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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
September 30, 1998
- --------------------------------------------------------------------------------
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
- --------------------------------------------------------------------------------
State of California 95-2747332
(State or other jurisdiction of Incorporation (I.R.S. Employer
or organization) Identification No.)
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 October 23, 1998
Common Stock $.01 Par Value 3,161,000
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ITEM 1. FINANCIAL STATEMENT
AMISTAR CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
SEPT. 30,* DEC. 31,
1998 1997
---------- ----------
ASSETS
Current assets:
Cash $ 2,632 $ 2,521
Trade accounts receivable, net 5,572 5,574
Inventories 4,813 5,327
Demonstration equipment 267 531
Prepaid expenses 213 272
Deferred income taxes 695 695
---------- ----------
Total current assets 14,192 14,920
Property & equipment, net 5,241 5,146
Contracts receivable 241 700
Restricted cash 1,329 1,329
Other 135 141
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$ 21,138 $ 22,236
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 1,406 $ 2,072
Income taxes payable - 216
---------- ----------
Total current liabilities 1,406 2,288
Industrial development bonds 4,500 4,500
Shareholders' equity:
Common stock 32 32
Additional paid in capital 4,707 4,843
Retained earnings 10,493 10,573
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Total shareholders' equity 15,232 15,448
$ 21,138 $ 22,236
========== ==========
*Unaudited
See accompanying notes to consolidated financial statements.
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<TABLE>
AMISTAR CORPORATION
Condensed Consolidated Statements of Earnings
(Unaudited and In thousands, except share amounts)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 4,547 $ 4,454 $ 14,743 $ 15,922
Cost of sales 3,489 3,116 10,721 10,382
------------ ------------ ------------ ------------
Gross profit 1,058 1,338 4,022 5,540
Operating expenses:
Selling 751 948 2,491 3,149
General & administrative 262 248 810 770
Research & development 271 354 873 1,023
------------ ------------ ------------ ------------
1,284 1,550 4,174 4,942
------------ ------------ ------------ ------------
Earnings (loss) from operations (226) (212) (152) 598
Other income (expense), net - (3) 28 134
------------ ------------ ------------ ------------
Earnings (loss) before
income taxes (226) (215) (124) 732
Income tax expense (benefit) (78) (86) (44) 247
------------ ------------ ------------ ------------
Net earnings (loss) $ (148) $ (129) $ (80) $ 485
============ ============ ============ ============
Basic and diluted earnings (loss)
per common share $ (0.05) $ (0.04) $ (0.03) $ 0.15
============ ============ ============ ============
Weighted average shares
outstanding 3,189,600 3,236,500 3,189,600 3,236,500
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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AMISTAR CORPORATION
Consolidated Statements of Cash Flows
(Unaudited and In thousands)
Nine months ended Sept 30, 1998 1997
- ----------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings (loss) $ (80) $ 485
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation & amortization 470 424
Gain on sale of equipment (21) (39)
Changes in assets & liabilities:
Accounts receivable, net 2 2,392
Inventories 514 (230)
Demonstration equipment 264 338
Prepaid expenses & other assets 65 62
Contracts receivable 459 (186)
Accounts payable & accrued liabilities (666) (811)
Income taxes payable (216) (277)
-------- --------
Cash provided by operating activities 791 2,158
Cash flows from investing activities:
Capital expenditures (571) (692)
Proceeds from sale of equipment 27 39
-------- --------
Cash used in investing activities (544) (653)
Cash flows from financing activities:
Common stock issued for stock options - 17
Repurchase of common stock (136) -
-------- --------
Cash (used in) provided by financing activities (136) 17
Net increase in cash 111 1,522
Cash at the beginning of the period 2,521 1,892
-------- --------
Cash at the end of the period $ 2,632 $ 3,414
======== ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 133 $ 131
Income tax $ 230 $ 524
See accompanying notes to consolidated financial statements.
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AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
- ---------------------
The Interim Condensed Consolidated 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 Condensed Consolidated
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 nine months ended September 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):
Sept. 30,* Dec. 31,
1998 1997
---------- ----------
Raw Material $ 818 $ 884
Work In Process 2,407 2,670
Finished Goods 1,588 1,773
========== ==========
$ 4,813 $ 5,327
========== ==========
* Unaudited
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AMISTAR CORPORATION
Notes to Condensed Consolidated 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 September 30, 1998, were $4,547,000
compared to $4,454,000 for the same period in the prior year. Although overall
sales increased slightly, machine sales were negatively affected by delivery
delays of the newest Private Label model, which was awaiting modifications to
its new generation software. Deliveries of the new model began near the end of
the third quarter when the software problems were corrected. Machine sales have
also continued to be impacted by the overall demand softness in the electronics
industry. Sales of manufacturing services grew by 60% over the prior year
quarter primarily from additional turnkey orders resulting from increased sales
effort to grow this segment of the business.
Gross Profit
- ------------
Gross profit declined as a percentage of sales due to a higher mix of
manufacturing services sales, which generated a negative gross profit in the
current quarter compared to a gross profit in the comparative quarter last year.
The gross profit continued to be affected by excess capacity in the machine
manufacturing division and the higher level of support personnel relative to the
level of sales in 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
being liquidated.
6
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AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, Continued
Research and development
- ------------------------
Research and development expenses decreased slightly in the current quarter
due to normal fluctuations experienced in the utilization of development
material. Development continued on projects in the machine peripheral area.
Other income, net
- -----------------
Other income decreased from the comparative nine months ended 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 $791,000 for
the nine months ended September 1998. Inventory decreased due to liquidation of
older machine models, sales of thru-hole technology machines, and due to
reductions in manufacturing services division materials on hand. Demonstration
equipment decreased $264,000 primarily related to sales of old models.
Expenditures for the current quarter for property and equipment were $72,000,
and primarily consisted of equipment for the manufacturing services division
facility expansion. The Company believes that cash provided from operations,
cash balances at September 30, 1998, and available drawings from its line of
credit will be adequate to support its operating and investing requirements
through 1998.
YEAR 2000 ISSUES
During 1997, the Company implemented a new enterprise-wide client-server
information system. This system has built-in features, which are compatible with
Year 2000 dating. Accordingly, the Company does not expect the Year 2000 issues
to have a material impact to its operations or financial reporting system.
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
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1998 AND THE RELATED STATEMENT OF OPERATIONS FOR THE
PERIOD ENDED SEPTEMBER 30, 1998.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,632
<SECURITIES> 0
<RECEIVABLES> 5,572
<ALLOWANCES> 0
<INVENTORY> 4,813
<CURRENT-ASSETS> 14,192
<PP&E> 5,241
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,138
<CURRENT-LIABILITIES> 1,406
<BONDS> 4,500
0
0
<COMMON> 32
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,138
<SALES> 14,743
<TOTAL-REVENUES> 14,743
<CGS> 10,721
<TOTAL-COSTS> 10,721
<OTHER-EXPENSES> 4,174
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131
<INCOME-PRETAX> (124)
<INCOME-TAX> (44)
<INCOME-CONTINUING> (80)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (80)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
