form10qsb_123104
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, 2004
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission File Number 0-11740
MESA LABORATORIES, INC.
(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 3,045,527 shares of the Issuer's common stock, no par value,
outstanding as of December 31, 2004.
ITEM 1. FINANCIAL STATEMENTS FORM 10-QSB
MESA LABORATORIES, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS DEC 31, 2004 MARCH 31, 2004
----------- -----------
CURRENT ASSETS
Cash and Cash Equivalents ............... $ 4,675,000 $ 4,670,000
Short-term Investments .................. 1,949,000 2,098,000
Accounts Receivable, Net ................ 1,595,000 1,603,000
Inventories, Net ........................ 2,056,000 2,099,000
Prepaid Expenses and Other .............. 300,000 267,000
----------- -----------
TOTAL CURRENT ASSETS .............. 10,575,000 10,737,000
PROPERTY, PLANT & EQUIPMENT, NET .......... 1,222,000 1,285,000
OTHER ASSETS
Goodwill and Other ...................... 4,208,000 4,208,000
----------- -----------
TOTAL ASSETS .............................. $16,005,000 $16,230,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ........................ $ 137,000 $ 110,000
Accrued Salaries & Payroll Taxes ........ 375,000 409,000
Other Accrued Expenses .................. 92,000 68,000
Taxes Payable ........................... 59,000 70,000
----------- -----------
TOTAL CURRENT LIABILITIES ............... 663,000 657,000
LONG TERM LIABILITIES
Deferred Income Taxes Payable ........... 189,000 189,000
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value ........... -- --
Common Stock, No Par Value;
authorized 8,000,000 shares;
issued and outstanding,
3,045,527 shares (12/31/04)
and 3,072,815 shares (3/31/04) ......... 1,082,000 1,330,000
Retained Earnings ....................... 14,071,000 14,054,000
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TOTAL STOCKHOLDERS' EQUITY .............. 15,153,000 15,384,000
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ...................... $16,005,000 $16,230,000
=========== ===========
See notes to financial statements.
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
Dec. 31, 2004 Dec. 31, 2003
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Sales .......................................... $ 2,530,000 $ 2,200,000
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Cost of Goods Sold ............................. 965,000 838,000
Selling, General & Administrative .............. 630,000 524,000
Research and Development ....................... 95,000 86,000
Other (Income) and Expenses .................... (25,000) (14,000)
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1,665,000 1,434,000
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Earnings Before Income Taxes ................... 865,000 766,000
Income Taxes ................................... 302,000 266,000
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Net Income ..................................... $ 563,000 $ 500,000
=========== ===========
Net Income Per Share (Basic) ................... $ .18 $ .16
=========== ===========
Net Income Per Share (Diluted) ................. $ .18 $ .16
=========== ===========
Average Common Shares Outstanding (Basic) ...... 3,052,000 3,049,000
=========== ===========
Average Common Shares Outstanding (Diluted) .... 3,154,000 3,148,000
=========== ===========
See notes to financial statements.
MESA LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
Dec. 31, 2004 Dec. 31, 2003
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Sales .......................................... $ 7,406,000 $ 6,729,000
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Cost of Goods Sold ............................. 2,786,000 2,546,000
Selling, General & Administrative .............. 1,748,000 1,588,000
Research and Development ....................... 266,000 236,000
Other (Income) and Expenses .................... (61,000) (37,000)
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4,739,000 4,333,000
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Earnings Before Income Taxes ................... 2,667,000 2,396,000
Income Taxes ................................... 931,000 844,000
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Net Income ..................................... $ 1,736,000 $ 1,552,000
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Net Income Per Share (Basic) ................... $ .57 $ .51
=========== ===========
Net Income Per Share (Diluted) ................. $ .55 $ .50
=========== ===========
Average Common Shares Outstanding (Basic) ...... 3,065,000 3,046,000
=========== ===========
Average Common Shares Outstanding (Diluted) .... 3,147,000 3,125,000
=========== ===========
See notes to financial statements.
