<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, 1996
[ ] 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 (760) 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_________
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
Aggregate market value of voting stock held by non-affiliates of the
registrant as of the close of business on February 28, 1997: $6,709,100.
The number of shares outstanding of registrant's Common Stock as of
February 28, 1997: 3,235,250 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 7, 1997 filed with the Securities and Exchange Commission.
1
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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
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PART I
ITEM 1. BUSINESS
Amistar designs, develops, manufactures, markets and services a variety
of 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 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 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 automatic axial and DIP
inserters, and automatic surface mount placement machines. 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, feeders, component centering devices,
nozzles, 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.
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, and "pick and place" 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 in San Marcos, California
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, and (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. In March 1996, the Company expanded its operations and began
production at an additional location in Anaheim, California.
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 1996, 1995 and 1994 the Company's engineering, research and
development expenses were approximately $1,234,000, $951,000 and
$1,431,000, respectively. Development efforts were focused in 1996 on
production of: the PlaceMaster(TM)CP, which is a high speed version of the
Company's surface mount machine; various types of feeders which load
components into the surface mount machines; and a process validation
system.
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 equipment that fulfills a variety of customer needs, and also
to emphasize the advanced features, ease of use, price, performance, and
reliability.
Amistar markets its products in the United States and Canada through a
network of strategically located sales offices and sales personnel, which
support independent manufacturer's representatives. and direct sales
personnel. The Company has maintained an office in Switzerland since 1981
and in Germany since 1990. In all other parts of the world, the Company
sells its products through distributors, who purchase and resell.
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 Westford, Massachusetts; Burr Ridge, Illinois;
Wiesbaden, 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 1996, sales of approximately $3,623,000 or 16%, 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.
(Dollars in thousands) 1996 1995 1994
--------------- --------------- ---------------
United States $19,497 84% $18,724 74% $12,866 72%
Europe 3,350 14% 6,200 24% 4,558 25%
Asia 183 1% 274 1% 351 2%
Other 240 1% 163 1% 203 1%
-------- ---- -------- ---- -------- ----
TOTALS $23,270 100% $25,361 100% $17,978 100%
======== ==== ======== ==== ======== ====
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 service personnel for its customers at the Company's
San Marcos, California; Burr Ridge, Illinois; Westford, 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.
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, Zevatech and Quad Systems. Amistar also faces competition
from foreign companies, including Mydata, 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.
Regarding contract electronic circuit board assembly, there are
numerous companies both large and small who may compete.
5
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Backlog
- -------
Customer machine order lead times are usually of a short duration.
Current practice is to wait to place the purchase order until just before
the equipment is required. The Company's Private Label inventory supply
pipeline has been adequate to fulfill machine orders in a short lead time.
Therefore, backlog may not necessarily be indicative of future sales. Order
lead times for contract assembly vary. The backlog at December 31, 1996 was
$2,460,000, all of which is expected to be shipped during the next 12
months. Firm backlog was $517,000 at December 31, 1995.
Patents and Licenses
- --------------------
Amistar has been issued six United States patents and has two
applications pending. 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 14, 1997, the Company had 154 full-time
employees and 35 temporary employees. Of the total employees, 130 were
employed in manufacturing, 37 in marketing and service, 12 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 Anaheim, California
(approximately 14,000 square feet). The Company also leases sales and
services offices in Westford, Massachusetts; Burr Ridge, Illinois; 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
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EXECUTIVE OFFICERS AND DIRECTORS
Name Age Title
- --------------- ----- ------------------------------------
Stuart Baker 65 Chairman of the Board, President and Director
William W. Holl 66 Vice President of Finance, Treasurer,
Secretary and Director
Harry A. Munn 45 Vice President of Sales and Marketing
Daniel C. Finn 40 Vice President of Engineering
Carl C. Roecks 63 Director
Richard A. Butcher 56 Director
Gordon S. Marshall 77 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 served the Company from 1988 as Vice President of Sales and
Marketing and resigned March 1, 1997.
Mr. Munn has served the Company since 1985 and as Vice President of
Sales and Marketing since 1997.
Mr. Finn has served the Company since 1979 and as Vice President of
Engineering since 1995.
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
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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:
Quarter ended High Low
-------------- ---- ----
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
Mar. 31, 1996 9-1/8 4-5/8
Jun. 30, 1996 5 3-3/4
Sep. 30, 1996 4-1/8 3
Dec. 31, 1996 4-1/4 3
* The prices indicated are as reported by the National Association of
Security Dealers.
The Company had approximately 100 shareholders of record on December
31, 1996, 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
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<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
Consolidated Statements of Earnings Data:
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
(In thousands, except per share data)
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $ 23,270 $ 25,361 $ 17,978 $ 16,225 $ 15,896
Cost of sales 14,634 16,732 11,584 9,891 15,011
---------- ---------- ---------- ---------- ----------
Gross profit 8,636 8,629 $ 6,394 6,334 885
---------- ---------- ---------- ---------- ----------
Operating expenses:
Selling 4,402 4,109 3,526 3,082 3,053
General & administrative 1,145 1,171 920 893 915
Engineering, research & development 1,234 951 1,431 1,566 1,601
---------- ---------- ---------- ---------- ----------
6,781 6,231 5,877 5,541 5,569
---------- ---------- ---------- ---------- ----------
Earnings (loss) from operations 1,855 2,398 517 793 (4,684)
Other income (expense):
Interest, net (67) (99) (82) (65) (80)
Miscellaneous 51 78 122 91 (23)
---------- ---------- ---------- ---------- ----------
Earnings (loss) before income taxes
and cumulative effect of change
in accounting principle 1,839 2,377 557 819 (4,787)
Income tax expense (benefit) 117 300 37 (81) (58)
---------- ---------- ---------- ---------- ----------
Earnings (loss) before cumulative effect
of change in accounting principle 1,722 2,077 520 900 (4,729)
Cumulative effect of change in
accounting for income taxes - - - 144 -
---------- ---------- ---------- ---------- ----------
Net earnings (loss) $ 1,722 $ 2,077 $ 520 $ 1,044 $ (4,729)
========== ========== ========== ========== ==========
Earnings (loss) per common share :
Earnings (loss) before cumulative
effect of change in accounting
principle $ 0.53 $ 0.65 $ 0.17 $ 0.29 $ (1.51)
Cumulative effect of change
in accounting for income taxes - - - 0.04 -
---------- ---------- ---------- ---------- ----------
Net earnings (loss) per share $ 0.53 $ 0.65 $ 0.17 $ 0.33 $ (1.51)
========== ========== ========== ========== ==========
Shares used in calculation of
net earnings (loss) per share 3,228 3,193 3,137 3,133 3,133
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
Selected Consolidated Balance Sheet Data:
<CAPTION>
Year Ended in December 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Working capital $ 11,938 $ 10,815 $ 5,291 $ 8,738 $ 7,801
Total assets 21,551 19,742 17,429 15,689 4,870
Long-term obligations 4,500 4,500 - 4,500 4,500
Retained earnings 9,480 7,758 5,682 5,161 4,117
Total shareholders' equity 14,338 12,613 10,485 9,914 8,870
</TABLE>
9
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ITEM 6. SELECTED FINANCIAL DATA (continued)
Quarterly Financial Information (unaudited)
Quarter Ended,
-----------------------------------------
3/31 6/30 9/30 12/31
-------- -------- -------- --------
(In thousands, except per share data)
1996
Net sales $ 4,873 $ 5,418 $ 5,806 $ 7,173
Gross profit 1,815 1,988 2,061 2,772
Net earnings 200 215 257 1,050
Earnings per Common share 0.06 0.07 0.08 0.32
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
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 $2,000,000
revolving line of credit with a new bank. As of December 31, 1996, no
amounts have been drawn on this line.
At December 31, 1996, the Company's cash balance was $1,892,000 compared
to $1,982,000 the same date the prior year, and $1,671,000 two years prior.
Excess cash is invested in money market accounts.
Working capital increased by $1,123,000 in 1996. Demand for machines
surged in the later portion of the fourth quarter of 1996. As a result,
accounts receivable and commissions payable increased while demonstration
equipment decreased in order to fulfill sales orders. Working capital also
increased due to the recognition of a deferred income tax benefit. This
increase in working capital in 1996 compares to an increase of $5,524,000 in
1995, which was primarily the result of reclassification of the industrial
development bonds from current to long-term liabilities when the maturity
date was extended in 1995. Cash provided from operations in 1996 decreased
significantly over 1995 primarily due to the increase in receivables and
partially offset by the decrease in demonstration equipment. 1995 cash
provided from operations differs from the 1994 cash used due primarily to
increased profitability in 1995, a smaller increase in accounts receivable,
a decrease in inventories and an increase in demonstration equipment.
Net inventory transfers to and purchases of capital equipment were
$897,000 in 1996, $48,000 in 1995, and $96,000 in 1994. In 1996, the
majority of these capital acquisitions were for the new Custom Assembly
operation in Anaheim, California and a new enterprise-wide information
system.
10
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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 cash at December 31, 1996, expected cash flows, and if
necessary supplemented from its existing credit facilities for the
foreseeable future.
Results of Operations
- ---------------------
Sales decreased to $23,270,000, a decrease of 8% from $25,361,000 in
1995. During the first half of 1996, sectors of the industry experienced a
slow-down due to product oversupply, and as a result, incurred excess
capacity. The table on page 12 also shows that sales of Amistar produced
machines, parts, and service declined 37% from 1995 as through-hole
technology machines experienced diminished demand and development of a
competitive surface mount machine continued. Also, the table on page 12
shows that sales of outside contracting increased 29% which is partially due
to the expansion into the Anaheim facility. None of the increase in sales is
attributable to inflation.
Gross margin percentage has increased over 1995 and 1994 primarily due
to the effects of improved dollar/yen exchange rate on Private Label
purchases. The Company's primary foreign currency risk is due to exchange
rate fluctuations on purchases of the Private label products, and as a
result, can significantly affect gross margins.
Selling expenses increased in the current year due to, a higher mix of
sales in which commissions were earned, personnel additions, and promotional
costs. Engineering, research & development increased in 1996 due to
additional development projects over 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 1997. Gain on the sale of assets and dividends
from workers compensation insurance represent the majority of miscellaneous
income during 1996, 1995 and 1994.
Federal income tax expense was incurred in 1996 and 1995, whereas in
1994, the Company incurred no income tax expense due to the utilization of
operating loss carryforwards. The effective income tax rate in 1996 was 6.4%
compared to 12.6% in 1995 due to recognition of a deferred income tax
benefit. See (Note 5) to the consolidated financial statements.
11
<PAGE>
The following table sets forth indicated items of cost in the consolidated
Statements of Earnings as a percentage of net sales:
Percentage of Net Sales
-----------------------
1996 1995 1994
-------- -------- --------
Net sales 100.0 100.0 100.0
Cost of sales 63.0 66.0 64.4
-------- -------- --------
Gross profit 37.0 34.0 35.6
-------- -------- --------
Operating expenses:
Selling 18.8 16.2 19.6
General & administrative 4.9 4.6 5.1
Engineering, research & development 5.3 3.8 8.0
-------- -------- --------
29.0 24.6 32.7
-------- -------- --------
Earnings from operations 8.0 9.4 2.9
Other income (expense):
Interest, net (.3) (.4) (.5)
Miscellaneous .2 .4 .6
-------- -------- --------
Earnings before income taxes
7.9 9.4 3.0
Income tax expense 0.5 1.2 0.1
-------- -------- --------
Net earnings 7.4 8.2 2.9
======== ======== ========
The following table sets forth sales (in thousands) by product
classification:
1996 1995 1994
-------------- -------------- --------------
Amistar machines,
parts and service $ 6,140 26% $ 9,676 38% $ 8,106 45%
Private label machines 12,894 56% 12,398 49% 7,067 39%
Outside contracting 4,236 18% 3,287 13% 2.805 16%
-------- ---- -------- ---- -------- ----
$ 23,270 100% $ 25,361 100% $ 17,978 100%
======== ==== ======== ==== ======== ====
12
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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, 1996 and 1995, and the
related consolidated statements of earnings and retained earnings, and cash
flows for each of the years in the three-year period ended December 31,
1996. 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, 1996 and 1995 and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1996, in conformity with generally
accepted accounting principles.
San Diego, California By: /s/ KPMG Peat Marwick LLP
February 11, 1997
13
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Amistar Corporation
and Subsidiaries
Consolidated Balance Sheets
December 31, 1996 1995
- ----------------------------------------------------------------------------
Assets (notes 3 & 4)
Current assets:
Cash $ 1,891,518 $ 1,982,483
Trade accounts receivable, less allowance
for doubtful accounts of $202,756 in 1996
and $104,615 in 1995. 5,901,504 4,545,456
Inventories
Raw materials 899,536 1,180,032
Work in process 2,061,751 1,416,471
Finished goods 2,165,756 2,535,396
------------ ------------
Total inventories 5,127,043 5,131,899
------------ ------------
Demonstration equipment 766,762 1,549,846
Prepaid expenses 306,595 233,962
Deferred income taxes (note 5 ) 658,000 -
------------ ------------
Total current assets 14,651,422 13,443,646
------------ ------------
Property and equipment, at cost
Land 981,875 981,875
Building 3,899,354 3,899,354
Machinery and equipment 5,511,021 5,157,981
Computer equipment 514,071 310,233
Leasehold improvements 24,855 19,908
------------ ------------
10,931,176 10,369,351
Less accumulated depreciation and amortization (5,981,737) (5,878,227)
------------ ------------
Net property and equipment 4,949,439 4,491,124
------------ ------------
Contracts receivable (note 2) 465,742 330,889
Restricted cash (note 4) 1,329,000 1,329,000
Other assets 154,963 147,617
------------ ------------
$21,550,566 $19,742,276
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 539,455 $ 510,976
Accrued payroll and related costs 416,520 398,897
Accrued liabilities 728,973 793,256
Customer deposits - 105,356
Estimated product installation and warranty
costs 150,000 150,000
Accrued commissions 601,116 392,662
Income taxes payable (note 5) 276,937 277,999
------------ ------------
Total current liabilities 2,713,001 2,629,146
Industrial development bonds (note 4) 4,500,000 4,500,000
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; 3,228,250 shares
issued and outstanding in 1996 and
3,227,000 in 1995 32,282 32,270
Additional paid-in capital 4,825,405 4,822,761
Retained earnings 9,479,878 7,758,099
------------ ------------
Total shareholders' equity 14,337,565 12,613,130
------------ ------------
Commitments (note 7)
$21,550,566 $19,742,276
============ ============
See accompanying notes to consolidated financial statements.
14
<PAGE>
Amistar Corporation
and Subsidiaries
Consolidated Statements of Earnings and Retained Earnings
Years ended December 31, 1996 1995 1994
- ----------------------------------------------------------------------------
Net sales $23,270,402 $25,360,959 $17,977,756
Cost of sales 14,633,993 16,732,141 11,583,948
------------ ------------ ------------
Gross profit 8,636,409 8,628,818 6,393,808
------------ ------------ ------------
Operating expenses:
Selling 4,402,427 4,109,327 3,526,237
General & administrative 1,144,561 1,170,599 920,058
Engineering, research &
development 1,234,212 951,267 1,430,688
------------ ------------ ------------
6,781,200 6,231,193 5,876,983
------------ ------------ ------------
Earnings from operations 1,855,209 2,397,625 516,825
Other income (expense):
Interest expense (171,061) (193,790) (146,439)
Interest income 103,616 95,034 64,335
Miscellaneous 51,015 77,683 122,586
------------ ------------ ------------
Earnings before income taxes 1,838,779 2,376,552 557,307
Income taxes (note 5) 117,000 300,000 37,000
------------ ------------ ------------
Net earnings 1,721,779 2,076,552 520,307
Retained earnings, beginning of year 7,758,099 5,681,547 5,161,240
------------ ------------ ------------
Retained earnings, end of year 9,479,878 7,758,099 5,681,547
============ ============ ============
Earnings per common share $ 0.53 $ 0.65 $ 0.17
============ ============ ============
See accompanying notes to consolidated financial statements.
15
<PAGE>
<TABLE>
Amistar Corporation
and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>
Years ended December 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,721,779 $ 2,076,552 $ 520,307
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 439,056 377,155 587,143
Gain on sale of equipment (8,700) (24,410) (40,058)
Provision for deferred income taxes (658,000) - -
Changes in assets and liabilities:
Trade accounts receivable (1,356,048) (308,941) (1,174,096)
Inventories (124,335) 439,935 (2,017,058)
Demonstration equipment 783,084 (1,001,310) (92,536)
Prepaid expenses (72,633) (14,270) 43,611
Contracts receivable (134,853) (74,389) (66,539)
Other assets (7,346) 75,571 (53,367)
Accounts payable 28,479 (122,156) 263,005
Accrued payroll and related costs 17,623 105,928 106,212
Accrued liabilities (64,283) 250,403 139,906
Customer deposits (105,356) (502,946) 586,229
Accrued commissions 208,454 237,530 64,853
Income taxes payable (1,062) 215,631 10,195
------------ ------------ -----------
Net cash provided by (used in) operating activities 665,859 1,730,283 (1,122,193)
------------ ------------ -----------
Cash flows from investing activities:
Proceeds from sale of equipment 8,700 24,410 150,441
Capital expenditures (768,180) (48,185) (95,741)
------------ ------------ -----------
Net cash provided by (used in) investing activities (759,480) (23,775) 54,700
------------ ------------ -----------
Cash flows from financing activities:
Restricted cash - (1,329,000) -
Industrial development bond costs - (118,372) -
Common stock issued upon exercise of stock options 2,656 51,937 50,094
------------ ------------ -----------
Net cash used in financing activities 2,656 (1,395,435) 50,094
------------ ------------ -----------
Net increase (decrease) in cash (90,965) 311,073 (1,017,399)
Cash at the beginning of the year 1,982,483 1,671,410 2,688,809
------------ ------------ ------------
Cash at the end of the year $ 1,891,518 $ 1,982,483 $ 1,671,410
============ ============ ============
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 172,904 $ 193,790 $ 146,439
============ ============ ============
Income taxes $ 777,000 $ 86,973 $ 7,436
============ ============ ============
Supplemental disclosure of non-cash investing activities:
The Company transferred inventory valued at $129,191 to property and equipment during 1996,
and transferred property and equipment valued at $167,030 to inventory for resale during 1994.
See accompanying notes to consolidated financial statements.
</TABLE>
16
<PAGE>
Amistar Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
Three years ended December 31, 1996
(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 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 and reported amounts of revenues and
expenses to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
Reclassifications
- -----------------
Certain amounts in the 1994 and 1995 consolidated financial statements have
been reclassified to conform with the 1996 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
Earnings.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amount of cash, trade accounts receivable, accounts payable,
accrued payroll and related costs and accrued liabilities approximate their
fair values because of the short maturity of those instruments. The carrying
amount of contracts receivable approximate their fair value due to the
related interest rate being at market rates. The carrying amount of the
Company's Industrial Development Bonds approximates fair value due to the
variable interest rate provision, which effectively re-prices the
instruments to market values on a monthly basis.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
- -----------------------------------------------------------------------
The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
on January 1, 1996. This Statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the assets to future net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value
of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of this Statement
did not have a material impact on the Company's financial position, results
of operations, or liquidity.
(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% to 13%. The balance due after one year is recorded as
a non-current asset, amounts due within one year are included in trade
accounts receivable.
18
<PAGE>
Amistar Corporation
and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(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 (8.25% at December 31, 1996)
plus 1%, and is secured by substantially all assets of the Company and
matures in September 1997. During 1996 and 1995, no amounts had been
advanced on this line.
(4) Industrial Development Bonds
The Company financed the construction of a manufacturing and office facility
in San Marcos, California, with $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 (3.75% at December 31, 1996) 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 bonds.
Deferred bond refinancing costs were approximately $125,000 and $118,000 at
December 31, 1996 and 1995, respectively. Ongoing fees related to the bonds
and the irrevocable letter of credit will approximate 2% of the bond
principal annually.
(5) Income Taxes
Income taxes consists of the following:
Federal State Foreign Total
---------- ---------- ---------- ----------
1996
Current $ 564,000 $ 165,000 $ 46,000 $ 775,000
Deferred (505,000) (153,000) - (658,000)
---------- ---------- ---------- ----------
$ 59,000 $ 12,000 $ 46,000 $ 117,000
========== ========== ========== ==========
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
========== ========== ========== ==========
19
<PAGE>
Amistar Corporation
and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(5) Income Taxes (continued)
Actual income taxes for 1996, 1995 and 1994 differ from "expected" income
taxes for those years (computed by applying the maximum U.S. federal
statutory rate of 34% to earnings before income taxes) as follows:
1996 1995 1994
---------- ---------- ----------
Income taxes (federal statutory rate) $ 625,000 $ 808,000 $ 190,000
State and foreign income taxes,
net of federal income tax benefit 54,000 34,000 37,000
Decrease in valuation allowance (641,000) (420,000) (370,000)
Other, net 79,000 (122,000) 180,000
---------- ---------- ----------
$ 117,000 $ 300,000 $ 37,000
========== ========== ==========
The tax effects of significant temporary differences which comprise deferred
tax assets and liabilities consist of the following:
1996 1995
---------- ----------
Deferred tax assets:
Allowance for doubtful accounts $ 81,000 $ 42,000
Reserve for returns 30,000 30,000
Warranty reserves 60,000 60,000
Inventory reserves 381,000 426,000
Depreciation and amortization 75,000 -
Self insurance - 30,000
Accrued vacation 16,000 18,000
Other 19,000 69,000
---------- ----------
Gross deferred tax assets 662,000 675,000
---------- ----------
Deferred tax liabilities:
Depreciation and amortization - 26,000
Other 4,000 8,000
---------- ----------
Gross deferred tax liabilities 4,000 34,000
---------- ----------
Net deferred tax asset before valuation allowance 658,000 641,000
---------- ----------
Valuation allowance - (641,000)
---------- ----------
Net deferred tax asset $ 658,000 $ -
========== ==========
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. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the amount and timing of scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment. Based upon the level of historical taxable income
and projections for future taxable income over the periods which the
deferred tax assets are deductible, management believes it is more likely
than not the Company will realize the benefits of these deductible
differences.
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 December 31, 1996,
there were 7,000 options outstanding at $2.125 of which all 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, 1,250 are currently exercisable.
The following reflects stock option activity:
Year Ended December 31,
---------------------------------
1996 1995 1994
---------- ---------- ----------
Options exercised 1,250 37,250 57,250
========== ========== ==========
Options expired - 5,000 5,750
========== ========== ==========
Exercise price range:
From $ 2.1250 $ 1.3125 $ 0.8750
========== ========== ==========
To $ 2.1250 $ 2.1250 $ 0.8750
========== ========== ==========
Amistar adopted the disclosure-only option under SFAS No. 123, accounting
for Stock-Based Compensation, as of December 31, 1996. If the accounting
provisions of the new Statement had been adopted as of the beginning of
1996, the effect on 1996 net earnings would have been immaterial. Further,
based on current and anticipated use of stock options, it is not envisioned
that the impact of the Statement's accounting provisions would be material
in any future period.
(7) Commitments
The Company leases certain offices and plant facilities under operating
leases. Rental expense for operating leases approximated $242,000 for 1996,
$241,000 for 1995, and $250,000 for 1994 and includes expense on certain
month-to-month leases which are expected to be renewed in the normal course
of operations.
A summary of future minimum lease payments under non-cancelable operating
leases follows:
Year Ending December 31:
-------------------------
1997 95,000
1998 81,000
1999 85,000
2000 85,000
2001 22,000
-------------
$ 368,000
==============
21
<PAGE>
Amistar Corporation
and Subsidiaries
Notes to Consolidated Financial Statements, Continued
(8) Related Party 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 1996, 1995, and 1994, such
purchases totaled $683,000, $652,000 and $105,000, respectively. The
Company acts as a subcontractor to Marshall Industries through its Contract
Assembly Group. Sales to Marshall in 1996 were $924,000, $504,000 in 1995,
and $1,268,000 in 1994. Accounts receivable from Marshall as of December
31, 1996 and 1995 were $87,000 and $99,000, respectively.
The Company sells its products to Automation, Ltd., which is the Company's
exclusive distributor for Great Britain and Ireland. Richard A. Butcher, a
Director of the Company, is Managing Director of Automation, Ltd. Net sales
to Automation, Ltd. aggregated $82,000, $115,000, and $690,000 for 1996,
1995, and 1994, respectively. Accounts receivable from Automation, Ltd. was
$24,000 at December 31, 1996, and $35,000 at December 31, 1995.
(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 1996,
1995, and 1994 were approximately $73,000, $59,000, and $52,000,
respectively.
