4,761,102
Short-term Investments 1,601,433 -
Accounts Receivable, Net 1,502,006 2,281,791
Inventories 2,190,961 2,328,999
Prepaid Expenses and Other 258,144 231,766
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TOTAL CURRENT ASSETS 10,240,222 9,603,658
PROPERTY, PLANT & EQUIPMENT, NET 1,302,008 1,347,980
OTHER ASSETS
Goodwill and Other 4,207,942 4,207,942
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TOTAL ASSETS $15,750,172 $15,159,580
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts Payable $ 86,950 $ 117,979
Accrued Salaries & Payroll Taxes 360,782 332,537
Other Accrued Expenses 87,668 100,698
Taxes Payable 50,213 35,492
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TOTAL CURRENT LIABILITIES 585,613 586,706
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,
3,080,127 shares (12/31/03)
and 3,098,907 shares (3/31/03) 1,364,304 1,284,887
Retained Earnings 13,713,904 13,201,636
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TOTAL STOCKHOLDERS' EQUITY 15,078,208 14,486,523
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,750,172 $15,159,580
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
Dec. 31, 2003 Dec. 31, 2002
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Sales $2,199,740 $2,196,865
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Cost of Goods Sold 837,555 793,324
Selling, General & Administrative 523,762 561,943
Research and Development 85,927 70,707
Other (Income) and Expenses (13,766) (13,204)
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1,433,478 1,412,770
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Earnings Before Income Taxes 766,262 784,095
Income Taxes 266,100 245,500
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Net Income $ 500,162 $ 538,595
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Net Income Per Share (Basic) $ .16 $ .17
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Net Income Per Share (Diluted) $ .16 $ .17
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Average Common Shares Outstanding (Basic) 3,049,000 3,157,000
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Average Common Shares Outstanding (Diluted) 3,148,000 3,238,000
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
Dec. 31, 2003 Dec. 31, 2002
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Sales $6,728,767 $6,681,189
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Cost of Goods Sold 2,545,471 2,483,432
Selling, General & Administrative 1,587,766 1,637,015
Research and Development 236,391 199,636
Other (Income) and Expenses (37,109) (43,796)
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4,332,519 4,276,287
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Earnings Before Income Taxes 2,396,248 2,404,902
Income Taxes 844,605 785,500
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Net Income $1,551,643 $1,619,402
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Net Income Per Share (Basic) $ .51 $ .50
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Net Income Per Share (Diluted) $ .50 $ .49
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Average Common Shares Outstanding (Basic) 3,046,000 3,264,000
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Average Common Shares Outstanding (Diluted) 3,125,000 3,338,000
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MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
Dec. 31, 2003 Dec. 31, 2002
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Cash Flows From Operating Activities:
Net Income $1,551,643 $1,619,402
Depreciation and Amortization 76,947 88,791
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable 779,785 331,235
(Increase) Decrease in Inventories 138,038 (52,652)
(Increase) Decrease in Prepaid Expenses and Other (26,378) 241,451
Increase (Decrease) in Accounts Payable (31,029) (57,002)
Increase (Decrease) in Accrued Liabilities 29,936 27,393
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Net Cash (Used) Provided by Operating
Activities 2,518,942 2,198,618
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Cash Flows From Investing Activities:
Purchase of Short-term Investments (1,601,433) -
Capital Expenditures, Net of Retirements (30,975) (55,906)
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Net Cash (Used) Provided by Investing Activities (1,632,408) (55,906)
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Cash Flows From Financing Activities:
Dividends Paid (616,271) -
Treasury Stock Purchases (667,356) (1,438,849)
Proceeds From Stock Options Exercised 323,669 60,649
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Net Cash (Used) Provided by Financing Activities (959,958) (1,378,200)
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Net Increase (Decrease) In Cash and Equivalents (73,424) 764,512
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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 $4,687,678 $ 4,226,490
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MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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 third quarter and year-to-date
would have been reduced to the pro forma amount indicated below:
Three Months Ended Nine Months Ended
December 31, December 31,
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2003 2002 2003 2002
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Net income - as reported $ 500,162 $ 538,595 $1,551,643 $1,619,402
Net income - pro forma $ 492,051 $ 538,204 $1,481,940 $1,550,213
Income per diluted share - as reported $ .16 $ .17 $ .50 $ .49
Income per diluted share - pro forma $ .16 $ .17 $ .47 $ .46
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 2.0% (2004) and 0% (2003);
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 December 31, 2003, the Company had cash and short-term investments of
$6,289,111. In addition, the Company had other current assets totaling
$3,951,111 and total current assets of $10,240,222. Current liabilities of Mesa
Laboratories, Inc. were $585,613, which resulted in a current ratio of 17.5:1.