MESA LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
Dec. 31, 2004 Dec. 31, 2003
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Cash Flows From Operating Activities:
Net Income ...................................... $ 1,736,000 $ 1,551,000
Depreciation and Amortization ................... 71,000 77,000
Change in Assets and Liabilities-
(Increase) Decrease in Accounts Receivable ... 8,000 780,000
(Increase) Decrease in Inventories ........... 43,000 138,000
(Increase) Decrease in Prepaid Expenses ...... (33,000) (26,000)
Increase (Decrease) in Accounts Payable ...... 27,000 (31,000)
Increase (Decrease) in Accrued Liabilities ... (21,000) 30,000
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Net Cash Provided by Operating
Activities ...................................... 1,831,000 2,519,000
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Cash Flows From Investing Activities:
Short-term Investments Purchased ................ (501,000) (1,601,000)
Short-term Investments Redeemed ................. 650,000 --
Capital Expenditures, Net of Retirements ........ (8,000) (31,000)
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Net Cash (Used) Provided by Investing Activities . 141,000 (1,632,000)
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Cash Flows From Financing Activities:
Dividends Paid .................................. (1,101,000) (616,000)
Treasury Stock Purchases ........................ (976,000) (667,000)
Proceeds From Stock Options Exercised ........... 110,000 323,000
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Net Cash (Used) Provided by Financing Activities . (1,967,000) (960,000)
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Net Increase (Decrease) In Cash and Equivalents .. 5,000 (73,000)
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Cash and Cash Equivalents at Beginning of Period . 4,670,000 4,761,000
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Cash and Cash Equivalents at End of Period ....... $ 4,675,000 $ 4,688,000
=========== ===========
See notes to financial statements.
MESA LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
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, 2004.
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, 2004.
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 2005
and 2004 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 amounts indicated below:
Three Months Ended Nine Months Ended
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December 31, December 31,
-------------------- -----------------------
2004 2003 2004 2003
--------- --------- ---------- ----------
Net income - as reported $ 563,000 $ 500,000 $1,736,000 $1,552,000
Less: Total stock based employee
compensation expense determined under
fair value based method for all awards,
Net of related tax effects $ 33,000 $ 8,000 $ 101,000 $ 70,000
Net income - pro forma $ 530,000 $ 492,000 $1,635,000 $1,482,000
Income per basic share - as reported $ .18 $ .16 $ .57 $ .51
Income per basic share - pro forma $ .17 $ .16 $ .53 $ .49
Income per diluted share - as reported $ .18 $ .16 $ .55 $ .50
Income per diluted share - pro forma $ .17 $ .16 $ .52 $ .47
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 3.6% to 3.9% (2005) and 0% to
2.0% (2004); expected volatility of approximately 19% to 29% (2005) and 14%
(2004); discount rate of 3.35% to 4.62% (2005)and 3.0% (2004); and expected
lives of 5 to 10 years.
NOTE C. NET INCOME PER COMMON SHARE
Basic net income per common share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted net income per common share is computed using the treasury stock method
to compute the weighted average common stock outstanding assuming the conversion
of potential dilutive common shares.
The following table presents a reconciliation of the denominators used in
the computation of net income per common share-- basic and net income per common
share-- diluted for the three and nine month periods ended December 31, 2004 and
2003:
Three Months Ended Nine Months Ended
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December 31, December 31,
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2004 2003 2004 2003
--------- -------- ---------- ----------
Net income available for shareholders $563,000 $500,000 $1,736,000 $1,552,000
Weighted avg. outstanding shares
of common stock 3,052,000 3,049,000 3,065,000 3,046,000
Dilutive effect of stock options 102,000 99,000 82,000 79,000
Common stock and equivalents 3,154,000 3,148,000 3,147,000 3,125,000
Earnings per share:
Basic $ .18 $ .16 $ .57 $ .51
Diluted $ .18 $ .16 $ .55 $ .50
For the three months and nine months ended December 31, 2004 and 2003, no shares
attributable to outstanding stock options were excluded from the calculation of
diluted earnings per share because the exercise prices of the stock options were
greater than or equal to the average price of the common shares, and therefore
their inclusion would have been anti-dilutive.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Mesa Laboratories, Inc. manufactures and distributes electronic measurement
systems for various niche applications, including renal treatment, food
processing, medical sterilization, pharmaceutical processing and other
industrial applications. Our Company follows a philosophy of manufacturing high
quality products and providing a high level of on-going service for those
products. In order to optimize the performance of our Company and to build the
value of the Company for its shareholders, we continually follow the trend of
various key financial indicators. A sample of some of the most important of
these indicators is presented in the following table.
