<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the quarter ended Commission File No. 0-13403
June 30, 1998
- --------------------------------------------------------------------------------
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
- --------------------------------------------------------------------------------
STATE OF CALIFORNIA 95-2747332
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
237 VIA VERA CRUZ 92069
SAN MARCOS, CALIFORNIA (Zip Code)
(Address of principle executive offices)
(760) 471-1700
(Registrant's telephone number, including area code)
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 __
CLASS OUTSTANDING AT AUGUST 3, 1998
Common Stock $.01 Par Value 3,214,600
1
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Item 1. Financial Statement
AMISTAR CORPORATION
AND SUBSIDIARIES
Condensed Balance Sheets
(In thousands)
JUNE 30,* DEC. 31,
1998 1997
---------- ----------
ASSETS
Current assets:
Cash $ 2,648 $ 2,521
Trade accounts receivable, net 5,781 5,574
Inventories 4,978 5,327
Demonstration equipment 281 531
Prepaid expenses 191 272
Deferred income taxes 695 695
--------- ---------
Total current assets 14,574 14,920
Property & equipment, net 5,317 5,146
Contracts receivable 485 700
Restricted cash 1,329 1,329
Other 205 141
--------- ---------
$ 21,910 $ 22,236
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 1,777 $ 2,072
Income taxes payable 163 216
--------- ---------
Total current liabilities 1,940 2,288
Industrial development bonds 4,500 4,500
Shareholders' equity
Common stock 32 32
Additional paid in capital 4,798 4,843
Retained earnings 10,640 10,573
--------- ---------
Total shareholders' equity 15,470 15,448
$ 21,910 $ 22,236
========= =========
*Unaudited
See accompanying notes to financial statements.
2
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<TABLE>
AMISTAR CORPORATION
AND SUBSIDIARIES
Condensed Statements of Earnings
(Unaudited and In thousands, except share amounts)
<CAPTION>
Three months ended Six months ended
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 4,890 $ 5,053 $ 10,196 $ 11,468
Cost of sales 3,657 3,160 7,232 7,265
------------ ------------ ------------ ------------
Gross profit 1,233 1,893 2,964 4,203
Operating expenses:
Selling 865 1,068 1,740 2,201
General & administrative 258 257 548 522
Research & development 305 281 602 669
------------ ------------ ------------ ------------
1,428 1,606 2,890 3,392
------------ ------------ ------------ ------------
Earnings (loss) from operations (195) 287 74 811
Other income, net 24 98 28 136
------------ ------------ ------------ ------------
Earnings (loss) before
income taxes (171) 385 102 947
Income tax expense (benefit) (60) 108 35 333
------------ ------------ ------------ ------------
Net earnings (loss) $ (111) $ 277 $ 67 $ 614
============ ============ ============ ============
Basic and diluted earnings (loss)
per common share $ (0.03) $ 0.09 $ 0.02 $ 0.19
============ ============ ============ ============
Weighted average shares
outstanding 3,222,100 3,236,500 3,222,100 3,236,500
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
3
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AMISTAR CORPORATION
AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited and In thousands)
Six months ended June 30, 1998 1997
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 67 $ 614
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation & Amortization 328 267
Gain on sale of equipment (27) (39)
Changes in assets & liabilities:
Accounts receivable, net (207) 2,567
Inventories 349 (712)
Demonstration equipment 250 265
Prepaid expenses & other assets 17 46
Contracts receivable 215 104
Accounts payable & accrued liabilities (295) (730)
Income taxes payable (53) (158)
-------- --------
Cash provided by operating activities 644 2,224
Cash flows from investing activities:
Capital expenditures (499) (484)
Proceeds from sale of equipment 27 39
-------- --------
Cash used in investing activities (472) (445)
Cash flows from financing activities:
Common stock issued for stock options - 17
Repurchase of common stock (45) -
-------- --------
Cash used in financing activities (45) 17
Net increase in cash 127 1,796
Cash at the beginning of the period 2,521 1,892
-------- --------
Cash at the end of the period $ 2,648 $ 3,688
======== ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 88 $ 126
Income tax $ 88 $ 314
See accompanying notes to financial statements.
4
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AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Condensed Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
- ---------------------
The Interim Consolidated Condensed Financial Statements of Amistar
Corporation, a California corporation, and subsidiaries (the "Company") have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. These Interim Consolidated Condensed
Financial Statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's 1997 annual report on
Form 10-K as filed with the Securities and Exchange Commission on March 25,
1998.