(10) Foreign Operations and Export Sales
The following table summarizes the Company's foreign operations and export
sales
(unaudited, amounts in thousands):
United Asia and
States Europe Elsewhere Consolidated
-------- ---------- --------- ------------
1996
- ----
Net sales $ 19,497 $ 3,350 $ 423 $ 23,270
========= ========= ========= =========
Earnings from operations 1,554 267 34 1,855
========= ========= ========= =========
Identifiable assets at
December 31,1996 19,434 2,080 37 21,551
========= ========= ========= =========
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
========= ========= ========= =========
Included in assets are amounts due from foreign customers aggregating
approximately $834,000 at December 31, 1996, $1,088,000 at December 31,
1995, and $1,472,000 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 56% of total sales in 1996 , 49% in 1995, and 39% in 1994 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 16% of total sales in 1996 and 10% in
1995. No sales to a single customer represented more than 10% in 1994. 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 24, 1997, 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 24, 1997,
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 24, 1997, 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 24, 1997, 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. Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Earnings and Retained Earnings -
Years ended December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows - Years ended
December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements - Three years
ended December 31, 1996
2. The following Consolidated Financial Statement Schedules as
of and for the years ended December 31, 1996, 1995 and 1994
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
-------------------------
*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 14, 1997
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 14, 1997
- ------------------------------
Stuart C. Baker
By: /s/ William W. Holl Vice President of Finance March 14, 1997
- ------------------------------ and Administration, Treasurer
William W. Holl Secretary and Director (Chief
Financial and Accounting Officer)
By: /s/ Carl C. Roecks Director March 14, 1997
- ------------------------------
Carl C. Roecks
By: /s/ Gordon S. Marshall Director March 14, 1997
- ------------------------------
Gordon S. Marshall
By: /s/ Richard A. Butcher Director March 14, 1997
- ------------------------------
Richard A. Butcher
26
<PAGE>
Amistar Corporation
and Subsidiaries
Schedule II
Valuation and Qualifying Accounts
Three years ended December 31, 1996
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 of period
- --------------- ---------- ---------------------- ---------- -----------
Allowance for doubtful
accounts:
1996 $ 104,615 $ 100,000 $ 1,837 $ 3,696 (a) $ 202,756
========= ========= ========== ======== =========
1995 111,614 - 13,018 20,017 (a) 104,615
========= ========= ========== ======== =========
1994 83,103 58,004 - 29,493 (a) 111,614
========= ========= ========== ======== =========
Estimated product installation
and warranty costs (b):
1996 $ 150,000 $ 914,161 $ - $ 914,161 $ 150,000
========= ========= ========== ========= =========
1995 150,000 805,714 - 805,714 150,000
========= ========= ========== ========= =========
1994 150,000 993,072 - 993,072 150,000
========= ========= ========== ========= =========
(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>
Exhibit 23.1
Amistar Corporation
and Subsidiaries
Independent Auditors' Consent and Report on Schedule
The Board of Directors
Amistar Corporation:
The audits referred to in our report dated February 11, 1997, included the
related financial statement schedule as of December 31, 1996, and for each
of the years in the three-year period ended December 31, 1996, included in
the annual report on Form 10-K of Amistar Corporation. 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 the registration statements on
Form S-8 (Nos. 2-94696 and 33-89554), of Amistar Corporation and
subsidiaries, of our report dated February 11, 1997, relating to the
consolidated balance sheets of Amistar Corporation and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of
earnings and retained earnings, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the
December 31, 1996, annual report on Form 10-K of Amistar Corporation. We
also consent to the incorporation by reference of our report on the schedule
included herein.
San Diego, California By: /s/ KPMG Peat Marwick LLP
March 26, 1997
28
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,892
<SECURITIES> 0
<RECEIVABLES> 5,902
<ALLOWANCES> 203
<INVENTORY> 5,127
<CURRENT-ASSETS> 14,651
<PP&E> 10,931
<DEPRECIATION> 5,982
<TOTAL-ASSETS> 21,551
<CURRENT-LIABILITIES> 2,713
<BONDS> 4,500
0
0
<COMMON> 32,282
<OTHER-SE> 14,305
<TOTAL-LIABILITY-AND-EQUITY> 21,551
<SALES> 23,270
<TOTAL-REVENUES> 23,270
<CGS> 14,634
<TOTAL-COSTS> 21,415
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 100,000
<INTEREST-EXPENSE> 171
<INCOME-PRETAX> 1,839
<INCOME-TAX> 117
<INCOME-CONTINUING> 1,722
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,722
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53
</TABLE>