Key Financial Indicators
For The Nine Months Ended December 31,
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2004 2003 2002 2001
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Cash and Investments $6,624,000 $6,289,000 $4,226,000 $3,138,000
Trade Receivables $1,622,000 $1,541,000 $1,904,000 $2,115,000
Days Sales Outstanding 57 60 73 85
Inventory $2,057,000 $2,191,000 $2,496,000 $2,316,000
Inventory Turns 1.8 1.6 1.3 1.6
Working Capital $9,911,000 $9,655,000 $8,604,000 $7,588,000
Current Ratio 16:1 17:1 19:1 16:1
Average Return On:
Stockholder Investment(1) 15.2% 14.0% 14.8% 16.0%
Assets 14.4% 13.4% 15.3% 15.3%
Invested Capital (2) 26.4% 22.1% 21.1% 20.3%
Net Sales $7,406,000 $6,729,000 $6,681,000 $6,951,000
Gross Profit $4,620,000 $4,183,000 $4,198,000 $4,193,000
Gross Margin 62% 62% 63% 60%
Operating Income $2,606,000 $2,359,000 $2,361,000 $2,291,000
Operating Margin 35% 35% 35% 33%
Net Profit $1,736,000 $1,552,000 $1,619,000 $1,587,000
Net Profit Margin 23% 23% 24% 23%
Earnings Per Diluted
Share $ .55 $ .50 $ .49 $ .46
Capital
Expenditures(Net) $ 8,000 $ 31,000 $ 56,000 $ 14,000
Head Count 48.5 48.5 46.5 51.0
Sales Per Employee $ 204,000 $ 185,000 $ 192,000 $ 182,000
(Annualized)
(1) Average return on stockholder investment is calculated by dividing total
net income by the average of end of period and beginning of year total
stockholder's equity.
(2) Average return on invested capital (invested capital = total assets -
current liabilities - cash and short-term investments) is calculated by
dividing total net income by the average of end of period and beginning of
year invested capital.
Results of Operations
Net Sales
Net sales for the third quarter of fiscal 2005 increased 15 percent from
fiscal 2004. In real dollars, net sales of $2,530,000 in fiscal 2005 increased
$330,000 from $2,200,000 in 2004.
Net sales for the first nine months of fiscal 2005 increased 10 percent
from fiscal 2004. In real dollars, net sales of $7,406,000 in fiscal 2005
increased $677,000 from $6,729,000 in 2004.
Our revenues come from two main sources, which include product revenues and
parts and service revenues. Parts and service revenues are derived from on-going
repair and recalibration or certification of our products. The certification or
recalibration of product is usually a key component of the customer's own
quality system and many of our customers operate in regulated industries, such
as food processing or medical and pharmaceutical processing. For this reason,
these revenues tend to be fairly stable and grow slowly over time. During the
nine months of fiscal years 2005 and 2004 our Company had parts and service
revenue of $2,085,000 and $1,931,000. As a percentage of total revenue, parts
and service revenues were 28% in 2005 and 29% in 2004.
The performance of new product sales is dependent on several factors,
including general economic conditions in the United States and abroad, capital
spending trends and the introduction of new products. Over the past two fiscal
years, general economic conditions and capital spending have been improving. New
products released to the market over the past two fiscal years include the
Datatrace Micropack III temperature loggers during the middle of fiscal 2003 and
the Datatrace Micropack III humidity and pressure loggers at the end of fiscal
2004. All three loggers, temperature, humidity and pressure, utilize a common PC
Interface system and operating software. For this reason, we believe that some
customer purchasing decisions were probably delayed into fiscal 2005, as those
customers awaited introduction of the humidity and pressure loggers. For the
first nine months of fiscal years 2005 and 2004 product sales for our company
were $5,321,000 and $4,798,000.
Over the fiscal third quarter and nine month periods, our medical revenues
increased eight percent and 12 percent compared to the prior periods. This
increase was due to higher sales of meters, solutions and service. Currently,
research and development efforts are in process to further enhance this line of
products.