The Company has made net capital asset purchases of $30,975 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. During the first nine months of the
fiscal year, the Company repurchased 87,000 shares of our common stock.
On November 12, 2003 the company's Board of Directors declared for the
first time a regular quarterly dividend of $.05 per share of common stock. In
addition the Board of Directors declared a special one-time dividend of $.15 per
share of common stock. Both dividends were paid on December 15, 2003, to
shareholders of record on December 1, 2003.
RESULTS OF OPERATIONS
REVENUE
Net sales for the nine months ended December 31, 2003 increased $47,578 or
1% to $6,728,767 from the $6,681,189 net sales level achieved for the same
nine-month period last year. Net sales for the quarter increased $2,875 or less
than 1% to $2,199,740 from the $2,196,865 net sales level achieved in the same
quarter last year. Over the first nine months of the fiscal year, revenues are
up a small amount compared to prior year. Datatrace sales for the nine-month
period produced a seven percent decline while medical instruments increased by
approximately eight percent. Nusonics products have increased over twenty
percent for the same period, but this gain is on a much smaller base of sales.
Net sales for the quarter were up a small amount from the prior year quarter.
For the quarter, medical products decreased approximately two percent and
Nusonics products were almost unchanged. Datatrace products decreased seven
percent from the prior year quarter, which was helped by initial shipments of
the Micropack III product.
COST OF GOODS SOLD
Cost of goods sold for the first nine months as a percent of net sales was
38%, which is an increase of 1% from the 37% level for the same nine-month
period last year. Cost of goods sold for the current quarter as a percent of net
sales was 38%, representing a 2% increase compared to the 36% level in the same
quarter last year. While the mix of products during the first nine months of the
fiscal year made a shift to Medical products compared to prior year leading to a
one percent change in the cost of goods sold as a percent of sales, the quarter
saw an increase of two percent 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 nine months
decreased 3% or $49,249 to $1,587,766 from $1,637,015 in the same period last
year. For the current quarter, selling, general and administrative expenses
totaled $523,762, which was down 7% or $38,181 from $561,943 expended in the
same quarter last year. Marketing expenses decreased 14 percent and two percent
for the quarter and nine month periods, respectively with Medical marketing
expenses declining six percent for the quarter and nine month periods compared
to the prior year. Datatrace marketing expenses decreased 16 percent for the
quarter and increased two percent for the nine-month period. The decrease in
marketing expenses for Datatrace products for the quarter was due chiefly to
lower bad debt expense. Individual marketing costs for medical products trended
down for the quarter and nine month periods and were relatively unchanged within
the major expense categories. Administration costs remained at consistent levels
increasing four percent in the current quarter and declining five percent over
the first nine months of the fiscal year compared to the previous year.
RESEARCH AND DEVELOPMENT
Research and development for the first nine months increased to $236,391
from $199,636, which represents an 18% increase from the same period last year.
Research and development for the quarter was $85,927, which represents an
increase of $15,220 or 22% from the $70,707 level expensed in the same quarter
last year. Research and development costs increased for the quarter and nine
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. 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 nine months ended December 31, 2003 decreased 4% to
$1,551,643 from $1,619,402, but earnings per share increased 2% to $.50 per
diluted share compared to $.49 per diluted share one year ago. Net income for
the quarter was $500,162 or $.16 per diluted share compared to net income of
$538,595 or $.17 per diluted share last year. For the quarter and year-to-date,
net income compared to last year declined slightly due to unchanged sales
performance, a shift in sales mix from Datatrace to Medical products and an
increase in the income tax rate compared to the prior year. On an earnings per
share basis, year-to-date net income increased by $.01 per diluted share due to
the lower outstanding shares generated by the company's share buyback program.
ITEM 3. 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 4. Submission of matters to a vote of securities holders
The Annual Meeting of Shareholders of Mesa Laboratories, Inc. was held on
December 12, 2003. Of the 3,046,638 Shares entitled to vote, 2,564,657 were
represented either in person or by proxy. Four Directors were elected to serve
until the next Annual Meeting of Shareholders.
The four directors elected were:
FOR WITHHELD
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Michael T. Brooks 2,550,157 14,500
H. Stuart Campbell 2,549,457 15,200
Paul D. Duke 2,541,134 23,523
Luke R. Schmieder 2,541,234 23,423
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 February 5, 2004, we furnished a report on Form 8-K under Item 9,
Regulation FD Disclosure, to announce that we issued a press release on February
4, 2004 announcing preliminary results for the third quarter period ended
December 31, 2003, and filed under Item 7, Financial Statements and Exhibits, a
copy of the press release dated February 4, 2004.
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: February 13, 2004 BY: /s/Luke R. Schmieder
Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: February 13, 2004 BY: /s/Steven W. Peterson
Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary