<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1995
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________ to _________
Commission file number 0-13403
- --------------------------------------------------------------------------------
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
- --------------------------------------------------------------------------------
CALIFORNIA 95-2747332
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
237 VIA VERA CRUZ 92069-2698
SAN MARCOS, CA (Zip Code)
(Address of principal executive offices)
AREA CODE (619) 471-1700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
COMMON STOCK, PAR VALUE
$.01 PER SHARE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
------- -------
Aggregate market value of voting stock held by non-affiliates of the
registrant as of the close of business on February 29, 1996: $9,399,700.
The number of shares outstanding of registrant's Common Stock as of
February 29, 1996: 3,227,000 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document are incorporated by reference:
PART III
Definitive Proxy Statement for Annual Meeting of Shareholders to be held
May 1, 1996 filed with the Securities and Exchange Commission.
1
<PAGE>
AMISTAR CORPORATION AND SUBSIDIARIES
FORM 10-K
TABLE OF CONTENTS
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . 6
PART II
5. Market for Registrant's Common Stock and
Related Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . . 8
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . . . . 10
8. Financial Statements and Supplementary Data. . . . . . . . . . . . . . . 13
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . 24
PART III
10. Directors and Executive Officers of the Registrant . . . . . . . . . . . 24
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 24
12. Security Ownership of Certain Beneficial Owners and Management . . . . . 24
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . 24
PART IV
14. Exhibits, Financial Statement Schedule and Reports on Form 8-K . . . . . 24
2
<PAGE>
PART I
ITEM 1. BUSINESS
Amistar designs, develops, manufactures, markets and services a variety of
automatic and semi-automatic equipment for assembling electronic components to
printed circuit boards. In addition, the Company is a contract assembler of
printed circuit board assemblies.
Printed circuit boards are commonly used by manufacturers of a wide variety
of electronic systems and products to interconnect components. Typically, these
boards contain conductive layers, holes that receive the leads of "through hole"
components, pads on the board surface that provide a connection point for
"surface mounted" components, and interconnect layers that connect the various
components to form an electrical network.
The development of programmable and computer-controlled assembly equipment
which offers increased speed and accuracy of assembly has resulted in general
acceptance of electronics factory automation by electronics manufacturers of all
sizes. The improved output and low insertion or placement error rate associated
with assembly automation provide a cost-effective alternative to manual
assembly.
As a result of the diverse physical characteristics of modern electronic
components and printed circuit boards, the design and manufacture of automatic
assembly equipment is highly specialized. A significant portion of electronic
components fall into three categories: axial lead components, circuit components
packaged in DIP (dual in-line package) form, and surface mounted components.
Axial lead components, such as resistors, capacitors and diodes, have a wire
lead arranged axially from either end of a cylindrical body. DIPs, such as
microprocessors, memory and linear circuits, and logic elements, customarily
have from 2 to 40 leads. Surface Mounted Components, commonly known as SMDs,
may be leaded or not, but have an electrical contact that makes connection with
conductors on the board surface. Within these three categories, components come
in a large range of sizes and configurations. Further, current printed circuit
board designs are complex and use numerous component types that must be densely
placed to minimize wasted space. Accordingly, automatic assembly equipment must
be sufficiently flexible to adjust to a wide variety of components and board
designs.
PRODUCTS
In 1973, the Company introduced its first semiautomatic DIP inserter, and
in 1976, Amistar commenced production of its first semiautomatic axial inserter.
The Company then focused on the development of automatic inserters, the first of
which, a DIP inserter, was introduced in 1978. Since that time, Amistar has
developed and marketed a number of new automatic and semiautomatic inserters
that offer increased capacity, versatility and additional capabilities to
enhance the productivity and cost-efficiency of the electronic assembly process.
The Company's current product line features two automatic inserters (one
axial and one DIP) and two semiautomatic inserters (one axial and one DIP), and
an automatic surface mount placement machine. For each model, numerous
configurations combining various optional features are available. For example,
the Company offers several different placement heads, component lead formers and
cutters, and testers for its equipment, each designed for different
applications. This flexibility enables a customer to order the features best
suited to its board assembly requirements.
The Company's semiautomatic inserters are bench-top mounted and, like the
automatic inserters, automatically prepare the components for insertion,
however, the circuit board must be positioned manually by the machine operator.
In 1989, Amistar began the development of a new generic machine control
system to meet the needs of sophisticated manufacturing companies. In 1990, the
Company continued the development of the generic machine control system, and in
1991, began development of a surface mount machine using this control system
(PlaceMaster-TM-). The company introduced this new machine at trade shows in
1992, however, continued development of software, machine options and
reliability was required throughout 1993 and 1994.
3
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AMISTAR'S PRIVATE LABEL PRODUCTS
Amistar buys and re-sells products complimentary to its own products to
provide single source capability for its customers' benefit. Such products
include glue and solder paste curing ovens, infrared reflow ovens, solder paste
screen printers, entry level "pick and place" machines, and advanced technology
surface mount machines. The Company distributes the majority of these products
under an OEM supply agreement with a manufacturer in Japan, and as a result,
has significant supply dependence. A change in suppliers could cause a loss of
sales and or change in gross margins, which could affect operating results
adversely.
CONTRACT ASSEMBLY
In 1990, the Company founded a new operation to custom assemble electronic
boards and products for customers. Included among the wide range of services
that the Company offers its customer are: (1) manual and automatic assembly and
testing of customers products, (2) material sourcing, procurement and control,
(3) design, manufacturing and test engineering support, (4) warehousing and
shipment services. By providing high quality assembly and test capabilities,
active engineering support and competitive material procurement, the Company
seeks to build long-term strategic alliances with its customers. The Company
has the ability to produce assemblies requiring mechanical as well as electronic
capabilities.
PRODUCT DEVELOPMENT
The Company's products are marketed to an industry that is subject to rapid
technological change and increasingly complex methods of manufacturing.
Amistar's ability to compete and operate successfully depends, among other
things, upon its ability to react to such change. Accordingly, the Company is
committed to the continuing enhancement of its current products to allow their
use in a wider variety of applications and development of new products to
further reduce labor costs and increase manufacturing efficiency.
During 1995, 1994 and 1993 the Company's engineering, research and
development expenses were approximately $951,000, $1,431,000 and $1,566,000,
respectively. Development efforts were focused in 1995 on production of a line
of feeders which load components into the surface mount machines. In addition,
near the end of 1995, work was begun on the Placemaster C\P, which is a high
speed version of the Company's surface mount machine.