Comprehensive Income
- --------------------
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 - "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes new rules for the reporting and display of comprehensive income and
its components. The adoption of SFAS 130 has no impact on the Company's net
income or shareholders' equity. For the six months ended June 30, 1998 and 1997,
comprehensive income equaled net income.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or market
and include material, labor and manufacturing costs. Inventories consist of the
following (in thousands):
June 30,* Dec. 31,
1998 1997
--------------- ---------------
Raw Material $ 826 $ 884
Work In Process 2,489 2,670
Finished Goods 1,663 1,773
--------------- ---------------
$ 4,978 $ 5,327
=============== ===============
*Unaudited
5
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AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Condensed Financial Statements, Continued
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
- --------------------------
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Reform Act of 1995, particularly statements
regarding market opportunities, customer acceptance of products, gross margin
and marketing expenses. These forward-looking statements involve risks and
uncertainties, and the cautionary statements set forth below, identify important
factors that could cause actual results to differ materially from those in any
such forward-looking statements. Such factors include, but are not limited to,
adverse changes in general economic conditions, including changes in the
specific markets for the Company's products, product availability, decreased or
lack of growth in the electronics industry, adverse changes in customer order
patterns, increased competition, lack of acceptance of new products, pricing
pressures, lack of success in technological advancements, risks associated with
foreign operations and other factors.
RESULTS OF OPERATIONS
Net Sales
- ---------
Net sales for the three months ended June 30, 1998, were $4,890,000
compared to $5,053,000 for the same period in the prior year. Machine sales have
continued to be affected by customer delays in accepting additional units while
awaiting the newest model, which was released in July 1998. Machine sales have
also continued to experience: limited acceptance in certain sectors of the
contract assembly market related to certain applications, the effects of
oversupply in the memory module industry, and the related intensifying of
competition. Sales of manufacturing services grew by 53% over the prior year
quarter.
Gross Margin
- ------------
Gross margin for the current quarter decreased as a percentage of sales due
to greater discounting in order to clear older machine model inventory and due
to competitive pressures. Gross margin also declined as a percentage of sales
due to a higher mix of manufacturing services sales, which generated a negative
gross margin in the both the current quarter and the comparative quarter last
year. The Company continued to increase management and support personnel related
to the expansion of the manufacturing services division.
Sales, General and Administrative
- ---------------------------------
Selling expenses declined in the current quarter primarily due to lower
commission expenses, which related to lower sales, and due to reduced operating
costs related to the Company's European operations, which are in the process of
liquidation.
6
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AMISTAR CORPORATION
AND SUBSIDIARIES
Notes to Condensed Financial Statements, Continued
Sales, General and Administrative, continued
- --------------------------------------------
Research and development expenses increased slightly in the current
quarter due to new development projects in the machine peripheral area.
Other income, net
- -----------------
Other income decreased from the comparative quarter in 1997, primarily due
to recognition of interest income on a note receivable in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operating activities totaling $644,000 for
the six months ended June 1998. Accounts receivable increased primarily due a
temporary extension of payment terms granted to two large customers. Inventory
decreased due to liquidation of older machine models and due to reductions in
manufacturing services division materials on hand. Demonstration equipment
decreased $250,000 primarily related to sales of old models. Expenditures for
the current quarter for property and equipment were $99,000, and primarily
consisted of equipment for the machine-division engineering department and for
the manufacturing services division expansion.
PART II.
Items 1-6 Non-Applicable
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMISTAR CORPORATION
By/s/ William W. Holl
-------------------
William W. Holl
Vice President - Finance
Chief Accounting Officer &
Duly Authorized Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF JUNE 30, 1998 AND THE RELATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1998.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,648
<SECURITIES> 0
<RECEIVABLES> 5,781
<ALLOWANCES> 0
<INVENTORY> 4,978
<CURRENT-ASSETS> 14,574
<PP&E> 5,317
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,910
<CURRENT-LIABILITIES> 1,940
<BONDS> 4,500
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<COMMON> 32
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<TOTAL-LIABILITY-AND-EQUITY> 21,910
<SALES> 10,196
<TOTAL-REVENUES> 10,196
<CGS> 7,232
<TOTAL-COSTS> 7,232
<OTHER-EXPENSES> 2,890
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<INCOME-TAX> 35
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