form-10qsb_123102
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, 2002
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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 3,116,430 shares of the Issuer's common stock, no par value,
outstanding as of December 31, 2002.
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
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MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
December 31, March 31,
2002 2002
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ASSETS
CURRENT ASSETS
Cash and Cash Equivalents ............... $ 4,226,490 $ 3,461,978
Accounts Receivable, Net ................ 2,195,789 2,296,024
Inventories ............................. 2,495,743 2,443,091
Prepaid Expenses ........................ 156,839 398,290
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TOTAL CURRENT ASSETS ................. 9,074,861 8,599,383
PROPERTY, PLANT & EQUIPMENT, NET .......... 1,365,513 1,398,398
OTHER ASSETS
Goodwill and Other ...................... 4,207,942 4,438,942
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TOTAL ASSETS ........................ $14,648,316 $14,436,723
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ........................ $ 31,892 $ 88,894
Accrued Salaries & Payroll Taxes ........ 310,889 310,272
Other Accrued Expenses .................. 80,314 66,878
Taxes Payable ........................... 48,001 34,661
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TOTAL CURRENT LIABILITIES ................. 471,096 500,705
LONG TERM LIABILITIES
Deferred Income Taxes Payable ........... 41,744 41,744
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value ........... -- --
Common Stock, No Par Value;
authorized 8,000,000 shares;
issued and outstanding,
3,116,430 shares (12/31/02)
and 3,342,376 shares (3/31/02) ......... 1,325,789 1,791,758
Retained Earnings ....................... 12,809,687 12,102,516
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TOTAL STOCKHOLDERS' EQUITY ................ 14,135,476 13,894,274
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ...................... $14,648,316 $14,436,723
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
December 31, December 31,
2002 2001
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Sales .......................................... $ 2,196,865 $ 2,222,370
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Cost of Goods Sold ............................. 793,324 921,413
Selling, General & Administrative .............. 561,943 508,814
Research and Development ....................... 70,707 74,212
Other (Income) and Expenses .................... (13,204) (15,579)
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1,412,770 1,488,860
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Earnings Before Income Taxes ................... 784,095 733,510
Income Taxes ................................... 245,500 250,000
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Net Income ..................................... $ 538,595 $ 483,510
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Net Income Per Share (Basic) ................... $ .17 $ .14
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Net Income Per Share (Diluted) ................. $ .17 $ .14
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Average Common Shares Outstanding (Basic) ...... 3,157,000 3,354,000
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Average Common Shares Outstanding (Diluted) .... 3,238,000 3,418,000
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MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
December 31, December 31,
2002 2001
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Sales .......................................... $ 6,681,189 $ 6,951,018
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Cost of Goods Sold ............................. 2,483,432 2,757,578
Selling, General & Administrative .............. 1,637,015 1,671,455
Research and Development ....................... 199,636 230,859
Other (Income) and Expenses .................... (43,796) (60,915)
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4,276,287 4,598,977
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Earnings Before Income Taxes ................... 2,404,902 2,352,041
Income Taxes ................................... 785,500 764,822
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Net Income ..................................... $ 1,619,402 $ 1,587,219
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Net Income Per Share (Basic) ................... $ .50 $ .46
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Net Income Per Share (Diluted) ................. $ .49 $ .46
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Average Common Shares Outstanding (Basic) ...... 3,264,000 3,431,000
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Average Common Shares Outstanding (Diluted) .... 3,338,000 3,455,000
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MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
December 31, December 31,
2002 2001
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Cash Flows From Operating Activities:
Net Income ...................................... $ 1,619,402 $ 1,587,219
Depreciation and Amortization ................... 88,791 87,555
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable ... 331,235 591,207
(Increase) Decrease in Inventories ........... (52,652) 87,337
(Increase) Decrease in Prepaid Expenses ...... 241,451 (210,615)
Increase (Decrease) in Accounts Payable ...... (57,002) (302,578)
Increase (Decrease) in Accrued Liabilities ... 27,393 (38,626)
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Net Cash (Used) Provided by Operating
Activities ...................................... 2,198,618 1,801,499
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Cash Flows From Investing Activities:
Capital Expenditures, Net of Retirements ........ (55,906) (13,650)
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Net Cash (Used) Provided by Investing Activities . (55,906) (13,650)
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Cash Flows From Financing Activities:
Treasury Stock Purchases ........................ (1,438,849) (966,495)
Proceeds From Stock Options Exercised ........... 60,649 30
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Net Cash (Used) Provided by Financing Activities . (1,378,200) (966,465)
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Net Increase (Decrease) In Cash and Equivalents .. 764,512 821,384
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Cash and Cash Equivalents at Beginning of Period . 3,461,978 2,316,769
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Cash and Cash Equivalents at End of Period ....... $ 4,226,490 $ 3,138,153
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MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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, 2002.
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On December 31, 2002, the Company had cash and short-term investments
of $4,226,490. In addition, the Company had other current assets totaling
$4,848,371 and total current assets of $9,074,861. Current liabilities of
Mesa Laboratories, Inc. were $471,096 which resulted in a current ratio of
19.3:1.
The Company has made net capital asset purchases of $55,906 for the
fiscal year-to-date.