CUSTOMERS AND MARKETING
The Company's products are sold primarily to electronic manufacturers, both
directly and through distributors. The Company's marketing strategy is to offer
flexible equipment that fulfills a variety of customer needs and to emphasize
the advanced features, ease of use, price and performance, and reliability.
Amistar markets its products in the United States through a network of
sales representative organizations and direct sales personnel. In Europe and
Asia the Company's products are generally marketed through distributors who
purchase the equipment for resale. Since 1990, the Company has sold direct in
Germany through its own sales force.
In addition to the main sales and service center at the Company's
headquarters in San Marcos, California, the Company maintains sales and service
offices in Woburn, Massachusetts; Burr Ridge, Illinois; Frankfurt, Germany; and
Wettingen, Switzerland. Amistar employs regional managers who support the sales
efforts of distributors and representatives. In addition, the Company maintains
a field staff of applications specialists who support the sales force by
responding to complex technical and applications problems.
The Company's custom assembly service is primarily marketed through a
combination of Company personnel, electronics component distributors and outside
representatives.
4
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DEPENDENCE ON A SINGLE CUSTOMER
During 1995, sales of approximately $2,585,000 or 10%, were made to Smart
Modular Technologies.
FOREIGN SALES
A significant portion of the Company's sales have traditionally been to
foreign customers. Profitability and product mix of foreign sales are generally
comparable to domestic sales. The Company is subject to the usual risks of
international trade, including unfavorable economic conditions, foreign currency
risk, restrictive trade policies, controls on funds and political uncertainties.
The following table illustrates the Company's sales, expressed in dollars and as
a percentage of total sales, in major geographic markets over the last three
fiscal years.
<TABLE>
<CAPTION>
(Dollars in thousands)
1995 1994 1993
------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
United States $18,724 74% $12,866 72% $11,307 70%
Europe 6,200 24% 4,558 25% 3,712 23%
Asia 274 1% 351 2% 759 5%
Other 163 1% 203 1% 447 2%
------- ---- ------- ---- ------- ----
TOTALS $25,361 100% $17,978 100% $16,225 100%
------- ---- ------- ---- ------- ----
------- ---- ------- ---- ------- ----
</TABLE>
The Company's products can be freely exported to most countries under a
general destination (G-Dest) export license from the U.S. Department of
Commerce.
SERVICE
The Company provides installation and service for all of its machines other
than those sold by certain distributors with qualified service personnel who
undertake the installation and service responsibility. The Company also
provides for its customers, service personnel at the Company's San Marcos,
California; Burr Ridge, Illinois; Woburn, Massachusetts; and Wettingen,
Switzerland offices.
MANUFACTURING
Amistar's machines are complex devices that combine a number of electronic
and electromechanical technologies, and must function in difficult production
environments with a high degree of precision and reliability. Product designs
typically call for a high percentage of specially designed machine parts, many
of which are fabricated in-house, as well as standard, commercially available
parts. The Company operates machine shops in San Marcos, California and
Rockford, Illinois.
Those parts of the Company's products that are not manufactured directly by
Amistar are purchased from outside vendors. Most parts are available from more
than one supplier. While certain parts are presently purchased from single
sources, the Company believes it would be able to locate additional sources for
such parts without material adverse effect on its business. Amistar has never
experienced a major production delay due to a parts shortage or the loss of a
single-sourced part or its tooling.
COMPETITION
The Company competes with a number of domestic and foreign manufacturers of
electronic component placement or insertion equipment, many of whom have more
diverse product lines and greater financial and marketing resources than the
Company. The Company's primary domestic competitors are Universal Instrument
Corporation, a subsidiary of Dover Corporation, and Quad Systems. Amistar also
faces competition from foreign companies, including Panasonic, Fuji, Mydata,
Zevatech, Philips and Siemens.
The Company believes that the key factors affecting the choice of an
insertion or surface mount machine are reliability, speed, quality and speed of
service, ability to detect errors, range of components inserted or placed, ease
of programming and price.
There are numerous companies both large and small who do contract
electronic circuit board assembly.
5
<PAGE>
BACKLOG
Over the past five years, the Company has experienced a decrease in lead
times requested by its customers. Current practice is to wait to place the
purchase order until just before the equipment is required. The Company's
Private Label inventory position has increased in the current year and as a
result, has been able to fulfill orders in a short lead time. Therefore, backlog
may not necessarily be indicative of future sales. The backlog at December 31,
1995 was $17,000, all of which is expected to be shipped during the next 12
months. Firm backlog was $1,785,000 at December 31, 1994.
PATENTS AND LICENSES
Amistar has been issued four United States patents, one of which relates to
its cartridge for axial lead components, one relates to its position correction
servo optical system, one relates to a pneumatic feed system for axial
components, and the fourth to an SMD feed system. Although the Company believes
that its patents have value, the Company also believes that responding to the
technological changes that characterize the electronics industry, maintaining a
strong marketing and service operation and continuing to produce quality
products are of greater significance than patent protection. Moreover, there
can be no assurance that patents applied for will be granted or that any patents
presently held or to be held by the Company will afford it commercially
significant protection of its proprietary technology.
EMPLOYEES
During the week ending February 16, 1996, the Company had 144 full-time
employees and 40 temporary employees. Of the total employees, 130 were employed
in manufacturing, 34 in marketing and service, 10 in product development and 10
in administration and finance.
ITEM 2. PROPERTIES
The Company owns the building and 5.6 acres of land on which the building
is located in San Marcos, California. The Company's headquarters, principal
administration, manufacturing, and research and development offices are located
in this building of 80,000 square feet which was completed in April of 1987.
The Company leases a manufacturing facility in Rockford, Illinois
(approximately 5,000 square feet). The company also leases sales and services
offices in Woburn, Massachusetts; Burr Ridge, Illinois; Frankfurt, Germany; and
Wettingen, Switzerland.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any material pending legal proceedings
involving the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
6
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
Name Age Title
- --------------------- --- ----------------------------------------
Stuart Baker 64 Chairman of the Board, President and
Director
William W. Holl 65 Vice President of Finance, Treasurer,
Secretary and Director
Michael R. Newkirk 45 Vice President of Sales and Marketing
Daniel C. Finn 39 Vice President of Engineering
Carl C. Roecks 62 Vice President and Director
Richard A. Butcher 55 Director
Gordon S. Marshall 76 Director
Mr. Baker, a founder of the Company, has served the Company as a Director
and President since its inception in 1971 and as Chairman of the Board since
1993.
Mr. Holl, a founder of the Company, has served the Company as a Director
and as Treasurer and Secretary since its inception in 1971, and as Vice
President of Finance since 1978.
Mr. Newkirk has served the Company since 1988.
Mr. Finn has served the Company since 1979 and as Vice President of
Engineering since 995.
Mr. Roecks, a founder of the Company, has served the Company in various
engineering and management capacities since its inception in 1971. Since 1989
Mr. Roecks has been semi-retired, and serves the Company on a part-time basis.
Mr. Butcher was elected a Director of the Company in February 1984. From
1977 to the present, he has been a group managing Director of Marbaix (Holdings)
Ltd., an equipment manufacturer and distributor, and the Managing Director of
Automation Ltd., a wholly-owned subsidiary of Marbaix and the Company's
exclusive distributor in Great Britain and Ireland.
Mr. Marshall has served the Company as the Chairman of the Board from 1974
to 1993. Mr. Marshall is the founder and Chairman of the Board of Marshall
Industries, an electronics distribution company.
7
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
From May 11, 1984, when Amistar had its initial public offering until June
18, 1985 the Company's stock was traded on the NASDAQ over the counter market
under the symbol AMTA. Since June 18, 1985 the Company's stock has traded on
the NASDAQ/NMS (National Market System). The following table reflects the
closing prices per share for the last two years:
<TABLE>
<CAPTION>
Quarter ended HIGH LOW
------------- ---- ---
<S> <C> <C>
Mar. 31, 1994 3-3/8 1-7/8
Jun. 30, 1994 3 1-1/8
Sep. 30, 1994 2-1/4 1-1/4
Dec. 31, 1994 2-1/8 1-3/4
Mar. 31, 1995 2-3/16 1-15/16
Jun. 30, 1995 3-11/16 2-1/16
Sep. 30, 1995 5-13/16 2-7/8
Dec. 31, 1995 10-5/8 5
</TABLE>
* The prices indicated are as reported by the National Association of
Security Dealers.
The Company had approximately 125 shareholders of record on December 31,
1995, however, the Company believes there are over 700 beneficial owners based
on the number of requests for proxies.
The Company has not paid cash dividends on its common stock and does not
plan to pay cash dividends to its shareholders in the foreseeable future.
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Consolidated Statements of Operations Data:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
(In thousands, except per share data)
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $ 25,361 $ 17,978 $ 16,225 $ 15,895 $ 13,940
Cost of sales 16,732 11,584 9,891 15,011 8,497
-------- -------- -------- -------- --------
Gross profit 8,629 $ 6,394 6,334 885 5,443
-------- -------- -------- -------- --------
Operating expenses:
Selling 4,109 3,526 3,082 3,053 3,979
General & administrative 1,171 920 893 915 939
Engineering, research & development 951 1,431 1,566 1,601 1,407
-------- -------- -------- -------- --------
6,231 5,877 5,541 5,569 6,325
Earnings (loss) from operations 2,398 517 793 (4,684) (882)
Other income (expense):
Interest, net (99) (82) (65) (80) (129)
Miscellaneous 78 122 91 (23) 137
-------- -------- -------- -------- --------
Earnings (loss) before income taxes
and cumulative effect of change
in accounting principle 2,377 557 819 (4,787) (874)
Income tax expense (benefit) 300 37 (81) (58) (216)
-------- -------- -------- -------- --------
Earnings (loss) before cumulative effect
of change in accounting principle 2,077 520 900 (4,729) (658)
Cumulative effect of change in
accounting for income taxes (1) - - 144 - -
-------- -------- -------- -------- --------
Net earnings (loss) $ 2,077 $ 520 $ 1,044 $ (4,729) $ (658)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Earnings (loss) per Common share :
Earnings (loss) before cumulative
effect of change in accounting
principle $ 0.65 $ 0.17 $ 0.29 $ (1.51) $ (0.21)
Cumulative effect of change
in accounting for income taxes - - 0.04 - -
-------- -------- -------- -------- --------
Net earnings (loss) per share $ 0.65 $ 0.17 $ 0.33 $ (1.51) $ (0.21)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Shares used in calculation of
earnings (loss) per share 3,193 3,137 3,133 3,133 3,133
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
Selected Consolidated Balance Sheet Data:
<TABLE>
<CAPTION>
Year Ended in December 31,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Working capital $ 10,815 $ 5,291 $ 8,738 $ 7,801 $ 12,292
Total assets 19,742 17,429 15,689 14,870 19,662
Long-term obligations 4,500 - 4,500 4,500 4,500
Retained earnings 7,758 5,682 5,161 4,117 8,845
Total shareholders' equity 12,613 10,485 9,914 8,870 13,598
</TABLE>
(1) SEE NOTES 1 AND 5 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
Quarter Ended,
--------------------------------------------
3/31 6/30 9/30 12/31
-------- -------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
1995
Net sales $ 5,498 $ 6,542 $ 7,477 $ 5,844
Gross profit 1,791 2,130 2,204 2,504
Net earnings 319 480 638 640
Earnings per Common share 0.10 0.15 0.20 0.20
1994
Net sales $ 3,315 $ 5,054 $ 4,848 $ 4,761
Gross profit 1,236 1,752 1,772 1,634
Net earnings (loss) (256) 199 245 332
Earnings (loss) per Common share (0.08) 0.06 0.08 0.11
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On May 11, 1984, the Company raised $4,910,000 from the sale of 750,000
shares of its common stock through an initial public offering. From time to
time thereafter, the Company borrowed funds from its bank to meet working
capital requirements. From 1989 to October 1995, however, the Company did not
have a line of credit available and met all requirements with internally
generated funds. In October 1995, the Company negotiated a two million dollar
revolving line of credit with a new bank. As of December 31, 1995 no amounts
have been drawn on this line.
At December 31, 1995, the Company's cash balance was $1,982,000 compared to
$1,671,000 the same date the prior year, and $2,689,000 two years prior. Excess
cash is invested in money market accounts. Inventory transfers to and purchases
of capital equipment were $48,000 in 1995, $96,000 in 1994, and $690,000 in
1993. Also, in 1994, a transfer from capital equipment to inventory of $167,000
was made. The majority of these capital acquisitions were for the Custom
Assembly Group.