During the fiscal third quarter and nine month periods, sales of the
Datatrace brand of products increased 20 percent for the quarter and increased
eight percent over the prior year-to-date period. At the end of fiscal 2004, we
released our latest version of user software and shipped initial units of the
Micropack III humidity and pressure loggers to customers. These new products
will allow customers who measure more than one parameter in their process to
program and retrieve data from the same PC Interface device. During April the
company began introduction of its new 4-20 milliamp logger. This user scalable
logging device is completely new and will allow users to log the 4-20 milliamp
output of various fixed monitors within their process and correlate that data to
the product data collected by our loggers. In this way, the user may bring
additional data parameters into their analysis without compromising data
integrity as required by various regulatory bodies.
During the fiscal third quarter and nine month periods, sales of the
Nusonics line of ultrasonic fluid measurement systems increased by 28 percent
and 15 percent compared to the prior year periods. At this time, Nusonics
products still contribute less than 10 percent of our total sales.
Cost of Sales
Cost of sales as a percent of net sales during the third fiscal quarter was
unchanged from fiscal 2004 at 38.1 percent. For the first nine months of the
fiscal year, cost of sales as a percent of net sales decreased 0.2 percent to
37.6 percent of sales. Most of our products enjoy gross margins in excess of
55%. Due to the fact that the dialysis products have sales concentrations to
several companies that maintain large chains of treatment centers, the products
that are sold to the renal market tend to be slightly more price sensitive than
the data logging products. Therefore, shifts in product mix toward higher sales
of Datatrace logging products will tend to produce lower cost of goods sold
expense and higher gross margins while shifts toward higher sales of medical
products will normally produce the opposite effect on cost of goods sold expense
and gross margins.
Over the current fiscal quarter, our Company experienced a higher growth
rate in its Datatrace sales which was off-set by an increase in Nusonics
products sales, which led to unchanged cost of goods sold expense as a percent
of sales compared to the prior year period.
Selling, General and Administrative
General and administrative expenses tend to be fairly fixed and stable from
year-to-year. To the greatest extent possible, we work at containing and
minimizing these costs. In the third quarter, increased recruiting costs for our
new Vice President of Sales and Marketing position were partially off-set by
lower Director and shareholder relations expenses. Total administrative costs
were $257,000 for the fiscal third quarter and $236,000 in the prior year
quarter, which represents a $21,000 or nine percent increase from fiscal 2004 to
fiscal 2005. For the first nine months of the fiscal year, administrative costs
were $740,000 and $658,000 in the prior year period, which represents a $82,000
or 12 percent increase from fiscal 2004 to fiscal 2005. Most of this increase
was incurred during the second quarter.
Our selling and marketing costs tend to be far more variable in relation to
sales, although there are various exceptions. Some of these exceptions include
the introduction of new products and the mix of international sales to domestic
sales. For a product line experiencing introduction of a new product, costs will
tend to be higher as a percent of sales due to higher advertising costs and
sales training programs. Our Company's international sales are usually
discounted and recorded at the net discounted price, so that a change in mix
between international and domestic sales may influence sales and marketing
costs. One other major influence on sales and marketing costs is the mix of
domestic medical sales to all other domestic sales. Domestic medical sales are
made by direct telemarketing representatives, which gives us a lower cost
structure, when compared to the independent representative sales channels
utilized by our other products.
In dollars, selling costs were $373,000 in the third fiscal quarter and
$288,000 in the same prior year quarter. As a percent of sales, selling costs
were 14.7% in the current quarter and 13.1% in the prior year quarter. In
dollars, selling costs were $1,008,000 in the first nine months of the current
fiscal year and $930,000 in the same prior year period. As a percent of sales,
selling costs were 13.6% in the current period and 13.8% in the prior year
period. During the current fiscal quarter and year-to-date period, most of the
increase in selling expense was due to increased compensation and outside
commission costs.
On October 11, 2004 Mr. John Sullivan, Ph.D., took over the newly created
position of Vice President of Sales and Marketing. John brings 15 years of
experience in various marketing management, business unit management and merger
and acquisition leadership positions at Varian, Inc. to our Company. His
experience will be very instrumental to our strategy of expanding sales through
both product line and sales channel expansion, as well as, through acquisition
of complimentary product lines. Due to the hiring of John, recruiting,
compensation and other marketing costs are expected to increase during the
second half of the current fiscal year, but at this time we cannot project how
much of this cost may be off-set by higher revenues.
