Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2019

Basis of Accounting, Policy [Policy Text Block]

Principals of Consolidation and

Basis of Presentation

Our Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include our accounts and our wholly owned subsidiaries after elimination of all intercompany accounts and transactions.

Reclassification, Policy [Policy Text Block]

Reclassification

Certain prior period amounts have been reclassified to conform to the current year presentation. Specifically,

2,214

and

$2,455

have been reclassified out of revenues from services and into product revenues for the years ended

March 31, 2018

and

March 31, 2017,

respectively. Additionally,

$905

and

$9,554

was reclassified out of cash flows from operating activities and into cash flows from financing activities for the years ended

March 31, 2018

and

March 31, 2017,

respectively.

Use of Estimates, Policy [Policy Text Block]

Management Estimates

The preparation of our Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our Consolidated Financial Statements and accompanying notes. Actual results could differ from our estimates under different assumptions or conditions.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Our revenues come from product sales, which include hardware and software, and consumables; as well as services, which include installation, discrete maintenance services, and ongoing maintenance contracts. We generally recognize revenues as follows:

Product sales:

Substantially all of our revenues and related receivables are generated from contracts with customers that are

months or less in duration. Evidence of an arrangement is typically in the form of a purchase order. Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied, typically by shipping ordered products.

Services:

We generally generate service revenues from

three

categories:

) discrete installation of our hardware and software,

) discrete but recurring calibration and maintenance of our hardware or,

) contracted and recurring testing and maintenance services and software license subscriptions. Evidence of a service arrangement

may

be in the form of a formal contract or a purchase order. Typically, discrete service revenue is recognized upon customer’s acknowledgment of completion of the service, while contracted revenue is recognized over a period of time reflective of the performance obligation period in the applicable contract.

For all revenue arrangements, prices are fixed at the time of purchase and

price protections or variables are offered. Collectability is reasonably assured through our customer credit and review process, and payment is typically due within

days or less. We adopted the practical expedient available in Accounting Standards Update

606

and we expense commission costs as incurred. For the vast majority of our contracts that have an original duration of

one

year or less, we have elected the practical expedient applicable to such contracts and have

not

disclosed the transaction price for future performance obligations as of the end of each reporting period or when the company expects to recognize sales.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and handling

Payments by customers to us for shipping and handling costs are included in revenues on the consolidated statements of operations, while our expense is included in cost of revenues. Shipping and handling for inventory and materials purchased by us is included as a component of inventory on the consolidated balance sheets, and in cost of revenues when the product is sold.

Revenue from Contract with Customer, Deferred Revenue [Policy Text Block]

Unearned Revenues

Certain of our products have associated annual service contracts whereby we provide repair, technical support, and various other analytical or maintenance services. In the event that these contracts are paid up front by the customer, the associated amounts are deferred and recognized ratably over the term of the service period, generally

one

year.

Standard Product Warranty, Policy [Policy Text Block]

Accrued Warranty Expense

We provide limited product warranty on our products and, accordingly, accrue an estimate of the related warranty expense at the time of sale.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash

and

Equivalents

We classify all highly liquid investments with a maturity of

three

months or less at the date of purchase as cash equivalents.

Accounts Receivable [Policy Text Block]

Accounts Receivable

and Allowance for Doubtful Accounts

All trade accounts are reported at net realizable value on the accompanying Consolidated Balance Sheets, adjusted for any write-offs and net of allowances for doubtful accounts. The allowance for doubtful accounts represents our best estimate of the credit losses expected from our trade accounts. We use judgment about the timing, frequency, and severity of credit losses to determine the allowances, and a difference from our original judgment could materially affect the provision for credit losses and, therefore, net earnings. We regularly perform detailed reviews of our receivables to determine if an impairment has occurred and we evaluate the collectability of receivables based on a combination of various financial and qualitative factors that

may

affect customers’ ability to pay, including customers’ financial condition, and history of payment. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. Additions to the allowances for doubtful accounts are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional reserves would be required. We do

not

believe that trade accounts receivable represent significant concentrations of credit risk because of the diversified portfolio of individual customers and geographical areas. We recorded

$13,

$17

and

$68

of expense associated with doubtful accounts for the years ended

March

31,

2019,

2018

and

2017,

respectively.

Inventory, Policy [Policy Text Block]

Inventories

Inventories include the costs of materials, labor, and overhead. Inventories are stated at the lower of cost or net realizable value, using the weighted average method to determine cost. We evaluate labor and overhead costs annually, unless specific circumstances necessitate a mid-year evaluation. Our work in process and finished goods inventory includes raw materials, labor and overhead, which are estimated based on trailing

twelve

months of expense and standard labor hours for each product. Our biological indicator inventory is tracked by lot number, thus it is generally based on actual hours.