Working capital increased by $5,524,000 in 1995. This was due primarily to
the reclassification of the $4,500,000 Industrial Development Bonds to long-term
liabilities when the maturity date was extended in 1995 and due to the increase
in demonstration equipment. Inventories decreased $440,000 during the year
primarily due to Placemaster sales and offset by the build up in Private Label
products. Demonstration equipment increased $1,001,000 in order to provide a
greater complement of the product line at the sales showrooms for
demonstrations. The increase in accounts receivable and commissions payable
during the year was due to higher sales volume. Customer deposits decreased
significantly over the previous year as one customer's deposit was applied to a
sale. Accrued payroll increased due to incentive compensation earned by the
management team. This increase in working capital in 1995 compares to an
decrease of $3,447,000 in 1994. Cash provided from operations in 1995 increased
significantly over 1994 due to greater profitability, a smaller increase in
accounts receivable, a decrease in inventories, and an increase in demonstration
equipment. 1994 cash used from operations differs from 1993 cash provided due
primarily to increases in inventory and trade accounts receivable in 1994.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
In 1984 the Company purchased 5.6 acres of land in San Marcos, California
for $982,000 and initiated efforts for the design and construction of an 80,000
square foot manufacturing and office facility. The building was completed in
the spring of 1987 and all California operations were consolidated into the new
building. Financing was arranged through the sales of $4,500,000 of bonds
issued by the Industrial Development Authority of the City of San Marcos. The
bonds carry a variable interest rate and were originally due in December, 1995.
In October, 1995 the company was successful in extending the maturity date to
December 2005. Payments of principal and interest are unconditionally guaranteed
by an irrevocable letter of credit issued by the Company's new bank. The terms
of the irrevocable letter of credit required the Company to establish a
$1,329,000 interest bearing cash collateral account in order to meet a loan to
value ratio. The Company believes that it will be able to fund future operations
from expected cash flows and if necessary supplemented from its existing credit
facilities for the foreseeable future.
RESULTS OF OPERATIONS
Sales increased to a Company record $25,361,000, an increase of 41% from
$17,978,000 in 1994. Significant growth has been in the area of Private Label
sales as shown in the table on Page 14. The continued growth in sales of
Private Label products reflects the increased customer acceptance of the surface
mount machines the Company imports from Japan and the recent period of industry
expansion during 1995. The table on page 14 also shows that sales of Amistar
produced machines, parts, service and contract assembly grew after relatively
flat results 1994 and 1993. None of the increase in sales is attributable to
inflation.
Gross margin percentage has declined over 1994 and 1993 primarily due to
the effects of Private Label sales, which generally sell at lower margins than
products manufactured by the Company and comprise a greater portion of the
sales mix.
Selling expenses increased in the current year due to higher sales volume.
Engineering, research & development decreased in 1995 due to fewer development
projects as in prior years. The Company does not have any firm commitments to
continue funding product research and development, however, management
anticipates that spending on development will continue at existing levels during
1996. Gain on the sale of assets and dividends from workers compensation
insurance represent the majority of miscellaneous income during 1995, 1994 and
1993.
The Company reviews potential foreign currency risk on an ongoing basis,
and to date has been able to effectively manage the risk and the natural
currency offsets.
The Company adopted FASB Statement 109 as of January 1, 1993. The
cumulative effect of this change in accounting for income taxes of $143,546 or
.9% of sales is reported separately in the Consolidated Statements of Operations
and Retained Earnings. Federal income tax expense was incurred in 1995, whereas
in 1994 and 1993, the Company utilized operating loss carryforwards.
NEW ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. ("SFAS") 123, "Accounting for Stock-Based
Compensation" effective for fiscal years beginning after December 15, 1995. SFAS
123 establishes the fair value based method of accounting for stock-based
compensation arrangements, under which compensation cost is determined using the
fair value of the stock option at the grant date and the number of options
vested, and is recognized over the periods in which the related services are
rendered. If the Company were to retain its current intrinsic value based method
as allowed by SFAS 123, it will be required to disclose the pro forma effect of
adopting the fair value based method. To date, the Company has not made a
decision to the adopt the fair value based method.
11
<PAGE>
The following table sets forth indicated items of cost in the consolidated
Statements of Operations as a percentage of net sales:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales 100.0 100.0 100.0
Cost of sales 66.0 64.4 61.0
-------- -------- --------
Gross profit 34.0 35.6 39.0
Operating expenses:
Selling 16.2 19.6 19.0
General & administrative 4.6 5.1 5.5
Engineering, research & development 3.8 8.0 9.7
-------- -------- --------
24.6 32.7 34.2
-------- -------- --------
Earnings from operations 9.4 2.9 4.8
Other income (expense):
Interest, net (.4) (.5) (.4)
Miscellaneous .4 .6 .6
-------- -------- --------
Earnings before income taxes and cumulative
effect of change in accounting principle 9.4 3.0 5.0
Income tax expense (benefit) 1.2 0.1 (.5)
-------- -------- --------
Earnings before cumulative effect of
change in accounting principle 8.2 2.9 5.5
Cumulative effect of change in accounting
principle .0 .0 .9
-------- -------- --------
Net earnings 8.2 2.9 6.4
-------- -------- --------
-------- -------- --------
</TABLE>
The following table sets forth sales (in thousands) by product classification:
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Amistar machines,
parts and service $ 9,676 38% $ 8,106 45% $ 8,068 50%
Private label machines 12,398 49% 7,067 39% 5,341 33%
Outside contracting 3,287 13% 2,805 16% 2,816 17%
-------- ------ -------- ------ -------- ------
$ 25,361 100% $ 17,978 100% $ 16,225 100%
-------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------
</TABLE>
12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Amistar Corporation:
We have audited the accompanying consolidated balance sheets of Amistar
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations and retained earnings, and cash flows for
each of the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Amistar Corporation
and subsidiaries as of December 31, 1995 and 1994 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
San Diego, California By: /s/KPMG Peat Marwick LLP
February 13, 1996
13
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (notes 3 & 4)
Current assets:
Cash $ 1,982,483 $ 1,671,410
Trade accounts receivable, less allowance for doubtful
accounts of $104,615 in 1995 and $111,614 in 1994. 4,545,456 4,236,515
Inventories
Raw materials 394,271 724,338
Work in process 2,175,455 2,563,044
Finished goods 2,562,173 2,284,452
------------ ------------
Total inventories 5,131,899 5,571,834
------------ ------------
Demonstration equipment 1,549,846 548,536
Prepaid expenses 233,962 207,232
------------ ------------