The Company has instituted a program to repurchase up to 500,000
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 nine months ended December 31, 2002 decreased
$269,829 or 4% to $6,681,189 from the $6,951,018 net sales level achieved
for the same nine-month period last year. Net sales for the quarter
decreased $25,505 or 1% to $2,196,865 from the $2,222,370 net sales level
achieved in the same quarter last year. For the quarter net sales showed a
modest decline. When the major products are analyzed sales of Datatrace
logging products increased 19% during the quarter, but were offset by a 16%
decline in medical product sales. The sales trend year-to-date is very
similar to the quarterly results with Datatrace products increasing 18%
while medical products declined 17%. At this time, revenues are being
positively impacted by the recent introduction of the Company's new
Micropack III Temperature Loggers and by a decrease in the value of the US
Dollar compared to the Euro. These positive events continue to be tempered
by an on-going weakness in capital spending. Additionally, medical sales
have declined year-to-date due primarily to lower Dialyzer Reprocessor
sales, which enjoyed higher than average sales volume in the prior fiscal
year.
COST OF GOODS SOLD
Cost of goods sold for the first nine months as a percent of net sales
was 37% which represents a 3% decrease from the 40% level for the same
nine-month period last year. Cost of goods sold for the current quarter as
a percent of net sales was 36%, representing a 5% decrease compared to the
41% level in the same quarter last year. The decrease realized during the
third quarter and first nine months of fiscal 2003 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 nine months
decreased 2% or $34,440 to $1,637,015 from $1,671,455 in the same period
last year. For the current quarter, selling, general and administrative
expenses totaled $561,943, which was up 10% or $53,129 from $508,814
expended in the same quarter last year. Marketing expenses increased 11%
and decreased 5% for the quarter and nine month periods, respectively with
Medical marketing expenses increasing 4% for the quarter and declining 20%
year-to-date from the prior year while Datatrace marketing expenses
increased 29% for the quarter and increased 17% for the nine month period.
The increase in marketing expenses for medical products for the quarter was
due chiefly to higher training costs. Datatrace costs increased for the
nine-month period due to promotional costs in support of the new Micropack
III product and increased bad debt levels. Administration costs increased
9% and 2% for the quarter and nine-month periods, and was due chiefly to
annual report and meeting costs, which were incurred earlier in the year
compared to the prior fiscal year.
RESEARCH AND DEVELOPMENT
Research and development for the first nine months decreased to
$199,636 from $230,859 which represents a 14% decrease from the same period
last year. Research and development for the quarter was $70,707, which
represents a decrease of $3,505 or 5% from the $74,212 level expensed in
the same quarter last year. Research and development costs for the
nine-month period decreased due to lower compensation and consulting costs.
The decrease for the quarter was due chiefly to lower consulting costs,
which were mostly offset by higher material costs.
NET INCOME
Net income for the nine months ended December 31, 2002 increased 2% to
$1,619,402 or $.49 per diluted share from $1,587,219 or $.46 per diluted
share last year. Net income for the quarter increased 11% to $538,595 or
$.17 per diluted share compared to net income of $483,510 or $.14 per
diluted share last year. For both the quarter and nine-month period, the
increase in net income compared to last year was due chiefly to increased
sales of logging products. For the quarter, diluted earnings per share
increased by 21% benefiting from the reduced shares outstanding produced by
the Company's on-going stock repurchase efforts.
PART II-OTHER INFORMATION
ITEM 3. Controls and procedures
The Company, under the supervision of the chief executive and financial
officers, has conducted an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures within 90
days of the filing date of this quarterly report. Based upon the results of
this evaluation, the Company believes that they maintain proper procedures
for gathering, analyzing and disclosing all information in a timely fashion
that is required to be disclosed in its Exchange Act reports. There have
been no significant changes in the Company's controls subsequent to the
evaluation date.
ITEM 4. Submission of matters to a vote of securities holders
The Annual Meeting of Shareholders of Mesa Laboratories, Inc. was held on
November 14, 2002. Of the 3,290,536 Shares entitled to vote, 2,870,987 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 2,853,526 17,461
H. Stuart Campbell 2,853,826 17,161
Paul D. Duke 2,849,526 21,461
Luke R. Schmieder 2,840,326 30,661
ITEM 6. Exhibits and reports on Form 8-K
a) Exhibits:
99.1 Certification of Chief Executive Officer and Chief Financial Officer
b) Reports on Form 8-K:
None
MESA LABORATORIES, INC.
DECEMBER 31, 2002
SIGNATURES
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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: January 24, 2003 BY: /s/Luke R. Schmieder
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Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: January 24, 2003 BY: /s/Steven W. Peterson
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Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary
CERTIFICATIONS
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I, Luke R. Schmieder, the Chief Executive Officer of Mesa Laboratories, Inc.
(the "Company"), certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Mesa Laboratories,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: January 24, 2003
By: /s/ Luke R. Schmieder
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Name: Luke R. Schmieder
Title: Chief Executive Officer
I, Steven W. Peterson, the Chief Financial Officer of Mesa Laboratories, Inc.
(the "Company"), certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Mesa Laboratories,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: January 24, 2003
By: /s/ Steven W. Peterson
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Name: Steven W. Peterson
Title: Chief Financial Officer