We monitor inventory cost compared to selling price in order to determine if a lower of cost or net realizable value reserve is necessary. Throughout the year, we perform various physical cycle count procedures on our inventories and we estimate and maintain an inventory reserve, as needed, for such matters as obsolete inventory, shrink and scrap.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Expenditures for major renewals and improvements are capitalized, while expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of our assets. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and any related gain or loss is reflected in other expense, net in the accompanying Consolidated Statements of Operations. At least annually, we evaluate, and adjust when necessary, the estimated lives of property, plant and equipment. Any changes in estimated useful lives are recorded prospectively. Estimated useful lives of depreciable assets are as follows:

Category		Useful Lives
Buildings (years)		40
Manufacturing Equipment (years or less)		7
Computer equipment (years or less)		3

Land is

not

depreciated and construction in progress is

not

depreciated until placed in service.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill

and Intangible Assets

Goodwill and other intangible assets result from our acquisition of existing businesses. Goodwill and indefinite-lived intangible assets (trademarks) are

not

subject to amortization, but instead are tested for impairment at least annually or when events or changes in circumstances indicate that the carrying amount

may

not

be recoverable, and we are required to record any necessary impairment adjustments. Impairment is measured as the excess of the carrying value over the fair value of the goodwill. We perform impairment tests of goodwill at our reporting unit level, which is

one

level below our operating segments.

We determine the useful lives of our finite intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, our long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized on a straight-line basis, over their useful lives, generally ranging from

three

years (See Note

“Goodwill and Long-Lived Assets”). Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. For the purposes of reviewing finite-lived assets for potential impairment, assets are grouped at the asset group level.

The fair value measurement for asset impairment is based on Level

inputs. See “Fair Value Measurements” below for a description of level inputs. We

first

compare the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value. The estimated fair value of the asset is generally determined using a discounted cash flow projection model. In certain cases, management uses other market information, when available, to estimate the fair value of an asset. The impairment charges represent the excess of each asset’s carrying amount over its estimated fair value.

Research and Development Expense, Policy [Policy Text Block]

Research & Development Costs

We conduct research and development activities for the purpose of developing new products and enhancing the functionality, effectiveness, reliability, and accuracy of existing products. Research and development expense is predominantly comprised of labor costs and

third

-party consultants. Research and development costs are expensed as incurred.

Share-based Payment Arrangement [Policy Text Block]

Stock-based Compensation

We issue shares in the form of stock options and full-value awards as part of employee compensation pursuant to the Mesa Laboratories, Inc.

2014

Equity Plan (“The

2014

Equity Plan”). Stock options and stock awards generally vest equally over

five

years and stock options generally expire after

six

years. Stock-based compensation expense is generally recognized on a straight-line basis over the vesting period of the award. We estimate forfeitures based on historical data when determining the amount of stock-based compensation costs to be recognized in each period and changed our methodology to applying the forfeiture to using a dynamic forfeiture model, instead of a static forfeiture model during the year ended

March 31, 2019.

Stock awards with performance conditions generally vest based on our achievement versus stated targets or criteria over a

three

-year performance and approximately

three

-year service period. Compensation expense on stock awards subject to performance conditions, which is based on the quantity of awards we have determined are probable of vesting, is recognized over the longer of the estimated performance goal attainment period or time vesting period. We allocate stock-based compensation expense to cost of revenues and general and administrative expense in the Consolidated Statements of Operations. Refer to Note

“Stock Transactions and Stock-Based Compensation” for additional information on stock-based compensation expense.

Income Tax, Policy [Policy Text Block]

Income Taxes

Income tax expense includes U.S., state, local and international income taxes, plus a provision for U.S. taxes on undistributed earnings of foreign subsidiaries and other prescribed foreign entities

not

deemed to be indefinitely reinvested. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting basis and the tax basis of existing assets and liabilities. The tax rate used to determine the deferred tax assets and liabilities is the enacted tax rate for the year and manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than

not

be realized.

We are involved in various tax matters, with respect to some of which the outcome is uncertain. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon

one

of the following conditions: (

) the tax position is

not

“more likely than

not”

to be sustained, (

) the tax position is “more likely than

not”

to be sustained, but for a lesser amount, or (

) the tax position is “more likely than

not”

to be sustained, but

not

in the financial period in which the tax position was originally taken. For purposes of evaluating whether or

not

a tax position is uncertain, (

) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (

) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (

) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years

may

elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the “more likely than

not”

recognition threshold would be recognized in income tax expense in the

first

interim period when the uncertainty disappears under any

one

of the following conditions: (

) the tax position is “more likely than

not”

to be sustained, (

) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (

) the statute of limitations for the tax position has expired (See Note

11.

“Income Taxes”).

Acquisition Related Contingent Consideration Liabilit

ies

Acquisition related contingent consideration liabilities consist of estimated amounts due under various acquisition agreements and is typically based on either revenues growth or specified profitability growth metrics. At each reporting period, we evaluate the expected future payments and the associated discount rate to determine the fair value of the contingent consideration, and record any necessary adjustments in other expense, net on the Consolidated Statements of Operations.