Total current assets 13,443,646 12,235,527
------------ ------------
Property and equipment, at cost
Land 981,875 981,875
Building 3,899,354 3,899,354
Machinery and equipment 5,157,981 5,162,226
Computer equipment 310,233 302,938
Leasehold improvements 19,908 19,908
------------ ------------
10,369,351 10,366,301
Less accumulated depreciation and amortization (5,878,227) (5,546,207)
------------ ------------
Net property and equipment 4,491,124 4,820,094
------------ ------------
Contracts receivable (note 2) 330,889 256,500
Restricted cash (note 4) 1,329,000 -
Other assets 147,617 117,276
------------ ------------
$ 19,742,276 $ 17,429,397
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 510,976 $ 633,132
Accrued payroll and related costs 519,240 292,969
Accrued liabilities 672,913 542,853
Customer deposits 105,356 608,302
Estimated product installation and warranty costs 150,000 150,000
Accrued commissions 392,662 155,132
Income taxes payable and deferred income taxes (note 5) 277,999 62,368
Industrial development bonds (note 4) - 4,500,000
------------ ------------
Total current liabilities 2,629,146 6,944,756
Industrial development bonds (note 4) 4,500,000 -
Commitments (note 7)
Shareholders' equity (note 6):
Preferred stock, $.01 par value. Authorized 2,000,000
shares; none outstanding - -
Common stock, $.01 par value. Authorized 20,000,000
shares; 3,227,000 shares issued and outstanding in
1995 and 3,189,750 in 1994 32,270 31,898
Additional paid-in capital 4,822,761 4,771,196
Retained earnings 7,758,099 5,681,547
------------ ------------
Total shareholders' equity 12,613,130 10,484,641
------------ ------------
$ 19,742,276 $ 17,429,397
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
14
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings
<TABLE>
<CAPTION>
Years ended December 31, 1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 25,360,959 $ 17,977,756 $ 16,224,865
Cost of sales 16,732,141 11,583,948 9,891,420
------------- ------------- -------------
Gross profit 8,628,818 6,393,808 6,333,445
Operating expenses:
Selling 4,109,327 3,526,237 3,080,499
General & administrative 1,170,599 920,058 892,915
Engineering, research & development 951,267 1,430,688 1,566,303
------------- ------------- -------------
6,231,193 5,876,983 5,539,717
------------- ------------- -------------
Earnings from operations 2,397,625 516,825 793,728
Other income (expense):
Interest expense (193,790) (146,439) (129,804)
Interest income 95,034 64,335 65,112
Miscellaneous 77,683 122,586 90,906
------------- ------------- -------------
Earnings before income taxes and cumulative
effect of change in accounting principle 2,376,552 557,307 819,942
Income tax expense (benefit) (note 5) 300,000 37,000 (81,000)
------------- ------------- -------------
Earnings before cumulative effect of change
in accounting principle 2,076,552 520,307 900,942
Cumulative effect of change in accounting
for income taxes (note 5) - - 143,546
------------- ------------- -------------
Net earnings 2,076,552 520,307 1,044,488
Retained earnings, beginning of year 5,681,547 5,161,240 4,116,752
------------- ------------- -------------
Retained earnings, end of year $ 7,758,099 $ 5,681,547 $ 5,161,240
------------- ------------- -------------
------------- ------------- -------------
Earnings per Common share:
Earnings before cumulative effect
of change in accounting principle .65 .17 .29
Cumulative effect of change in accounting
for income taxes (note 5) - - .04
------------- ------------- -------------
Earnings per share $ 0.65 $ 0.17 $ 0.33
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
15
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31, 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,076,552 $ 520,307 $ 1,044,488
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 377,155 587,143 672,803
Gain on sale of equipment (24,410) (40,058) (59,068)
Cumulative effect of accounting change - - (143,546)
Changes in assets and liabilities:
Trade accounts receivable (308,941) (1,174,096) 84,874
Inventories 439,935 (2,017,058) (375,223)
Demonstration equipment (1,001,310) (92,536) 181,883
Prepaid expenses (14,270) 43,611 4,833
Other assets 75,571 (53,367) (7,753)
Accounts payable (122,156) 263,005 51,618
Accrued payroll and related costs 226,271 106,212 29,820
Accrued liabilities 130,060 139,906 1,726
Customer deposits (502,946) 586,229 (17,040)
Estimated installation and warranty costs - - (25,000)
Accrued commissions 237,530 64,853 (44,057)
Income taxes payable and deferred income taxes 215,631 10,195 (118,379)
----------- ----------- -----------
Net cash provided by (used in) operating activities 1,804,672 (1,055,654) 1,281,979
Cash flows from investing activities:
Proceeds from sale of equipment 24,410 150,441 59,068
Capital expenditures (48,185) (95,741) (473,662)
----------- ----------- -----------
Net cash provided by (used in) investing activities (23,775) 54,700 (414,594)
Cash flows from financing activities:
Contracts receivable (74,389) (66,539) (81,880)
Restricted cash (1,329,000) - -
Industrial development bond costs (118,372) - -
Common stock issued upon exercise of stock options 51,937 50,094 -
----------- ----------- -----------
Net cash used in financing activities (1,469,824) (16,445) (81,880)
Net increase (decrease) in cash 311,073 (1,017,399) 785,505
Cash at the beginning of the year 1,671,410 2,688,809 1,903,304
----------- ----------- -----------
Cash at the end of the year $ 1,982,483 $ 1,671,410 $ 2,688,809
----------- ----------- -----------
----------- ----------- -----------
Supplemental disclosure of cash flow information
Cash paid (received) during the year for:
Interest $ 193,790 $ 146,439 $ 129,804
----------- ----------- -----------
----------- ----------- -----------
Income taxes $ 86,973 $ 7,436 $ (44,000)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Supplemental disclosure of non-cash investing activities:
The Company transferred inventory valued at $216,434 to property and
equipment during 1993. In 1994 the Company transferred property and
equipment valued at $167,030 to inventory for resale.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
16
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Three years ended December 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Amistar Corporation (the Company) manufactures and markets productivity-
enhancement machinery for the electronics industry. In addition, the
Company is a contract assembler of printed circuit board assemblies. The
Company's customers are predominately located in the United States and
Europe. The Company's headquarters and primary manufacturing facility is
located in San Marcos, California. The Company's raw materials are readily
available, and the Company is not dependent on a single supplier or only a
few suppliers except for the Private Label Equipment line as disclosed in
Note 11.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Amistar AG (a Swiss corporation),
Amistar GmbH (a German corporation) and Amistar Ltd., a foreign sales
corporation (FSC). All significant inter-company balances and transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
The Company recognizes sales revenues upon shipment of machinery and parts
and upon performance of billable service labor. At the time of shipment,
the Company also provides for all estimated non-billable installation,
training and warranty repair costs to be incurred subsequent to the date of
revenue recognition.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out) or market
(net realizable value) and are reviewed regularly for obsolescence.
DEMONSTRATION EQUIPMENT
Demonstration equipment represents short-term transfers of inventory for
purposes of participating in trade shows and demonstrations with customers.