Research and Development
Company sponsored research and development cost was $95,000 during the
third fiscal quarter and $86,000 during the previous year period. For the first
nine months of the current fiscal year, costs were $266,000 during the current
period and compared to $236,000 during the prior year period. Costs for research
and development are up for both the quarter and year-to-date, due to an increase
in headcount in the current year compared to prior year. We are currently trying
to execute a strategy of increasing the flow of internally developed products.
This strategy has led to the introduction of two new Datatrace logging products
in fiscal 2004 and a third Datatrace logging product early in fiscal 2005. Work
has also begun on a new generation of our dialysate meter line of products.
Net Income
Net income increased 13 percent to $563,000 or $.18 per share on a diluted
basis during the third quarter from $500,000 or $.16 per share on a diluted
basis in the previous year period. Net income increased 12 percent to $1,736,000
or $.55 per share on a diluted basis for the current nine month period from
$1,552,000 or $.50 per share on a diluted basis in the previous year period. Net
income growth was due primarily to the increase in revenues.
Liquidity and Capital Resources
On December 31, 2004, we had cash and short term investments of $6,624,000.
In addition, we had other current assets totaling $3,951,000 and total current
assets of $10,575,000. Current liabilities of our Company were $663,000 which
resulted in a current ratio of 16:1.
Our Company has made capital acquisitions of $8,000 during the first nine
months of the current fiscal year. We have instituted a program to repurchase up
to 300,000 shares of our 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. We do not maintain a set
policy or schedule for our buyback program. Most of our stock buybacks have
occurred during periods when the price to earnings multiple has been near
historical low points, or during times when selling activity in the stock is out
of balance with buying demand.
On November 12, 2003 our Board of Directors instituted a policy of paying
regular quarterly dividends. On June 15, 2004 and September 15, 2004, quarterly
dividends of $.05 per common share were paid to shareholders of record on June
1, 2004 and September 1, 2004. On December 15, 2004, a regular quarterly
dividend of $.06 per common share and a special dividend of $.20 per common
share was paid to shareholders of record on December 1, 2004. For the current
year, dividends paid have totaled $1,101,000, and the rates paid in December for
the quarterly and special dividends represent an increase of 20 and 33 percent,
respectively, from the former rates.
Our Company invests its surplus capital in various interest bearing
instruments, including money market funds, short-term treasuries and municipal
bonds. All investments are fixed dollar investments with variable rates in order
to minimize the risk of principal loss. In some cases, additional guarantees of
the investment principal are provided in the form of bank letters of credit.
The Company does not currently maintain a line of credit or any other form
of debt. Nor does the Company guarantee the debt of any other entity. The
Company has maintained a long history of surplus cash flow from operations. This
surplus cash flow has been used in the past to fund acquisitions and stock
buybacks and is currently being partially utilized to fund our on-going
dividend. If interesting candidates come to our attention, we may chose to
pursue new acquisitions.
Contractual Obligations
At December 31, 2004 our only contractual obligations were open purchase
orders for routine purchases of supplies and inventory, which would be payable
in less than one year.
Forward Looking Statements
All statements other than statements of historical fact included in this
annual report regarding our Company's financial position and operating and
strategic initiatives and addressing industry developments are forward-looking
statements. Where, in any forward-looking statement, the Company, or its
management, expresses an expectation or belief as to future results, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished. Factors which
could cause actual results to differ materially from those anticipated, include
but are not limited to general economic, financial and business conditions;
competition in the data logging market; competition in the kidney dialysis
market; competition in the fluid measurement market; the discontinuance of the
practice of dialyzer reuse; the business abilities and judgment of personnel;
the impacts of unusual items resulting from ongoing evaluations of business
strategies; and changes in business strategy. We do not intend to update these
forward looking statements. You are advised to review the "Additional Cautionary
Statements" provided in our Company's most recent Form 10-KSB filing with the
SEC for more information about risks that could affect the financial results of
Mesa Laboratories, Inc.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
our financial statements and accompanying notes. Actual results could differ
materially from those estimates.
We believe that there are several accounting policies that are critical to
understanding the Company's historical and future performance, as these policies
affect the reported amounts of revenue and the more significant areas involving
management's judgments and estimates. These significant accounting policies
relate to revenue recognition, research and development costs, valuation of
inventory, and valuation of long-lived assets. These policies, and the Company's
procedures related to these policies, are described in detail below.