Commitments and Contingencies, Policy [Policy Text Block]

Legal

Contingencies

We are involved in various claims and legal proceedings that arise in the normal course of business. We record an accrual for legal contingencies when we determine that it is probable that we have incurred a liability and we can reasonably estimate the amount of the loss (See Note

12.

“Commitments and Contingencies”).

Fair Value Measurement, Policy [Policy Text Block]

Fair Value

Measurements

Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and long-term debt. The carrying value of these financial instruments (other than acquisition related contingent consideration liabilities, see above) is considered to be representative of their fair value due to the short maturity of these instruments. Our debt has a variable interest rate, so the carrying amount approximates fair value because interest rates on these instruments approximate the interest rate on debt with similar terms available to us. Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. For assets and liabilities recorded or disclosed at fair value on a recurring basis, we determine fair value based on the following:

Level

Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level

Observable inputs other than prices included in Level

such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are

not

active; or other inputs that are observable or can be corroborated with observable market data.

Level

Unobservable inputs for the asset or liability. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Business Combinations Policy [Policy Text Block]

Acquisitions

For the years ended

March 31, 2019,

2018,

and

2017,

our acquisitions of businesses (net of cash acquired) totaled

$4,840,

$15,518

and

$8,622,

respectively, of which

none

were individually material in nature. Subsequent to

March 31, 2019,

we acquired a business for

$2,804.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

February 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016

02,

Leases (Topic

842

)

, as amended by multiple standard updates. The pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use asset on the balance sheet for all leases with terms greater than

months. The guidance also requires qualitative and quantitative disclosures designed to present financial statement users with the ability to assess the amount, timing, and uncertainty of cash flows arising from leases. We have initiated our plan for the adoption and implementation of this new accounting standard, including assessing our lease arrangements, evaluating practical expedients, and making necessary changes to our accounting policies, processes, and internal controls over financial reporting. We expect to adopt the standard using the optional transition method, which will allow us to apply the standard as of the effective date, therefore we will

not

apply changes to comparative periods presented in our financial statements. We expect the right-of-use asset and lease liability to be approximately

$1,400,

and ASU

2016

will

not

significantly impact our consolidated statements of operations and cash flows.

Recently

Adopted

Accounting Pronouncements

August 2018,

the Securities and Exchange Commission (“SEC”) issued Release

No.

10532

that amends and clarifies certain financial reporting requirements. The principal change to our financial reporting is the inclusion of the annual disclosure requirement of changes in stockholders’ equity in Rule

of Regulation S-

to interim periods. We adopted this new rule beginning the quarter ended

December 31, 2018

and will continue including the Consolidated Statements of Stockholders’ Equity with each quarterly filing on Form

-Q.

During the year ended

March 31, 2019,

we elected to early-adopt ASU

2018

Intangibles – Goodwill and Other Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

(“ASU

2018

15”

) on a prospective basis. ASU

2018

aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs of other internal-use software arrangements. Accordingly, we capitalized

$206

of costs incurred during the year ended

March 31, 2019

primarily to implement a hosted enterprise resource planning system to our European subsidiaries. The related assets are held in prepaid expenses and other on our Consolidated Balance Sheets, and we began amortizing the expense of those assets that were placed in service to general and administrative costs on our Consolidated Statements of Operations on a straight-line basis over the contractual term of the arrangement. Total depreciation expense for hosted software arrangements was

$41

for the year ended

March 31, 2019

and the related assets are expected to be depreciated over approximately

two

years.

Effective

April 1, 2018,

we adopted ASU

2014

Revenue from Contracts with Customers (Topic

606

)

and all related amendments (referred to collectively hereinafter as “ASU

606”

) to all contracts on a modified retrospective basis. ASU

606

requires an entity to recognize revenue for the transfer of goods or services equal to the amount it expects to be entitled to receive for the goods and services. The adoption did

not

have a material impact on our Consolidated Balance Sheets, Statements of Operations, or Cash Flows. The primary impact of adoption was the enhancement of disclosures to provide additional clarity regarding how revenue is earned and recognized, and to show revenues at a more disaggregated level, included in Note

“Revenue Recognition.”

March 2018,

the FASB issued ASU

2018

05,

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

No.

118.

We adopted the ASU immediately upon release. The amendments in the update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Cuts and Jobs Act (“TCJA”). The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. Additionally, this ASU discusses required disclosures that an entity must make with regard to the TCJA. As of the year ended

March 31, 2019,

we have completed our analysis of the TCJA’s income tax effects. Refer to Note

11.

“Income Taxes” for additional information on the TCJA.

The TCJA created a new requirement that global intangible low taxed income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFC’s U.S. shareholder. Under U.S. GAAP, we are allowed to make an accounting policy choice of how GILTI taxes are treated. We have elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI as current period expenses when incurred (“the period cost method”).