This equipment is typically sold or returned to inventory within six
months.
PROPERTY AND EQUIPMENT
Machinery, equipment and computer equipment are depreciated and amortized
using the straight-line method over four to seven-year lives. Leasehold
improvements are amortized using the straight-line method over the lives of
the related leases. The building is being depreciated using the straight-
line method over 40 years.
DEFERRED BOND REFINANCING COSTS
Costs incurred in connection with refinancing the Industrial Development
bonds are amortized on a straight line basis over the life of the bonds.
Deferred costs are included in prepaid expenses and other assets.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed in the period incurred.
INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
17
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share are calculated based upon
the weighted average number of common and common equivalent shares
outstanding during each period. There were no common equivalent shares
included in the calculations as their effect would be immaterial or anti-
dilutive.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the 1993 and 1994 consolidated financial statements have
been reclassified to conform with the 1995 presentation.
FOREIGN CURRENCY TRANSLATION
The accounts of foreign subsidiaries are measured using the U.S. dollar as
the functional currency. Gains and losses are not significant and are
included in general and administrative expense in the Statements of
Operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, trade receivables, trade accounts payable and
accrued expenses approximate fair values because of the short maturity of
those instruments. The carrying amount of the Company's Industrial
Development Bonds approximate fair value due to the variable interest rate
provision, which effectively re-prices the instruments to market values on
a monthly basis.
(2) CONTRACTS RECEIVABLE
The Company sells machines to certain customers with payment terms
extending beyond one year. The Company charges interest on these sales
contracts, at rates ranging from 9.5% to 12%. The balance due after
December 31, 1996 is $330,889 and accordingly is recorded as a non-current
asset.
(3) REVOLVING CREDIT LINE
In October 1995, the Company established a $2,000,000 revolving line of
credit with a bank to finance short term working capital. The terms provide
for interest payable at the bank reference rate plus 1%, is secured by
substantially all assets of the Company and matures in September 1997.
During 1995, no amounts had been advanced on this line.
18
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) INDUSTRIAL DEVELOPMENT BONDS
The Company financed the construction of a manufacturing and office
facility in San Marcos, California through $4,500,000 of bonds issued by
the Industrial Development Authority of City of San Marcos on December 19,
1985. The bonds originally matured in December, 1995. In October, 1995 the
Company secured an extension of the maturity date to December 2005. The
bonds bear interest at a variable rate (4.1% at December 31, 1995), with
interest payable monthly. The bonds are guaranteed by an irrevocable
letter of credit which is secured by substantially all assets of the
Company. The terms of the irrevocable letter of credit required the Company
to establish a $1,329,000 interest bearing cash collateral account in order
to meet a loan to value ratio covenant. Costs incurred in connection with
the bond refinancing primarily consists of loan origination fees, broker's
commission, legal and other fees, which have been capitalized and included
in prepaid expenses and other assets. The bond costs will be amortized over
the term of the loans. Amounts of refinancing costs deferred at December
31, 1995 were approximately $118,000. Ongoing fees related to the bonds and
the irrevocable letter of credit will approximate 2% of the bond principle
annually.
(5) INCOME TAXES
The Company adopted Statement 109 prospectively as of January 1, 1993. The
cumulative effect of this change in accounting for income taxes of
approximately $144,000 was determined as of January 1, 1993 and was
reported separately in the 1993 consolidated statement of operations and
retained earnings. Prior years' financial statements were not restated to
apply the provisions of Statement 109.
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
Federal State Foreign Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1995:
Current $ 264,000 $ 7,000 $ 29,000 $ 300,000
Deferred - - - -
---------- ---------- ---------- ----------
$ 264,000 $ 7,000 $ 29,000 $ 300,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1994:
Current - - 37,000 37,000
Deferred - - - -
---------- ---------- ---------- ----------
$ - $ - $ 37,000 $ 37,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1993:
Current (20,000) - 36,000 16,000
Deferred (84,000) (13,000) - (97,000)
---------- ---------- ---------- ----------
$ (104,000) $ (13,000) $ 36,000 $ (81,000)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
19
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) INCOME TAXES (continued)
Actual income taxes for 1995, 1994 and 1993 differ from "expected" income
taxes for those years (computed by applying the maximum U.S. federal
statutory rate of 34% to earnings (losses) before taxes) as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Income taxes (federal statutory rate) $ 808,000 $ 190,000 $ 279,000
State and foreign income taxes,
net of federal income tax benefit 34,000 37,000 36,000
Change in valuation allowance (420,000) (370,000) (417,000)
Other, net (122,000) 180,000 21,000
---------- ---------- ----------
$ 300,000 $ 37,000 $ (81,000)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The tax effects of significant temporary differences which comprise
deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 42,000 $ 42,000
Reserve for returns 30,000 -
Warranty reserves 60,000 56,000
Inventory reserves 426,000 904,000
Self Insurance 30,000 -
Accrued vacation 18,000 18,000
Other 69,000 41,000
---------- -----------
Gross deferred tax assets 675,000 1,061,000
---------- -----------
Deferred tax liabilities:
Depreciation and amortization 26,000 9,000
Other 8,000 -
---------- -----------
Gross deferred tax liabilities 34,000 9,000
---------- -----------
Net deferred tax asset before valuation allowance 641,000 1,052,000
---------- -----------
Valuation allowance (641,000) (1,061,000)
---------- -----------
Net deferred tax asset (liability) $ - $ (9,000)
---------- -----------
---------- -----------
</TABLE>
The Company has recorded a valuation allowance of $641,000 as of December 31,
1995 to reflect the estimated amount of deferred taxes assets that may not be
realized by the reversal of future taxable temporary differences. In 1995,
the Company recognized a decrease in the valuation allowance of approximately
$420,000 related primarily to the disposal of obsolete inventory and
expiration of foreign tax credits.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Management has determined, based on the
Company's history of prior operating earnings and its expectation for the
future, that is more likely than not that the portion of deferred tax assets
not utilized through reversing of deferred tax liabilities will not be
realized. Accordingly the Company has recorded a valuation allowance to
reduce deferred tax assets to the amount that is more likely than not to be
realized.
The Company has foreign tax credit carryforwards amounting to $65,000 which
begin expiring in 1996.