Revenue Recognition
We sell our products directly through our sales force and through
distributors. Revenue from direct sales of our product is recognized upon
shipment to the customer. Revenue from ongoing product service and repair is
fully recognized upon completion and shipment of serviced product.
Research & Development Costs
Research and development activities consist primarily of new product
development and continuing engineering on existing products. Costs related to
research and development efforts on existing or potential products are expensed
as incurred.
Valuation of Inventories
Inventories are stated at the lower of cost or market, using the first-in,
first-out method (FIFO) to determine cost. The Company's policy is to
periodically evaluate the market value of the inventory and the stage of product
life cycle, and record a reserve for any inventory considered slow moving or
obsolete.
Valuation of Long-Lived Assets and Goodwill
The Company assesses the realizable value of long-lived assets and goodwill
for potential impairment at least annually or when events and circumstances
warrant such a review. The carrying value of a long-lived asset is considered
impaired when the anticipated fair value is less than its carrying value. In
assessing the recoverability of our long-lived assets and goodwill, we must make
assumptions regarding estimated future cash flows and other factors to determine
the fair value of the respective assets. In addition, we must make assumptions
regarding the useful lives of these assets.
The above listing is not intended to be a comprehensive list of all of our
accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles, generally
accepted in the United States of America, with no need for management's judgment
in their application. There are also areas in which management's judgment in
selecting any viable alternative would not produce a materially different
result. See our audited financial statements and notes thereto which begin at
"Item 7. Financial Statements" of the last Annual Report on Form 10-KSB which
contain accounting policies and other disclosures required by accounting
principles, generally accepted in the United States of America.
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.
b. There was no change in our internal control over financial reporting that
occurred during our quarter ended December 31, 2004 that has materially
affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
PART II-OTHER INFORMATION
ITEM 2. Changes in securities, use of proceeds and issuer purchases of equity
Securities
We made the following repurchases of our common stock, by month, within the
third quarter of the fiscal year covered by this report:
Total Shares Purchased Remaining Shares
Shares Avg. Price as Part of Publicly to Purchase
Purchased Paid Announced Plan Under Plan
--------- ------- -------------- ----------
Oct. 1-31, 2004 29,444 $ 12.01 108,256 191,744
Nov. 1-30, 2004 25,683 $ 12.07 133,939 166,061
Dec. 1-31, 2004 5,157 $ 11.77 139,096 160,904
------- -------
Total Third Qtr 60,284 $ 12.02
On June 19, 2003, the Board of Directors of Mesa Laboratories, Inc. adopted a
share repurchase plan which allows for the repurchase of up 300,000 of the
company's common shares. This plan will continue until the maximum is reached or
the plan is terminated by further action of the Board.
ITEM 4. Submission of matters to a vote of securities holders
The Annual Meeting of Shareholders of Mesa Laboratories, Inc. was held on
October 18, 2004. Of the 3,072,403 Shares entitled to vote, 2,659,068 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
--------- --------
Michael T. Brooks 2,651,068 8,000
H. Stuart Campbell 2,649,068 10,000
Paul D. Duke 2,567,232 91,836
Luke R. Schmieder 2,568,159 90,909
An amendment to our 1999 Stock Compensation Plan increasing the authorized
number of shares of common stock from 300,000 to 500,000 was approved by the
following vote.
FOR AGAINST ABSTAIN
--- ------- -------
1,963,205 62,259 9,020
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 November 2, 2004, we furnished a report on Form 8-K under Item 9,
Regulation FD Disclosure, to announce that we issued a press release on November
2, 2004 announcing preliminary results for the second quarter period ended
September 30, 2004, and filed under Item 7, Financial Statements and Exhibits, a
copy of the press release dated November 2, 2004.
MESA LABORATORIES, INC.
DECEMBER 31, 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 14, 2005 BY: /s/Luke R. Schmieder
------------------- --------------------
Luke R. Schmieder
President, Chief Executive Officer,
Treasurer and Director
DATED: February 14, 2005 BY: /s/Steven W. Peterson
------------------- ---------------------
Steven W. Peterson
Vice President-Finance, Chief
Financial and Accounting Officer and
Secretary