20
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6) STOCK OPTIONS
In February, 1984 the Company's Board of Directors and common shareholders
approved the 1984 Employee Stock Option Plan, which permitted the issuance
to employees of the Company and its subsidiaries of up to 340,000 incentive
stock options or non-qualifying stock options. Specific terms of the
options were determined by a committee of the Board; however, no options
could be granted at less than the fair market value of the common stock,
nor for terms exceeding ten years, or ten years and one month for non-
qualifying stock options. This plan expired in February, 1994. At that
time there were 113,500 options outstanding at prices ranging between $.875
and $2.125. At December 31, 1995 there were 8,250 options outstanding at
$2.125 of which 5,250 were exercisable. At December 31, 1994 there were
50,500 options outstanding at prices ranging between $1.3125 and $2.125 of
which 40,750 were exercisable.
At the annual meeting held on May 4, 1994 shareholders approved the 1994
Employee Stock Option Plan which succeeded the 1984 plan. The 1994 plan
permits the issuance to employees of the Company and its subsidiaries of up
to 310,000 incentive stock options at no less than the fair market value of
the common stock. Specific terms of the options are similar to that of the
1984 plan. Options for 5,000 shares at $2.4375 have been granted under the
1994 plan of which, none are currently exercisable.
The following reflects stock option activity:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Options exercised 37,250 57,250 -
--------- --------- ---------
--------- --------- ---------
Options expired 5,000 5,750 -
--------- --------- ---------
--------- --------- ---------
Exercise price range:
From $ 1.3125 $ 0.8750 $ -
--------- --------- ---------
--------- --------- ---------
To $ 2.1250 $ 0.8750 $ -
--------- --------- ---------
--------- --------- ---------
</TABLE>
(7) COMMITMENTS
The Company leases certain offices and plant facilities under operating
leases. Rental expense for operating leases approximated $241,000 for
1995, $250,000 for 1994 and $247,000 for 1993.
A summary of future minimum lease payments under non-cancelable operating
leases follows:
<TABLE>
<CAPTION>
Year Ending December 31:
<S> <C>
1996 59,000
1997 16,000
----------
$ 75,000
----------
----------
</TABLE>
(8) CERTAIN TRANSACTIONS
The Company purchases certain electronic components from Marshall
Industries. Gordon Marshall, a director of the Company, is Chairman of the
Board of Marshall Industries. During fiscal 1995, 1994, and 1993, such
purchases aggregated approximately $652,000, $105,000 and $64,000,
respectively. The Company acts as a subcontractor to Marshall Industries
through its Contract Assembly Group. Sales to Marshall in 1995 were
$503,529, 1,268,000 in 1994, and $2,615,000 in 1993. Accounts receivable
from Marshall as of December 31, 1995 and 1994 were $99,000 and $177,000,
respectively.
21
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8) CERTAIN TRANSACTIONS (continued)
The Company sells its products to Automation, Ltd., the Company's exclusive
distributor for Great Britain and Ireland. Richard A. Butcher, a Director
of the Company, is Managing Director of Automation, Ltd. (see note 10).
(9) 401(K)
In 1982, the Company established a 401(k) plan for the benefit of its
employees. The plan permits eligible employees to contribute to the plan
up to 10% of annual compensation subject to the maximum allowable under the
limits of Internal Revenue Code Sections 415, 401(k) and 404. The Company
makes a matching contribution to the plan equal to 50% of the first 6% of
compensation contributed by each participant. Amounts contributed in 1995,
1994, and 1993 were $59,000, $52,000, and $41,000, respectively.
(10) FOREIGN OPERATIONS AND EXPORT SALES
The following table summarizes the Company's foreign operations and export
sales (unaudited in thousands):
<TABLE>
<CAPTION>
United Asia and
States Europe Elsewhere Consolidated
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1995
Net sales $ 18,724 $ 6,200 $ 437 $ 25,361
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings from Operations 1,770 587 41 2,398
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Identifiable assets at December 31, 1995 17,956 1,768 18 19,742
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
1994
Net sales 12,866 4,558 554 17,978
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings from Operations 370 131 16 517
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Identifiable assets at December 31, 1994 13,999 3,320 110 17,429
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
1993
Net sales 11,307 3,712 1,206 16,225
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings from Operations 553 182 59 794
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Identifiable assets at December 31, 1993 $ 13,278 $ 2,299 $ 112 $ 15,689
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Included in assets are amounts due from foreign customers aggregating
$1,088,000 at December 31, 1995, $1,472,000 at December 31, 1994, and
$1,271,000 at December 31, 1993.
Net sales to Automation, Ltd. aggregated 1%, 4%, and 2% of total sales for
1995, 1994, and 1993, respectively. Accounts receivable from Automation,
Ltd. was $35,000 at December 31, 1995, and $402,000 at December 31, 1994.
22
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(11) BUSINESS CONCENTRATIONS
The Company distributes the majority of the Private Label products, which
represented 49% of total sales in 1995, 39% in 1994 and 33% in 1993 under
a long-term OEM supply agreement originally dated 1987 and revised in 1995,
and as a result, has significant dependence on this supplier. The
agreement provides the Company with exclusive rights to sell in North
America and limited rights to sell in Europe. A change in suppliers,
however, could cause a possible loss of sales and or change in gross
margins, which could affect operating results adversely.
Most of the Company's customers are located in the United States and
Europe. Sales to one customer represented 10% of total sales in 1995. No
sales to a single customer represented more than 10% in 1994 and 1993. The
company estimates an allowance for doubtful accounts based on the credit
worthiness of its customers as well as general economic conditions.
Consequently an adverse change in those factors could effect the Company's
estimate of its bad debts.
23
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated herein by reference the information from the section
entitled "Election of Directors" on pages 2 and 3 of the Company's definitive
Proxy Statement, dated March 18, 1996, filed with the Securities and Exchange
Commission. Reference is also made to the list of Executive Officers, which is
provided in Part I of this report under the caption "Executive Officers and
Directors."
ITEM 11. EXECUTIVE COMPENSATION
There is incorporated herein by reference the information from the section
entitled "Compensation of Directors and Executive Officers" on pages 5 to 8 of
the Company's definitive Proxy Statement, dated March 18, 1996, filed with the
Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated herein by reference the information from the section
entitled "Security Ownership of Certain Beneficial Owners and Management" on
pages 3 and 4 of the Company's definitive Proxy Statement, dated March 15, 1996,
filed with the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated herein by reference the information from the section
entitled "Certain Transactions" on Page 10 of the Company's definitive Proxy
Statement, dated March 18, 1996, filed with the Securities and Exchange
Commission.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following financial statements of Amistar Corporation are set
forth in item 8 of this Annual Report on Form 10-K:
1. Consolidated Financial Statements:
Independent Auditors' Report.
Consolidated Balance Sheets - December 31, 1995 and 1994
Consolidated Statements of Operations and Retained Earnings -
Years Ended December 31, 1995, 1994, and 1993.
Consolidated Statements of Cash Flows - Years Ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements - Three Years ended
December 31, 1995
2. The following Consolidated Financial Statement Schedules as of
and for the years ended December 31, 1995, 1994 and 1993 are
submitted herewith:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required.
3. Exhibits:
3.1 Restated Articles of Incorporation of Registrant, as amended.
3.2 Bylaws of Registrant, as amended.*
24
<PAGE>
10.1 Lease dated July 30, 1982, between Registrant (Lessee) and Skyway
Business Park, 1978, a Limited Partnership (Lessor) with respect
to premises located at 3130 Skyway Business Park, Building 2,
Santa Maria, California 93454*
10.2 Export Distributorship Agreement dated August 17, 1981 between
the Registrant and Automation Ltd. (England, Scotland, Wales and
Ireland).*
10.3 Form of Export Distributorship Agreement used in France, West
Germany, Switzerland, Liechtenstein and Australia.*
10.4 Form of Contract for Sales Representatives used in the United
States.*
10.5 Letter Agreement dated December 6, 1984, between Registrant and
First Interstate Bank of California.***
10.6 1984 Employee Stock Option Plan and related forms of Incentive
Stock Option Agreement and Non-Qualified Stock Option
Agreement.**
10.7 Deed of Trust with assignment of rents and promissory note dated
September 21,1984, with respect to the purchase of land in San
Marcos, California.***
10.8 Financing documents relative to $4,500,000 of bonds issued by the
Industrial Development Authority of the City of San Marcos on
December 19, 1985.***
10.9 Bank agreement dated November 19, 1984.*****
10.10 Amendments to the stock option plan.****
10.11 Form of Indemnity Agreement*****
10.12 1994 Employee Stock Option Plan******
22.1 List of Subsidiaries *
23.1 Independent Auditors' Consent and Report on Schedules
(b) Report on Form 8-K
A report on Form 8-K was filed on December 9, 1992 indicating that the
Company was providing for a restructuring charge of $4,920,000 for the
write down of inventory due to discontinuing certain product lines and
changes in sales projections for certain other product lines.
- ---------------
*These exhibits are incorporated by reference from the exhibits of the
same number in the Company's Registration Statement on form S-1
(No. 2-897782).
**This exhibit is incorporated by reference from the exhibits numbered
28.1, 28.2 and 28.3 of the Company's Registration Statement on Form S-8
(No. 2-94696).
***This exhibit is incorporated by reference from the exhibits of the
same number in the Company's Annual Report on form 10-K for Year ended
December 31, 1985.
****This exhibit is incorporated by reference from the exhibits of the
same number in the Company's Annual Report on form 10-K for Year ended
December 31, 1986.
*****This exhibit is incorporated by reference from the exhibits of the
same number in the Company's Annual Report on form 10-K for Year ended
December 31, 1987.
******This exhibit is incorporated by reference of the Company's
Registration Statement of Form-S-8 filed February 15, 1995.
25
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
AMISTAR CORPORATION
By /s/ Stuart C. Baker
-------------------------------
Stuart C. Baker
President
Date: March 15, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and the dates indicated.
By: /s/ Stuart C. Baker President and Director March 15, 1996
- ---------------------------------
Stuart C. Baker
By: /s/ William W. Holl Vice President of Finance March 15, 1996
- --------------------------------- and Administration,
William W. Holl Treasurer Secretary and
Director (Chief Financial
and Accounting Officer)
By:/s/ Carl C. Roecks Vice President and Director March 15, 1996
- ---------------------------------
Carl C. Roecks
By: /s/ Gordon S. Marshall Director March 15, 1996
- ---------------------------------
Gordon S. Marshall
By: /s/ Richard A. Butcher Director March 15, 1996
- ---------------------------------
Richard A. Butcher
26
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts
Three years ended December 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------------------------------------- ------------- ---------------------------- ------------- -------------
Additions
----------------------------
Balance at Charged to Charged Balance
beginning costs and to other at end
Description of period expenses accounts Deductions(a) of period
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts:
1995 $ 111,614 $ - $ 13,018 $ 20,017 $ 104,615
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
1994 83,103 58,004 - 29,493 111,614
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
1993 102,642 3,658 - 23,197 83,103
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Estimated product installation
and warranty costs (b):
1995 $ 150,000 $ 805,714 $ - $ 805,714 $ 150,000
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
1994 150,000 993,072 - 993,072 150,000
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
1993 175,000 1,177,617 - 1,202,617 150,000
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
(A) ACCOUNTS WRITTEN OFF AS UNCOLLECTIBLE.
(B) TOTAL COST OF SERVICE, WHICH INCLUDES TRADE SHOWS, CUSTOMER DEMONSTRATIONS,
PRODUCT SUPPORT AND TRAINING, AS WELL AS WARRANTY AND INSTALLATION EXPENSE.
27
<PAGE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Exhibit 23.1
Independent Auditors' Consent and Report on Schedule
The Board of Directors
Amistar Corporation:
The audits referred to in our report dated February 13, 1996 included the
related financial statement schedule as of December 31, 1995, and for each of
the years in the three-year period ended December 31, 1995, included in the Form
10-K. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, the financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We consent to incorporation by reference in registration statement on Form S-8,
as amended, of Amistar Corporation and subsidiaries, of our report dated
February 13, 1996 relating to the consolidated balance sheets of Amistar
Corporation and subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of operations and retained earnings, and cash flows for
each of the years in the three-year period ended December 31, 1995, which
appears in the December 31, 1995 annual report on Form 10-K of Amistar
Corporation. We also consent to the use of our report on the schedule included
herein.
San Diego, California By: /s/ KPMG Peat Marwick LLP
March 22, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AS OF DECEMBER 31, 1995 AND THE RELATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1982
<SECURITIES> 0
<RECEIVABLES> 4545
<ALLOWANCES> 0
<INVENTORY> 5132
<CURRENT-ASSETS> 13444
<PP&E> 10369
<DEPRECIATION> 5878
<TOTAL-ASSETS> 19742
<CURRENT-LIABILITIES> 2629
<BONDS> 4500
0
0
<COMMON> 32
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19742
<SALES> 25361
<TOTAL-REVENUES> 25361
<CGS> 16732
<TOTAL-COSTS> 16732
<OTHER-EXPENSES> 6231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 194
<INCOME-PRETAX> 2377
<INCOME-TAX> 300
<INCOME-CONTINUING> 2077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2077
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
</TABLE>
